10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 29, 2001

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-3506

GEORGIA-PACIFIC CORPORATION

(Exact name of registrant as specified in its charter)

Georgia	93-0432081
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

133 Peachtree Street, N.E.,

Atlanta, Georgia 30303

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (404) 652-4000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on which Registered
Georgia-Pacific Corporation—Georgia-Pacific Group Common Stock ($.80 par value)	New York Stock Exchange
Premium Equity Participating Security Units—PEPS Units	New York Stock Exchange
Georgia-Pacific Group Rights to Purchase Series B Junior Preferred Stock (no par value)	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:    None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this  Form 10-K.    ¨

As of the close of business on March 7, 2002, the registrant had 230,201,893 shares of Georgia-Pacific Common Stock outstanding.

The aggregate market value of the voting stock held by non-affiliates of the registrant on March 7, 2002 (assuming, for the sole purpose of this calculation that all executive officers and directors of the registrant are “affiliates”) was $6,396,717,968 for Georgia-Pacific Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Georgia-Pacific Corporation’s definitive Proxy Statement for use in connection with its Annual Meeting of Shareholders scheduled to be held on May 7, 2002 are incorporated by reference in answer to Part III of this Form 10-K.

GEORGIA-PACIFIC CORPORATION

ANNUAL REPORT ON FORM 10-K

For the Fiscal Year Ended December 29, 2001

TABLE OF CONTENTS

PART I

		Page
Item 1.	Business	1
Item 2.	Properties	8
Item 3.	Legal Proceedings	8
Item 4.	Submission of Matters to a Vote of Security Holders	8
PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	9
Item 6.	Selected Financial Data	9
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 8.	Financial Statements and Supplementary Data	30
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	101
PART III
Item 10.	Directors and Executive Officers of the Registrant	101
Item 11.	Executive Compensation	103
Item 12.	Security Ownership of Certain Beneficial Owners and Management	103
Item 13.	Certain Relationships and Related Transactions	103
PART IV
Item 14.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	103

PART I

ITEM 1.     BUSINESS

Georgia-Pacific Corporation was organized in 1927 under the laws of the State of Georgia.

The Corporation is engaged in five principal business operations: the manufacture of tissue products (including bath tissue, paper towels, and napkins) and disposable tabletop products (including disposable cups, plates and cutlery); the manufacture of containerboard and packaging (including linerboard, medium, kraft and corrugated packaging); the manufacture of bleached pulp and paper (including paper, market and fluff pulp, and bleached board) and the distribution of paper products and supplies manufactured by the Corporation or purchased from others; and the manufacture and distribution of building products (including plywood, oriented strand board, various industrial wood products, and softwood and hardwood lumber as well as certain non-wood products including gypsum board, chemicals and other products). During 2001, the Corporation, through its timber and timberlands business referred to as “The Timber Company” also engaged in the growing of timber on approximately 4.7 million acres of timberlands that the Corporation owned or leased. In 2001, these timberlands supplied approximately 10% of the overall timber requirements of the Corporation’s manufacturing facilities. On October 6, 2001, the Corporation completed the spin off of The Timber Company which merged with and into Plum Creek Timber Company, Inc. (“Plum Creek”) (see Note 3 of the Notes to Consolidated Financial Statements).

Among North American producers, Georgia-Pacific ranks first in the production of tissue paper products, disposable tableware, and industrial panels; second in structural wood panels, wood bonding and industrial thermosetting resins; third in lumber products and gypsum wallboard; fourth in containerboard, corrugated packaging and market pulp; and fifth in paper (uncoated free-sheet). The Corporation’s building products distribution business is the leading supplier of wholesale building products in the United States. Georgia-Pacific’s office product distribution business, Unisource Worldwide, Inc. (“Unisource”), is one of the largest distributors of paper and janitorial and other supplies in North America. Georgia-Pacific’s chemical business also supplies paper chemicals and tall oil based chemicals.

Most of Georgia-Pacific’s products are made of solid wood, virgin and recycled wood fiber, or wood by-products. Georgia-Pacific purchases the majority of these readily available raw materials from timber owners (such as Plum Creek), independent log merchants and brokers, and recycled fiber brokers.

Georgia-Pacific’s strategy is to improve its portfolio of businesses by divesting or exiting non-strategic businesses, and by acquiring and investing in businesses that are high value-added and that position Georgia-Pacific closer to consumers. A key component of that strategy is improving the Corporation’s bath tissue, paper towel and napkin business, which is commonly referred to as the tissue business. The Corporation believes that its acquisition of Fort James Corporation in 2000 directly facilitated that strategy. In 2001, in connection with the Corporation’s redirection of its focus away from commodity-based businesses, the Corporation sold a portion of its pulp and paper assets to Domtar Inc. and divested its timber businesses by redeeming all of the outstanding shares of stock of The Timber Company and merging its timber businesses with Plum Creek.

As the Corporation completed evaluations of its business portfolio last year, it became increasingly convinced that separating its consumer products and packaging business and its building products business has the potential to create shareholder value. In the summer of 2001, management began working on a plan to create separate vehicles for those businesses. Management believes there are a number of potential benefits from separating the businesses. Among them, it is believed a separation would create both a high-value-added consumer products and packaging company with strong brands and stable cashflow and one of the strongest domestic “pure-play” building products companies; drive sharpened management focus and provide better performance incentives; eliminate cross-subsidies, with each business free to use its cash flow to reinvest or distribute to shareholders as appropriate; and allow each business to develop its own appropriate strategies and capital structures.

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Georgia-Pacific operates its production facilities in four operating segments: Consumer Products, Packaging, Bleached Pulp and Paper, and Building Products. Operating segment descriptions follow.

Consumer Products Segment

Georgia-Pacific is the largest North American producer of tissue products, a leading manufacturer of tissue products in Europe, and, through its Dixie business, the largest producer of disposable tableware in North America. The segment’s products include a wide array of branded and private label consumer and commercial tissue products. These include bath tissue, paper towels and napkins, which are made from virgin and recycled fibers, as well as disposable plates, cups and cutlery. Primary production of these products takes place in 27 tissue mills throughout Europe and the United States and 12 disposable tableware plants in the United States. Worldwide tissue capacity is approximately four million tons, making this segment the world’s largest producer of tissue products. In 2001, export and foreign sales accounted for approximately $1,590 million, or 23% of segment sales. Markets for tissue products are generally influenced by population growth, changes in per capita consumption, and levels of economic activity in a geographic market.

In March 2001, Georgia-Pacific completed the sale of 368,000 tons of tissue manufacturing capacity, associated converting facilities, and related sales and marketing functions to Svenska Cellulosa Aktiebolaget (publ) (“SCA”) for approximately $850 million (see Note 3 of the Notes to Consolidated Financial Statements). The majority of this sale involved products in the commercial or “away-from-home” market.

Our Consumer Products segment is broken down into three divisions; North American Tissue, European Tissue, and Dixie.

North American Tissue

Georgia-Pacific’s consumer products segment is the largest producer of tissue products, such as bath tissue, paper towels and napkins, in North America. The business produces both branded and private label tissue products made from virgin and recycled fibers for the retail and commercial markets. Fourteen production and converting facilities located throughout the United States and a converting facility in Mexico produce finished goods to serve the North American market. In 2001, North American sales accounted for approximately $4,549 million, or 74% of tissue sales.

Retail Tissue.    In the retail (or “at-home”) channel, which accounted for approximately 67% of domestic tissue sales in 2001, Georgia-Pacific produces both branded and private label products. The Corporation’s principal retail brands include Quilted Northern and Angel Soft bath tissue (the number two and three bathroom tissue brands, respectively), Brawny and Sparkle paper towels (the number two and three paper towel brands, respectively), and six of the seven leading napkin brands including Mardi Gras napkins (the leading paper napkin brand) and Vanity Fair premium dinner napkins (the number one premium napkin brand). Other retail brands include Sparkle paper napkins (the number three paper napkin brand), and Soft’N Gentle bathroom and facial tissue, MD bath tissue, Mardi Gras towels, Zee napkins (number one on the West Coast), and Green Forest towels and napkins.

Georgia-Pacific also supplies private label or customer brand products to some of the largest retailers in the United States. The Corporation believes that it is the leading supplier to the United States private label towel and tissue market, with an estimated market share between 40% and 45%. Additionally, the Corporation believes it is the leading supplier of tissue, towel and napkin products to the warehouse club channel.

Commercial Tissue.    In 2001, the other 33% of domestic tissue sales came from commercial and industrial (or “away-from-home”) markets through the Corporation’s office product distribution business (Unisource), independent paper distributors, food service and janitorial distributors, and directly to national fast food accounts for use in restaurants, offices, factories, hospitals, schools and hotels. The Corporation’s principal away-from-

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home brands include proprietary dispensing systems for the Cormatic, Ultimatic and Guardian brands; Envision, the leading brand of environmentally positioned 100% recycled tissue, towel and napkin products. With an estimated market share of approximately 39%, Georgia-Pacific believes it is now the leading producer of towel and tissue products in the United States away-from-home channel.

European Tissue

The European tissue business is a leading supplier of paper-based consumer products in many European countries. Product lines in both the retail and away-from-home markets include bathroom and facial tissue, paper towels and napkins. Retail sales include both branded and private label products. The Corporation also markets feminine hygiene products and pharmacy supplies in select countries. These products are manufactured across Europe in 13 mills with an annual capacity of over 946,000 tons, or are purchased from others. Eleven stand-alone converting plants strategically located throughout Europe and China supplement converting operations located at the primary production mills. The combined network provides cost-effective market reach given the high European distribution costs and the resulting decrease in the maximum practical distribution radius from any one-mill site. In 2001, net sales for the European tissue business accounted for approximately $1,590 million, or 26% of tissue sales.

During 2001, tissue-based products accounted for approximately 87% of the Corporation’s European annual sales with the balance comprised of feminine hygiene products, ancillary products such as health care and pharmacy items, and unconverted tissue parent rolls. Georgia-Pacific sells its tissue, towel and napkin products through both retail and away-from-home distribution channels in Europe. Approximately 75% of the Corporation’s European towel and tissue sales were into retail distribution channels and 25% were into away-from-home and other channels. Sales into retail channels are supported by both branded and private label product offerings.

The Corporation’s principal European brands include Lotus bathroom tissue and handkerchiefs (both hold the number one position in France), Moltonel bathroom tissue (the number two tissue in France), Lotus kitchen towels (the number one kitchen towel in the Netherlands), O’Kay kitchen towels (the number one kitchen towel in France), Colhogar kitchen towels and bathroom tissue (both hold number one positions in Spain), KittenSoft towels and bathroom tissue (both hold number one positions in Ireland), EMBO bathroom tissue (the number one tissue in Finland), Tenderly bathroom tissue (the number three tissue in Italy), Delica kitchen towels and bathroom tissue (the number one towel and number two bath tissue in Greece), Vania feminine hygiene products (the leader in France), Selpak premium tissue products (the leader in Turkey) and Demak’Up cotton facial pads (the leader in Europe).

Georgia-Pacific’s largest European operations are in France and the United Kingdom, which combined account for approximately 71% of its European tissue sales. Aggregating at-home branded, private label and away-from-home production, the Corporation believes it is the largest producer of tissue products in France, Spain, Finland, Ireland, and Turkey and the second largest producer in the United Kingdom and Greece.

Dixie

The Dixie business, with one of the best known names in disposable plates, cups and cutlery, provides a full range of products for both retail and foodservice markets. Through a twelve-plant network of focused production facilities in North America, Dixie manufactures products for its retail and foodservice customers. The Corporation’s principal retail tabletop brand is Dixie, which has the largest United States retail market share for disposable cups and plates. The Corporation believes that it is also the leading supplier of tabletop products to the warehouse club channel. Foodservice customers include distributors, restaurants, hotels, office buildings and institutions. The Corporation believes that it is one of the largest producers of disposable cups, plates and related products for the foodservice industry. Approximately 54% of sales are into retail distribution channels and the remaining 46% are into foodservice distribution channels. In 2001, Dixie’s net sales were approximately $871 million.

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Packaging Segment

The packaging segment focuses on providing packaging solutions for a wide variety of industrial customers. Its primary products include corrugated containers and containerboard. The Corporation’s four containerboard mills rank fourth in North American containerboard production with a capacity of 3.7 million tons, approximately 10% of North American capacity. The segment’s 53 packaging plants consume approximately 70% of the segment’s containerboard production; the remainder is sold to independent box converters in the United States, Latin America and Asia. One of the largest domestic producers of containerboard, the packaging segment is the second largest supplier of containerboard to independent converters in the United States and the fourth largest supplier of corrugated containers in the United States. Markets for containerboard and packaging products are affected primarily by changes in industry capacity, the level of industrial activity in the United States, and export markets. Containerboard exports totaled 266,000 tons during 2001 compared to 2000’s level of 332,000 tons. In 2001, exports for the packaging segment were $113 million, approximately 4% of segment net sales.

In addition to standard corrugated containers, the segment’s packaging plants manufacture many specialty packaging products. These include display-ready corrugated packaging that works interchangeably with the Corporation’s line of returnable plastic containers, double and triple-wall boxes, bulk bins, water-resistant packaging, and high-finish and preprinted packaging for point-of-sale displays. During 2001, Georgia-Pacific acquired the remaining interest in Color-Box, LLC, a joint venture with Chesapeake Corporation (see Note 3 of the Notes to Consolidated Financial Statements). Color-Box is a producer of high quality litho-laminated packaging.

Bleached Pulp and Paper Segment

The bleached pulp and paper segment produces market pulp, paper and other products at nine facilities in North America. Combined production capacity for pulp and paper is 3.8 million tons. The bleached pulp and paper segment’s mills are among the industry’s lowest cost producers. Markets for pulp and paper products are affected primarily by changes in industry capacity, the level of economic growth in the United States and export markets, and fluctuations in currency exchange rates. Exports from this business segment consist chiefly of market pulp bound for Asia, Europe, and Latin America. In 2001, exports for the bleached pulp and paper segment were $1.3 billion, approximately 15% of segment sales.

Paper.    Georgia-Pacific is the nation’s fifth largest domestic producer of paper. Also known as uncoated free-sheet, paper is used in office copy machines and printers, commercial printing, business forms, stationery, tablets, books, envelopes, labels and checks. The bleached pulp and paper segment’s four uncoated free-sheet paper mills have a combined annual capacity of 1.2 million tons, approximately 8% of North American capacity. These products are sold through Unisource, our office product distribution business, other major paper distributors, office product distributors, printing equipment manufacturers, retailers and converters. Products are sold under a variety of brand names including: Microprint, Spectrum, Eureka, GeoCycle, and Eclipse.

In August 2001, Georgia-Pacific sold its mills at Ashdown, Arkansas; Woodland, Maine; and Nekoosa and Port Edwards, Wisconsin. Combined, these facilities represented 1.3 million tons of production or 47% of the segment’s white paper capacity. Additionally, the segment permanently closed paper machines at Camas, Washington resulting in the reduction of another 140,000 tons, equal to 9%, of this segment’s white paper capacity.

Market Pulp.    Georgia-Pacific ranks eighth in the production of market pulp worldwide. The bleached pulp and paper segment includes three pulp mills with a combined annual capacity of nearly 1.7 million tons, approximately 19% of United States capacity. These mills produce primarily Southern softwood and Northern hardwood pulps sold to industrial users for the manufacture of many paper grades. The segment also is a major supplier of fluff pulp and other specialty pulps. Fluff pulp is used primarily in the manufacture of disposable diapers and other sanitary items.

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In August 2001, the Woodland, Maine market pulp mill, with an annual capacity of 380 thousand tons of Northern Hardwood was sold. The Corporation’s Bellingham, Washington mill was permanently closed in 2001.

Bleached Board.    The bleached pulp and paper segment produces bleached paperboard for use in frozen food containers, food service items and other products. The combined bleached board capacities at Naheola, Alabama and Crossett, Arkansas make Georgia-Pacific Corporation the fourth largest bleached board producer in North America.

Paper Distribution.    Unisource is a leading distributor of printing and imaging paper, packaging systems, and facility and packaging supplies in North America. Unisource operates primarily in the United States, with 24 locations in Canada and 21 in Mexico, and is a large distributor for most major paper producers in North America, including Georgia-Pacific’s paper, commercial tissue and packaging businesses. Unisource operates with 16 customer service centers, 95 major distribution centers, and 59 Paper Plus retail store locations in the United States. The paper distribution business is affected by the level of economic activity in the United States, Canada and Mexico and the pricing environment for paper and paper products.

Unisource sells and distributes high-quality printing, writing and copying papers to printers, publishers, business forms manufacturers and direct mail firms, as well as to corporate and retail copy centers, in-plant print facilities, government institutions and other paper intensive businesses. Unisource also sells and distributes a broad range of packaging and maintenance supplies, equipment and services (principally to manufacturers, food processors, and retailers); maintenance supplies and equipment such as carton erectors, baggers and filers as well as films, shrink-wrap and cushioning materials; shipping room supplies such as corrugated boxes, cushioning materials, tapes and labeling; and food service supplies such as films and food wraps, food containers and disposable apparel for food service workers. Roughly two thirds of Unisource’s revenue is derived from printing and imaging and one third from packaging and supplies.

The business is the exclusive national distributor of Xerox^®, one of the most recognized brand names in office papers.

Building Products Segment

Georgia-Pacific is a leading manufacturer and distributor of building products in the United States. The building products segment manufactures wood panels (including plywood, oriented strand board (“OSB”) and industrial panels), lumber, gypsum products, chemicals and other products. These products are manufactured at 127 facilities in the United States, 7 plants in Canada, 2 plants in South America, and a joint venture in South Africa. These products are sold directly to industrial customers, independent dealers and wholesalers, and large building product retailers or through our building products distribution business. The segment is the largest distributor of building products in North America.

The building products business is affected by the level of housing starts; the level of home repairs, remodeling and additions; commercial building activity; the availability and cost of financing; and changes in industry capacity. The demand for building products tends to be stronger during the second and third quarters when weather conditions favor construction. Exports for the building products segment in 2001 were $167 million (approximately 2% of segment sales), primarily to the Caribbean and Europe.

Wood Panels.    A leading producer of structural wood panels in the United States, Georgia-Pacific accounts for about 19% of North American capacity. The segment’s 16 softwood plywood plants and seven OSB plants can produce approximately 7.9 billion square feet of panels annually. With most of these plants located in the Southeast, the business benefits from an ample supply of timber, favorable weather conditions, regional population growth, national economic growth and other factors. OSB is a structural panel made from wood strands arranged in layers and bonded with resin. OSB serves many of the same uses as unsanded plywood including roof decking, sidewall sheathing and floor underlayment.

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Industrial Wood Products.    The building products segment leads in production of manufactured board products for industrial and construction applications. Seventeen mills manufacture hardboard, particleboard, panelboard, softboard, hardwood plywood, decorative panels and medium-density fiberboard. Applications include furniture, cabinets, housing, retail fixtures, and other industrial products. In 2001, the segment closed its Conway, North Carolina and Superior, Wisconsin hardboard plants. The combined capacity of these facilities was 345 million square feet (1/8” basis) or approximately 34% of its annual hardboard capacity as of January 1, 2001.

Lumber.    The third largest lumber producer in North America, Georgia-Pacific annually manufactures about 2.5 billion board feet or approximately 4% of North American lumber production. Most of the Corporation’s 33 lumber mills are located in the Southern United States. Lumber products are manufactured from Southern pine, a variety of Appalachian and Southern hardwoods, redwood, cedar, spruce, hemlock and Douglas fir. During 2001, the Corporation’s Idabel, Oklahoma southern pine sawmill was sold and the Varnville, South Carolina pine sawmill was closed. The combined capacity of these facilities was 172 million board feet. Additionally, the Corporation’s Tioga, Pennsylvania Appalachian hardwood sawmill, with a capacity of 18 million board feet, was sold.

The building products segment ranks as one of the top producers of pressure-treated lumber in the nation. With production from 12 facilities, the segment can sell more than one billion board feet of lumber annually. Pressure treated lumber is used primarily in construction of outdoor structures such as decks, fences, bridges and playground equipment.

Demand for the building products segment’s engineered lumber products has increased in recent years as wood I-joists (made from veneer, OSB and sawn lumber) have increasingly become the product of choice for floor joist applications. Laminated veneer lumber (“LVL”) and wood I-joists are designed to meet the precise structural performance requirements of roofing and flooring systems. The segment produces both LVL and I-joists in two facilities.

Gypsum Products.    Georgia-Pacific operates 18 gypsum board plants throughout the United States and Canada and is one of the three largest producers of gypsum wallboard in North America, with an annual capacity of 6.5 billion square feet. Gypsum products include wallboard, Dens specialty panels, fire-door cores, industrial plaster and joint compound. In addition, the business is substantially vertically integrated in both paper and gypsum rock, operating four recycled gypsum paperboard mills and nine gypsum quarries/mines. Gypsum reserves are approximately 302 million recoverable tons, an estimated 49-year supply at current production rates.

In June 2001, the Corporation announced that it would close gypsum wallboard plants at Savannah, Georgia, Long Beach, California, and Winnipeg, Manitoba, Canada. The Corporation also announced that it would indefinitely idle wallboard production lines at Acme, Texas; Sigurd, Utah; and Blue Rapids, Kansas, and reduce operations at its remaining gypsum wallboard production facilities. The plant closures and production curtailments affect approximately 45% of the Corporation’s gypsum wallboard production capacity.

Chemicals.    The Corporation’s chemical business is a leading supplier of wood bonding resins, industrial thermosetting resins, paper chemicals, and tall oil based chemicals. These chemicals and resins are used in a variety of specialty applications, including production of wood panels, paper-making, roofing, thermal insulation, metalworking, coatings, fertilizers, and transportation. The business ships more than 4.1 billion pounds of bonding and thermosetting resins, formaldehyde, pulp chemicals, and paper chemicals annually from 19 United States and 2 South American plants. In January 2001, the business acquired the balance of its Chilean and Argentinean joint ventures from Masisa S.A. The business also operates through a joint venture in South Africa with Chemical Services, Ltd. In February 2001, the Corporation’s Hampton, South Carolina formaldehyde plant, with a capacity of 65 million pounds, was permanently closed. In December 2001, the closure of the Houston, Texas formaldehyde plant with a capacity of 110 million pounds was announced to be effective during the first quarter of 2002.

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Building Products Distribution.    The building products distribution business is the leading domestic wholesaler of building products. It sells building products to independent dealers, industrial customers and large home improvement centers from 64 locations throughout the United States and one in Canada. The building products distribution business provides a nationwide outlet for a significant portion of Georgia-Pacific’s lumber and structural panel products. Approximately 72% of the business’ sales are building products purchased from third parties. The Corporation’s building products distribution business believes that its geographic coverage and product breadth are unmatched in North America.

The Timber Company

On October 6, 2001, the Corporation completed the spin off of its timber and timberlands business and its merger with and into Plum Creek. Accordingly, the Corporation has terminated the registration of The Timber Company common stock with the Securities and Exchange Commission and de-listed the stock from the New York Stock Exchange. The Timber Company has been treated as a discontinued operation in the accompanying consolidated financial statements.

Additional Information

Additional information pertaining to the Corporation’s businesses, including operating segments, is set forth under the captions “Georgia-Pacific Corporation and Subsidiaries—Management’s Discussion and Analysis” and “Georgia-Pacific Corporation and Subsidiaries—Sales and Operating Profits by Operating Segment presented in Notes 1 and 2 of the Corporation’s Notes to Consolidated Financial Statements, presented under Item 8 of this Form 10-K.

Timber Resources

The principal raw material used by the Corporation is timber and wood fiber. During 2001, The Timber Company supplied 10% of the overall timber requirements of Georgia-Pacific Group’s facilities. Prior to 2001, the prices and terms of the transactions between The Timber Company and Georgia-Pacific Group were determined on an arms length basis pursuant to supply contracts put in place in 1997 at the time of the Corporation’s recapitalization which created two separate classes of common stock: The Timber Group and Georgia-Pacific Group (see Note 15 of the Notes to Consolidated Financial Statements). The Corporation purchases its remaining timber requirements from third-party land owners in the open market. No single supplier, other than The Timber Company prior to its spin off and merger with Plum Creek, supplied more than 10% of the Corporation’s timber requirements.

In preparation for the merger of The Timber Company and Plum Creek, Georgia-Pacific, Plum Creek and The Timber Company negotiated a new timber supply agreement which is effective for 10 years following the completion of the merger and subject to an automatic ten year renewal period, unless either party delivers a timely termination notice. This agreement covers four key southern timber basins: Southeast Arkansas, Mississippi, Florida and Southeast Georgia. Under the agreement, Plum Creek must offer to Georgia-Pacific specified percentages of its annual harvest, subject to absolute minimum and maximum limitations in each basin. Georgia-Pacific can elect between 36%-51% of such annual harvest each year in Mississippi, Florida and Southeast Georgia, and between 52%-65% in Southeast Arkansas. The total annual softwood volume will range from a minimum of 2.7 million tons to a maximum of 4.2 million tons. The prices for such timber will be negotiated at arms length between Plum Creek and Georgia-Pacific every six months.

Mineral Resources

Information pertaining to the Corporation’s gypsum resources is set forth under the captions “Georgia-Pacific Group—Building Products—Gypsum Products” in this item.

Environment

Information pertaining to environmental issues and the Corporation’s expenditures for pollution control facilities and equipment is set forth under the captions “Georgia-Pacific Corporation and Subsidiaries—Management’s Discussion and Analysis—Liquidity and Capital Resources—Investing Activities” and Note 14 of the Notes to Consolidated Financial Statements, and is presented under Items 7 and 8 of this Form 10-K.

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Employees

Information pertaining to persons employed by the Corporation is set forth under the captions “Georgia-Pacific Corporation and Subsidiaries—Management’s Discussion and Analysis—Liquidity and Capital Resources—Other”, and is presented under Item 7 of this Form 10-K.

Patents, Copyrights, Licenses, Trade Secrets and Trademarks

The Corporation is the owner of numerous patents, copyrights, trademarks, licenses and trade secrets, as well as substantial know-how and technology (herein collectively referred to as “technology”), relating to its products and the processes for their production, the packages used for its products, the design and operation of various processes and equipment used in its business and certain quality assurance and financial software. The manufacturing and processing of many of the Corporation’s products are among the important trade secrets of the Corporation.

The Corporation also owns numerous trademarks which are very important to its business, especially its consumer products business. Depending on the jurisdiction, trademarks are valid as long as they are in use and/or their registrations are properly maintained and they have not been found to have become generic. Registrations of trademarks can generally be renewed indefinitely as long as the trademarks are in use. The Corporation has registered and licenses the right to use its trademarks in conjunction with certain merchandise other than products it manufactures. In part, the Corporation’s success can be attributed to the existence of its trademarks.

ITEM 2.     PROPERTIES

The geographic location and capacity of the manufacturing facilities by segment is set forth on Exhibit 99.1 hereto which is hereby incorporated herein by this reference.

The Corporation’s manufacturing and support facilities are designed according to the requirements of the products to be manufactured. Therefore, the type of construction varies from facility to facility. Management believes that its manufacturing facilities, taken as a whole, are well maintained and generally adequate for current operations.

Utilization of a particular facility varies based upon demand for the product. While it is not possible to measure with any degree of certainty the productive capacity of a facility, we have estimated capacity in Exhibit 99.1 which is incorporated herein by reference thereto.

The Corporation generally owns its manufacturing and other facilities, although warehouse and office facilities are often leased. The Corporation examines alternatives for its higher cost facilities, including modernizing, replacing or closing such facilities. The Corporation continually reviews many business opportunities and alternatives, including possible acquisitions or sales of properties.

Information concerning the Corporation’s timber and mineral resources is presented under Item 1 of this Form 10-K.

ITEM 3.     LEGAL PROCEEDINGS

Information pertaining to the Corporation’s Legal Proceedings is set forth in Note 14 of the Corporation’s Consolidated Financial Statements which are presented under Item 8 of this Form 10-K and are incorporated herein by reference thereto.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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PART II

ITEM 5.     MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Georgia-Pacific common stock is listed on the New York Stock Exchange and trades under the symbol GP. As of the close of business on March 7, 2002, the closing stock price of one share of Georgia-Pacific common stock was $28.14 and there were approximately 36,462 record holders of such stock.

Information with respect to the Market for the Corporation’s Common Equity and Related Stockholder Matters is set forth in a table under the captions “Selected Financial Data—Financial Position, End of Year” in Note 16 of the Corporation’s Consolidated Financial Statements under Item 8 of this Form 10-K, which are incorporated herein by reference thereto.

The Corporation expects to continue to pay quarterly dividends in the amounts set forth in Note 16 of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K, which dividend information is incorporated herein by reference thereto.

On October 4, 2001 and pursuant to its 1995 Outside Directors Stock Plan (the “1995 Plan”), the Corporation issued 40,183 shares of Georgia-Pacific common stock, $0.80 par value per share, to its nonemployee directors. The shares were issued to replace shares of common stock of The Timber Company which previously had been issued under the 1995 Plan and were either exchanged or canceled in connection with the spin-off and merger of The Timber Company. Accordingly, the Corporation received no cash consideration in connection with the issuance. The issuance to the directors was exempt from registration under the Securities Act of 1933, as amended (the “Act”) pursuant to Section 4(2) of the Act because it was a transaction by an issuer that did not involve a public offering.

ITEM 6.     SELECTED FINANCIAL DATA

Information with respect to Selected Financial Data for the Corporation is set forth under the captions “Selected Financial Data—Operations—Georgia-Pacific Corporation and Subsidiaries” and “Selected Financial Data—Financial Position, End of Year,” which are presented under Item 8 of this Form 10-K, and is incorporated herein by reference.

ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion summaries the significant factors affecting the results of operations and financial condition of the Corporation during the three fiscal years ended December 29, 2001. This discussion should be read in conjunction with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Supplemental Information set forth in Item 8 of this report.

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Georgia-Pacific Corporation manufactures and sells a wide variety of pulp and paper products (including pulp, paper, containerboard, packaging, commercial and consumer tissue products (including bath tissue, paper towels and napkins) and disposable tabletop products (including disposable cups, plates and cutlery) and manufactures and sells building products (including plywood, oriented strand board and industrial panels, lumber, gypsum products, chemicals and other products).

2001 Compared with 2000

The Corporation reported consolidated net sales of $25.0 billion and a net loss of $407 million for 2001, compared with net sales of $22.1 billion and net income of $505 million in 2000. Included in the 2001 results are a full year of net sales and operating profits from the Fort James operations that were consolidated with the Corporation beginning in December 2000.

Interest expense was $1,080 million in 2001, compared with $595 million in 2000. The increase is the result of higher debt levels, primarily related to the acquisition of Fort James, offset slightly by lower interest rates.

The Corporation reported a loss from continuing operations before income taxes of $295 million and an income tax provision of $181 million for the year ended December 29, 2001, compared with income from continuing operations before income taxes of $553 million and an income tax provision of $210 million for the year ended December 30, 2000. The effective rate in 2001 was different from the statutory rate primarily because of nondeductible goodwill amortization expense associated with business acquisitions and because of nondeductible goodwill applicable to assets sold (see Note 3 of the Notes to Consolidated Financial Statements). The effective tax rate in 2000 was different from the statutory rate due to the utilization of state tax credits and foreign sales corporation tax benefits that more than offset nondeductible goodwill amortization expense associated with business combinations.

During 2001, the Corporation recorded a pretax charge to earnings of $350 million to cover all of its projected asbestos liabilities and defense costs, net of insurance recoveries, through 2011 (see Note 14 of the Notes to Consolidated Financial Statements).

Beginning in the third quarter of 2001, the Corporation began reporting The Timber Company as a discontinued operation. Income from discontinued operations decreased to $70 million in 2001, compared with $162 million in 2000. This decrease was primarily a result of a decline in both sales prices and sales volume. Included in the 2001 results was interest expense of $31 million and a $24 million pretax charge for an insurance premium associated with the merger of the Corporation’s timber and timberlands business with Plum Creek (see Note 3 of the Notes to Consolidated Financial Statements).

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The remaining discussion refers to the “Selected Operating Segment Data” table below which should be read in conjunction with the more detailed segment information set forth in Note 2 of the Notes to Consolidated Financial Statements and Sales and Operating Profits by Operating Segment.

SELECTED OPERATING SEGMENT DATA

Georgia-Pacific Corporation and Subsidiaries

	Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions
Net sales:
Consumer products	$	7,138		$	2,119		$	1,234
Packaging		2,610			2,735			2,511
Bleached pulp and paper		8,713			9,454			5,869
Building products		7,784			8,723			9,689
Other*		(1,229	)		(981	)		(894	)
Total net sales	$	25,016		$	22,050		$	18,409
Operating profits (losses):
Consumer products	$	792		$	(17	)	$	131
Packaging		384			512			324
Bleached pulp and paper		69			509			181
Building products		150			382			1,205
Other*		(610	)		(238	)		(251	)
Operating profits		785			1,148			1,590
Interest expense		1,080			595			426
(Loss) income from continuing operations before income taxes		(295	)		553			1,164
Provision for income taxes		181			210			448
(Loss) income from continuing operations		(476	)		343			716
Income from discontinued operations, net of taxes		70			162			400
(Loss) income before extraordinary item and accounting change		(406	)		505			1,116
Extraordinary item, net of taxes		(12	)		–			–
Cumulative effect of accounting change, net of taxes		11			–			–
Net (loss) income	$	(407	)	$	505		$	1,116

* Includes the elimination of intersegment sales.

Consumer Products

The Corporation’s consumer products segment reported net sales of $7.1 billion and operating profits of $792 million for the year ended December 29, 2001, which included net sales and operating profits from the operations of Fort James that were acquired at the end of November 2000. Fort James’ results of operations were consolidated with those of the Corporation beginning in the fiscal month of December 2000. During 2000, the segment reported net sales of $2.1 billion and an operating loss of $17 million. Included in 2001 results was a one-time unusual charge of $83 million for the closure of the Bellingham, Washington pulp mill. Included in 2000 results was a one-time unusual charge of $204 million for the write-down of assets of the Corporation’s away-from-home tissue business that was sold during the first quarter of 2001. Excluding these one-time charges, return on sales increased to 12% compared with 9% in 2000. The increase in 2001 operating profits was due principally to the inclusion of a full year of operating results of the Fort James businesses and significant savings

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from lower distribution and manufacturing costs and other synergies resulting from merging the Corporation’s retail tissue business with the Fort James operations.

On March 30, 2001, the Corporation announced that it would permanently close its pulp mill and associated chemical plant at Bellingham, Washington. These operations had been temporarily closed since December 2000. The Bellingham pulp mill produced approximately 220,000 tons of pulp, including 135,000 tons of sulfite market pulp, and 260,000 tons of lignin annually. In connection with this closure, the Corporation recorded a pretax charge to earnings in the consumer products segment of approximately $57 million for the write-off of assets, approximately $14 million for the termination of approximately 420 hourly and salaried employees and approximately $12 million for facility closing costs. Of the $83 million total pretax charge to earnings, $79 million was charged to cost of sales, $3 million was charged to selling and distribution expense and $1 million was charged to general and administrative expenses.

During 2002, the Corporation expects the consumer products segment to continue to produce improved operating profits driven by sales growth and cost reduction programs associated with the Fort James acquisition. Selling prices and direct material costs are not expected to differ materially from levels experienced in the 4th quarter of 2001.

Packaging

The Corporation’s packaging segment reported net sales of $2.6 billion and operating profits of $384 million for the year ended December 29, 2001, compared with net sales of $2.7 billion and operating profits of $512 million in 2000. During 2000, the Corporation sold certain packaging assets resulting in a pre-tax gain of $25 million. Excluding this gain on asset sales, return on sales decreased to 15% from 18% in 2000. Average selling prices decreased in 2001 for all packaging products. Average selling prices for linerboard and medium decreased 5% and 10%, respectively, and average selling prices for packaging decreased slightly. Sales volume decreased for packaging by 4% when compared with the prior year. These decreases were offset by a slight increase in sales volume for linerboard and a $36 million cost savings year over year. The Corporation expects continued weakness in packaging markets in 2002 with gradual declines in selling prices.

During 2001 and 2000, the Corporation took market-related paper machine slowback or downtime at its containerboard mills to avoid excess inventories, resulting in a reduction in containerboard production of approximately 274,000 tons and 271,000 tons, respectively.

Bleached Pulp and Paper

The Corporation’s bleached pulp and paper segment reported net sales of $8.7 billion and operating profits of $69 million for the year ended December 29, 2001. In 2000, the segment reported net sales of $9.5 billion and operating profits of $509 million. In August 2001, the bleached pulp and paper segment sold four paper and pulp facilities and recorded a pre-tax loss of $63 million. Excluding this loss, return on sales decreased to 1% compared with 5% for the same period a year ago. The decrease in net sales and operating profits was due primarily to a decrease in average prices for all of the Corporation’s bleached pulp and paper, offset somewhat by lower wood fiber and production costs. Average selling prices for market pulp and fluff pulp decreased 27% and 13%, respectively, while paper prices decreased 5% compared with 2000 prices.

During 2001, the Corporation incurred market-related downtime at its bleached pulp and paper mills, resulting in a reduction in pulp production of 104,000 tons and in paper production of 21,000 tons. In December 2000, the Corporation announced the permanent closure of its Kalamazoo, Michigan, paper mill and a permanent closure of a paper machine at its Nekoosa, Wisconsin, operations. In connection with the Kalamazoo paper mill closing, the Corporation recorded a fourth quarter 2000 charge of $57 million for employee termination, asset write-down, mill closing and other costs. In 2000, the Corporation incurred market-related downtime at its pulp and paper mills resulting in a reduction in pulp and paper production of 17,000 tons and 60,000 tons,

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respectively. Divested operations contributed operating losses of $64 million and operating profits of $59 million to the segment’s 2001 and 2000 results, respectively.

The segment’s paper distribution business, which represents the operating results of Unisource, reported net sales of $6.2 billion and operating profits of $48 million in 2001, compared to net sales and operating profits of $6.9 billion and $158 million, respectively, in 2000. The decline in sales and operating profits for the paper distribution business is a direct result of declining prices and volumes in the printing business.

Selling prices for the Corporation’s pulp and paper products continually decreased during 2001 and ended the year at levels lower than 2000. The Corporation expects pulp selling prices to remain relatively depressed through 2002. Selling prices for paper products are expected to gradually improve in 2002. Historically, selling prices for all of the Corporation’s pulp and paper products have been volatile and difficult to predict. Sales volume is also expected to decrease significantly during 2002 related to the sale of the paper and pulp assets to Domtar in August 2001.

Building Products

The Corporation’s building products segment reported net sales of $7.8 billion and operating profits of $150 million for the year ended December 29, 2001, compared with net sales of $8.7 billion and operating profits of $382 million in 2000. As a result of weak market conditions in this segment, the Corporation announced the closure of certain structural panels mills, lumber mills, industrial wood products mills, building products distribution centers and gypsum plants and recorded one-time net charges of $88 million in 2001 related to these plant closures and asset impairments. In 2000, the Corporation recorded a restructuring charge of approximately $8 million for asset write-offs, employee termination and facility closing costs of a gypsum facility Excluding these unusual charges, return on sales was 3% in 2001 and 4% in 2000. The primary components of the decrease in 2001 net sales and operating profits were 10% lower average particleboard selling prices, 20% lower average OSB selling prices and a 24% decrease in average gypsum wallboard selling prices coupled with a 10% decrease in plywood sales volume, an 18% decrease in softwood lumber sales volume, a 15% decrease in particleboard sales volume and a 19% decrease in gypsum wallboard sales volume. These declines were slightly offset by a 15% increase in oriented strand board sales volume and a decline in wood costs. Despite the decline in markets for the building products segment, the building products distribution business contributed $62 million of profits in 2001 compared with $20 million in 2000. The Corporation expects moderate improvement in this segment’s operating profits in 2002 resulting primarily from modest improvements in selling prices for most building products and slight reductions in wood costs.

In June 2001, the Corporation announced that it would close gypsum wallboard plants at Savannah, Georgia; Long Beach, California; and Winnipeg, Manitoba, Canada. The Corporation also announced that it would indefinitely idle wallboard production lines at Acme, Texas; Sigurd, Utah; and Blue Rapids, Kansas; and reduce operations at its remaining gypsum wallboard production facilities. The plant closures and production curtailments affect approximately 45% of the Corporation’s gypsum wallboard production capacity. In connection with this announcement, the Corporation recorded a pretax charge to earnings in the building products segment of approximately $57 million for the write-off and impairment of assets, approximately $5 million for the termination of approximately 350 hourly and salaried employees, and approximately $5 million for facility closing costs, most of which was charged to cost of sales.

During 2001, the Corporation also announced the closure of certain structural panels mills, lumber mills, industrial wood products mills, chemical plants and building products distribution centers. In connection with these announcements, the Corporation recorded a pretax charge to earnings in the building products segment of approximately $14 million for the write-off and impairment of assets, approximately $16 million for the termination of approximately 900 hourly and salaried employees, and approximately $5 million for facility closing costs, most of which was charged to cost of sales.

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Other

The operating loss for the “Other” nonreportable segment, which includes some miscellaneous businesses, unallocated corporate operating expenses and the elimination of profit on intersegment sales, increased by $372 million to a loss of $610 million in 2001 from a loss of $238 million in 2000. This increase was primarily the result of the $350 million charge recorded in the fourth quarter of 2001 for projected asbestos liabilities through the year 2011, net of anticipated insurance recoveries (See Note 14 of the Notes to Consolidated Financial Statements).

During 2001, the Corporation recorded pension expense of $9.2 million and made pension contributions of $13.3 million for its solely administered plans. Because of lower than expected returns on pension plan assets and a lower discount rate used to value the pension liabilities, the Corporation estimates its pension expense and pension contributions for its solely administered plans will increase to approximately $133 million and $98.4 million, respectively, in 2002.

Liquidity and Capital Resources

During 2001, the Corporation reduced debt by approximately $3.3 billion. The main factors contributing to the debt reduction were proceeds from asset sales of $2.3 billion ($1.9 billion after taxes), the reduction of $0.6 billion of debt assumed by Plum Creek when the Corporation’s timber and timberlands business were merged into Plum Creek, and nearly $0.8 billion of cash from operations and other resources. The Corporation also paid approximately $133 million for acquisitions and the remaining ownership in various businesses during 2001. In 2002, the Corporation expects its cash flow from operations and financing activities (including proceeds from a successful Premium Equity Participating Security Units (“PEPS Units”) remarketing) to be sufficient to fund planned capital investments, pay dividends and make scheduled debt repayments. If the Corporation’s 2002 cash flows are significantly less than expected or if the Corporation is unsuccessful in remarketing the PEPS Units, the Corporation could be required to draw down funds from available credit facilities. The following discussion provides further details of the Corporation’s liquidity and capital resources.

Operating Activities

The Corporation generated cash from operations of $1,485 million during 2001 and $1,556 million in 2000. The decrease in cash provided by operations in 2001 was primarily a result of the net lower operating results in the building products, packaging and bleached pulp and paper segments, offset somewhat by a reduction in overall working capital requirements. Increased interest costs also contributed to the decrease in cash generated from operations.

Investing Activities

During 2001, capital expenditures for property, plant and equipment were $739 million compared with $909 million in 2000. Expenditures in 2001 included $114 million in the building products segment, $2 million in the discontinued timber segment, $78 million in the packaging segment, $149 million in the bleached pulp and paper segment, $337 million in the consumer products segment, and $59 million of other and general corporate. In 2002, the Corporation expects to make capital expenditures for property, plant and equipment of approximately $720 million.

During 2001, the Corporation invested $88 million for pollution control and abatement. The Corporation’s 2002 capital expenditure budget currently includes approximately $49 million for environment-related projects. Certain other capital projects being undertaken primarily for improving financial returns or safety will also include expenditures for pollution control.

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On April 15, 1998, the United States Environmental Protection Agency promulgated a set of regulations known as the “Cluster Rule” that establishes new requirements for air emissions and wastewater discharges from pulp and paper mills. The Cluster Rule requires pulp and paper mills to become elemental chlorine free in the pulp bleaching process. The Corporation estimates that it will make capital expenditures up to approximately $543 million through April 2006 in order to comply with the Cluster Rule’s requirements. Of that total, approximately $425 million was spent through 2001 and an additional $21 million is expected to be spent in 2002. The work performed in 2001 essentially completed the projects required during the first three years of the Cluster Rule. Remaining expenditures are for air emissions controls under MACT II regulations (to be completed by January 2004) and the MACT I regulations (to be completed by April 2006). Air regulations under the Cluster Rule are called MACT regulations, with MACT I regulations representing rules regarding pulping and bleaching and MACT II regulations representing rules regarding combustion sources.

Investments to purchase timberlands (including purchases of timberlands by The Timber Company prior to its spin off and merger with Plum Creek) totaled $31 million in 2001 compared with $59 million in 2000.

At the end of November 2000, the Corporation completed a tender offer pursuant to which it purchased each outstanding share of common stock of Fort James Corporation for $29.60 per share in cash and 0.2644 shares of Georgia-Pacific common stock. The Corporation is paying cash and issuing Georgia-Pacific shares as the untendered Fort James shares are delivered to the Corporation’s exchange agent for cancellation. Through December 29, 2001, the Corporation had paid approximately $6,186 million in cash ($46 million of which was paid during 2001) and issued approximately 53.9 million shares of Georgia-Pacific common stock (0.2 million shares of which were issued during 2001) valued at $1,485 million for such shares. The fair value of the Georgia-Pacific common shares was determined based on the average trading prices of Georgia-Pacific common stock for the two trading days before and after July 16, 2000 (the date of the announcement of the Fort James acquisition). The Corporation expects to pay an additional $7 million in cash and issue approximately 57,000 shares valued at $2 million for Fort James common stock that had not been tendered as of December 29, 2001. In addition, the Corporation assumed $3.3 billion of Fort James debt in the acquisition.

During 2001, the Corporation acquired the remaining 46% interest it did not previously own in Color-Box, LLC, a joint venture with Chesapeake Corporation for approximately $59 million. The results of operations of this joint venture were consolidated with those of the Corporation beginning in July 2001. The Corporation has accounted for this acquisition using the purchase method to record a new cost basis for the additional share of assets acquired and liabilities assumed. During the first quarter of 2000, the Corporation contributed certain packaging assets with a net book value of $34 million to this joint venture. In exchange for these assets, the Corporation received a 54 % interest in the joint venture. This investment in the joint venture was accounted for under the equity method until July 2001 because the joint venture partner had substantive participating rights.

During the first quarter of 2001, the Corporation acquired the remaining ownership of two chemical joint ventures for approximately $26 million. The results of operations of these chemical businesses were consolidated with those of the Corporation beginning in February 2001. The Corporation has accounted for these acquisitions using the purchase method to record a new cost basis for assets acquired and liabilities assumed.

On August 7, 2001, the Corporation completed the sale of a portion of its paper and pulp assets to Domtar Inc. for $1.65 billion in cash. The assets involved in this transaction were the Corporation’s stand-alone uncoated free sheet paper mills at Ashdown, Arkansas; Nekoosa and Port Edwards, Wisconsin; and Woodland, Maine, as well as associated pulp facilities. The Corporation used the net proceeds of approximately $1.53 billion ($1.14 billion after taxes) to repay debt. In connection with this sale, the Corporation recorded a pretax loss of $63 million in the third quarter of 2001 in the bleached pulp and paper segment. This loss was reflected in Other loss on the accompanying consolidated statements of income. In addition, the Corporation recorded a provision for income taxes of $197 million, principally applicable to $630 million of non-deductible goodwill related to the assets sold.

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Pursuant to a consent decree executed with the United States Department of Justice in connection with the Fort James acquisition, the Corporation sold a portion of its away-from-home tissue manufacturing assets (formerly Georgia-Pacific Tissue) to SCA for approximately $850 million. The sale was completed on March 2, 2001, with net proceeds of approximately $581 million ($660 million after tax benefit) used to repay debt. In the fourth quarter of 2000, the Corporation recorded a pretax loss of $204 million in the consumer products segment for the write-down of these assets to their net realizable value; accordingly, no significant gain or loss was recognized upon completion of the sale in 2001.

On October 6, 2001, the Corporation completed the spin off of its timber and timberland business and its merger with and into Plum Creek. In accordance with the merger agreement, shareholders of The Timber Company received 1.37 shares of Plum Creek stock for each share of The Timber Company stock. This transaction was valued at approximately $3.4 billion.

The transaction was originally conditioned on the receipt of a private letter ruling from the Internal Revenue Service (the “Service”) that the transaction would be tax-free to the Corporation and to the shareholders of The Timber Company. In June 2001, the Corporation and Plum Creek amended the original merger agreement and determined to effect the merger upon receipt of opinions from tax counsel that the spin off of The Timber Company from the Corporation and the subsequent merger with Plum Creek would be tax-free to the Corporation and to the shareholders of The Timber Company. The Service notified the companies on June 12, 2001, that it had decided not to issue the private letter ruling based on its belief that the companies had failed to carry the high burden of proof of business purpose necessary for the transaction to receive such an advance ruling. This high burden of proof, which is more stringent than the legal standards applicable to the audit process or any judicial proceeding, pertains only to advance rulings. Based on discussions with the Service and the advice of legal counsel, the companies believe the transaction will not be taxable to the Corporation or the shareholders of The Timber Company. As an added measure to reduce the uncertainty concerning possible tax risks associated with the transaction, the Corporation obtained up to $500 million in tax liability insurance.

During 2001, the Corporation sold various assets including two lumber mills, industrial wood products property, certain paper distribution assets, timber assets and corporate aircraft for a total of $202 million in cash and recognized a pretax gain of $82 million which was reflected in Cost of sales in the accompanying consolidated statements of income.

Financing Activities

The Corporation’s senior management has established the parameters of the Corporation’s financial policies, which have been approved by the Board of Directors. These include balancing the Corporation’s debt and equity to keep its weighted average cost of capital low while retaining the flexibility needed to ensure that the Corporation can meet its financial obligations when or before they come due and to finance attractive business opportunities. Historically the Corporation has set debt targets based on the cash generating capability of the Corporation under various business scenarios. The Corporation experiences variances in its cash flow from period to period and various statistical methods are utilized to reasonably estimate possible deviations in estimated future cash flows.

The Corporation maintains a high portion of its debt as long-term at fixed interest rates. The Corporation intends to manage the maturities of its long-term debt so that no more than $500 million matures in any one year and if it does then the sum of the maturities of any two consecutive years does not exceed $1 billion. Generally, the Corporation seeks to have 75% of its aggregate debt at fixed rates so as to minimize exposure to fluctuating interest rates. Short-term debt is used in modest proportions and generally for seasonal working capital variations and/or financing some of its accounts receivable. The Corporation utilizes bank credits for temporary short and/or intermediate term financing usually bridging known or expected events. Additionally, the Corporation maintains committed, available borrowing capacity to allow for seasonal, timing, or unexpected needs. Currently, unused capacity exceeds $1.4 billion.

The Corporation intends to review its aggregate debt objective to achieve greater flexibility to finance growth and investment opportunities. The Corporation may determine that a lower debt target than its cash flow and its variances otherwise would justify is appropriate.

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The Corporation’s total debt, excluding senior deferrable notes, decreased by $3,340 million to $12,214 million at December 29, 2001 from $15,554 million at December 30, 2000. The decrease was primarily due to the Corporation utilizing cash generated from the sale of assets and cash flow from operations. The Plum Creek merger (see Note 3 of the Notes to Consolidated Financial Statements) also reduced outstanding borrowings under the credit facilities by $646 million. At December 29, 2001, the weighted average interest rate on the Corporation’s total debt, excluding senior deferrable notes and including outstanding interest rate exchange agreements, was 6.70%. See Note 1 of the Notes to Consolidated Financial Statements for further discussion of financial activities.

The Corporation had commitments totaling $1.3 billion and CN $95 million (approximately $59 million) under its United States and Canadian accounts receivable secured borrowing programs, respectively, of which $1.2 billion and CN $95 million was outstanding under these programs at December 29, 2001. Of the $1.3 billion in the United States program, $400 million will expire in September 2002 and the remaining $900 million expires in December 2002. The Canadian program expires in May 2004. The Corporation expects to renew these agreements prior to expiration. The receivables outstanding under these programs and the corresponding debt are included as “Receivables” and “Commercial paper and other short-term notes,” respectively, on the accompanying consolidated balance sheets. All accounts receivable programs are accounted for as secured borrowings. As collections reduce previously pledged interests, new receivables may be pledged.

On November 1, 2001, the Corporation issued $27 million of 6.375% fixed rate industrial revenue bonds, due November 1, 2026. On October 24, 2001, the Corporation also replaced $28 million of its variable rate industrial revenue bonds, due October 1, 2007, with $28 million of 4.875% fixed rate industrial revenue bonds due October 1, 2007.

The Corporation consolidated a $10 million variable rate industrial revenue bond due September 1, 2021, in connection with acquiring ownership of Color-Box (see Note 3 of the Notes to Consolidated Financial Statements). On June 25, 2001, the Corporation also redeemed $42 million of its 7.9% fixed rate industrial revenue bonds, due October 1, 2005, and issued $42 million of 6.5% fixed rate industrial revenue bonds due  June 1, 2031.

On May 3, 2001, the Corporation replaced $1.5 billion of its Capital Markets Bridge Facility by issuing $500 million of 7.5% Notes Due May 15, 2006, $600 million of 8.125% Notes Due May 15, 2011, and $400 million of 8.875% Notes Due May 15, 2031. The $10.4 million underwriting fee associated with the transaction is being amortized over the term of the notes.

On March 15, 2001, the Corporation redeemed $300 million of its 6.234% Senior Notes Due March 15, 2011 and recorded an extraordinary loss of approximately $12 million (net of taxes of $7 million).

In October 2000, the Corporation negotiated several new unsecured financing facilities totaling $5,400 million with terms ranging from 6 to 18 months and an unsecured revolving credit facility totaling $3,750 million with a term of 5 years. The proceeds from these unsecured facilities were used to partially finance the Fort James acquisition, and for ongoing working capital and other general corporate requirements of the Corporation. During 2001, proceeds from the sale of assets (see Note 3 of the Notes to Consolidated Financial Statements), the merger of the Corporation’s timber and timberland business with Plum Creek (see Note 3 of the Notes to Consolidated Financial Statements), increases in the accounts receivable secured borrowing program, and the issuance on  May 3, 2001 of notes (described above) were used to reduce the unsecured financing facilities.

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The Corporation’s amounts outstanding under the credit agreements include the following:

	December 29, 2001
In millions
Commitments:
Multi-Year Revolving Credit Facility	$	3,750
Capital Markets Bridge Facility		925
Credit facilities available		4,675
Amounts Outstanding:
Letter of Credit Agreements		(265	)
Money Markets, average rate of 2.8%		(90	)
Multi-Year Revolving Credit Facility due November 2005, average rate of 3.7%		(1,935	)
Capital Markets Bridge Facility due August 2002, average rate of 3.9%		(925	)
Total credit balance		(3,215	)
Total credit available *	$	1,460

* At December 29, 2001, the Corporation was limited to $851 million of available credit pursuant to certain restrictive debt covenants and its outstanding debt balance at December 29, 2001. This limitation on available credit will be reduced as the Corporation pays down debt.

Borrowings under the agreements bear interest at competitive market rates. These interest rates may be adjusted according to a rate grid based on the Corporation’s long-term debt ratings. Fees associated with these revolving credit facilities include a facility fee of 0.2% per annum on the aggregate commitments of the lenders as well as up-front fees totaling $5.5 million and $34 million as of December 29, 2001 and December 30, 2000, respectively. The fees are being amortized over the term of the agreements. Fees and margins may also be adjusted according to a pricing grid based on the Corporation’s long-term debt ratings. At December 29, 2001 and December 30, 2000, $3,215 million and $7,757 million, respectively, was borrowed under the credit agreements at a weighted-average interest rate of 3.4% and 7.9%, respectively. Amounts outstanding under the revolving credit facilities are included in “Commercial paper and other short-term notes” and “Long-term debt, excluding current portion” on the accompanying consolidated balance sheets.

In connection with the acquisition of Fort James during 2000, the Corporation assumed debt totaling  $3.3 billion, including $927 million of short-term debt, $141 million (including premium) of capital leases,  $197 million of industrial revenue bonds, $1,642 million of notes, $218 million (net of discount) of Euro-denominated bonds and $156 million of European debt. Shortly after the acquisition, all of the commercial paper was replaced by borrowings issued under the Corporation’s revolving credit facilities. The Corporation subsequently fully and unconditionally guaranteed all of Fort James’ publicly held debt issued pursuant to an Indenture with The Bank of New York, as trustee, dated as of November 1, 1991, as amended by a first supplemental Indenture dated as of September 19, 1997 and second supplemental Indenture dated as of February 19, 2001.

In order to finance a portion of the Unisource acquisition in July 1999, the Corporation issued 17,250,000 of 7.5% PEPS Units for $862.5 million. Each PEPS Unit consists of a purchase contract that obligates the holder to purchase shares of Georgia-Pacific common stock for $50 on or prior to August 16, 2002 and a senior deferrable note of the Corporation due August 16, 2004. The amount of shares purchased per PEPS Unit will be based on the average closing price of Georgia-Pacific common stock over a 20-day trading period ending August 13, 2002. Assuming an average stock price of less than or equal to $47.375 per share, the Corporation expects to issue approximately 18.2 million shares of Georgia-Pacific common stock in 2002. Each purchase contract yields interest of 0.35% per year, paid quarterly, on the $50 stated amount of the PEPS Unit. Each senior deferrable note yields interest of 7.15% per year, paid quarterly, until August 16, 2002. The terms of the PEPS offering include a remarketing of the senior deferrable notes on August 16, 2002 that, if successfully completed, would generate $862.5 million for repayment of debt. The interest rate will be reset at a rate that will be equal to or greater than 7.15%. Management is considering certain other financing activities that could include issuance of

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different securities to replace these senior deferrable notes prior to their scheduled remarketing. The liability related to the PEPS Units is classified as “Senior deferrable notes” on the accompanying consolidated balance sheets.

In December 2001, the Corporation amended its restrictive covenants under the unsecured financing facilities to require a maximum leverage ratio (funded indebtedness, excluding senior deferrable notes, to net worth plus funded indebtedness) of 72.50% on December 29, 2001, March 30, 2002 and June 29, 2002; 70.00% on September 28, 2002, December 28, 2002 and March 29, 2003; 67.50% on June 28, 2003 and September 27, 2003; and 65.00% on January 3, 2004 and thereafter. The restrictive covenants also require a minimum interest coverage ratio (earnings before interest, taxes, depreciation and amortization, “EBITDA”, to interest charges) of 2.25 to 1.00 on December 29, 2001, March 30, 2002, June 29, 2002 and September 28, 2002; 2.50 to 1.00 on December 28, 2002 and March 29, 2003; 2.75 to 1.00 on June 28, 2003 and September 27, 2003; and 3.00 to 1.00 on January 3, 2004 and thereafter. In addition, the restrictive covenants require a minimum net worth that changes quarterly and a maximum debt level of $13,065 million. The Corporation was in compliance with its debt covenants as of December 29, 2001 with a leverage ratio of 71.35%, an interest coverage ratio of 2.59 to 1.00, and a debt balance of $12,214 million. The $17.9 million fee associated with amending the restrictive covenants is being amortized over the term of the financing facilities.

In 1999, the Corporation entered into a financing arrangement to enhance the return of the deposit made in connection with a 1995 sale-leaseback transaction by issuing NZ$724 million of 5.74% Debentures Due April 5, 2005 that were legally defeased with deposits of an equal amount. Because they were legally defeased, generally accepted accounting principles do not require the debentures and related deposits to be reflected on the Corporation’s consolidated balance sheets. Accordingly, the Corporation has not reflected the debentures or the related deposits on the accompanying consolidated balance sheets.

In conjunction with the sale of 194,000 acres of the Corporation’s California timberlands in 1999, the Corporation received notes from the purchaser in the amount of $397 million. These notes were monetized on October 25, 2000, through the issuance of commercial paper secured by the notes. Net proceeds of $342 million from this monetization were used to reduce debt allocated to The Timber Company. Proceeds from the notes received from the purchaser will be used to fund payments required for the notes payable. The notes receivable and notes payable are reflected in “Other assets” and “Other long-term liabilities,” respectively, on the accompanying consolidated balance sheets. In conjunction with the sale of 440,000 acres of the Corporation’s Maine timberlands in 1999, the Corporation received notes from the purchaser in the amount of $51 million. These notes were monetized through the issuance of notes payable in a private placement with the proceeds used to reduce debt allocated to The Timber Company. Proceeds from the notes received from the purchaser will be used to fund payments required for the notes payable. The notes receivable and notes payable are reflected in “Other assets” and “Other long-term liabilities,” respectively, on the accompanying consolidated balance sheets. Additionally, in connection with the sale of 127,000 acres of the Corporation’s California timberlands in 1997, the Corporation received notes from the purchaser in the amount of $270 million. The Corporation monetized these notes receivable through the issuance of notes payable in a private placement. The notes receivable are included in “Other assets” and the notes payable are included as “Other long-term liabilities” on the accompanying consolidated balance sheets.

The Corporation’s senior management establishes the parameters of the Corporation’s financial risk, which have been approved by the Corporation’s Board of Directors. Hedging interest rate exposure through the use of swaps and options and hedging foreign exchange exposure through the use of forward contracts are specifically contemplated to manage risk in keeping with management’s policy. Derivative instruments, such as swaps, forwards, options or futures, which are based directly or indirectly upon interest rates, currencies, equities and commodities, may be used by the Corporation to manage and reduce the risk inherent in price, currency and interest rate fluctuations.

The Corporation does not utilize derivatives for speculative purposes. Derivatives are transaction specific so that a specific debt instrument, contract or invoice determines the amount, maturity and other specifics of the hedge. Counterparty risk is limited to institutions with long-term debt ratings of A or better.

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The following table presents principal (or notional) amounts and related weighted average interest rates by year of expected maturity for the Corporation’s debt obligations and interest rate exchange agreements as of December 29, 2001. For obligations with variable interest rates, the tables set forth payout amounts based on current rates and do not attempt to project future interest rates.

As of December 29, 2001

	2002			2003			2004			2005			2006			Thereafter			Total			Fair Value December 29, 2001
(In millions, except percentages)
Commercial paper and other short-term Notes		–			–			–			–			–		$	1,359		$	1,359		$	1,359
Average interest rates		–			–			–			–			–			2.5	%		2.5	%		2.5	%
Credit facilities	$	925			–			–		$	1,935			–			–		$	2,860		$	2,860
Average interest rates		3.9	%		–			–			3.6	%		–			–			3.7	%		3.7	%
Notes and debentures	$	462		$	580		$	336		$	4		$	600		$	4,700		$	6,682		$	6,679
Average interest rates		8.9	%		6.7	%		6.7	%		4.7	%		7.5	%		8.4	%		7.8	%		7.8	%
Euro-denominated Bonds		–			–		$	266			–			–			–		$	266		$	257
Average interest rates		–			–			4.8	%		–			–			–			4.8	%		6.6	%
Revenue bonds	$	75		$	3		$	31		$	21			–		$	739		$	869		$	833
Average interest rates		1.9	%		5.2	%		2.0	%		5.6	%		–			5.6	%		5.2	%		5.8	%
Capital leases	$	5		$	5		$	6		$	7		$	7		$	96		$	126		$	148
Average interest rates		12.0	%		11.6	%		2.5	%		2.3	%		10.8	%		10.8	%		10.0	%		8.0	%
European Debt	$	22		$	24		$	23		$	11		$	11		$	46		$	137		$	137
Average interest rates		6.8	%		6.7	%		6.2	%		4.9	%		4.7	%		3.6	%		6.1	%		6.7	%
Other loans	$	8			–			–			–			–			–		$	8		$	8
Average interest rates		4.6	%		–			–			–			–			–			4.6	%		3.7	%
Senior deferrable notes		–			–		$	863			–			–			–		$	863		$	889
Average interest rates		–			–			7.2	%		–			–			–			7.2	%		3.6	%
Total debt maturity	$	1,497		$	612		$	1,525		$	1,978		$	618		$	6,940
Notional amount of interest rate exchange Agreements (variable to fixed)		–			–			–			–			–			–			–			–
Average interest rate paid (fixed)		–			–			–			–			–			–			–			–
Average interest rate received (variable)		–			–			–			–			–			–			–			–
Notional amount of interest rate exchange Agreements (fixed to variable)	$	1,657		$	300			–			–			–			–		$	1,957		$	(51	)
Average interest rate paid (fixed)		5.9	%		5.9	%		–			–			–			–			5.9	%		5.9	%
Average interest rate received (variable)		2.5	%		3.5	%		–			–			–			–			2.7	%		2.7	%
Notional amount of interest rate exchange Agreements (rate collar)		–			–			–		$	47			–			–		$	47		$	2
Average interest rate cap		–			–			–			7.5	%		–			–			7.5	%		7.5	%
Average interest rate floor		–			–			–			5.5	%		–			–			5.5	%		5.5	%

The Corporation has the intent to refinance commercial paper and other short-term notes as they mature. Therefore, maturities of these obligations are reflected as cash flows expected to be made after 2006. At December 29, 2001, the Corporation did not have commercial paper outstanding.

The following table presents commitment amounts by year of expected expiration for the Corporation’s lines of credit, standby letters of credit agreements and noncancelable contracts (including operating leases).

As of December 29, 2001

	2002		2003		2004		2005		2006		Thereafter		Total
(In millions)
Lines of credit	$	1	$	–	$	1	$	–	$	1	$	–		$       3
Standby Letters of Credit	$	–	$	–	$	–	$	–	$	–	$	191	$	191
Noncancelable Contracts*	$	333	$	264	$	219	$	192	$	175	$	356	$	1,539

* Noncancelable contracts including operating leases.

The Corporation has the intent to renew the Standby Letters of Credit where appropriate as they mature, therefore, the obligations do not have a definite maturity date.

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At December 29, 2001, the Corporation had interest rate exchange agreements that effectively converted $1,957 million of floating rate obligations with a weighted average interest rate of 2.7% to fixed rate obligations with an average effective interest rate of approximately 5.9%. Of the $1,957 million, the Corporation had $457 million of these floating rate obligations outstanding at December 30, 2000. These agreements increased interest expense by $29 million for the year ended December 29, 2001, and decreased interest expense by $1 million for the year ended December 30, 2000. The agreements had a weighted-average maturity of approximately seven months at December 29, 2001.

At December 29, 2001, the Corporation also had interest rate exchange agreements (a collar) that effectively capped $47 million of floating rate obligations to a maximum interest rate of 7.5% and established a minimum interest rate on such obligations of 5.5%. The Corporation’s interest expense is unaffected by this agreement when the market interest rate falls within this range. There was an immaterial effect on the Corporation’s interest expense for 2001 and 2000 related to these agreements. The agreements had a weighted-average maturity of approximately four years at December 29, 2001.

The Corporation’s debt portfolio is sensitive to changes in interest rates. Interest rate changes would result in gains or losses in the market value of the Corporation’s debt portfolio due to differences in market interest rates and the rates at inception of the debt agreements. Based on the Corporation’s indebtedness at December 29, 2001, a 100 basis point interest rate change would impact the fair value of the debt portfolio by $444 million.

The Corporation’s international operations create exposure to foreign currency exchange rate risks. At December 29, 2001, the Corporation had outstanding approximately $238 million (net of discount) of Euro-denominated bonds which were designated as a hedge against its net investment in Europe. The use of this financial instrument allows the Corporation to reduce its overall exposure to exchange rate movements, since the gains and losses on this instrument substantially offsets losses and gains on the assets, liabilities and transactions being hedged.

Since 1991, the Argentine peso has been pegged to the US dollar at a rate of one Argentine peso to one US dollar. In January 2002, the Argentine government announced its intent to create a dual currency system with an “official” fixed exchange rate of 1.4 pesos to 1 US dollar for import and export transactions, and a “free” floating exchange rate for other transactions. The Corporation has a small investment in Argentina, for which the effect of this devaluation of the Argentine peso was insignificant.

The Corporation has entered into a commodity swap, the fair value of which was $9.5 million at December 29, 2001 (see Note 9 of the Notes to Consolidated Financial Statements).

As of December 29, 2001, the Corporation had $1.5 billion of debt and equity securities available for issuance under a shelf registration statement filed with the Securities and Exchange Commission in 2000.

Prior to 1996, the Corporation sold certain assets for $354 million and agreed to lease the assets back from the purchaser over a period of 30 years. Under the agreement with the purchaser, the Corporation agreed to maintain a deposit (initially in the amount of $322 million) that, together with interest earned thereon, was expected to be sufficient to fund the Corporation’s lease obligation, including the repurchase of assets at the end of the term. This transaction was accounted for as a financing arrangement. At the inception of the agreement, the Corporation recorded on its balance sheet an asset for the deposit from the sale of $305 million and a liability for the lease obligation of $346 million. The sale of these assets to Domtar in 2001 (see Note 3 of the Notes to Consolidated Financial Statements) required the Corporation to repurchase these assets from the lessor. Accordingly, the lessor and the Corporation agreed to a deferred payment arrangement essentially under the same terms as the original lease obligation. The Corporation agreed to maintain the original deposit under its existing terms and create a second deposit. The sum of these deposits (approximately $400 million at December 29, 2001) approximates the deferred payment amount. A legal right of set off exists between the deferred payment amount owed and the deposits and, accordingly, the Corporation has recorded these transactions net in the accompanying consolidated balance sheets as “Other long-term liabilities”.

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During 2000, the Corporation purchased on the open market approximately 1.7 million shares of Georgia-Pacific stock at an aggregate price of $62 million ($36.47 average per share). The Corporation also purchased on the open market approximately 3.3 million shares of The Timber Company stock at an aggregate price of $78 million ($23.67 average per share), all of which were held as treasury stock at December 30, 2000.

At the end of November 2000, the Corporation acquired Fort James (as described above and in Note 3 of the Notes to Consolidated Financial Statements) and issued 21.5 million shares of Georgia-Pacific treasury stock and 32.2 million newly issued shares of Georgia-Pacific stock as part of that transaction. During 2001, the Corporation issued an additional 190,000 shares of Georgia-Pacific Stock as part of this transaction. The Corporation does not hold any Georgia-Pacific stock as treasury stock as of December 29, 2001.

The Corporation received proceeds from stock option exercises of $165 million and $26 million in 2001 and 2000, respectively.

During 2001 and 2000, the Corporation paid dividends totaling $175 million and $166 million, respectively.

As discussed above, Georgia-Pacific’s strategy is to improve its portfolio of businesses by divesting or exiting non-strategic businesses, and by acquiring and investing in businesses that are high value-added and that position Georgia-Pacific closer to consumers. A key component of that strategy is improving the Corporation’s bath tissue, paper towel and napkin business which is commonly referred to as the tissue business. The Corporation believes that its acquisition of Fort James Corporation in 2000 directly facilitated that strategy. In 2001, in connection with the Corporation’s redirection of its focus away from commodity-based businesses, the Corporation sold a portion of its pulp and paper assets to Domtar Inc. and divested its timber and timberlands business by redeeming all of the outstanding shares of The Timber Company stock and merging its timber and timberlands business with Plum Creek.

As the Corporation completed evaluations of its business portfolio last year, it became increasingly convinced that separating its consumer products and packaging business and its building products business has the potential to create shareholder value. In the summer of 2001, management began working on a plan to create separate vehicles for those businesses. Management believes there are a number of potential benefits from separating the businesses. Among them, it is believed a separation would create both a high-value-added consumer products and packaging company with strong brands and stable cashflow and one of the strongest domestic “pure-play” building products companies; drive sharpened management focus and provide better performance incentives; eliminate cross-subsidies, with each business free to use it cash flow to reinvest or distribute to shareholders as appropriate; and allow each business to develop its own appropriate strategies and capital structures.

Other

The Corporation employs approximately 75,000 people, approximately 28,000 of whom are members of unions. The Corporation considers its relationship with its employees to be good. Fifty-five union contracts are subject to negotiation and renewal in 2002, including seven at large facilities.

On January 1, 1999, eleven of the fifteen members of the European Union (the “Participating Countries”) established fixed conversion rates between their existing sovereign currencies (the “Legacy Currencies”) and a single new currency (the “Euro”). For a three-year transition period, transactions can be conducted in both the Euro and the Legacy Currencies but all corporate transactions and records must legally be maintained in Euros effective January 1, 2002. The adoption of the Euro will affect a multitude of financial systems and business applications. The Corporation has operations in seven of the Participating Countries, which adopted the Euro effective January 2001, and has product sales in ten of the Participating Countries. The Corporation’s European businesses affected by the Euro conversion have established plans to address the information system issues and the potential business implications of converting to a common currency. As of December 29, 2001, the

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Corporation’s core financial information technology systems were capable of processing Euro-denominated transactions. The impact of converting to the Euro was immaterial to the Corporation.

The Corporation and many other companies are defendants in suits brought in various courts around the nation by plaintiffs who allege that they have suffered personal injury as a result of exposure to asbestos-containing products. These suits allege a variety of lung and other diseases based on alleged exposure to products previously manufactured by the Corporation. In many cases, the plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that any injuries they have incurred in fact resulted from exposure to the Corporation’s products.

The Corporation’s asbestos liabilities relate primarily to joint systems products manufactured by Bestwall Gypsum Company that contained asbestos fiber. The Corporation acquired Bestwall in 1965, and discontinued using asbestos in the manufacture of these products in 1977.

The following table presents information about the approximate number of the Corporation’s asbestos claims during the past three years and the most recent quarterly period:

	Quarter Ended	Year Ended
	December 29, 2001	December 29, 2001	December 30, 2000	January 1, 2000
Claims Filed 1	6,700	39,700	55,600	29,100
Claims Resolved 2	6,800	30,900	46,000	22,000
Claims Unresolved at End of Period	62,200	62,200	53,400	43,800

1 Claims Filed includes all asbestos claims for which service has been received and/or a file has been opened by the Corporation.

2 Claims Resolved includes asbestos claims which have been settled or dismissed or which are in the process of being settled or dismissed based upon agreements or understandings in place with counsel for the claimants.

In addition, Fort James Corporation, a wholly owned subsidiary of the Corporation, currently is defending approximately 1,000 asbestos premises liability claims.

As of December 31, 2001, the Corporation had either settled, had dismissed or was in the process of finalizing the settlement of a total of approximately 235,000 asbestos claims. The Corporation generally settles asbestos claims for amounts it considers reasonable given the facts and circumstances of each claim. Substantially all of the amounts it has paid to date for settled claims, and anticipates paying for pending claims, have been covered by product liability insurance. The amounts not covered by such insurance have been immaterial. The annual average settlement payment per asbestos claimant has fluctuated up and down during the three year period ended December 29, 2001, and management of the Corporation expects such fluctuations to continue in the future based upon, among other things, the number and type of claims settled in a particular period and the jurisdictions in which such claims arose.

In the late Fall of 2001, the Corporation retained National Economic Research Associates (NERA) and Peterson Consulting, nationally-recognized consultants in asbestos liability and insurance, to work with the Corporation to project the amount, net of insurance, that the Corporation would pay for its asbestos-related liabilities and defense costs through 2011.

The methodology employed by NERA to project the Corporation’s asbestos-related liabilities and defense costs included: 1) an analysis of the population likely to have been exposed or claim exposure to products manufactured by the Corporation; 2) the use of epidemiological studies to estimate the number of people who might allege exposure to the Corporation’s products that would be likely to develop asbestos-related diseases in each year between 2002 and 2011; 3) an analysis of the Corporation’s recent claims history to estimate likely filing rates for these diseases for the period 2002 through 2011; 4) an analysis of the Corporation’s currently pending asbestos claims; and 5) an analysis of the Corporation’s historical asbestos settlements and defense costs to develop average settlement values and defense costs, which varied by disease type and the nature of claim, to determine an estimate of costs likely to be associated with currently pending and projected asbestos claims

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through 2011. Based upon its analysis, NERA projected that the Corporation’s total, undiscounted asbestos liabilities, including defense costs, over the next 10 years will be less than $1 billion (including payments related to the approximately 62,200 claims currently pending).

NERA’s projection was based on historical data supplied by the Corporation and publicly available studies. NERA concluded that, based on the latency periods of asbestos-related diseases (both cancers and non-cancers), the peak incidence of such diseases occurred prior to 2002. It expects, based on the last dates of manufacture of asbestos-containing products in the United States, that the number of new diagnoses of asbestosis and other non-cancerous diseases will drop beginning in 2001. It also cites annual surveys of the National Cancer Institutes that show the annual incidence of mesothelioma (a cancer frequently associated with asbestos exposure) began to decline in the mid-1990s. NERA expects these factors, as well as the advancing age of the allegedly exposed population, its movement away from work centers as its members retire, and NERA’s view that many asbestos claims filed in the 1990s were based in part on mass screenings of possibly-exposed individuals, will result in the number of claims filed against the Corporation for asbestos-related injuries beginning to decline in 2002.

Using NERA’s projection, Peterson Consulting and the Corporation then conducted an analysis to determine the amount of insurance that it is probable that the Corporation will recover during this ten year period. In conducting such analysis, Peterson Consulting and the Corporation reviewed the Corporation’s existing insurance arrangements and agreements, engaged in discussions with counsel to the Corporation, analyzed publicly available information bearing on the credit worthiness of the Corporation’s various insurers and employed such insurance allocation methodologies as the Corporation and Peterson Consulting believed appropriate to ascertain the probable insurance recoveries for asbestos liabilities through 2011. The analysis took into account self-insurance reserves, policy exclusions, liability caps and gaps in the Corporation’s coverage, as well as insolvencies among certain of the Corporation’s insurance carriers.

Based on the analysis of NERA and Peterson Consulting, the Corporation has established reserves for the probable and reasonably estimable liabilities and defense costs it believes it will pay through 2011, and has also established receivables for the insurance recoveries that are deemed probable. The Corporation has recorded the reserves for the asbestos liabilities as “Other current liabilities” and “Other long-term liabilities” and the related insurance recoveries as “Other current assets” and “Other assets” in the accompanying consolidated balance sheets. For the fourth quarter 2001, the Corporation recorded a pre-tax charge to earnings of $350 million to cover all of the projected asbestos liabilities and defense costs, net of expected insurance recoveries, it expects to pay through 2011. This charge principally covers the share of such costs which the Corporation expects to incur because of the insolvencies of certain insurance companies which wrote a part of the Corporation’s product liability insurance in prior years. The charge is not due to exhaustion of the Corporation’s total product liability insurance for asbestos liabilities, and the Corporation believes that the majority of its asbestos-related liabilities and defense costs during the next ten years will be recovered from its insurance carriers. The insurance receivable recorded by the Corporation does not assume any recovery from insolvent carriers, and assumes that those carriers which are currently solvent will continue to be solvent throughout the period of NERA’s projection. However, there can be no assurances that these assumptions will be correct. Substantially all of the insurance recoveries deemed probable are from insurance companies rated A- (excellent) or better by A.M. Best Company. No more than 21% of such insurance recoveries are from any one company, though several of the insurers are under common control. The Corporation also has significant additional insurance coverage which it expects to be available for asbestos liabilities and defense costs it may incur after 2011.

The analyses of NERA and Peterson Consulting are based on their best judgment and that of the Corporation. However, projecting future events, such as the number of new claims to be filed each year, the average cost of resolving each such claim, coverage issues among layers of insurers and the continuing solvency of various insurance companies is subject to many uncertainties which could cause the actual liabilities and insurance recoveries to be higher or lower than those projected and/or recorded. Consequently, there can be no assurance these projected liabilities will be accurate, or that the probable insurance recoveries will be realized.

In light of the uncertainties inherent in making long term projections, the Corporation has determined that the ten year period through 2011 is the most reasonable time period for projecting asbestos liabilities and defense

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costs and probable insurance recoveries and, accordingly, the charge to earnings does not include either asbestos liabilities or insurance recoveries for any period past 2011.

Given the uncertainties associated with projecting matters into the future and numerous other factors outside the control of the Corporation, the Corporation believes that it is possible that it may incur asbestos liabilities for the period through 2011 and beyond in an amount in excess of the NERA projection. Based on currently available data and upon the analysis of NERA and Peterson Consulting, the Corporation does not believe that any such possible asbestos liabilities in excess of the NERA projection are reasonably likely to be material to the financial condition, results of operations or liquidity of the Corporation.

Critical Accounting Policies

A summary of the Corporation’s significant accounting policies are included in Note 1 to the Consolidated Financial Statements. Management believes that the consistent application of these policies enables the Corporation to provide readers of the financial statements with useful and reliable information about the Corporation’s operating results and financial condition. The following are accounting policies that management believes are most important to the portrayal of the Corporation’s financial condition and results and require management’s most difficult, subjective, or complex judgments.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Judgments and assessments of uncertainties are required in applying the Corporation’s accounting policies in many areas. For example, key assumptions are particularly important when determining amounts allocated to identifiable intangible assets in a business combination and in developing the Corporation’s projected liabilities for pension and other postretirement benefits. Other areas in which significant uncertainties exist include, but are not limited to, projected costs to be incurred in connection with environmental and legal matters. The Corporation recognizes a liability for environmental remediation and legal indemnification and defense costs when it believes it is probable a liability has been incurred and the amount can be reasonably estimated. The liabilities are developed based on currently available information and reflect the participation of other potentially responsible parties, depending on the parties’ financial condition and probable contribution. The accruals are recorded at undiscounted amounts and are reflected as liabilities on the accompanying consolidated balance sheets. The Corporation also has insurance that covers losses on certain environmental claims and records a receivable to the extent that the realization of the insurance is deemed probable. This receivable is recorded at undiscounted amounts and is reflected as assets in the accompanying consolidated balance sheets.

In addition, management uses judgment in assessing goodwill, and other long-lived assets for impairment. The Corporation amortizes costs in excess of fair value of net assets of businesses acquired using the straight-line method over a period not to exceed 40 years. The Corporation reviews the recorded value of its goodwill annually, or sooner if events or changes in circumstances indicate that the carrying amount may exceed fair value. Recoverability is then determined by comparing the undiscounted net cash flows of the assets to which the goodwill applies to the net book value, including goodwill, of those assets. Goodwill, net of amortization, totaled $8.3 billion at December 29, 2001 and represented 31% of total assets. The Corporation assesses its long-lived assets other than goodwill for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. To analyze recoverablility, the Corporation projects undiscounted net future cash flows over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amount and the fair value of the assets.

Accounting Standards Changes

In July 2001, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations (“SFAS No. 141”), and SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”).

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SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 142 requires that entities assess the fair value of the net assets underlying all acquisition related goodwill on a reporting unit basis effective beginning in fiscal year 2002. When the fair value is less than the related carrying value, entities are required to reduce the amount of goodwill. Reductions are made retroactive to the beginning of fiscal year 2002. SFAS No. 142 also requires that entities discontinue amortization of all purchased goodwill, including amortization of goodwill recorded in past business combinations. The Corporation has determined its reporting units to be the following: structural panels, lumber, industrial wood products, gypsum, chemical, building products distribution, packaging, bleached pulp and paper, paper distribution, North American towel and tissue, Dixie and European towel and tissue. Management is evaluating the effect of this statement on each of these reporting units. As of December 29, 2001, the Corporation had acquisition related goodwill of $8.3 billion, net of accumulated amortization. Beginning in 2002, the Corporation will no longer be amortizing acquisition related goodwill. In 2001 and 2000, goodwill amortization expense aggregated $235 million and $86 million, respectively.

In July 2001, the FASB also issued SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS No. 143”). SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the entity either settles the obligation for the amount recorded or incurs a gain or loss. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. Management is evaluating the effect of this statement on the Corporation’s results of operations and financial position.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”). SFAS No. 144 supersedes FASB statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (“SFAS No. 121”), and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions (“Opinion 30”) for the disposal of a segment of a business (as previously defined in Opinion 30). The FASB issued SFAS No. 144 to establish a single accounting model, based on the framework established in SFAS No. 121, for long-lived assets to be disposed of by sale. SFAS No. 144 broadens the presentation of discontinued operations in the income statement to include a component of an entity (rather than a segment of a business). A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. SFAS No. 144 also requires that discontinued operations be measured at the lower of the carrying amount or fair value less cost to sell. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001 and should be applied prospectively.

For a discussion of commitments and contingencies, see Note 14 of the Notes to Consolidated Financial Statements.

2000 Compared with 1999

The Corporation reported consolidated net sales of $22.1 billion and net income of $505 million for 2000, compared with net sales of $18.4 billion and net income of $1,116 million in 1999. Included in 2000 are $528 million of net sales from the Fort James operations acquired during 2000. The 1999 results included pretax gains of $355 million ($215 million after taxes) from the sales of the Corporation’s timberlands located in California, Maine and New Brunswick, Canada. The factors contributing to the decrease in 2000 net income are described below.

Income from discontinued operations decreased to $162 million in 2000 compared with $400 million in 1999 Included in the 1999 results was the $215 million after tax gain for timberland sales discussed above. The decrease in income from discontinued operations is primarily due to a 6% decrease in sawtimber prices and a 21% decrease in harvest volumes.

26

Interest expense was $595 million in 2000, compared with $426 million in 1999. The increase is the result of higher debt levels primarily related to the acquisition of Fort James and higher average interest rates.

The Corporation reported income from continuing operations before income taxes of $553 million and an income tax provision of $210 million for the year ended December 30, 2000, compared with income from continuing operations before income taxes of $1,164 million and an income tax provision of $448 million for the year ended January 1, 2000. The effective income tax rate was 38% in both 2000 and 1999.

Consumer Products

The Corporation’s consumer products segment reported net sales of $2.1 billion and an operating loss of $17 million for the year ended December 30, 2000, which included net sales and operating profits of $528 million and $34 million, respectively, from the operations of Fort James that were acquired at the end of November 2000. Fort James’ results of operations were consolidated with those of the Corporation beginning in the fiscal month of December 2000. 1999 net sales and operating profits were $1.2 billion and $131 million, respectively. Included in 2000 results was a one-time charge of $204 million for the write-down of assets of the Georgia-Pacific Tissue away-from-home tissue business that was sold during the first quarter of 2001. Excluding this one-time charge, 2000 operating profits were $187 million and return on sales decreased to 9% compared with 11% in 1999. The increase in 2000 operating profits was due principally to 7% higher average selling prices and to a full year of the Wisconsin Tissue operations, which were combined with those of the Corporation’s commercial tissue business beginning on October 3, 1999, when the Georgia-Pacific Tissue joint venture was formed. These increases were offset somewhat by higher energy and wood fiber costs.

Packaging

The Corporation’s packaging segment reported net sales of $2.7 billion and operating profits of $512 million for the year ended December 30, 2000, compared with net sales of $2.5 billion and operating profits of $324 million in 1999. During 2000, the Corporation sold certain packaging assets resulting in a pre-tax gain of $25 million. Excluding this gain on asset sales, return on sales increased to 18% from 13% in 1999. Average selling prices increased in 2000 and ended the year above 1999 levels despite softening demand in the fourth quarter. Average selling prices for linerboard and medium increased 21% and 31%, respectively, while average selling prices for packaging increased 12%.

During 2000 and 1999, the Corporation took market-related paper machine slowback or downtime at its containerboard mills to avoid excess inventories, resulting in a reduction in containerboard production of approximately 271,000 tons and 30,000 tons, respectively.

Bleached Pulp and Paper

The Corporation’s bleached pulp and paper segment reported net sales of $9.5 billion and operating profits of $509 million for the year ended December 30, 2000, compared with net sales of $5.9 billion and operating profits of $181 million in 1999. Return on sales increased to 5% compared with 3% for the same period a year ago. The increase in net sales and operating profits was due primarily to an increase in average selling prices for all of the Corporation’s bleached pulp and paper products, offset somewhat by higher wood fiber and production costs. Average selling prices for pulp and paper during 2000 were approximately 35% and 10%, respectively, above 1999 prices.

During 2000, the Corporation incurred market-related downtime at its bleached pulp and paper mills, resulting in a reduction in pulp production of 17,000 tons and in paper production of 60,000 tons. In December 2000, the Corporation announced the permanent closure of its Kalamazoo, Michigan, paper mill and a permanent closure of a paper machine at its Nekoosa, Wisconsin, operations. In connection with the Kalamazoo paper mill closure, the Corporation recorded a fourth quarter 2000 charge of $57 million for employee termination, asset write-down, mill closure and other costs. In 1999, the Corporation incurred market-related downtime at its pulp and paper mills resulting in a reduction in pulp and paper production of 311,000 tons and 17,000 tons, respectively.

27

Building Products

The Corporation’s building products segment reported net sales of $8.7 billion and operating profits of $382 million for the year ended December 30, 2000, compared with net sales of $9.7 billion and operating profits of $1,205 million in 1999. Return on sales was 4% in 2000 and 12% in 1999. The primary components of the decrease in 2000 sales and operating profits were 16% lower average plywood selling prices, 17% lower average softwood lumber selling prices, 18% lower average oriented strand board selling prices and a 12% decrease in average gypsum selling prices coupled with a 23% decrease in gypsum sales volume. Because of weak market conditions in this segment, the Corporation temporarily suspended production at three structural panels mills and 12 lumber mills during the latter part of 2000. In addition, the Corporation permanently closed the Grand Rapids East, Michigan, gypsum plant in September 2000, and recorded a restructuring charge of approximately $8 million for asset write-off, employee termination and facility closing costs.

Other

The operating loss for the “Other” nonreportable segment, which includes some miscellaneous businesses, unallocated corporate operating expenses and the elimination of profit on intersegment sales, decreased by $13 million to a loss of $238 million in 2000 from a loss of $251 million in 1999. This decrease was primarily the result of last-in, first-out (“LIFO”) inventory valuation adjustments.

Factors That May Affect Future Results

Some of the matters discussed in this Form 10-K and the accompanying Annual Review concerning, among other things, the business outlook, anticipated financial and operating results, strategies, contingencies and contemplated transactions of the Corporation, constitute forward-looking statements and are based upon management’s expectations and beliefs concerning future events. There can be no assurance that these events will occur or that the Corporation’s results will be as estimated. In some cases, the forward-looking statements contained in this Form 10-K and the accompanying Annual Review can be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” or “estimates,” or the negative of these terms or other comparable terminology.

Forward-looking statements are only predictions. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements, which are based on information known today and speak only as of the date of the filing of this Form 10-K. Moreover, in the future, the Corporation, through its senior management team, may make additional or different forward-looking statements about the matters described in this document. The Corporation undertakes no obligation to publicly revise any of these forward-looking statements to reflect changes in the facts or information on which they are based or any events or circumstances occurring after the date hereof. Actual events or future results may differ materially as a result of the following factors, as well as other factors described elsewhere in this Form 10-K, or in the Corporation’s other SEC filings, including the Corporation’s Form 8-K, dated October 17, 1996, and Form 8-K, dated January 24, 2002, which are incorporated herein by this reference.

The following factors, which the Corporation cautions are not exclusive, are described in accordance with the provisions of the Private Securities Litigation Reform Act of 1995, which encourages companies to disclose these factors.

1.    The Corporation has substantial indebtedness.

As described in this Form 10-K and the accompanying Annual Review, the Corporation has substantial indebtedness. The Corporation’s ability to meet its debt service obligations and to repay its outstanding indebtedness will depend in part on cash from operations and in part on cash produced by divestitures of some of the Corporation’s businesses. There can be no assurance that such divestitures will be consummated, or, if

28

consummated, that the price and terms of such divestitures will be advantageous to the Corporation. Further, there can be no assurance that the Corporation’s businesses will be able to generate sufficient cash flows from operations, as they are subject to general economic, business, financial, competitive, legislative, regulatory and other factors beyond the Corporation’s control.

The Corporation’s level of indebtedness has important consequences, including limiting the Corporation’s ability to invest operating cash flow to expand its business, to capitalize on business opportunities and to react to competitive pressures or adverse changes in governmental regulation, because it must dedicate a substantial portion of these cash flows to service its debt. In addition, the Corporation could, under certain circumstances that management believes are unlikely to occur, be unable to refinance or obtain additional financing because of market conditions, its high levels of debt and the debt restrictions under its current debt agreements.

In early January 2002, Moody’s Investors Service announced that it was placing under review for possible downgrade, from investment grade to non-investment grade, the Corporation’s senior unsecured notes which Moody’s currently rates as Baa3 and commercial paper carrying a Prime-3 short-term rating. Although no such downgrade has occurred and other credit rating services have not followed Moody’s position, there can be no assurance that any rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances in the future so warrant. Management does not believe such a downgrade would adversely affect its access to the debt markets or its financing costs. However, changes in market conditions could mean that such a downgrade, if it were to occur, could result in the Corporation experiencing difficulties in borrowing on terms as favorable as it was able to achieve previously.

2.    Execution of Transformation Strategy.

The Corporation’s long-term strategy is to improve its portfolio of businesses by divesting or exiting non-strategic businesses, and by acquiring and expanding businesses which are high value-added and that position Georgia-Pacific closer to its customers. A key to this transformation will be the Corporation’s tissue business, which was expanded significantly with the acquisition of Fort James Corporation in late 2000. Although the Corporation believes that it has a strong cost position, superior manufacturing expertise and excellent brands, this business faces competition from established companies that may have more experience or expertise in marketing, advertising and brand management than the Corporation currently has. To succeed, the Corporation must continue to develop brand recognition and loyalty, product quality and performance, price, marketing and distribution capabilities. Aggressive reaction by competitors may lead to increased advertising and promotional spending by the Corporation in order to maintain market share in this segment as well as others. In addition, to successfully achieve its strategy the Corporation will need to rely heavily on the development and introduction of new products and product line extensions as a means of achieving and/or maintaining leadership in various product categories.

3.    Competition and Volatility of Commodity Businesses.

The Corporation faces intense competition from both large international and small domestic producers in most of its businesses. However, operating results are particularly volatile for the Corporation’s building products and pulp and paper businesses because most of these products are commodities, for which price is the principal competitive factor. The Corporation cannot control such factors as decreasing demand from customers or increasing supply from competitors, both of which cause price decreases for such products which adversely affects the Corporation’s net sales, operating income and cash flows.

4.    Costs Associated with Environmental Compliance and Remediation and Litigation.

As more fully discussed under Note 14 of the Corporation’s Consolidated Financial Statements which are presented under Item 8 of this Form 10-K, the Corporation’s operations are subject to significant regulation by federal, state and local environmental and safety authorities. The costs of compliance with existing and new regulatory schemes could require significant capital expenditures that would decrease the amount of funds

29

available for investment in other areas of the Corporation’s operations. For example, the United States Environmental Protection Agency has recently issued new air emission regulations, known as “MACT” or Maximum Achievable Control Technology regulations. The costs of compliance with these regulations and additional or supplementary regulations cannot be definitively quantified and there can be no assurance that the costs of such compliance will not be material to the Corporation’s results of operations in certain reporting periods. In addition, the costs of remediating known environmental sites, as described in Note 14 of the Corporation’s Consolidated Financial Statements, in some instances has been significant and remediation of future sites could also be significant. There can be no assurance that the final remediation costs will equal currently estimated costs or that additional sites will not require significant remediation expenses.

The Corporation is subject to litigation risks that are similar to other Corporations of its size and complexity in an increasingly litigious environment. While the Corporation does not believe that any of these matters will be material to its long term financial status, as disclosed under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other” and Note 14 of the Corporation’s Consolidated Financial Statements, certain litigation related matters may be material to the Corporation’s results of operations in certain reporting periods.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Quantitative and Qualitative Disclosure about Market Risk information for the Corporation required by this Item set forth under the caption “Georgia-Pacific Corporation and Subsidiaries—Management’s Discussion and Analysis—Liquidity and Capital Resources—Financing Activities” under Item 7 of this Form 10-K is incorporated herein by reference thereto.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

	Page
Financial Statements
Report on Management’s Responsibilities	31
Report of Independent Public Accountants	32
Consolidated Statements of Income	33
Consolidated Statements of Cash Flows	34
Consolidated Balance Sheets	35
Consolidated Statements of Shareholders’ Equity	36
Consolidated Statements of Comprehensive (Loss) Income	37
Notes to Consolidated Financial Statements	38
Supplemental Information:
Selected Financial Data-Operations	95
Selected Financial Data-Financial Position, End of Year	97
Sales and Operating Profits by Operating Segment	99
Schedule II-Valuation and Qualifying Accounts	100

30

REPORT ON MANAGEMENT’S RESPONSIBILITIES

Georgia-Pacific Corporation and Subsidaries

Management of Georgia-Pacific Corporation is responsible for the preparation, integrity, and fair presentation of the consolidated financial statements and the estimates and judgments upon which certain amounts in the financial statements are based. Management is also responsible for preparing the other financial information included in the annual report on Form 10-K. In our opinion, the accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, and the other financial information in the annual report on Form 10-K is consistent with the financial statements.

Management is also responsible for establishing and maintaining a system of internal control over financial reporting, which encompasses policies, procedures, and controls directly related to, and designed to provide reasonable assurance as to, the reliability of the published financial statements. An independent assessment of the system is performed by the Corporation’s internal audit staff in order to confirm that the system is adequate and operating effectively. The Corporation’s independent public accountants also consider certain elements of the internal control system in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements. Management has considered any significant recommendations regarding the internal control system that have been brought to its attention by the internal audit staff or independent public accountants and has taken steps it deems appropriate to maintain a cost-effective internal control system. The Audit Committee of the Board of Directors, consisting of independent directors, provides oversight to the financial reporting process. The Corporation’s internal auditors and independent public accountants meet regularly with the Audit Committee to discuss financial reporting and internal control issues and have full and free access to the Audit Committee.

There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation. Furthermore, the effectiveness of an internal control system can vary over time due to changes in conditions.

Management believes that as of December 29, 2001, the internal control system over financial reporting is adequate and effective in all material respects.

JA MES E. TERRELL

Vic e President and Controller

DA NNY W. HUFF

Ex ecutive Vice President—Finance and Chief Financial Officer

A.D . CORRELL

Ch airman, Chief Executive Officer and President

January 23, 2002

31

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Georgia-Pacific Corporation:

We have audited the accompanying consolidated balance sheets of Georgia-Pacific Corporation (a Georgia corporation) and subsidiaries as of December 29, 2001 and December 30, 2000 and the related consolidated statements of income, shareholders’ equity, comprehensive income, and cash flows for each of the three years in the period ended December 29, 2001. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Georgia-Pacific Corporation and subsidiaries as of December 29, 2001 and December 30, 2000 and the results of their operations and their cash flows for each of the three years in the period ended December 29, 2001 in conformity with accounting principles generally accepted in the United States.

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index of the financial statements is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

Arthur Andersen LLP

Atlanta, Georgia

January 23, 2002

32

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Year Ended
	December 29, 2001			December 30, 2000		January 1, 2000
In millions, except per share amounts
Net sales	$	25,016		$	22,050	$	18,409
Costs and expenses:
Cost of sales		19,378			17,332		14,421
Selling and distribution		2,025			1,600		818
Depreciation and amortization		1,343			910		815
General and administrative		1,072			856		765
Interest		1,080			595		426
Other loss		413			204		–
Total costs and expenses		25,311			21,497		17,245
(Loss) income from continuing operations before income taxes		(295	)		553		1,164
Provision for income taxes		181			210		448
(Loss) income from continuing operations		(476	)		343		716
Income from discontinued operations, net of taxes		70			162		400
(Loss) income before extraordinary loss and accounting change		(406	)		505		1,116
Extraordinary loss from early retirement of debt, net of taxes		(12	)		–		–
Cumulative effect of accounting change, net of taxes		11			–		–
Net (loss) income	$	(407	)	$	505	$	1,116
Georgia-Pacific Group
(Loss) income from continuing operations	$	(476	)	$	343	$	716
Extraordinary loss, net of taxes		(12	)		–		–
Cumulative effect of accounting change, net of taxes		11			–		–
Net (loss) income	$	(477	)	$	343	$	716
Basic per share:
(Loss) income from continuing operations	$	(2.09	)	$	1.95	$	4.17
Extraordinary loss, net of taxes		(0.05	)		–		–
Cumulative effect of accounting change, net of taxes		0.04			–		–
Net (loss) income	$	(2.10	)	$	1.95	$	4.17
Diluted per share:
(Loss) income from continuing operations	$	(2.09	)	$	1.94	$	4.07
Extraordinary loss, net of taxes		(0.05	)		–		–
Cumulative effect of accounting change, net of taxes		0.04			–		–
Net (loss) income	$	(2.10	)	$	1.94	$	4.07
Average number of shares outstanding:
Basic		227.6			175.8		171.8
Diluted		227.6			176.9		175.9
The Timber Company
Income from discontinued operations, net of taxes	$	70		$	162	$	400
Basic per common share	$	0.86		$	2.01	$	4.75
Diluted per common share	$	0.86		$	2.00	$	4.73
Average number of shares outstanding:
Basic		81.0			80.7		84.1
Diluted		81.7			81.1		84.6

The accompanying notes are an integral part of these consolidated financial statements.

33

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions
Cash flows from operating activities:
Net (loss) income	$	(407	)	$	505		$	1,116
Adjustments to reconcile net (loss) income to cash provided by operations, excluding the effects of acquisitions:
Cumulative effect of accounting change, net of taxes		(11	)		–			–
Depreciation		1,079			819			752
Deferred income taxes		(109	)		82			73
Amortization of goodwill and intangibles		267			96			69
Other loss		413			204			–
Loss (gain) on disposal of assets, net		36			(88	)		(48	)
Decrease (increase) in receivables		274			183			(206	)
Decrease (increase) in inventories		176			(20	)		(244	)
(Decrease) increase in accounts payable		(69	)		17			51
Change in other working capital		(102	)		8			(186	)
Decrease in taxes payable		(11	)		(178	)		(2	)
Change in other assets and other long-term liabilities		86			(27	)		87
Tax benefit on stock options		23			4			24
Other, net		(163	)		(49	)		(214	)
Cash provided by operations		1,482			1,556			1,272
Cash flows from investing activities:
Property, plant and equipment investments		(739	)		(909	)		(723	)
Timber and timberland purchases		(31	)		(59	)		(78	)
Acquisitions		(133	)		(6,142	)		(1,658	)
Proceeds from sales of assets		2,311			422			104
Other		(66	)		(63	)		29
Cash provided by (used for) investing activities		1,342			(6,751	)		(2,326	)
Cash flows from financing activities:
Repayments of long-term debt		(2,631	)		(123	)		(579	)
Additions to long-term debt		631			5,937			624
Fees paid to issue debt		(39	)		(38	)		(35	)
(Decrease) increase in bank overdrafts		(94	)		14			(18	)
(Decrease) increase in commercial paper and other short-term notes		(690	)		(300	)		661
Senior deferrable notes		–			–			863
Common stock repurchased		–			(140	)		(388	)
Proceeds from option plan exercises		165			26			116
Cash dividends paid		(175	)		(166	)		(170	)
Cash (used for) provided by financing activities		(2,833	)		5,210			1,074
(Decrease) increase in cash		(9	)		15			20
Balance at beginning of year		40			25			5
Balance at end of year	$	31		$	40		$	25

The accompanying notes are an integral part of these consolidated financial statements.

34

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 29, 2001			December 30, 2000
In millions, except shares and per share amounts
ASSETS
Current assets:
Cash	$	31		$	40
Receivables, less allowances of $39 and $34, respectively		2,352			2,704
Inventories
Raw materials		628			655
Finished goods		1,537			1,868
Supplies		504			548
LIFO reserve		(157	)		(178	)
Total inventories		2,512			2,893
Deferred income tax assets		101			176
Net assets of discontinued operations		–			145
Other current assets		464			449
Total current assets		5,460			6,407
Property, plant and equipment
Land and improvements		612			653
Buildings		2,197			2,532
Machinery and equipment		15,502			17,353
Construction in progress		532			624
Property, plant and equipment, at cost		18,843			21,162
Accumulated depreciation		(9,051	)		(9,378	)
Total property, plant and equipment, net		9,792			11,784
Goodwill, net		8,265			8,985
Other assets		2,847			2,242
Total assets	$	26,364		$	29,418
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Commercial paper and other short-term notes	$	2,284		$	2,327
Current portion of long-term debt		572			232
Accounts payable		1,630			1,808
Accrued compensation		300			430
Other current liabilities		1,024			879
Total current liabilities		5,810			5,676
Long-term debt, excluding current portion		9,358			12,355
Senior deferrable notes		863			863
Other long-term liabilities		3,582			2,647
Deferred income tax liabilities		1,846			2,155
Commitments and contingencies
Shareholders’ equity:
Common stock		184			182
Georgia-Pacific Group, par value $0.80; 400,000,000 shares authorized; 230,095,000 shares and 224,844,000 shares issued and outstanding at December 29, 2001 and December 30, 2000, respectively
The Timber Company, par value $0.80; 250,000,000 shares authorized; 94,571,000 shares issued at December 30, 2000
Treasury stock, at cost		–			(330	)
14,387,000 shares of The Timber Company common stock at December 30, 2000
Additional paid-in capital		2,521			2,427
Retained earnings		2,321			3,463
Long-term incentive plan deferred compensation		(3	)		(4	)
Accumulated other comprehensive loss		(118	)		(16	)
Total shareholders’ equity		4,905			5,722
Total liabilities and shareholders’ equity	$	26,364		$	29,418

The accompanying notes are an integral part of these consolidated financial statements.

35

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

	Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions, except shares in thousands and per share amounts
Common stock:
Beginning balance	$	182		$	155		$	150
Common stock issued:
Stock option plans and directors plan		4			1			3
Employee stock purchase plans		1			–			2
Common stock issued for acquisitions		–			26
Spin-off of The Timber Company		(3	)		–			–
Ending balance		184			182			155
Treasury stock:
Beginning balance		(330	)		(880	)		(492	)
Common stock repurchased		–			(140	)		(388	)
Treasury stock issued for acquisition		–			690			–
Spin-off of The Timber Company		330			–			–
Ending balance		–			(330	)		(880	)
Additional paid-in capital:
Beginning balance		2,427			1,510			1,331
Common stock issued:
Stock option plans and directors plan		149			153			155
Employee stock purchase plans		35			–			53
Common stock issued for acquisitions		5			764			–
Spin-off of The Timber Company		(95	)		–			–
Stock issuance costs		–			–			(29	)
Ending balance		2,521			2,427			1,510
Retained earnings:
Beginning balance		3,463			3,124			2,178
Net (loss) income		(407	)		505			1,116
Spin-off of The Timber Company		(560	)		–			–
Cash dividends declared (Georgia-Pacific Group, $0.50, per common share for each of the three years presented; The Timber Company, $0.75 per common share for 2001 and $1.00 per share for both 2000 and 1999)		(175	)		(166	)		(170	)
Ending balance		2,321			3,463			3,124
Long-term incentive plan deferred compensation:
Beginning balance		(4	)		(2	)		–
Common stock issued under long-term incentive plan, net		1			(2	)		(2	)
Ending balance		(3	)		(4	)		(2	)
Accumulated other comprehensive loss:
Beginning balance		(16	)		(32	)		(43	)
Activity, net of taxes		(102	)		16			11
Ending balance		(118	)		(16	)		(32	)
Total shareholders’ equity	$	4,905		$	5,722		$	3,875
Georgia-Pacific Group common stock shares issued and outstanding:
Beginning balance, common stock issued		224,844			191,983			186,564
Common stock issued:
Stock option plans and directors plan		3,550			570			3,982
Employee stock purchase plans		1,511			–			1,397
Long-term incentive plan		–			92			40
Common stock issued for acquisitions		190			32,199			–
Balance, common stock issued		230,095			224,844			191,983
Common stock repurchased and held in treasury		–			(21,501	)		(19,776	)
Treasury stock issued for acquisition		–			21,501			–
Balance, common stock outstanding		230,095			224,844			172,207
The Timber Company common stock shares issued and outstanding:
Beginning balance, common stock issued		94,571			93,904			92,785
Common stock issued:
Stock option plans and directors plan		2,081			667			421
Employee stock purchase plans		17			–			698
Spin-off of The Timber Company		(96,669	)		–			–
Balance, common stock issued		–			94,571			93,904
Common stock repurchased and held in treasury		–			(14,387	)		(11,053	)
Balance, common stock outstanding		–			80,184			82,851

The accompanying notes are an integral part of these consolidated financial statements.

36

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

	Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions
Net (loss) income	$	(407	)	$	505		$	1,116
Other comprehensive (loss) income before taxes
Foreign currency translation adjustments		(29	)		24			11
Derivative instruments		(50	)		–			–
Minimum pension liability adjustment		(75	)		2			7
Income tax benefit (expense) related to items of other comprehensive income		52			(10	)		(7	)
Comprehensive (loss) income	$	(509	)	$	521		$	1,127

The accompanying notes are an integral part of these consolidated financial statements.

37

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

The Corporation, a Georgia corporation, is broadly engaged in five business operations: the manufacture and distribution of building products (including plywood, oriented strand board, various industrial wood products, and softwood and hardwood lumber as well as certain nonwood products including gypsum board, chemicals and other products); the manufacture of containerboard and packaging (including linerboard, medium, kraft and corrugated packaging); the manufacture of bleached pulp and paper (including paper, market pulp, and bleached board) and the distribution of paper products and supplies manufactured by the Corporation or purchased from others; and the manufacture of tissue products (including bath tissue, paper towels, and napkins) and disposable tabletop products (including disposable cups, plates and cutlery). Prior to October 6, 2001, the Corporation also engaged in the growing of timber on approximately 4.7 million acres of timberlands that the Corporation owned or leased. In 2001, these timberlands supplied approximately 10% of the overall timber requirements of the Corporation’s manufacturing facilities. On October 6, 2001, the Corporation completed the spin off of The Timber Company and its merger with and into Plum Creek Timber Company, Inc. (“Plum Creek”) (see Note 3).

Basis of Presentation

On December 16, 1997, shareholders of the Corporation approved the creation of two classes of common stock intended to reflect separately the performance of the Corporation’s manufacturing and timber businesses (the “Letter Stock Recapitalization”). The Corporation’s Articles of Incorporation were amended and restated to (i) create a new class of stock designated as Georgia-Pacific Corporation—Timber Group common stock, $0.80 par value per share (“The Timber Company stock”), consisting of 250 million authorized shares; (ii) redesignate each authorized share of the Corporation’s common stock, $0.80 par value per share (the Existing Common Stock) as, and convert each share into, one share of Georgia-Pacific Corporation—Georgia-Pacific Group common stock (now two shares of Georgia-Pacific Group common stock after giving effect to the May 14, 1999 two-for-one stock split), $0.80 par value per share (“Georgia-Pacific Group stock”); (iii) increase the number of shares of Georgia-Pacific Group stock authorized for issuance from 150 million shares to 400 million shares; and (iv) authorize the distribution of one share of The Timber Company stock for each outstanding share of Georgia-Pacific Group stock.

The Corporation’s manufacturing and former timber businesses are referred to herein as the “Georgia-Pacific Group” and “The Timber Company,” respectively, or collectively as the “groups.”

The Georgia-Pacific Group is a manufacturer and distributor of building products and pulp and paper products. The Georgia-Pacific Group also includes a procurement function that is responsible for purchasing timber and wood fiber for all the Corporation’s manufacturing facilities. The Timber Company was engaged primarily in the growing and selling of timber. After the spin off of The Timber Company and its merger with and into Plum Creek on October 6, 2001, the Corporation is comprised solely of Georgia-Pacific Group.

Principles of Consolidation

The consolidated financial statements include the accounts of the Corporation and its wholly owned domestic and foreign subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. The equity method of accounting is used for investments in companies where the Corporation has a 20% to 50% ownership interest. The equity method of accounting is also used in instances where the Corporation may have an ownership interest greater than 50% and the investing partner has significant participation rights.

38

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Discontinued Operations

On October 6, 2001, the Corporation completed the spin off of The Timber Company and its merger with and into Plum Creek (see Note 3). The results of the Timber Company are reported as “Income from discontinued operations, net of taxes” in the accompanying consolidated statements of income.

Financial Activities

At June 30, 1997, $1.0 billion of the Corporation’s total debt was allocated to The Timber Company for financial reporting purposes, and the balance of the Corporation’s total debt was allocated to the Georgia-Pacific Group. The Corporation’s debt was allocated between the groups based upon a number of factors including expected future cash flows, volatility of earnings, and the ability to pay debt service and dividends. In addition, the Corporation considered certain measures of creditworthiness, such as coverage ratios and various tests of liquidity, as a means of ensuring that each group could continue to pay debt service during a business downcycle. Management believed that such allocation was equitable and reasonable.

In connection with the spin off of The Timber Company and its merger with and into Plum Creek, Plum Creek assumed $646 million of debt previously allocated to The Timber Company. The debt of each group bore interest at a rate equal to the weighted average interest rate of all the Corporation’s debt calculated on a quarterly basis. This weighted average interest rate excluded the interest on the senior deferrable notes. Management believes that this method of allocation of the cost of debt was equitable and provided a reasonable estimate of the cost attributable to the groups.

Each group’s debt increased or decreased by the amount of any net cash generated by, or required to fund, the group’s operating activities, investing activities, dividend payments, share repurchases and other financing activities. Interest was charged to each group in proportion to the respective amount of each group’s debt. Changes in the cost of the Corporation’s debt were reflected in adjustments to the weighted average interest cost of such debt.

Allocation of Shared Services

A portion of the Corporation’s shared General and administrative expenses (such as executive management, human resources, legal, accounting and auditing, tax, treasury, strategic planning and information systems support) had been allocated to each group based upon identification of such services specifically used by each group. Where determinations based on specific usage alone were impracticable, other methods and criteria were used that management believed were equitable and provided a reasonable estimate of the cost attributable to each group. These methods consisted of allocating costs based on (i) number of employees of each group, (ii) percentage of office space of each group and (iii) estimated percentage of staff time allocable to each group. The total of these allocations was $369 million, $280 million and $251 million in 2001, 2000 and 1999, respectively. It is not practicable to provide a detailed estimate of the expenses that would be recognized if either group were a separate legal entity.

Allocation of Employee Benefits

A portion of the Corporation’s employee benefit costs, including pension and postretirement health care and life insurance benefits, had been allocated to each group. The pension cost related to their participation in the Corporation’s noncontributory defined benefit pension plan, and other employee benefit costs related to their participation in the Corporation’s postretirement health care and life insurance benefit plans, were actuarially determined based on the number of their employees and an allocable share of the plan assets and were calculated in accordance with SFAS No. 87, “Employers’ Accounting for Pensions,” and SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” respectively. Management believes such method of allocation was equitable and provided a reasonable estimate of the costs attributable to each group.

39

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES—(Continued)

Since plan assets were not segregated into separate accounts or restricted to providing benefits to employees of either group, assets of the Corporation’s employee benefit plans may have been used to provide benefits to employees of both the Georgia-Pacific Group and The Timber Company. Plan assets have been allocated to the groups based on the percentage of their projected benefit obligations to the plans’ total projected benefit obligations.

Allocation of Federal and State Income Taxes

The federal income taxes of the Corporation and the subsidiaries that own assets allocated between the groups were determined on a consolidated basis. Consolidated federal income tax provisions and related tax payments or refunds were allocated between the groups based principally on the taxable income and tax credits directly attributable to each group. Such allocations reflected each group’s contribution (positive or negative) to the Corporation’s consolidated federal taxable income and the consolidated federal tax liability and tax credit position. Tax benefits that could not be used by the group generating those benefits, but could be used on a consolidated basis, were credited to the group that enabled the use of such benefits. Had the groups filed separate tax returns, the provision for income taxes and net income for each group would not have significantly differed from the amounts reported on the groups’ statements of income for the years ended December 29, 2001, December 30, 2000 and January 1, 2000. However, the amounts of current and deferred taxes and taxes payable or refundable allocated to each group on the historical financial statements may have differed from those that would have been allocated had the groups filed separate income tax returns.

Depending on the tax laws of the respective jurisdictions, state and local income taxes were calculated on either a consolidated or combined basis or on a separate corporation basis. State income tax provisions and related tax payments or refunds determined on a consolidated or combined basis were allocated between the groups based on their respective contributions to such consolidated or combined state taxable incomes. State and local income tax provisions and related tax payments that are determined on a separate corporation basis were allocated between the groups in a manner designed to reflect the respective contributions of the groups to the Corporation’s separate state or local taxable income.

Dividends

For purposes of the historical financial statements of the Georgia-Pacific Group and The Timber Company, for periods prior to 1999, all dividends declared and paid by the Corporation were evenly allocated between the groups. Management believes that such method of allocation was equitable and provides a reasonable estimate of the dividends that would have been declared and paid in respect of each class of common stock. The amount of earnings available for payment of dividends on Georgia-Pacific Group stock and on The Timber Company stock (i.e., the available dividend amounts) on any date was the amount in excess of the minimum amount necessary for the particular group to be able to pay its debts as they become due in the usual course of business.

Stock Split

On May 4, 1999, the Board declared a two-for-one split of the Georgia-Pacific Group’s stock in the form of a special dividend to shareholders of record on May 14, 1999. The special dividend was paid as one share of Georgia-Pacific Group stock for each such share outstanding on June 3, 1999. A total of 95,126,911 additional shares were issued in conjunction with the stock split. The Georgia-Pacific Group’s par value of $0.80 remained unchanged. As a result, $76 million of shareholders’ equity was reclassified from “Additional paid-in capital” to “Common stock.” All historical share and per share amounts have been restated to reflect retroactively the stock split.

40

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES—(Continued)

Revenue Recognition

The Corporation recognizes revenue when the following criteria are met: persuasive evidence of an agreement exists, delivery has occurred or services have been rendered, the Corporation’s price to the buyer is fixed and determinable, and collectibility is reasonably assured. Delivery is not considered to have occurred until the customer takes title and assumes the risks and rewards of ownership. The timing of revenue recognition is largely dependent on shipping terms. Revenue is recorded at the time of shipment for terms designated at f.o.b. (free on board) shipping point. For sales transactions designated f.o.b. destination, revenue is recorded when the product is delivered to the customer’s delivery site. The Corporation does not recognize revenue from bill and hold transactions until the product is delivered to the customer’s delivery site (for sales with terms of f.o.b. destination) or until the product is shipped to the customer (for sales with terms of f.o.b. shipping point).

Foreign Currency Translation

The functional currency for most international subsidiaries is the local currency for the country in which the subsidiaries own their primary assets. The translation of the applicable currencies into United States dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Any related translation adjustments are recorded directly in other comprehensive income. Foreign currency transaction gains (losses) are reflected in the Consolidated Statements of Income and were not material.

Income Per Share

Basic earnings per share are computed based on net income and the weighted average number of common shares outstanding. Diluted earnings per share reflect the assumed issuance of common shares under long-term incentive, stock option and stock purchase plans, and pursuant to the terms of the Premium Equity Participating Security Units (“PEPS Units”) (see Note 7). The computation of diluted earnings per share does not assume conversion or exercise of securities that would have an antidilutive effect on earnings per share. Amounts are computed for each class of common stock based on the separate earnings attributed to each of the respective businesses.

41

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Earnings Per Share

	Georgia-Pacific Group Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions, except shares and per share amounts
Basic and diluted income available to Shareholders (numerator):
(Loss) income from continuing operations	$	(476	)	$	343		$	716
Extraordinary loss from early retirement of debt, net of taxes		(12	)		–			–
Cumulative effect of accounting change, net of taxes		11			–			–
Net (loss) income	$	(477	)	$	343		$	716
Shares (denominator):
Weighted average shares outstanding		227,590,185			175,835,279			171,807,884
Dilutive securities:
Options		–	*		872,380	**		3,677,295	***
Employee stock purchase plans		–			191,945			438,630
Total assuming conversion		227,590,185			176,899,604			175,923,809
Per share amounts:
Basic
(Loss) income from continuing operations	$	(2.09	)	$	1.95		$	4.17
Extraordinary loss, net of taxes		(0.05	)
Cumulative effect of accounting change, net of taxes		0.04			–			–
Net (loss) income	$	(2.10	)	$	1.95		$	4.17
Diluted
(Loss) income from continuing operations	$	(2.09	)	$	1.94		$	4.07
Extraordinary loss, net of taxes		(0.05	)
Cumulative effect of accounting change, net of taxes		0.04			–			–
Net (loss) income	$	(2.10	)	$	1.94		$	4.07
	The Timber Company Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions, except shares and per share amounts
Basic and diluted income available to Shareholders (numerator):
Income from discontinued operations, net of taxes	$	70		$	162		$	400
Shares (denominator):
Weighted average shares outstanding		80,960,667			80,705,171			84,138,673
Dilutive securities:
Options		785,449			408,905			426,423	#
Employee stock purchase plans		–			1,936			40,508
Total assuming conversion		81,746,116			81,116,012			84,605,604
Per share amounts:
Basic per common share	$	0.86		$	2.01		$	4.75
Diluted per common share	$	0.86		$	2.00		$	4.73

* Options to purchase 20,151,717 shares of Georgia-Pacific Group stock at prices ranging from $9.59 to $91.58 per share were outstanding during 2001, as were PEPS Units to purchase Georgia-Pacific Group stock. However, these were not included in the computation of diluted earnings per share because the Corporation reported a loss for the year and inclusion of such shares would have had an antidilutive effect.

** Options to purchase 5,474,098 shares of Georgia-Pacific Group stock at prices ranging from $31.57 to $91.58 per share were outstanding during 2000, as were PEPS Units to purchase Georgia-Pacific Group stock. However, these were not included in the computation of diluted earnings per share because the options’ exercise price and the PEPS Unit purchase contract price were greater than the average market price of the common shares.

42

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

*** Options to purchase 176,490 shares of Georgia-Pacific Group stock at prices ranging from $43.58 to $91.58 per share were outstanding during 1999, as were PEPS Units to purchase Georgia-Pacific Group stock. However, these were not included in the computation of diluted earnings per share because the options’ exercise price and the PEPS Unit purchase contract price were greater than the average market price of the common shares.

# Options to purchase 1,004,000 shares of The Timber Company stock at $25.13 per share were outstanding during 1999 but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares.

Inventory Valuation

Inventories are valued at the lower of year-to-date average cost or market and include the costs of materials, labor and manufacturing overhead. The LIFO dollar value pool method was used to determine the cost of approximately 61% and 64% of inventories at December 29, 2001 and December 30, 2000, respectively.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Lease obligations for which the Corporation assumes or retains substantially all the property rights and risks of ownership are capitalized. Replacements of major units of property are capitalized, and the replaced properties are retired. Replacements of minor components of property, and repair and maintenance costs, are charged to expense as incurred. Planned shutdown maintenance costs are charged to earnings ratably during the year.

Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Useful lives are 25 years for land improvements, 20 to 45 years for buildings, and 3 to 20 years for machinery and equipment. Upon retirement or disposition of assets, cost and accumulated depreciation are removed from the related accounts and any gain or loss is included in income.

The Corporation capitalizes incremental costs that are directly associated with the development of software for internal use. Amounts are amortized over five years beginning when the assets are placed in service. Amounts capitalized costs were $236 thousand in 2001, $48 million in 2000, and $66 million in 1999. Amounts are included as “Property, plant and equipment” on the accompanying consolidated balance sheets.

The Corporation capitalizes interest on projects when construction takes considerable time and entails major expenditures. Such interest is charged to the property, plant and equipment accounts and amortized over the approximate lives of the related assets. Interest capitalized, expensed and paid was as follows:

	Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions
Total interest costs	$	1,091		$	606		$	432
Interest capitalized		(11	)		(11	)		(6	)
Interest expense	$	1,080		$	595		$	426
Interest paid	$	1,112		$	628		$	473

Landfills and Lagoons

The Corporation accrues for landfill closure costs including waste treatment, storage or disposal over the periods that benefit from the use of the landfill and accrues for lagoon clean-out costs over the useful period between clean-outs.

43

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Identifiable Intangible Assets

The Corporation amortizes identifiable intangible assets such as patents, trademarks, and tradenames using the straight-line method over their estimated useful lives of up to 40 years. Amortization expense for identifiable intangible assets was $32 million and $10 million in 2001 and 2000, respectively. Accumulated amortization at December 29, 2001 and December 30, 2000 was $42 million and $10 million, respectively.

Impairment of Long-Lived Assets Other Than Goodwill

The Corporation assesses its long-lived assets other than goodwill for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. To analyze recoverability, the Corporation projects undiscounted net future cash flows over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amount and the fair value of the assets.

Goodwill

The Corporation amortizes costs in excess of fair value of net assets of businesses acquired using the straight-line method over a period not to exceed 40 years. The Corporation reviews the recorded value of its goodwill annually, or sooner if events or changes in circumstances indicate that the carrying amount may exceed fair value. Recoverability is then determined by comparing the undiscounted net cash flows of the assets to which the goodwill applies to the net book value, including goodwill, of those assets.

Amortization expense was $235 million, $86 million and $69 million in 2001, 2000, and 1999, respectively. Accumulated amortization at December 29, 2001 and December 30, 2000 was $936 million and $701 million, respectively.

Shipping and Handling Costs

The Corporation classifies the majority of shipping and handling costs as cost of sales. However, certain shipping and handling costs are classified as selling and distribution expenses. Shipping and handling costs included in selling and distribution expenses were $658 million, $521 million and $352 million in 2001, 2000, and 1999, respectively.

Advertising Costs

Advertising costs are expensed as incurred.

Environmental and Legal Matters

The Corporation recognizes a liability for environmental remediation and legal indemnification and defense costs when it believes it is probable a liability has been incurred and the amount can be reasonably estimated. The liabilities are developed based on currently available information and reflect the participation of other potentially responsible parties, depending on the parties’ financial condition and probable contribution. The accruals are recorded at undiscounted amounts and are reflected as liabilities on the accompanying consolidated balance sheets. The Corporation also has insurance that covers losses on certain environmental claims and records a receivable to the extent that the realization of the insurance is deemed probable. These receivables are recorded at undiscounted amounts and are reflected as assets in the accompanying consolidated balance sheets.

Environmental costs are generally capitalized when the costs improve the condition of the property or the costs prevent or mitigate future contamination. All other costs are expensed.

44

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Accounting Standards Changes

In July 2001, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations (“SFAS No. 141”), and SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 142 requires that entities assess the fair value of the net assets underlying all acquisition related goodwill on a reporting unit basis effective beginning in 2002. When the fair value is less than the related carrying value, entities are required to reduce the amount of goodwill. Reductions are made retroactive to the beginning of fiscal year 2002. SFAS No. 142 also requires that entities discontinue amortization of all purchased goodwill, including amortization of goodwill recorded in past business combinations. The Corporation has determined its reporting units to be the following: structural panels, lumber, industrial wood products, gypsum, chemical, building products distribution, packaging, bleached pulp and paper, paper distribution, North American towel and tissue, Dixie and European towel and tissue. Management is evaluating the effect of this statement on these reporting units. As of December 29, 2001, the Corporation had acquisition related goodwill of $8.3 billion, net of accumulated amortization. Beginning in 2002, the Corporation will no longer be amortizing acquisition related goodwill. In 2001 and 2000, goodwill amortization expense aggregated $235 million and $86 million, respectively.

In July 2001, the FASB also issued SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS No. 143”). SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the entity either settles the obligation for the amount recorded or incurs a gain or loss. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. Management is evaluating the effect of this statement on the Corporation’s results of operations and financial position.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”). SFAS No. 144 supersedes FASB statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (“SFAS No. 121”), and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions (“Opinion 30”) for the disposal of a segment of a business(as previously defined in Opinion 30). The FASB issued SFAS No. 144 to establish a single accounting model, based on the framework established in SFAS No. 121, for long-lived assets to be disposed of by sale. SFAS No. 144 broadens the presentation of discontinued operations in the income statement to include a component of an entity (rather than a segment of a business). A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. SFAS No. 144 also requires that discontinued operations be measured at the lower of the carrying amount or fair value less cost to sell. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001 and should be applied prospectively.

45

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Change in Fiscal Year

In April 1999, the Corporation determined to change its fiscal year from December 31 to end on the Saturday closest to December 31. Additionally, the Corporation reports its 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. There was no transition period on which to report.

Reclassifications

Certain 2000 and 1999 amounts have been reclassified to conform with the 2001 presentation. In 2001, the Corporation began classifying bank overdrafts as accounts payable. Total bank overdrafts at December 29, 2001 and December 30, 2000 were $199 million and $293 million, respectively.

NOTE 2.    OPERATING SEGMENT INFORMATION

The Corporation has four reportable operating segments: consumer products, packaging, bleached pulp and paper, and building products.

• The consumer products segment produces and sells retail and away-from-home tissue and the Dixie line.

• The packaging segment produces and sells linerboard, medium, kraft and corrugated packaging.

• The bleached pulp and paper segment produces paper, market pulp, and bleached board. The distribution division of the bleached pulp and paper segment sells and distributes high-quality printing, writing and copying papers and a broad range of packaging and maintenance supplies, equipment and services.

• Manufactured products in the building products segment consist primarily of wood panels (plywood, oriented strand board, hardboard and particleboard), lumber, gypsum products and chemicals. The distribution business of the building products segment sells a wide range of building products manufactured by the Corporation or purchased from others. This segment of the business is primarily affected by the level of housing starts; the level of repairs, remodeling and additions; industrial markets; commercial building activity; the availability and cost of financing; and changes in industry capacity.

Markets for these segments are affected primarily by changes in industry capacity, the level of economic growth in United States and export markets, and fluctuations in currency exchange rates.

The accounting policies of the segments are primarily the same as those described in the summary of significant accounting policies. The Corporation evaluates performance based on profit or loss from operations before interest and income taxes (i.e., operating profit or loss).

The Corporation accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices.

The Corporation’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business has different customers and requires different production processes.

The “Other” nonreportable segment includes some miscellaneous businesses, unallocated corporate operating expenses, and the elimination of intersegment sales and related profits.

46

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Corporation has a large and diverse customer base, which includes some customers located in foreign countries. No single unaffiliated customer accounted for more than 10% of total sales in any year during the three years ended December 29, 2001. Sales to foreign markets in 2001, 2000 and 1999 were 13%, 10% and 7%, respectively. These sales were primarily to customers in Canada, Europe, Asia and Latin America. Information on operations in United States and foreign markets is as follows:

Revenues*

	Year Ended
	December 29, 2001		December 30, 2000		January 1, 2000
In millions
United States	$	21,724	$	19,937	$	17,052
Foreign countries		3,292		2,113		1,357
Total Net Sales	$	25,016	$	22,050	$	18,409

* Revenues are attributed to countries based on location of customer.

Long lived assets located in the United States and abroad were valued at $8.1 billion and $1.7 billion, respectively as of December 29, 2001 and were $10.4 billion and $1.4 billion, respectively, at December 30, 2000. Prior to the acquisition of Fort James in November 2000 (see Note 3), a substantial portion of the Corporation’s foreign revenues was derived from the sale of United States—produced products abroad. Therefore, assets located outside the United States as of January 1, 2000 were not material.

47

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following summarizes certain financial information by segment:

	Consumer Products			Packaging		Bleached Pulp and Paper		Building Products		All Other			Consolidated
In millions
2001
Net sales to unaffiliated customers	$	6,992		$	2,482	$	8,492	$	7,049	$	1	*	$	25,016
Intersegment sales		146			128		221		735		(1,230	)**		–
Total net sales	$	7,138		$	2,610	$	8,713	$	7,784	$	(1,229	)	$	25,016
Operating profit (loss)	$	792		$	384	$	69	$	150	$	(610	)***	$	785
Depreciation and amortization		608			174		336		202		23			1,343
Property, plant and equipment Investments		337			78		149		114		61			739
Timber and timberland purchases		–			–		–		–		31			31
Acquisitions		46			61		–		26		–			133
Assets		16,059			2,367		3,822		3,185		931			26,364
2000
Net sales to unaffiliated customers	$	2,054		$	2,646	$	9,387	$	7,961	$	2	*	$	22,050
Intersegment sales		65			89		67		762		(983	)**		–
Total net sales	$	2,119		$	2,735	$	9,454	$	8,723	$	(981	)	$	22,050
Operating profit (loss)	$	(17	)	$	512	$	509	$	382	$	(238	)***	$	1,148
Depreciation and amortization		162			172		355		204		17			910
Property, plant and equipment Investments		243			112		227		268		59			909
Timber and timberland purchases		–			–		–		–		59			59
Acquisitions		6,140			–		2		–		–			6,142
Assets		15,610			2,421		6,416		3,497		1,474	#		29,418
1999
Net sales to unaffiliated customers	$	1,195		$	2,446	$	5,844	$	8,921	$	3	*	$	18,409
Intersegment sales		39			65		25		768		(897	)**		–
Total net sales	$	1,234		$	2,511	$	5,869	$	9,689	$	(894	)	$	18,409
Operating profit (loss)	$	131		$	324	$	181	$	1,205	$	(251	)***	$	1,590
Depreciation and amortization		67			157		309		208		74			815
Property, plant and equipment Investments		138			92		165		285		43			723
Timber and timberland purchases		–			–		–		–		78			78
Acquisitions		755			23		829		51		–			1,658
Assets		1,603			2,461		6,435		3,626		1,380	#		15,505

* Amounts include net sales from miscellaneous businesses.

** Elimination of intersegment sales.

*** Includes some miscellaneous businesses, unallocated corporate operating expenses and the elimination of profit on intersegment sales. Amounts in 2001 include a charge of $350 million for expenditures, net of anticipated insurance recoveries, for projected asbestos liabilities through 2011.

# Includes net assets of discontinued operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reconciliation to Net (Loss) Income

	Year Ended
	December 29, 2001			December 30, 2000		January 1, 2000
In millions
Total operating profit	$	785		$	1,148	$	1,590
Interest expense		1,080			595		426
(Loss) income from continuing operations before income taxes		(295	)		553		1,164
Provision for income taxes		181			210		448
(Loss) income from continuing operations		(476	)		343		716
Income from discontinued operations, net of taxes		70			162		400
(Loss) income before extraordinary item and accounting change		(406	)		505		1,116
Extraordinary loss from early extinguishment of debt, net of taxes		(12	)		–		–
Cumulative effect of accounting change, net of taxes		11			–		–
Net (loss) income	$	(407	)	$	505	$	1,116

NOTE 3.    ACQUISITIONS AND DIVESTITURES

• On August 7, 2001, the Corporation completed the sale of a portion of its paper and pulp assets to Domtar Inc. for $1.65 billion in cash. The assets involved in this transaction were the Corporation’s stand-alone uncoated fine paper mills at Ashdown, Arkansas; Nekoosa and Port Edwards, Wisconsin; and Woodland, Maine, as well as associated pulp facilities. The Corporation used the net proceeds of approximately $1.53 billion ($1.14 billion after taxes) to repay debt. In connection with this sale, the Corporation recorded a pretax loss of $63 million in the third quarter of 2001 in the bleached pulp and paper segment. This loss was reflected in “Other loss” on the accompanying consolidated statements of income. In addition, the Corporation recorded a provision for income taxes of $197 million principally applicable to $630 million of non-deductible goodwill related to the assets sold.

• On October 6, 2001, the Corporation completed the spin off of The Timber Company and its merger with and into Plum Creek. In accordance with the merger agreement, shareholders of The Timber Company received 1.37 shares of Plum Creek stock for each share of The Timber Company stock. This transaction, which included the assumption by Plum Creek of $646 million of the Corporation’s debt, was valued at approximately $3.4 billion. Plum Creek assumed a 10-year timber supply agreement between the Corporation and The Timber Company.

The transaction was originally conditioned on the receipt of a private letter ruling from the Internal Revenue Service (the “Service”) that the transaction would be tax-free to the Corporation and to the shareholders of The Timber Company. In June 2001, the Corporation and Plum Creek amended the original merger agreement and determined to effect the merger upon receipt of opinions from tax counsel that the spin off of The Timber Company from the Corporation and the subsequent merger with Plum Creek would be tax-free to the Corporation and to the shareholders of The Timber Company. The Service notified the companies on June 12, 2001, that it had decided not to issue the private letter ruling based on its belief that the companies had failed to carry the high burden of proof of business purpose necessary for the transaction to receive such an advance ruling. This high burden of proof, which is more stringent than the legal standards applicable to the audit process or any judicial proceeding, pertains only to advance rulings. Based on discussion with the Service and the advice of legal counsel, the companies believe the transaction will not be taxable to the Corporation or the shareholders of The Timber Company. As an added measure to reduce the uncertainty

49

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

concerning any possible tax risks associated with the transaction, the Corporation obtained up to $500 million in tax liability insurance.

The Timber Company has been treated as a discontinued operation in the accompanying consolidated financial statements. The components of net assets of discontinued operations are as follows:

In millions	December 30, 2000
Timber and timberlands	$	1,220
Other assets		399
Debt		(640	)
Other liabilities		(834	)
Net assets of discontinued operations	$	145

Operating results of the discontinued operation were as follows:

In millions	Dec. 29, 2001			Dec. 30, 2000			Jan. 1, 2000
Net sales	$	293		$	394		$	526
Income before income taxes	$	129		$	259		$	657
Provision for income taxes		(59	)		(97	)		(257	)
Income from discontinued operation	$	70		$	162		$	400

• During 2001, the Corporation sold various assets including two lumber mills, industrial wood products property, certain paper distribution assets, timber assets and corporate aircraft for a total of $202 million in cash and recognized a pretax gain of $82 million which was reflected in “Cost of sales” in the accompanying consolidated statements of income.

• During the first quarter of 2001, the Corporation acquired the remaining ownership of two chemical joint ventures for approximately $26 million. The results of operations of these chemical businesses were consolidated with those of the Corporation beginning in February 2001. The Corporation has accounted for these acquisitions using the purchase method to record a new cost basis for assets acquired and liabilities assumed.

• At the end of November 2000, the Corporation completed a tender offer pursuant to which it purchased each outstanding share of common stock of Fort James Corporation (“Fort James”) for $29.60 per share in cash and 0.2644 shares of Georgia-Pacific common stock. The Corporation is paying cash and issuing Georgia-Pacific shares as the untendered Fort James shares are delivered to the Corporation’s exchange agent for cancellation. Through December 29, 2001, the Corporation had paid approximately $6,186 million in cash ($46 million of which was paid during 2001) and issued approximately 53.9 million shares of Georgia-Pacific common stock (0.2 million shares of which were issued during 2001) valued at $1,485 million for such shares. The fair value of the Georgia-Pacific common shares was determined based on the average trading prices of Georgia-Pacific common stock for the two trading days before and after July 16, 2000 (the date of the announcement of the Fort James acquisition). The Corporation expects to pay an additional $7 million in cash and issue approximately 57,000 shares valued at $2 million for Fort James common stock that had not been tendered as of December 29, 2001. In addition, the Corporation assumed $3.3 billion of Fort James debt in the acquisition.

Fort James’ results of operations were consolidated with those of the Corporation beginning in December 2000. The Corporation has accounted for this business combination using the purchase method to record a new cost basis for assets acquired and liabilities assumed. The difference between the purchase price and the

50

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

fair value of the assets acquired and liabilities assumed was recorded as goodwill and is being amortized over 40 years. The allocation of net cash paid for the Fort James acquisition is summarized as follows:

In millions
Current assets	$	1,784
Property, plant and equipment		4,618
Other noncurrent assets		486
Intangible assets other than goodwill		714
Goodwill		6,804
Liabilities		(6,620	)
Common stock issued and value of stock options converted		(1,600	)
Net cash paid for Fort James	$	6,186

The following unaudited pro forma financial data has been prepared assuming that the acquisition of Fort James and related financings were consummated on January 1, 1999. This pro forma financial data is presented for informational purposes and is not indicative of the operating results that would have occurred had the acquisition been consummated on January 1, 1999, nor does it include adjustments for expected synergies, cost savings or consistent application of accounting methods. Accordingly, this pro forma data is not necessarily indicative of future operations.

In millions, except per share amounts	Year Ended
	December 30, 2000		January 1, 2000
Georgia-Pacific Corporation:
Net sales	$	28,294	$	25,080
Income from continuing operations		118		577
Net income		280		1,145
Georgia-Pacific Group data:
Net sales	$	28,294	$	25,080
Income from continuing operations		118		577
Net income		118		745
Basic income per share from continuing operations		0.52		2.53
Diluted income per share from continuing operations		0.51		2.49
Basic earnings per share		0.52		3.31
Diluted earnings per share		0.51		3.25

The Timber Company’s results of operations were not impacted by the Fort James transaction.

• Effective October 3, 1999, the Corporation and Chesapeake completed a previously announced agreement to create Georgia-Pacific Tissue, a joint venture in which the two companies combined certain parts of their tissue businesses. The Corporation contributed substantially all the assets of its away-from-home tissue business to the joint venture. The Corporation controlled and managed the joint venture and owned 95% of its equity. Chesapeake contributed the assets of its Wisconsin Tissue business to the joint venture, in which it had a 5% equity interest after receipt of an initial cash distribution of approximately $755 million.

The results of the Wisconsin Tissue operations were combined with the Corporation’s commercial tissue business beginning on October 3, 1999, when the Georgia-Pacific Tissue joint venture was formed. The Corporation accounted for this transaction using the purchase method to record a new cost basis for assets acquired by the joint venture and liabilities assumed by the joint venture. The difference between the allocated values and the fair market value of the assets acquired and liabilities assumed by the joint venture

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

was recorded as goodwill and was being amortized over 40 years. The allocation of the values of the Wisconsin Tissue assets acquired by the joint venture was as follows:

In millions
Current assets	$	102
Property, plant and equipment		638
Goodwill		284
Liabilities and value of stock options converted		(269	)
Net cash distribution to Wisconsin Tissue	$	755

Pursuant to a consent decree executed with the United States Department of Justice in connection with the Fort James acquisition, the Corporation sold a portion of its away-from-home tissue manufacturing assets (formerly Georgia-Pacific Tissue) to SCA for approximately $850 million. The sale was completed on March 2, 2001, with net proceeds of approximately $581 million ($660 million after tax benefit) used to repay debt. In the fourth quarter of 2000, the Corporation recorded a pretax loss of $204 million in the consumer products segment for the write-down of these assets to their net realizable value; accordingly, no significant gain or loss was recognized upon completion of the sale in 2001.

• During the first quarter of 2000, the Corporation contributed certain packaging assets with a net book value of $34 million to a joint venture. In exchange for these assets, the Corporation retained a 54 percent interest in the joint venture. This investment in the joint venture was accounted for under the equity method until July 2001 because the joint venture partner had substantive participating rights.

In July 2001, the Corporation acquired an additional 27 percent interest in this joint venture for approximately $35 million. In November 2001, the Corporation acquired the remaining 19 percent interest in the joint venture for approximately $24 million. The results of operations of this joint venture were consolidated with those of the Corporation beginning in July 2001. The Corporation has accounted for this acquisition using the purchase method to record a new cost basis for the additional share of assets acquired and liabilities assumed.

• At the end of the second quarter of 1999, the Corporation, through its wholly owned subsidiary Atlanta Acquisition Corp., completed a tender offer for all the outstanding shares of common stock of Unisource, the largest independent marketer and distributor of printing and imaging paper and supplies in North America, and acquired 90.7% of the then outstanding shares of Unisource. On July 6, 1999, Atlanta Acquisition Corp. was merged with and into Unisource and, by virtue of such merger, shares of Unisource that were not tendered to the Corporation (other than shares held by Unisource and the Corporation and its subsidiaries) were converted into the right to receive $12.00 per Unisource share in cash, subject to dissenters’ rights. The Corporation is paying for such untendered shares as they are delivered to the exchange agent for cancellation. Through December 30, 2000, the Corporation had paid approximately $831 million for all Unisource shares, $2 million of which was paid during 2000. In addition, the Corporation assumed $785 million of Unisource debt in the acquisition.

52

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Unisource’s results of operations were consolidated with those of the Corporation beginning July 4, 1999. The Corporation has accounted for this transaction using the purchase method to record a new cost basis for assets acquired and liabilities assumed. The difference between the purchase price and the fair market value of the assets acquired and liabilities assumed was recorded as goodwill and is being amortized over 40 years. The allocation of the purchase price of the acquisition is summarized as follows:

In millions
Current assets	$	1,207
Property, plant and equipment		219
Other noncurrent assets		27
Goodwill		753
Liabilities and value of stock options converted		(1,375	)
Net cash paid for Unisource	$	831

The following unaudited pro forma financial data has been prepared assuming that the acquisition of Unisource and related financings were consummated on January 1, 1999. This pro forma financial data is presented for informational purposes and is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated on January 1, 1999, nor does it include adjustments for expected synergies or cost savings. Accordingly, this pro forma data is not necessarily indicative of future operations.

	Year Ended January 1, 2000
In millions, except per share amounts
Georgia-Pacific Corporation:
Net sales	$	21,615
Income before extraordinary item		1,109
Net income		1,109
Georgia-Pacific Group data:
Net sales	$	21,434
Income before extraordinary item		709
Net income		709
Basic income before extraordinary item per share		4.12
Diluted income before extraordinary item per share		4.03
Basic earnings per share		4.12
Diluted earnings per share		4.03

The Timber Company’s results of operations are not impacted by the Unisource transaction.

• During 2000, the Corporation sold certain packaging assets resulting in a pre-tax gain of $25 million.

• In addition, during 1999, the Corporation completed the acquisition of a packaging plant, four treated lumber facilities, a chemical business and lumber transportation assets for a total consideration of approximately $74 million in cash. The results of operations of the packaging plant and treated lumber facilities were consolidated with those of the Corporation beginning in the second quarter of 1999. The operating results of the chemical business and lumber transportation assets were consolidated with those of the Corporation beginning in the third and fourth quarters, respectively, of 1999. The Corporation has accounted for these business combinations using the purchase method to record a new cost basis for assets acquired and liabilities assumed.

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

• During the second quarter of 1999, the Corporation sold approximately 390,000 acres of timberlands in New Brunswick, Canada and approximately 440,000 acres of timberlands in Maine for approximately $92 million and recognized a pretax gain of $84 million ($50 million after taxes). This gain is reflected in “Income from discontinued operations, net of taxes” on the accompanying consolidated statements of income. In conjunction with the sale of its Maine timberlands, the Corporation received notes from the purchaser in the amount of $51 million. In November 1999, the Corporation monetized these notes through the issuance of notes payable in a private placement. The Corporation will use proceeds from the notes received from the purchaser to fund payments required for the notes payable. The notes receivable are classified as “Other assets” and the notes payable are classified as “Other long-term liabilities” on the accompanying consolidated balance sheets.

• In December 1999, the Corporation sold approximately 194,000 acres of redwood and Douglas fir timberlands in Northern California for approximately $397 million and recognized a pretax gain of $271 million ($165 million after taxes). This gain is reflected in “Income from discontinued operations, net of taxes” on the accompanying consolidated statements of income.

In conjunction with the sale of its California timberlands, the Corporation received notes from the purchaser of $397 million. These notes are fully secured by a standby letter of credit with an unaffiliated third-party financial institution. In October 2000, the Corporation monetized these notes through the issuance of commercial paper secured by the notes. The net proceeds of $342 million from this monetization were used to reduce debt allocated to The Timber Company. The notes receivable are classified as “Other assets” and the commercial paper is classified as “Other long-term liabilities” on the accompanying consolidated balance sheets.

NOTE 4.    RESTRUCTURING AND ASSET IMPAIRMENTS

• In June 2001, the Corporation announced that it would close gypsum wallboard plants at Savannah, Georgia; Long Beach, California; and Winnipeg, Manitoba, Canada. The Corporation also announced that it would indefinitely idle wallboard production lines at Acme, Texas; Sigurd, Utah; and Blue Rapids, Kansas; and reduce operations at its remaining gypsum wallboard production facilities. The plant closures and production curtailments affect approximately 45% of the Corporation’s gypsum wallboard production capacity. In connection with this announcement, the Corporation recorded a pretax charge to earnings in the building products segment of approximately $57 million for the write-off and impairment of assets, approximately $5 million for the termination of approximately 350 hourly and salaried employees, and approximately $5 million for facility closing costs, most of which was charged to cost of sales. The fair value of impaired assets was determined using the present value of expected future cash flows or the expected net realizable value. During 2001, 234 employees were terminated and approximately $3 million of the reserve was used to pay termination benefits. The following table provides a rollforward of these reserves through December 29, 2001.

Type of Cost	Liability Established June 2001		Usage			Liability Balance at December 29, 2001
In millions
Employee termination	$	5	$	(3	)	$	2
Facility closing costs		5		(1	)		4
Total	$	10	$	(4	)	$	6

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

• On March 30, 2001, the Corporation announced that it would permanently close its pulp mill and associated chemical plant at Bellingham, Washington. These operations had been temporarily closed since December 2000. The Bellingham pulp mill produced approximately 220,000 tons of pulp, including 135,000 tons of sulfite market pulp, and 260,000 tons of lignin annually. In connection with this closure the Corporation recorded a pretax charge to earnings in the consumer products segment of approximately $57 million for the write-off of assets, approximately $14 million for the termination of approximately 420 hourly and salaried employees and approximately $12 million for facility closing costs. Of the $83 million total pretax charge to earnings, $79 million was charged to cost of sales, $3 million was charged to selling and distribution expense and $1 million was charged to general and administrative expenses. During 2001, 410 employees were terminated and approximately $14 million of the reserve was used to pay termination benefits. The following table provides a rollforward of these reserves through December 29, 2001:

Type of Cost	Liability Established During 2001		Usage			Liability Balance at December 29, 2001
In millions
Employee termination	$	14	$	(14	)	$	–
Facility closing costs		12		(11	)		1
Total	$	26	$	(25	)	$	1

• In connection with the acquisition of Fort James, the Corporation recorded liabilities totaling approximately $78 million for employee termination costs relating to approximately 960 hourly and salaried employees. In addition, the Corporation recorded liabilities of approximately $26 million for the closure of the Camas, Washington tissue mill and $35 million primarily for lease and contract termination costs at administrative facilities that have been or will be closed in California, Connecticut, Illinois, Virginia and Wisconsin. During 2001, approximately 605 employees were terminated and approximately $55 million of the reserve was used to pay termination benefits. The remaining employee terminations and Camas facility closing activities (primarily demolition activities) are expected to be completed in 2002. The leases and contracts at the administrative facilities expire through 2012. The following table provides a rollforward of these reserves from December 30, 2000 through December 29, 2001:

Type of Cost	Liability Balance at December 30, 2000		Additions		Usage			Liability Balance at December 29, 2001
In millions
Employee termination	$	30	$	48	$	(55	)	$	23
Facility closing costs		–		61		(3	)		58
Total	$	30	$	109	$	(58	)	$	81

• During 2001, the Corporation announced the closure of certain structural panels mills, lumber mills, industrial wood products mills, chemical plants and building products distribution centers. In connection with these announcements, the Corporation recorded a pretax charge to earnings in the building products segment of approximately $14 million for the write-off and impairment of assets, approximately $16 million for the termination of approximately 900 hourly and salaried employees, and approximately $5 million for facility closing costs, most of which was charged to cost of sales. The fair value of impaired assets was determined using the present value of expected future cash flows or the expected net realizable value. During 2001, approximately 670 employees were terminated and approximately $11 million of the reserve was used to pay termination benefits. The following table provides a rollforward of these reserves through December 29, 2001:

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Type of Cost	Liability Additions During 2001		Usage			Balance December 29, 2001
In millions
Employee termination	$	16	$	(11	)	$	5
Facility closing costs		5		(4	)		1
Total	$	21	$	(15	)	$	6

• During 2000, the Corporation announced the closure of the Grand Rapids East, Michigan, gypsum plant and the Kalamazoo, Michigan, paper mill. In connection with these closures, the Corporation recorded a pretax charge to earnings totaling $7 million for the termination of approximately 325 salaried and hourly employees, $25 million for the write-off of assets and $12 million for facility closing costs. During 2001 and 2000, approximately 40 employees and 284 employees were terminated, respectively. During the second quarter of 2001, the Corporation reversed $2 million of reserves for facility closing costs that were no longer needed. The following table provides information related to these liabilities:

Type of Cost	Balance December 30, 2000		Usage			Reversal of Reserves			Balance December 29, 2001
In millions
Employee termination	$	7	$	(6	)	$	–		$	1
Facility closing costs		10		(1	)		(2	)		7
Total	$	17	$	(7	)		(2	)	$	8

• In connection with the acquisition of Unisource in the second quarter of 1999, the Corporation recorded liabilities totaling approximately $50 million for employee termination (relating to approximately 1,170 hourly and salaried employees) and relocation costs, and $22 million for closing costs of 48 facilities. During 2001, 151 employees were terminated as part of this program. The following table provides a rollforward of the reserve for restructuring from December 30, 2000 through December 29, 2001:

Type of Cost	Balance December 30, 2000		Usage			Liability Balance at December 29, 2001
In millions
Employee termination	$	3	$	(3	)	$	–
Facility closing costs		5		(4	)		1
Total	$	8	$	(7	)	$	1

• In connection with the formation of the Georgia-Pacific Tissue joint venture, the Corporation completed an organizational restructuring of the sales, marketing, administrative and manufacturing support activities for its tissue business, which resulted in the elimination of approximately 300 salaried and hourly positions. The Corporation reserved approximately $5 million for termination and relocation costs of Wisconsin Tissue employees. This $5 million liability was included as part of the purchase price of the Wisconsin Tissue assets. In addition, the Corporation recorded provisions totaling approximately $2 million for the termination and relocation of employees of the Corporation, which were charged to earnings in 1999. As a result of these programs, approximately 80 employees were terminated and approximately $2 million of the termination and relocation reserve was used in 1999. During 2000, the remaining employees were terminated or relocated and all the related reserve was used.

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 5.    RECEIVABLES

The Corporation has a large, diversified customer base, which includes some customers located in foreign countries. The Corporation closely monitors extensions of credit and has not experienced significant losses related to its receivables. In addition, a portion of the receivables from foreign sales is covered by confirmed letters of credit to help ensure collectibility.

The Corporation had commitments totaling $1.3 billion and CN $95 million (approximately $59 million) under its United States and Canadian accounts receivable secured borrowing programs, respectively, of which $1.2 billion and CN $95 million was outstanding under these programs at December 29, 2001. Of the $1.3 billion in the United States program, $400 million will expire in September 2002 and the remaining $900 million expires in December 2002. The Canadian program expires in May 2004. The Corporation expects to renew these agreements prior to expiration. The receivables outstanding under these programs and the corresponding debt are included as “Receivables” and “Commercial paper and other short-term notes,” respectively, on the accompanying consolidated balance sheets. All such programs are accounted for as secured borrowings. As collections reduce previously pledged interests, new receivables may be pledged.

A portion of the cost of the accounts receivable secured borrowing programs is based on the creditors’ level of investment and borrowing costs. The total cost of the programs, which was $41 million in 2001, $63 million in 2000 and $36 million in 1999, is included in interest expense on the accompanying statements of income.

Under the accounts receivable secured borrowing programs, the maximum amount of the creditors’ investment is subject to change based on the level of eligible receivables and restrictions on concentrations of receivables.

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 6.    INDEBTEDNESS

The Corporation’s indebtedness includes the following:

	December 29, 2001			December 30, 2000
In millions
Debentures, average rate of 8.6%, payable through 2029	$	3,582		$	3,582
Notes, average rates of 7.5% and 7.0%, payable through 2031		3,100			2,094
Credit facilities, average rates of 3.6% and 7.9%, payable through 2005		1,935			5,900
Revenue bonds,average rates of 5.2% and 5.7%, payable through 2031		869			832
Euro-denominated bonds, average rate of 4.8%, payable through 2004		266			283
European Debt, average rates of 6.1% and 7.2%, payable through 2012		137			141
Capital leases, average rates of 10.0% and 10.2%, payable through 2016		126			138
Other loans, average rates of 4.6% and 7.1%, payable through 2002		8			7
Less: unamortized net discount		(93	)		(118	)
		9,930			12,859
Less: long-term portion of debt		9,358			12,627
Current portion of long-term debt		572			232
Commercial paper and other short-term notes, average rates of 2.5% and 7.0%		1,359			1,295
Credit facilities, average rates of 3.9% and 8.0%		925			1,400
Total short-term debt		2,856			2,927
Total debt	$	12,214		$	15,554
Georgia-Pacific Group’s portion of Corporation debt:
Short-term debt				$	2,559
Long-term debt, excluding current portion					12,355
Georgia-Pacific Group’s total debt				$	14,914
*The Timber Company’s portion of Corporation debt:
Short-term debt				$	368
Long-term debt, excluding current portion					272
*The Timber Company’s total debt				$	640
Weighted average interest rate on Corporation debt at year-end		6.7	%		7.7	%

* The Corporation completed the spin off of The Timber Company on October 6, 2001 (see Note 3).

For additional information regarding financial instruments, see Notes 7 and 8.

The scheduled maturities of the Corporation’s long-term debt for the next five years are as follows: $572 million in 2002, $612 million in 2003, $662 million in 2004, $43 million in 2005 and $618 million in 2006.

Notes and Debentures

In connection with the acquisition of Fort James in November 2000, the Corporation assumed $1,642 million of notes, $26 million of which matured in December 2000. The Corporation subsequently fully and unconditionally guaranteed all of Fort James’ publicly held debt issued pursuant to an Indenture with the Bank of New York, as trustee, dated as of November 1, 1991, as amended by a first supplemental Indenture dated as of September 19, 1997 and second supplemental Indenture dated as of February 19, 2001. The Corporation had outstanding borrowings of approximately $6,682 million and $5,676 million under certain notes and debentures, including notes totaling $1,179 million and $1,680 from the Fort James acquisition for December 29, 2001 and December 30, 2000, respectively.

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During 2001, the Corporation replaced $1.5 billion of its Capital Markets Bridge Facility by issuing $500 million of 7.5% Notes Due May 15, 2006, $600 million of 8.125% Notes Due May 15, 2011, and $400 million of 8.875% Notes Due May 15, 2031. The $10.4 million underwriting fee associated with the transaction is being amortized over the term of the notes. During 2001, the Corporation also redeemed $300 million of its 6.235%Senior Notes Due March 15, 2011 and recorded an after-tax extraordinary loss of approximately $12 million (net of taxes of $7 million).

Euro-Denominated Bonds

In connection with the acquisition of Fort James, the Corporation assumed $218 million (net of discount) of Euro-denominated bonds. These bonds totaled $238 million (net of discount) and $242 million (net of discount) at December 29, 2001 and December 30, 2000, respectively.

European Debt

In connection with the acquisition of Fort James, the Corporation assumed $156 million of European debt. The Corporation’s European debt decreased by approximately $4 million to $137 million at December 29, 2001 from $141 million at December 30, 2000.

Revenue Bonds

At December 29, 2001 and December 30, 2000, the Corporation had outstanding borrowings of approximately $869 million and $832 million, respectively, under certain industrial revenue bonds. During 2001, the Corporation issued $27 million of 6.375% fixed rate industrial revenue bonds due November 1, 2026. In addition, the Corporation replaced $28 million of its variable rate industrial revenue bonds, due October 1, 2007, with $28 million of 4.87% fixed rate industrial revenue bonds due October 1, 2007. The Corporation also consolidated a $10 million variable rate industrial revenue bond, due September 1, 2021, in connection with acquiring ownership of Color-Box (see Note 3) and redeemed $42 million of its 7.9% fixed rate industrial revenue bonds, due October 1, 2005, and issued $42 million of 6.5% fixed rate industrial revenue bonds due June 1, 2031. for a lower fixed rate bond. In connection with the acquisition of Fort James, the Corporation assumed $197 million of industrial revenue bonds.

Capital Leases and Other Loans

The Corporation had outstanding borrowings of approximately $145 million and $152 million under capital leases (including premium) and other loans, at December 29, 2001 and December 30, 2000, respectively. In connection with the acquisition of Fort James, the Corporation assumed $141 million (including premium) of capital leases during 2000.

Revolving Credit Facilities

In October 2000, the Corporation negotiated several new unsecured financing facilities totaling $5,400 million with terms ranging from six to 18 months and an unsecured revolving credit facility totaling $3,750 million with a term of 5 years. The proceeds under these unsecured facilities were used to partially finance the Fort James acquisition and for ongoing working capital and other general corporate requirements of the Corporation. During 2001, proceeds from the sale of assets (see Note 3); the spin off of The Timber Company and its merger with and into Plum Creek (see Note 3); increases in the accounts receivable secured borrowing

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

programs; and the issuance of notes reduced the unsecured financing facilities. The Corporation’s amounts outstanding under the credit agreements include the following:

	December 29, 2001
In millions
Commitments:
Multi-Year Revolving Credit Facility	$	3,750
Capital Markets Bridge Facility		925
Credit facilities available		4,675
Amounts Outstanding:
Letter of Credit Agreements		(265	)
Money Markets, average rate of 2.8%		(90	)
Multi-Year Revolving Credit Facility due November 2005, average rate of 3.7%		(1,935	)
Capital Markets Bridge Facility due August 2002, average rate of 3.9%		(925	)
Total credit balance		(3,215	)
Total credit available*	$	1,460

* At December 29, 2001, the Corporation was limited to $851 million of available credit pursuant to certain restrictive debt covenants and its outstanding debt balance at December 29, 2001. This limitation on available credit will be reduced as the Corporation pays down debt.

Borrowings under the agreements bear interest at competitive market rates. These interest rates may be adjusted according to a rate grid based on the Corporation’s long-term debt ratings. Fees associated with these revolving credit facilities include a facility fee of 0.2% per annum on the aggregate commitments of the lenders as well as up-front fees totaling $5.5 million and $34 million as of December 29, 2001 and December 30, 2000, respectively. The fees are being amortized over the term of the agreements. Fees and margins may also be adjusted according to a pricing grid based on the Corporation’s long-term debt ratings. At December 29, 2001 and December 30, 2000, $3,215 million and $7,700 million, respectively, was borrowed under the credit agreements at a weighted-average interest rate of 3.4% and 7.9%, respectively. Amounts outstanding under the revolving credit facilities are included in “Commercial paper and other short-term notes” and “Long-term debt, excluding current portion” on the accompanying consolidated balance sheets.

In December 2001, the Corporation amended its restrictive covenants under the unsecured financing facilities to require a maximum leverage ratio (funded indebtedness, excluding senior deferrable notes, to net worth plus funded indebtedness) of 72.50% on December 29, 2001, March 30, 2002 and June 29, 2002; 70.00% on September 28, 2002, December 28, 2002 and March 29, 2003; 67.50% on June 28, 2003 and September 27, 2003; and 65.00% on January 3, 2004 and thereafter. The restrictive covenants also require a minimum interest coverage ratio (earnings before interest, taxes, depreciation and amortization “EBITDA” to interest charges) of 2.25 to 1.00 on December 29, 2001, March 30, 2002, June 29, 2002 and September 28, 2002; 2.50 to 1.00 on December 28, 2002 and March 29, 2003; 2.75 to 1.00 on June 28, 2003 and September 27, 2003; and 3.00 to 1.00 on January 3, 2004 and thereafter. In addition, the restrictive covenants require a minimum net worth that

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

changes quarterly and a maximum debt level of $13,065 million. The Corporation was in compliance with its debt covenants as of December 29, 2001 with a 71.35% leverage ratio, a 2.59 to 1.00 interest coverage ratio, and a debt balance of $12,214 million. The $17.9 million fee associated with amending the restrictive covenants is being amortized over the term of the financing facilities.

Commercial Paper and Other Short-Term Notes

These borrowings are classified as current liabilities, although all or a portion may be refinanced on a long-term basis in 2002. In connection with the acquisition of Fort James, the Corporation assumed $927 million of short-term debt, all of which was replaced by commercial paper issued by the Corporation in the fourth quarter of 2000.

Other

At December 29, 2001, the amount of long-term debt secured by property, plant and equipment was not material.

Prior to 1996, the Corporation sold certain assets for $354 million and agreed to lease the assets back from the purchaser over a period of 30 years. Under the agreement with the purchaser, the Corporation agreed to maintain a deposit (initially in the amount of $322 million) that, together with interest earned thereon, was expected to be sufficient to fund the Corporation’s lease obligation, including the repurchase of assets at the end of the term. This transaction was accounted for as a financing arrangement. At the inception of the agreement, the Corporation recorded on its balance sheet an asset for the deposit from the sale of $305 million and a liability for the lease obligation of $346 million.

The sale of these assets to Domtar in 2001 (see Note 3) required the Corporation to repurchase these assets from the lessor. Accordingly, the lessor and the Corporation agreed to a deferred payment arrangement essentially under the same terms as the original lease obligation. The Corporation agreed to maintain the original deposit under its existing terms and create a second deposit. The sum of these deposits (approximately $400 million at December 29, 2001) approximates the deferred payment amount. A legal right of set off exists between the deferred payment amount owed and the deposits and, accordingly, the Corporation has recorded these transactions net in the accompanying consolidated balance sheets as “Other long-term liabilities”.

In 1999, the Corporation entered into a financing arrangement to enhance the return of the deposit made in connection with the sale-leaseback transaction discussed above by issuing NZ$724 million of 5.74% Debentures Due April 5, 2005 that were legally defeased with deposits of an equal amount. Because they were legally defeased, generally accepted accounting principles do not require the debentures and related deposits to be reflected on the Corporation’s consolidated balance sheets. Accordingly, the Corporation has not reflected the debentures or the related deposits on the accompanying consolidated balance sheets.

In conjunction with the sale of 194,000 acres of the Corporation’s California timberlands in 1999, the Corporation received notes from the purchaser in the amount of $397 million. These notes were monetized on October 25, 2000, through the issuance of commercial paper secured by the notes. Net proceeds of $342 million from this monetization will be used to reduce debt allocated to The Timber Company. Proceeds from the notes received from the purchaser were used to fund payments required for the notes payable. In conjunction with the sale of 440,000 acres of the Corporation’s Maine timberlands in 1999, the Corporation received notes from the purchaser in the amount of $51 million. These notes were monetized through the issuance of notes payable in a private placement with the proceeds used to reduce debt allocated to The Timber Company. Proceeds from the notes received from the purchaser will be used to fund payments required for the notes payable. The notes receivable and notes payable are reflected in “Other assets” and “Other long-term liabilities,” respectively, on the accompanying consolidated balance sheets. In connection with the sale of 127,000 acres of the Corporation’s California timberlands in 1997, the Corporation received notes from the purchaser in the amount of $270 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Corporation monetized these notes receivable through the issuance of notes payable in a private placement. The notes receivable are included in “Other assets” and the notes payable are included as “Other long-term liabilities” on the accompanying consolidated balance sheets.

As of December 29, 2001, the Corporation had $1.5 billion of debt and equity securities available for issuance under a shelf registration statement filed with the Securities and Exchange Commission in 2000.

NOTE 7.    SENIOR DEFERRABLE NOTES

In order to finance a portion of the Unisource acquisition in July 1999, the Corporation issued 17,250,000 of 7.5% PEPS Units for $862.5 million. Each PEPS Unit consists of a purchase contract that obligates the holder to purchase shares of Georgia-Pacific common stock for $50 on or prior to August 16, 2002 and a senior deferrable note of the Corporation due August 16, 2004. The amount of shares purchased per PEPS Unit will be based on the average closing price of Georgia-Pacific common stock over a 20-day trading period ending August 13, 2002. Assuming an average stock price of less than $47.375 per share, the Corporation expects to issue approximately 18.2 million shares of Georgia-Pacific common stock in 2002. Each purchase contract yields interest of 0.35% per year, paid quarterly, on the $50 stated amount of the PEPS Unit. Each senior deferrable note yields interest of 7.15% per year, paid quarterly, until August 16, 2002. The terms of the PEPS offering include a remarketing of the senior deferrable notes on August 16, 2002 that, if successfully completed, would generate $862.5 million for repayment of debt. The interest rate will be reset at a rate that will be equal to or greater than 7.15%. Management is considering certain other financing activities that could include issuance of different securities to replace these senior deferrable notes prior to their scheduled remarketing. The liability related to the PEPS Units is classified as “Senior deferrable notes” on the accompanying consolidated balance sheets.

NOTE 8.    FINANCIAL INSTRUMENTS

The carrying amount (net of discounts and premiums) and estimated fair value of the Corporation’s financial instruments are as follows:

	December 29, 2001					December 30, 2000
	Carrying Amount		Fair Value			Carrying Amount		Fair Value
In millions
Commercial paper, credit facilities and short-term notes (Note 6)	$	4,219	$	4,219		$	8,595	$	8,595
Notes and debentures (Note 6)		6,682		6,679			5,676		5,105
Euro denominated bonds (Note 6)		266		257			283		252
Revenue bonds (Note 6)		869		833			832		778
Capital leases (Note 6)		126		148			138		140
European debt (Note 6)		137		137			141		141
Other loans (Note 6)		8		8			7		7
Senior deferrable notes (Note 7)		863		889			863		871
Investments in marketable securities		81		81			44		44
Interest rate exchange agreements (floating to fixed)		*		–			*		–
Interest rate exchange agreements (fixed to floating)		*		(51	)		*		(1	)
Notes receivable from sale of timberlands		674		755			673		651
Notes payable from monetizations		659		746			659		645

* The Corporation’s balance sheets at December 29, 2001 and December 30, 2000 included accrued interest payable (receivable) of $11.4 million and ($.3) million, respectively, related to these interest rate exchange agreements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Commercial Paper, Credit Facilities and Short-Term Notes

The carrying amounts approximate fair value because of the short maturity of these instruments.

Notes and Debentures

The fair value of notes and debentures was estimated primarily by calculating the present value of anticipated cash flows. The discount rate used was an estimated borrowing rate for similar debt instruments with like maturities.

Euro-Denominated Bonds and European Debt

The fair value of Euro-denominated bonds and European debt was estimated primarily by obtaining quotes from brokers for these and similar issues. For Euro-denominated bonds and European debt for which there are no quoted market prices, the fair value was estimated by calculating the present value of anticipated cash flows. The discount rate used was an estimated borrowing rate for similar debt instruments with like maturities.

Revenue Bonds, Capital Leases, Senior Deferrable Notes and Other Loans

The fair value of revenue bonds, capital leases, senior deferrable notes and other loans was estimated by calculating the present value of anticipated cash flows. The discount rate used was an estimated borrowing rate for similar debt instruments with like maturities.

Investments in Marketable Securities

The fair value of investments in marketable securities was based on quoted market prices.

Notes Receivable and Notes Payable

The fair value of notes receivable and notes payable was estimated by calculating the present value of anticipated cash flows. The discount rate used was an estimated borrowing rate for similar debt instruments with like maturities.

Interest Rate Exchange Agreements

The Corporation has used interest rate swap agreements in the normal course of business to manage and reduce the risk inherent in interest rate fluctuations.

The Corporation uses interest rate swap arrangements to manage its exposure to interest rate changes. Such arrangements are considered hedges of specific borrowings, and differences paid and received under the swap arrangements are recognized as adjustments to interest expense. Under these agreements, the Corporation makes payments to counterparties at fixed interest rates and in turn receives payments at variable rates. The Corporation entered into interest rate exchange agreements in prior years to protect against the increased cost associated with a rise in interest rates.

At December 29, 2001, the Corporation had interest rate exchange agreements that effectively converted $1,957 million of floating rate obligations with a weighted average interest rate of 2.7% to fixed rate obligations with an average effective interest rate of approximately 5.9%. Of the $1,957 million, the Corporation had $457 million of these floating rate obligations outstanding at December 30, 2000. These agreements increased

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

interest expense by $29 million for the year ended December 29, 2001, and decreased interest expense by $1 million for the year ended December 30, 2000. The agreements had a weighted-average maturity of approximately seven months at December 29, 2001.

At December 29, 2001, the Corporation also had interest rate exchange agreements (a collar) that effectively capped $47 million of floating rate obligations to a maximum interest rate of 7.5% and established a minimum interest rate on such obligations of 5.5%. The Corporation’s interest expense is unaffected by this agreement when the market interest rate falls within this range. There was an immaterial effect on the Corporation’s interest expense for 2001 and 2000 related to these agreements. The agreements had a weighted-average maturity of approximately four years at December 29, 2001.

The estimated fair value of the Corporation’s interest rate exchange agreements at both December 29, 2001 and December 30, 2000 comprised of a $51 million liability and $1 million asset, respectively. The liability and asset balance represent the estimated amount the Corporation could have paid or received upon termination of the agreements. The fair value at December 29, 2001 and December 30, 2000 was estimated by calculating the present value of anticipated cash flows. The discount rate used was an estimated borrowing rate for similar debt instruments with like maturities.

The Corporation may be exposed to losses in the event of nonperformance of counterparties but does not anticipate such nonperformance.

NOTE 9.    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Effective December 31, 2000, the Corporation adopted Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and, accordingly, all derivatives are recognized on the balance sheet at their fair value. As a result of adopting SFAS 133, the Corporation recorded an after-tax cumulative effect of accounting change credit of $11 million (net of taxes of $6 million) and an $18 million transition adjustment (net of taxes of $12 million) in other comprehensive loss. On the date a derivative contract is entered into, the Corporation designates the derivative as either (1) a fair value hedge, (2) a cash flow hedge, (3) the hedge of a net investment in a foreign operation or (4) a non-designated derivative instrument. The Corporation engages primarily in derivatives classified as cash flow hedges, and changes in the fair value of highly effective derivatives are recorded in accumulated other comprehensive income (loss). The Corporation also participates in some derivatives that are classified as non-designated derivative instruments and a hedge in the net investment of certain European operations. Changes in the fair value of the non-designated derivative instruments and any ineffectiveness in cash flow hedges are reported in current period earnings. Changes in fair value of the hedge in the net investment of certain European operations are recorded in accumulated other comprehensive loss.

The Corporation formally documents all relations between hedging instruments and the hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. The Corporation formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the hedged items.

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Cash Flow Hedges:    The Corporation uses interest rate agreements in the normal course of business to manage and reduce the risk inherent in interest rate fluctuations. Interest rate swap agreements are considered hedges of specific borrowings and differences paid and received under the swap arrangements are recognized as adjustments to interest expense. Such contracts had a total notional amount of $1,830 million at December 29, 2001. The fair market value of such contracts was a liability of $46 million at December 29, 2001.

With each type of cash flow hedge, the settlement of the forecasted transaction will result in the reclassification into earnings of gains and losses that are reported in accumulated other comprehensive loss. As of December 29, 2001, approximately $32 million of deferred losses on derivative instruments included in accumulated other comprehensive loss are expected to be reclassified to earnings during the next twelve months. These losses are primarily related to the floating-to-fixed interest rate swap agreements and are due to the significant decrease in interest rates during the current year.

Hedge of the net investment in a foreign operation:    At December 29, 2001, the Corporation had outstanding approximately $238 million (net of discount) of Euro-denominated bonds which were designated as a hedge against its net investment in Europe.

Non-designated/ineffective derivative instruments:    The Corporation has two foreign currency interest rate swap agreements that were assumed in the acquisition of Fort James. These agreements do not qualify for hedge accounting. Included in the cumulative effect of accounting change is a pre-tax loss of $1 million relating to the fair value of these agreements. The fair value of these agreements at December 29, 2001 was approximately $1 million. The Corporation also has three interest rate swaps that, during the third quarter, were no longer highly effective in offsetting changes in cash flows of the borrowings hedged. The notional amount of these instruments was $127 million. At December 29, 2001, the fair market value of these three instruments was approximately $5 million.

During 2000, the Corporation entered into a derivative agreement in connection with the sale of certain packaging assets whereby the Corporation has guaranteed a certain margin on the buyer’s production. This derivative agreement expires in 2005. This agreement does not qualify for hedge accounting because the buyer’s production does not qualify as a hedged item in accordance with SFAS No. 133. The Corporation also entered into certain commodity swap agreements to offset the gain on the aforementioned derivative agreement. The net fair value of these derivative agreements was $17.3 million (pre-tax) at December 30, 2000 and is included in the cumulative effect of accounting change. Effective December 28, 2001, the Corporation terminated the offsetting commodity agreements. The termination was effective with the counter-party’s bankruptcy filing. As of December 29, 2001, the fair market value of the original derivative agreement was $9.5 million.

The Corporation’s senior management establishes the parameters of the Corporation’s financial risk, which have been approved by the Corporation’s Board of Directors. Hedging interest rate exposure through the use of swaps and options and hedging foreign exchange exposure through the use of forward contracts are specifically contemplated to manage risk in keeping with management’s policy. Derivative instruments, such as swaps, forwards, options or futures, which are based directly or indirectly upon interest rates, currencies, equities and commodities, may be used by the Corporation to manage and reduce the risk inherent in price, currency and interest rate fluctuations.

The Corporation does not utilize derivatives for speculative purposes. Derivatives are transaction specific so that a specific debt instrument, contract or invoice determines the amount, maturity and other specifics of the hedge. Counterparty risk is limited to institutions with long-term debt ratings of A or better.

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 10.    INCOME TAXES

Following is a summary of (loss) income from continuing operations before income taxes for United States and foreign operations:

	Year Ended
	December 29, 2001			December 30, 2000		January 1, 2000
In millions
United States	$	(663	)	$	465	$	1,016
Foreign		368			88		148
(Loss) income from continuing operations before income taxes	$	(295	)	$	553	$	1,164

The provision for income taxes includes income taxes currently payable and those deferred because of temporary differences between the financial statement and tax bases of assets and liabilities. The provision (benefit) for income taxes consists of the following:

	Year Ended
	December 29, 2001			December 30, 2000		January 1, 2000
In millions
Current income taxes:
Federal	$	536		$	153	$	410
State		69			3		76
Foreign		107			18		21
Deferred income taxes:
Federal		(446	)		35		(50	)
State		(93	)		–		(9	)
Foreign		8			1		–
Provision for income taxes	$	181		$	210	$	448
Income taxes paid, net of refunds	$	246		$	425	$	620

Income taxes paid during 2001 are net of approximately $3 million in state income tax refunds, $98 million in federal income tax refunds, and $3 million in foreign income tax refunds. Income taxes paid during 2000 are net of approximately $8 million in state income tax refunds. No provision for income taxes has been made for $608 million of undistributed earnings of certain of the Corporation’s foreign subsidiaries and affiliates which have been indefinitely reinvested. It is not practicable to determine the amount of United States income tax which would be payable if such undistributed foreign earnings were repatriated because any United States taxes payable on such repatriation would be offset, in part, by foreign tax credits.

The Internal Revenue Service is currently conducting audits of various federal income tax returns for the years 1997 and 1998. All related payments for completed federal income tax audits have been made.

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The federal statutory income tax rate was 35%. The provision for income taxes is reconciled to the federal statutory amounts as follows:

	Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions
(Benefit) provision for income taxes computed at the federal statutory tax rate	$	(103	)	$	194		$	407
State income taxes, net of federal benefit		(8	)		10			47
Foreign income taxes, net of federal benefit		(15	)		–			–
Write off and amortization of nondeductible goodwill		304			33			25
Foreign sales corporation		(5	)		(19	)		(25	)
Other		9			(8	)		(6	)
Provision for income taxes	$	181		$	210		$	448

The components of the net deferred income tax liabilities are as follows:

	Year Ended
	December 29, 2001			December 30, 2000
In millions
Deferred income tax assets:
Compensation related accruals	$	504		$	413
Other accruals and reserves		367			97
Other		48			58
		919			568
Valuation allowance		–			–
		919			568
Deferred income tax liabilities:
Property, plant and equipment		(2,034	)		(2,437	)
Timber and timberlands		(203	)		(2	)
Other		(427	)		(108	)
		(2,664	)		(2,547	)
Deferred income tax liabilities, net	$	(1,745	)	$	(1,979	)
Included on the balance sheets:
Deferred income tax assets*	$	101		$	176
Deferred income tax liabilities**		(1,846	)		(2,155	)
Deferred income tax liabilities, net	$	(1,745	)	$	(1,979	)

* Net of current liabilities of $75 million at December 29, 2001 and $30 million at December 30, 2000.

** Net of long-term assets of $579 million at December 29, 2001 and $364 million at December 30, 2000.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 11.    RETIREMENT PLANS

Defined Benefit Pension Plans

Most of the Corporation’s employees participate in noncontributory defined benefit pension plans. These include plans that are administered solely by the Corporation and union-administered multiemployer plans. The Corporation’s funding policy for solely administered plans is based on actuarial calculations and the applicable requirements of federal law. Contributions to multiemployer plans are generally based on negotiated labor contracts.

Benefits under the majority of plans for hourly employees (including multiemployer plans) are primarily related to years of service. The Corporation has separate plans for salaried employees and officers under which benefits are primarily related to compensation and years of service. The officers’ plan and certain salaried employee plans are not funded and are nonqualified for federal income tax purposes.

Plan assets consist principally of common stocks (55%), bonds (18%), mortgage securities (4%), interests in limited partnerships (19%), cash equivalents (3%) and real estate (1%). At December 29, 2001 and December 30, 2000, $476 million and $538 million, respectively, of non-current prepaid pension cost was included in “Other assets” on the accompanying balance sheets. Accrued pension liability of $272 million and $161 million at December 29, 2001 and December 30, 2000, respectively, was included in “Other long-term liabilities” on the accompanying balance sheets.

Pursuant to the provisions of SFAS No. 87, intangible assets of $108 million and $2 million were recorded as of December 29, 2001 and December 30, 2000, respectively, in order to recognize the required minimum liability.

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables set forth the change in projected benefit obligation and the change in plan assets for the solely administered plans:

	December 29, 2001			December 30, 2000
In millions
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	3,704		$	2,014
Service cost		163			121
Interest cost		270			160
Acquisitions		2			1,515
Curtailments		(2	)		–
Participant contributions		3			1
Plan amendments		9			4
Actuarial (gains) losses		(21	)		2
Foreign currency exchange rate changes		(6	)		7
Benefits paid		(256	)		(120	)
Projected benefit obligation at end of year	$	3,866		$	3,704
Change in plan assets:
Fair value of assets at beginning of year	$	4,508		$	2,613
Actual return on plan assets		(546	)		101
Acquisitions/Divestitures		(5	)		1,895
Participant contributions		3			1
Employer contributions		13			10
Foreign currency exchange rate changes		(6	)		8
Benefits paid		(256	)		(120	)
Fair value of assets at end of year	$	3,711		$	4,508

The funded status and the amounts recognized on the accompanying balance sheets for the solely administered plans are set forth in the following table:

	December 29, 2001			December 30, 2000
In millions
Funded status (under) over	$	(155	)	$	804
Employer contributions		2			1
Unrecognized actuarial loss (gain)		469			(494	)
Unrecognized prior service cost		69			68
Unrecognized net (asset) obligation		–			–
Net prepaid benefit cost	$	385		$	379
Amounts recognized on the balance sheets consist of:
Prepaid pension cost	$	476		$	538
Accrued pension liability		(272	)		(161	)
Intangible asset		108			2
Accumulated other comprehensive income		73			–
Net amount recognized	$	385		$	379

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets were $2,980 million, $2,954 million and $2,687 million, respectively, as of December 29, 2001 and $348 million, $263 million and $189 million, respectively, as of December 30, 2000.

Net periodic pension cost for solely administered and union-administered pension plans included the following:

	Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions
Service cost of benefits earned	$	163		$	121		$	97
Interest cost on projected benefit obligation		270			160			126
Expected return on plan assets		(414	)		(262	)		(208	)
Amortization of gains		(19	)		(33	)		(11	)
Amortization of prior service cost		9			9			9
Contributions to multiemployer pension plans		8			4			4
Net periodic pension cost (income)	$	17		$	(1	)	$	17

The following assumptions were used for United States and Canadian pension plans:

	Year Ended
	December 29, 2001		December 30, 2000		January 1, 2000
Discount rate used to determine the projected benefit obligation	7.0	%	7.5	%	7.5	%
Rate of increase in future compensation levels used to determine the projected benefit obligation	5.7	%	5.6	%	5.7	%
Expected long-term rate of return on plan assets used to determine net periodic pension cost	9.5	%	9.5	%	9.5	%

The following assumptions were used for the European pension plans:

	Year Ended December 29, 2001		Year Ended December 30, 2000
Discount rate used to determine the projected benefit obligation	6.00	%	6.00	%
Rate of increase in future compensation levels used to determine the projected benefit obligation	4.25	%	4.25	%
Expected long-term rate of return on plan assets used to determine net periodic pension cost	7.25	%	7.25	%

On April 14, 1997, a class action lawsuit alleging claims under the Employee Retirement Income Security Act of 1974 (“ERISA”) was filed against the Corporation and the Georgia-Pacific Corporation Salaried Employees Retirement Plan (“the Plan”) (together, “the Defendants”) in the United States District Court for the Northern District of Georgia, seeking recovery of alleged underpayments of lump-sum benefits, together with interest, attorney’s fees, and costs. After the District Court granted the Defendants’ motion for summary judgment in March 1999, the United States Court of Appeals for the Eleventh Circuit reversed the District Court’s ruling in August 2000 and remanded the case for further proceedings, holding that the terms of the Plan required a calculation of lump-sum benefits that could result in additional payments to members of the class. In September 2000, the Defendants filed a petition for rehearing and rehearing en banc with the Eleventh Circuit, which was denied. The Defendants also filed a petition for certiorari to the United States Supreme Court in January 2001, which was denied. In March 2002, at the conclusion of the summary judgment briefing process on remand, the District Court issued an Order granting in part and denying in part the summary judgment motions of

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both the Plaintiff class and the Defendants. In addition, the Order remanded some issues to the Plan administrator for interpretation and specified that the parties must file another proposed Order implementing the rulings of the initial Order within a certain time period. The Corporation has determined that, in all likelihood, damages will be awarded to the Plaintiff class. In that case, the Plan will be required to make additional payments to members of the class, which may in turn affect the Corporation’s net periodic pension cost and obligation to fund the Plan over time. The Corporation has identified a minimum amount of additional benefits the Plan likely will be required to pay, which should not result in a material impact on the Corporation’s funding obligation or results of operations. However, beyond this minimum, it is impossible to determine with any certainty the amount, if any, the Plan will be required to pay. In the event that damages above the minimum amount are awarded, it could have a material effect on the Corporation’s net periodic pension cost and funding obligation. The Defendants are engaged in discussions and negotiations with the Plaintiff class for purposes of submitting a proposed Order to the Court in accordance with the mandate of the March 2002 Order.

Defined Contribution Plans

The Corporation sponsors several defined contribution plans to provide eligible employees with additional income upon retirement. The Corporation’s contributions to the plans are based on employee contributions and compensation. The Corporation’s contributions totaled $89 million in 2001, $65 million in 2000 and $62 million in 1999.

Health Care and Life Insurance Benefits

The Corporation provides certain health care and life insurance benefits to certain eligible retired employees. Benefits, eligibility and cost-sharing provisions for hourly employees vary by location and/or bargaining unit. Generally, the medical plans pay a stated percentage of most medical expenses, reduced for any deductible and payments made by government programs and other group coverage. The plans are funded through trusts established for the payment of active and retiree benefits. The Corporation contributes to the trust in the amounts necessary to fund current obligations of the plans.

In 1991, the Corporation began transferring its share of the cost of post-age 65 health care benefits to future salaried retirees. The Corporation reduced the percentage of the cost of post-age 65 benefits that it pays on behalf of salaried employees who retire in each of the years 1995 through 1999 and no longer pays any of the post-age 65 cost for salaried employees who retire after 1999. The Corporation has continued to share the pre-age 65 cost with future retirees.

Salaried and non-bargaining hourly employees of the former Fort James Corporation leaving after 1999 are generally eligible for retiree health care benefits if they terminate after age 55 with 10 years of service and participated in the Fort James Retiree Medical Savings Account (“RMSA”) Plan. After October 1, 2001, these employees are eligible for retiree health care benefits under the Georgia-Pacific retiree medical plan. The RMSA plan requires retirees to pay the full cost of the pre-65 and post-65 plans. Under the Georgia-Pacific plan, the Corporation shares the pre-65 plan cost with future retirees once their RMSA account is exhausted.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables set forth the change in accumulated postretirement benefit obligation and the amounts recognized on the accompanying balance sheets:

	December 29, 2001			December 30, 2000
In millions
Change in accumulated postretirement benefit obligation:
Accumulated benefit obligation at beginning of year	$	868		$	437
Service cost		8			9
Interest cost		52			32
Acquisitions		1			412
Curtailments		(7	)		1
Plan changes		(109	)		–
Actuarial losses (gains)		29			(4	)
Change in assumptions		34			16
Benefits paid		(69	)		(35	)
Accumulated postretirement benefit obligation at end of year	$	807		$	868
Funded status (under)	$	(807	)	$	(868	)
Unrecognized actuarial gain		(6	)		(67	)
Unrecognized prior service cost		(63	)		11
Unrecognized net (asset) obligation		–			–
Net accrued benefit cost	$	(876	)	$	(924	)
Amounts recognized on the balance sheets consist of:
Prepaid benefit cost	$	–		$	–
Accrued benefit liability		(876	)		(924	)
Net amount recognized	$	(876	)	$	(924	)

Net periodic postretirement benefit cost included the following components:

	Year Ended
	December 29, 2001			December 30, 2000			January 1, 2000
In millions
Service cost of benefits earned	$	8		$	9		$	8
Interest cost on accumulated postretirement benefit obligation		52			32			26
Amortization of prior service (credit) cost		(10	)		–			1
Amortization of gains		–			(1	)		(2	)
Net periodic postretirement benefit cost	$	50		$	40		$	33

In connection with the sale of a portion of the its paper and pulp assets to Domtar Inc. (see Note 3), the Corporation recognized a curtailment gain of approximately $31 million which was reflected in the pretax loss on the sale.

For measuring the expected accumulated postretirement benefit obligation, annual rates of increase in per capita claims cost for its pre-age 65 and age 65 and older claims were assumed to be 10.5% and 11.5%, respectively, for 2001 and 7.5% and 10%, respectively, for 2000. A single annual rate of increase in the per capita claims cost of 7% was assumed for 1999. For 2001 and 2000, the rates were assumed to decrease gradually to 5.5% in 2006 and 5.0% in 2007, respectively, and remain at that level thereafter.

For measuring the 2000 expected accumulated postretirement benefit obligation for the former Fort James, a 7.5%, 10.0% and 12.0% annual rate of increase in the per capita claims cost was assumed for pre-age 65, age 65 and older medical coverage and age 65 and older prescription drug coverage, respectively.

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The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 6.5% at December 29, 2001, 7.0% at December 30, 2000 and 7.0% at January 1, 2000.

If the annual health care cost trend rate were increased by 1%, the accumulated postretirement benefit obligation would have increased by 8% as of December 29, 2001, 10% as of December 30, 2000 and January 1, 2000. The effect of this change on the aggregate of service and interest costs would be an increase of 9% for 2001, 12% for 2000 and 12% for 1999.

If the annual health care cost trend rate were decreased by 1%, the accumulated postretirement benefit obligation would have decreased by 7% as of December 29, 2001, 8% as of December 30, 2000 and 9% as of January 1, 2000. The effect of this change on the aggregate of service and interest costs would be a decrease of 8% for 2001, 10% for 2000 and 11% for 1999.

NOTE 12.    COMMON AND PREFERRED STOCK

The Corporation’s authorized capital stock consists of (i) 10 million shares of Preferred Stock and 25 million shares of Junior Preferred Stock, of which no shares were issued at December 29, 2001 and December 30, 2000, and (ii) 400 million shares of Georgia-Pacific common stock of which 230,095,000 shares and 224,844,000 shares were issued at December 29, 2001 and December 30, 2000, respectively. At December 30, 2000, 250 million shares of The Timber Company common stock were authorized, of which 94,571,000 shares were issued.

At December 29, 2001, the following authorized shares of common stock were reserved for issue:

Georgia-Pacific Group
PEPS Units	18,205,650
2000 Fort James conversions	6,960,931
2000 Employee Stock Purchase Plan	7,038,702
1999 Unisource conversions	321,540
1999 Wisconsin Tissue conversions	22,702
1997 Long-Term Incentive Plan	15,353,957
1995 Outside Directors Stock Plan	276,746
1995 Shareholder Value Incentive Plan	4,525,786
Common stock reserved	52,706,014

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1997 Long-Term Incentive Plans

The Corporation reserved 16,000,000 shares of Georgia-Pacific Group stock (the “Georgia-Pacific Group Plan”) for issuance under the 1997 Long-Term Incentive Plan. The Georgia-Pacific Group Plan authorizes grants of stock options, restricted stock and performance awards.

Under the Georgia-Pacific Group Plan, options covering 2,938,500 shares; 34,000 shares; 27,600 shares; 2,848,060 shares; 2,412,955; and 2,027,800 shares were granted on January 29, March 2 and July 29, 1998, January 28, 1999, January 21, 2000, and January 29, 2001, respectively. These grants have a 10-year term and vest ratably over a three-year period. In addition, performance share awards covering 96,000 shares and 40,800 shares were both granted on January 28, 1999 and awarded on January 21, 2000 and January 29, 2001, respectively. At the time performance shares were awarded, the average of the high and low market value of the stock was added to common stock and additional paid-in capital and was deducted from shareholders’ equity (long-term incentive plan deferred compensation) in the accompanying financial statements. The long-term incentive plan deferred compensation of $3.2 million and $1.2 million at the award date is being amortized over the vesting (restriction) period, which is five years.

Employee Stock Purchase Plan

The Corporation reserved 8,550,000 shares of Georgia-Pacific Group stock under the 2000 Employee Stock Purchase Plan (the “2000 Purchase Plan”), which offers employees the right to subscribe for shares of the Georgia-Pacific Group at a subscription price equal to 90% of the lower of the average price per share on the first day or the last day of the purchase period. The purchase period for the initial one-year period began on July 1, 2000 and ended on June 30, 2001. The Corporation issued 1,511,298 shares of Georgia-Pacific Group stock at a purchase price of $24.10 for the initial one-year period. The 2000 Purchase Plan was extended, and the next purchase period began on July 1, 2001 and ends on June 30, 2002. If the 2000 Purchase Plan is extended, the Plan Administrator will set the next purchase period for the plan year 2002. An employee may terminate his or her subscription at any time before he or she pays the full price of the shares subscribed and will receive in cash the full amount withheld, without interest.

1995 Outside Directors Stock Plan

The Corporation reserved 400,000 shares of Georgia-Pacific Group stock and 200,000 shares of The Timber Company stock for issuance under the 1995 Outside Directors Stock Plan (the “Directors Plan”), which provides for the issuance of shares of common stock to nonemployee directors of the Corporation on a restricted basis. Each nonemployee director was issued 625 and 647 restricted shares of Georgia-Pacific Group stock in 2001 and 2000, respectively.

As a result of The Timber Company spin-off and merger with Plum Creek, 33,212 restricted shares of The Timber Company were exchanged or canceled and 40,183 restricted shares of Georgia-Pacific were issued.

Effective May 6, 1997, accrual of additional retirement benefits under the Corporation’s retirement program for directors ceased, and the accrued benefits of each of the current nonemployee directors (the present value of which totaled $1,303,889 as of May 6, 1997) were converted into a grant of an equivalent number of shares of restricted stock under the Directors Plan. The total number of shares issued related to this conversion was 15,702.

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Employee Stock Option Plans

The 1995 Shareholder Value Incentive Plan (the “SVIP”) provides for the granting of stock options having a term of either 5½ or 10 years to officers and key employees. Under the amended and restated SVIP, no further grants may be made under the plan. Options having a term of 10 years become exercisable in 9½ years unless certain performance targets tied to the Corporation’s common stock performance are met, in which case the holder could exercise such options after 3, 4 or 5 years from the grant date. Options having a term of 5½ years may be exercised only if such performance targets are met in the third, fourth or fifth year after such grant date. At the time options are exercised, the exercise price is payable in cash or by surrender of shares of common stock already owned by the optionee. All shares were vested as of February 2000.

Unisource Conversions

In connection with the acquisition of Unisource as described in Note 3, the Corporation converted certain stock options awarded under a former Unisource stock option plan (“Unisource stock options”) into Georgia-Pacific Group stock options. The conversion was intended to ensure that the aggregate intrinsic value of the Unisource stock options was preserved and the ratio of the exercise price per Unisource stock option to the market value per share of Georgia-Pacific Group stock was not reduced. Unisource stock options to purchase 2,633,459 shares had original grant dates ranging from November 10, 1994 through May 19, 1999 with a 10-year term, and vest ratably over three-year and five-year periods. These Unisource stock options were converted into options to purchase 629,648 shares of Georgia-Pacific Group stock at prices ranging from $31.88 to $91.58 per share. The vesting provisions and option periods of the original grants remained the same following such conversion. The value of these options at the acquisition date was $9.4 million and was included as part of the purchase price paid for Unisource

The Corporation also issued 40,152 restricted shares of Georgia-Pacific Group stock under the 1997 Long-Term Incentive Plan to two former Unisource officers who became officers of the Corporation. Each officer was issued 20,076 restricted shares of Georgia-Pacific Group stock. At the time restricted shares were awarded, the average of the high and low market value of the stock was added to common stock and additional paid-in capital and was deducted from shareholders’ equity (long-term incentive plan deferred compensation) on the accompanying financial statements. The long-term incentive plan deferred compensation of $2 million is being amortized over the vesting (restriction) periods of one, two and three years.

Wisconsin Tissue Conversions

In connection with the formation of Georgia-Pacific Tissue as described in Note 3, the Corporation converted certain outstanding stock options awarded under a Chesapeake stock option plan (“Chesapeake stock options”) into Georgia-Pacific Group stock options. The conversion was intended to ensure that the aggregate intrinsic value of the Chesapeake stock options was preserved and the ratio of the exercise price per Chesapeake stock option to the market value per share of Georgia-Pacific Group stock was not reduced. Chesapeake stock options to purchase 172,250 shares had original grant dates ranging from August 11, 1997 through April 16, 1999, with a vesting period of three years and a 10-year term.

These Chesapeake stock options were converted into options to purchase 92,960 shares of Georgia-Pacific Group stock at prices ranging from $36.20 to $50.36 per share. The vesting provisions and option periods of the original grants remained the same following such conversion. The stock options’ total value of $1.3 million was included in the asset purchase price on the date the Corporation formed Georgia-Pacific Tissue.

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fort James Conversions

In connection with the acquisition of Fort James as described in Note 3, the Corporation converted certain stock options awarded under a former Fort James stock option plan (“Fort James stock options”) into Georgia-Pacific Group stock options. The conversion was intended to ensure that the aggregate intrinsic value of the Fort James stock options was preserved and the ratio of the exercise price per Fort James stock option to the market value per share of Georgia-Pacific Group stock was not reduced. Fort James stock options to purchase 7,399,316 shares had original grant dates ranging from February 11, 1991 through August 15, 2000 with a 10-year term. These Fort James stock options were converted into options to purchase 10,348,501 shares of Georgia-Pacific Group stock at prices ranging from $9.59 to $36.76 per share. The options became fully vested as of the acquisition date with the same option period of the original grants. The value of these options at the acquisition date was $120 million and was included as part of the purchase price paid for Fort James.

The Corporation also converted 15,000 Fort James stock appreciation rights to receive cash into 20,981 Georgia-Pacific Rights with prices of $17.61 and $28.06. The rights became fully vested as of the acquisition date and maintained their original option dates of February 11, 2000 and January 6, 1999 with a 10 year term. The related compensation expense is being recorded based on changes in the quoted market price of the underlying stock until the rights are exercised or expire.

2001 Long-Term Appreciation Plan

The Corporation reserved 2,600,000 stock appreciation rights (“SARs”) for issuance under the 2001 Long-Term Appreciation Plan (the “LTAP”). The LTAP provides for the granting of SARs to key employees of the Corporation. Benefits paid under this plan will be made in cash, not common stock. During 2001, the Corporation issued 2.35 million SARs under the LTAP with an exercise price of $29.47 each. The SAR exercise price was based on the underlying fair value of Georgia-Pacific Group common stock at the grant date. The SARs vest over three years. Compensation expense for the SARs is based on the difference between the current fair market value of Georgia-Pacific Group common stock and the fair market value at the date of grant. Compensation expense recorded in 2001 related to these SARs was deminimus.

PEPS Units

Each PEPS Unit consists of a purchase contract that obligates the holder to purchase shares of Georgia-Pacific common stock for $50 on or prior to August 16, 2002 and a senior deferrable not of the Corporation due August 16, 2004 (see Note 7). The amount of shares purchased per PEPS Unit will be based on the average closing price of Georgia-Pacific common stock over a 20-day trading period ending August 13, 2002. Assuming an average stock price of less than $47.375 per share, the Corporation expects to issue approximately 18.2 million shares of Georgia-Pacific common stock in 2002. Accordingly, the Corporation has reserved the full number of shares of Georgia-Pacific common stock issuable under the PEPS Units.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Additional information relating to the Corporation’s existing employee stock options is as follows:

	Year Ended December 29,
	2001				2001
	Georgia-Pacific Group				The Timber Company
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Options outstanding at December 31, 2000	22,522,345		$	28.53	4,909,699		$	22.46
Options granted/converted	2,027,800			29.47	(2,806,737	)		22.71
Options exercised/surrendered	(3,503,152	)		23.71	(2,086,679	)		22.13
Options canceled	(895,276	)		40.84	(16,283	)		21.85
Options outstanding at December 29, 2001	20,151,717†			29.05	–			–
Options available for grant at December 29, 2001	6,885,449				–
Total reserved shares	27,037,166				–
Options exercisable at December 29, 2001	18,449,373			24.71	–			–
Option prices per share:
Granted/converted	$29				$21-$25
Exercised/surrendered	$9-$33				$21-$25
Canceled	$9-$92				$21-$25

† Options outstanding by exercise price:

Georgia-Pacific Group
$9.59-$12.62	154,956	$	10.58
Average remaining life	1.9 years
$12.71-$14.89	157,728	$	14.33
Average remaining life	2.0 years
$14.91-$16.23	39,365	$	15.61
Average remaining life	2.8 years
$16.58-$18.29	1,136,443	$	17.61
Average remaining life	4.7 years
$18.52-$18.96	217,551	$	18.90
Average remaining life	3.7 years
$19.35-$20.11	11,772	$	19.73
Average remaining life	4.3 years
$22.03-$24.63	358,466	$	24.22
Average remaining life	4.8 years
$24.76-$27.10	5,983,089	$	26.38
Average remaining life	5.6 years
$27.23-$30.78	7,235,874	$	28.67
Average remaining life	6.1 years
$31.57-$41.59	4,668,287	$	36.47
Average remaining life	6.8 years
$43.58-$61.63	26,024	$	50.71
Average remaining life	4.8 years
$63.73-$91.58	162,162	$	67.73
Average remaining life	4.9 years

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended December 30,
	2000				2000
	Georgia-Pacific Group				The Timber Company
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Options outstanding at January 1, 2000	10,788,269		$	29.97	4,967,650		$	22.33
Options granted/converted	12,740,475			27.39	624,250			22.50
Options exercised/surrendered	(561,407	)		22.15	(659,601	)		21.56
Options canceled	(444,992	)		39.70	(22,600	)		22.17
Options outstanding at December 30, 2000	22,522,345			28.53	4,909,699			22.46
Options available for grant at December 30, 2000	7,738,885				2,164,200
Total reserved shares	30,261,230				7,073,899
Options exercisable at December 30, 2000	17,650,283			26.35	4,052,772			22.30
Option prices per share:
Granted/converted	$9-$42				$23
Exercised/surrendered	$9-$50				$21-$25
Canceled	$26-$92				$21-$25

	Year Ended January 1,
	2000				2000
	Georgia-Pacific Group				The Timber Company
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Options outstanding at January 1, 1999	11,696,183		$	27.03	5,553,850		$	22.26
Options granted/converted	3,570,668			36.09	950			22.56
Options exercised/surrendered	(3,974,803	)		26.89	(417,150	)		21.58
Options canceled	(503,779	)		28.70	(170,000	)		21.70
Options outstanding at January 1, 2000	10,788,269			29.97	4,967,650			22.33
Options available for grant at January 1, 2000	3,111,688				1,288,450
Total reserved shares	13,899,957				6,256,100
Options exercisable at January 1, 2000	2,952,766			30.20	2,972,400			22.32
Option prices per share:
Granted/converted	$32-$92				$23
Exercised/surrendered	$26-$37				$21-$23
Canceled	$26-$32				$21-$23

Shareholder Rights Plan

On December 16, 1997, shareholders approved an amended and restated Shareholder Rights Plan (the “Rights Agreement”) pursuant to which preferred stock purchase rights (the “Rights”) are issued on each outstanding share of Georgia-Pacific Group stock (a “Georgia-Pacific Group Right”), which will entitle the holders thereof to purchase shares of Series B Junior Preferred Stock under the conditions specified in the Rights Agreement.

The Rights will expire on December 31, 2007, unless earlier redeemed by the Corporation or extended. The Rights would be exercisable only if a person or group acquires 15% or more of the total voting rights of all then

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

outstanding shares of common stock of the Corporation or commences a tender offer that would result in such person or group beneficially owning 15% or more of the total voting rights of all then outstanding shares of common stock of the Corporation. In such event, each Right would entitle the holder to purchase from the Corporation one one-hundredth of a share of Series B Junior Preferred Stock (a “Series B Unit”) at a purchase price of $175 (the “Series B Unit Purchase Price”), subject to adjustment.

Thereafter, in the event one of several specified events (generally involving transactions by an acquirer in the Corporation’s common stock or a business combination involving the Corporation) occurs, each Georgia-Pacific Group Right will entitle its holder to purchase, for the Series B Unit Purchase Price, a number of shares of common stock of such entity or purchaser with a market value equal to twice the applicable purchase price. Because of the nature of the dividend, liquidation and voting rights of each class of Junior Preferred Stock related to the Rights, the economic value of one Series B Unit should approximate the economic value of one share of Georgia-Pacific Group stock.

Capital Stock

The Corporation does not hold any Georgia-Pacific Group stock in Treasury as of December 29, 2001 and December 30, 2000.

During 2000, the Corporation purchased on the open market approximately 1.7 million shares of Georgia-Pacific stock at an aggregate price of $62 million ($36.47 average per share). The Corporation also purchased on the open market approximately 3.3 million shares of The Timber Company stock at an aggregate price of $78 million ($23.64 average per share), all of which were held as treasury stock at December 30, 2000.

At the end of November 2000, the Corporation acquired Fort James (as described above and in Note 3 of the Notes to Consolidated Financial Statements) and issued 21.5 million shares of Georgia-Pacific treasury stock and 32.2 million newly issued shares of Georgia-Pacific stock as part of that transaction. During 2001, the Corporation issued an additional 190,000 shares of Georgia-Pacific Stock as part of this transaction.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other

The Corporation has elected to continue to account for its stock-based compensation plans under APB Opinion No. 25 and disclose pro forma effects of the plans on net income and earnings per share as provided by SFAS No. 123. Accordingly, because the fair market value on the date of grant was equal to the exercise price, no compensation cost has been recognized for the Fort James stock options, Unisource stock options, Chesapeake stock options, the SVIP, the Georgia-Pacific Group Plan, The Timber Company Plan or the 2000 Purchase Plan. Had compensation cost for these plans been determined based on the fair value at the grant dates in 2001, 2000 or 1999 under the plan consistent with the method of SFAS No. 123, the pro forma net income and earnings per share would have been as follows:

	Year Ended
	December 29, 2001			December 30, 2000		January 1, 2000
In millions, except per share amounts
Georgia-Pacific Corporation
Net (loss) income
As reported	$	(407	)	$	505	$	1,116
Pro forma		(439	)		467		1,079
Georgia-Pacific Group
Net (loss) income
As reported		(477	)		343		716
Pro forma		(507	)		308		685
Net (loss) income per share*
As reported		(2.10	)		1.95		4.17
Pro forma		(2.23	)		1.75		3.99
The Timber Company
Income from discontinued operations, net of taxes
As reported		70			162		400
Pro forma		68			159		394
Income from discontinued operations, net of taxes per share*
As reported		0.86			2.01		4.75
Pro forma		0.84			1.97		4.68

* Represents basic earnings per share. Pro forma diluted per share amounts were ($2.23) and $0.83 in 2001, $1.74 and $1.96 in 2000 and $3.89 and $4.66 in 1999 for the Georgia-Pacific Group and The Timber Company, respectively.

The fair-value-based method of accounting for stock-based compensation plans under SFAS No. 123 recognizes the value of options granted as compensation cost over the option’s vesting period and has not been applied to options granted prior to January 1, 1995. Accordingly, the resulting pro forma compensation cost is not representative of what compensation cost will be in future years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Following are the weighted average assumptions used in connection with the Black-Scholes option pricing model to estimate the fair value of options granted in 2001, 2000 and 1999:

	Year Ended
	December 29, 2001				December 30, 2000				January 1, 2000
	Options		ESPP*		Options		ESPP*		Options
Georgia-Pacific Group
Risk-free interest rate	5.2	%	3.6	%	6.7	%	6.1	%	4.9	%
Expected dividend yield	1.7	%	1.5	%	1.2	%	1.9	%	1.1	%
Expected life	7 years		1 year		10 years		1 year		7 years
Expected volatility	0.47		0.47		0.42		0.42		0.46
Option forfeiture rate	5.0	%	7.3	%	3.0	%	7.3	%	3.0	%
The Timber Company
Risk-free interest rate					6.7	%	6.1	%	4.9	%
Expected dividend yield					4.4	%	4.5	%	4.4	%
Expected life					10 years		1 year		9 years
Expected volatility					0.38		0.38		0.32
Option forfeiture rate					3	%	8.6	%	3	%

* Employee Stock Purchase Plan

The weighted average grant date fair value per share of Georgia-Pacific Group options granted during the year using the Black-Scholes option pricing model was $15.46, $23.26 and $16.97 for 2001, 2000 and 1999, respectively. The weighted average grant date fair value per share of The Timber Company options granted during the year using the Black-Scholes option pricing model was $7.35 for 2000 and $7.89 for 1999. The weighted average grant date fair value per share of shares subscribed under the 2000 Purchase Plan was $8.01 and $6.13 for Georgia-Pacific Group in 2001 and 2000, respectively. The weighted average grant date fair value per share of shares subscribed under the 2000 Purchase Plan was $4.34 for The Timber Company in 2000.

NOTE 13.    OTHER COMPREHENSIVE LOSS

The Corporation’s accumulated other comprehensive loss includes the following:

	Foreign Currency Items			Derivative Instruments			Minimum Pension Liability Adjustment			Accumulated Other Comprehensive Income (Loss)
In millions
January 1, 2000	$	(29	)	$	–		$	(3	)	$	(32	)
Activity, net of taxes		15			–			1			16
December 30, 2000		(14	)		–			(2	)		(16	)
Activity, net of taxes		(29	)		(30	)		(43	)		(102	)
December 29, 2001	$	(43	)	$	(30	)	$	(45	)	$	(118	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 14.    COMMITMENTS AND CONTINGENCIES

Total rental expense was approximately $206.7 million, $167.2 million and $117.4 million in 2001, 2000 and 1999, respectively.

At December 29, 2001, total commitments of the Corporation under long-term, noncancelable contracts, including operating leases, were as follows:

In millions
2002	$	333
2003		264
2004		219
2005		192
2006		175
After 2006		356
	$	1,539

The Corporation is a party to various legal proceedings incidental to its business and is subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which it operates. As is the case with other companies in similar industries, the Corporation faces exposure from actual or potential claims and legal proceedings involving environmental matters. Liability insurance in effect during the last several years provides only very limited coverage for environmental matters.

The Corporation is involved in environmental remediation activities at approximately 170 sites, both owned by the Corporation and owned by others, where it has been notified that it is or may be a potentially responsible party (“PRP”) under the United States Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) or similar state “superfund” laws. Of the known sites in which it is involved, the Corporation estimates that approximately 45% are being investigated, approximately 30% are being remediated and approximately 25% are being monitored (an activity that occurs after either site investigation or remediation has been completed). The ultimate costs to the Corporation for the investigation, remediation and monitoring of many of these sites cannot be predicted with certainty, due to the often unknown magnitude of the pollution or the necessary cleanup, the varying costs of alternative cleanup methods, the amount of time necessary to accomplish such cleanups, the evolving nature of cleanup technologies and governmental regulations, and the inability to determine the Corporation’s share of multiparty cleanups or the extent to which contribution will be available from other parties. The Corporation has established reserves for environmental remediation costs for these sites that it believes are probable and reasonably able to be estimated. Based on analyses of currently available information and previous experience with respect to the cleanup of hazardous substances, the Corporation believes it is reasonably possible that costs associated with these sites may exceed current reserves by amounts that may prove insignificant or that could range, in the aggregate, up to approximately $121 million. This estimate of the range of reasonably possible additional costs is less certain than the estimates upon which reserves are based, and in order to establish the upper limit of such range, assumptions least favorable to the Corporation among the range of reasonably possible outcomes were used. In estimating both its current reserve for environmental remediation and the possible range of additional costs, the Corporation has not assumed it will bear the entire cost of remediation of every site to the exclusion of other known PRPs who may be jointly and severally liable. The ability of other PRPs to participate has been taken into account, based generally on their financial condition and probable contribution on a per-site basis.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Corporation is implementing an Administrative Order on Consent entered into with the Michigan Department of Natural Resources and the Environmental Protection Agency (“EPA”) regarding an investigation of the Kalamazoo River and two disposal areas which are contaminated with polychlorinated biphenyls (“PCBs”). Data regarding the extent of contamination at the two disposal areas have been evaluated. The cost to remediate one of the disposal areas was estimated at $8 million. The remediation at this site has been essentially completed. It is anticipated that the cost of remediation of the second disposal area will be at least equal to that amount. The Corporation is still negotiating a final closing agreement with the State of Michigan.

A draft Remedial Investigation/Feasibility Study (“RI/FS”) for the Kalamazoo River was submitted to the State of Michigan on October 30, 2000 by the Corporation and other PRPs, including Fort James. The draft RI/FS evaluated five remedial options ranging from no action to total dredging of the river and off-site disposal of the dredged materials. The cost for these remedial options ranges from $0 to $2.5 billion. The draft RI/FS recommends a remedy involving stabilization of over twenty miles of riverbank and long-term monitoring of the riverbed. The total cost for the remedy recommended in the draft RI/FS is approximately $73 million. The State of Michigan has asked for additional possible remedies. The US EPA has recently taken over management of the RI/FS and is evaluating the proposed remedy.

Fort James has been identified as a PRP for contamination of the Lower Fox River and Green Bay system in Wisconsin by PCBs. In October 2001, the Wisconsin Department of Natural Resources (“WDNR”) and the EPA released for public comment a draft RI/FS study and proposed remedial action plan for the Fox River and Green Bay. The draft sets forth a proposed remedy with an estimated total cost of $308 million. The Corporation provided comments on this plan to the relevant agencies in January 2002. The final cleanup alternative to be selected and implemented, the costs of that alternative, and the Corporation’s share of such costs for the Fox River, are unknown at this time.

In October 2000, the United States Fish and Wildlife Service (“FWS”) released for public comment its Restoration and Compensation Determination Plan for natural resource damages to the Lower Fox River and Green Bay. Fort James has entered into an agreement with the WDNR and the FWS that would settle claims for natural resource damages under CERCLA, the Federal Water Pollution Control Act, and state law for approximately $14 million. The agreement will be effective when entered by the appropriate Federal court.

The Corporation is finalizing a settlement for alleged violations of an air permit at Ft. Bragg, California. The allegations involve the burning of demolition wood waste as a fuel source in its three boilers. The parties have agreed to a tentative settlement in the amount of $250,000.

The Corporation and many other companies are defendants in suits brought in various courts around the nation by plaintiffs who allege that they have suffered personal injury as a result of exposure to asbestos-containing products. These suits allege a variety of lung and other diseases based on alleged exposure to products previously manufactured by the Corporation. In many cases, the plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that any injuries they have incurred in fact resulted from exposure to the Corporation’s products.

The Corporation’s asbestos liabilities relate primarily to joint systems products manufactured by Bestwall Gypsum Company that contained asbestos fiber. The Corporation acquired Bestwall in 1965, and discontinued using asbestos in the manufacture of these products in 1977.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents information about the approximate number of the Corporation’s asbestos claims during the past three years and the most recent quarterly period:

	Quarter Ended	Year Ended
	December 29, 2001	December 29, 2001	December 30, 2000	January 1, 2000
Claims Filed 1	6,700	39,700	55,600	29,100
Claims Resolved 2	6,800	30,900	46,000	22,000
Claims Unresolved at End of Period	62,200	62,200	53,400	43,800

¹ Claims Filed includes all asbestos claims for which service has been received and/or a file has been opened by the Corporation.

² Claims Resolved includes asbestos claims which have been settled or dismissed or which are in the process of being settled or dismissed based upon agreements or understandings in place with counsel for the claimants.

In addition, Fort James Corporation, a wholly owned subsidiary of the Corporation, currently is defending approximately 1,000 asbestos premises liability claims.

As of December 31, 2001, the Corporation had either settled, had dismissed or was in the process of finalizing the settlement of a total of approximately 235,000 asbestos claims. The Corporation generally settles asbestos claims for amounts it considers reasonable given the facts and circumstances of each claim. Substantially all of the amounts it has paid to date for settled claims, and anticipates paying for pending claims, have been covered by product liability insurance. The amounts not covered by such insurance have been immaterial. The annual average settlement payment per asbestos claimant has fluctuated up and down during the three year period ended December 29, 2001, and management of the Corporation expects such fluctuations to continue in the future based upon, among other things, the number and type of claims settled in a particular period and the jurisdictions in which such claims arose.

In the late Fall of 2001, the Corporation retained National Economic Research Associates (NERA) and Peterson Consulting, nationally-recognized consultants in asbestos liability and insurance, to work with the Corporation to project the amount, net of insurance, that the Corporation would pay for its asbestos-related liabilities and defense costs through 2011.

The methodology employed by NERA to project the Corporation’s asbestos-related liabilities and defense costs included: 1) an analysis of the population likely to have been exposed or claim exposure to products manufactured by the Corporation; 2) the use of epidemiological studies to estimate the number of people who might allege exposure to the Corporation’s products that would be likely to develop asbestos-related diseases in each year between 2002 and 2011; 3) an analysis of the Corporation’s recent claims history to estimate likely filing rates for these diseases for the period 2002 through 2011; 4) an analysis of the Corporation’s currently pending asbestos claims; and 5) an analysis of the Corporation’s historical asbestos settlements and defense costs to develop average settlement values and defense costs, which varied by disease type and the nature of claim, to determine an estimate of costs likely to be associated with currently pending and projected asbestos claims through 2011. Based upon its analysis, NERA projected that the Corporation’s total, undiscounted asbestos liabilities, including defense costs, over the next 10 years will be less than $1 billion (including payments related to the approximately 62,200 claims currently pending).

NERA’s projection was based on historical data supplied by the Corporation and publicly available studies. NERA concluded that, based on the latency periods of asbestos-related diseases (both cancers and non-cancers), the peak incidence of such diseases occurred prior to 2002. It expects, based on the last dates of manufacture of asbestos-containing products in the United States, that the number of new diagnoses of asbestosis and other non-cancerous diseases will drop beginning in 2001. It also cites annual surveys of the National Cancer Institutes that

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

show the annual incidence of mesothelioma (a cancer frequently associated with asbestos exposure) began to decline in the mid-1990s. NERA expects these factors, as well as the advancing age of the allegedly exposed population, its movement away from work centers as its members retire, and NERA’s view that many asbestos claims filed in the 1990s were based in part on mass screenings of possibly-exposed individuals, will result in the number of claims filed against the Corporation for asbestos-related injuries beginning to decline in 2002.

Using NERA’s projection, Peterson Consulting and the Corporation then conducted an analysis to determine the amount of insurance that it is probable that the Corporation will recover during this ten year period. In conducting such analysis, Peterson Consulting and the Corporation reviewed the Corporation’s existing insurance arrangements and agreements, engaged in discussions with counsel to the Corporation, analyzed publicly available information bearing on the credit worthiness of the Corporation’s various insurers and employed such insurance allocation methodologies as the Corporation and Peterson Consulting believed appropriate to ascertain the probable insurance recoveries for asbestos liabilities through 2011. The analysis took into account self- insurance reserves, policy exclusions, liability caps and gaps in the Corporation’s coverage, as well as insolvencies among certain of the Corporation’s insurance carriers.

Based on the analysis of NERA and Peterson Consulting, the Corporation has established reserves for the probable and reasonably estimable liabilities and defense costs it believes it will pay through 2011, and has also established receivables for the insurance recoveries that are deemed probable. The Corporation has recorded the reserves for the asbestos liabilities as “Other current liabilities” and “Other long-term liabilities” and the related insurance recoveries as “Other current assets” and “Other assets” in the accompanying consolidated balance sheets. For the fourth quarter 2001, the Corporation recorded a pre-tax charge to earnings of $350 million to cover all of the projected asbestos liabilities and defense costs, net of expected insurance recoveries, it expects to pay through 2011. This charge principally covers the share of such costs which the Corporation expects to incur because of the insolvencies of certain insurance companies which wrote a part of the Corporation’s product liability insurance in prior years. The charge is not due to exhaustion of the Corporation’s total product liability insurance for asbestos liabilities, and the Corporation believes that the majority of its asbestos-related liabilities and defense costs during the next ten years will be recovered from its insurance carriers. The insurance receivable recorded by the Corporation does not assume any recovery from insolvent carriers, and assumes that those carriers which are currently solvent will continue to be solvent throughout the period of NERA’s projection. However, there can be no assurances that these assumptions will be correct. Substantially all of the insurance recoveries deemed probable are from insurance companies rated A- (excellent) or better by A.M. Best Company. No more than 21% of such insurance recoveries are from any one company, though several of the insurers are under common control. The Corporation also has significant additional insurance coverage which it expects to be available for asbestos liabilities and defense costs it may incur after 2011.

The analyses of NERA and Peterson Consulting are based on their best judgment and that of the Corporation. However, projecting future events, such as the number of new claims to be filed each year, the average cost of resolving each such claim, coverage issues among layers of insurers and the continuing solvency of various insurance companies is subject to many uncertainties which could cause the actual liabilities and insurance recoveries to be higher or lower than those projected and/or recorded. Consequently, there can be no assurance these projected liabilities will be accurate, or that the probable insurance recoveries will be realized.

In light of the uncertainties inherent in making long term projections, the Corporation has determined that the ten year period through 2011 is the most reasonable time period for projecting asbestos liabilities and defense costs and probable insurance recoveries and, accordingly, the charge to earnings does not include either asbestos liabilities or insurance recoveries for any period past 2011.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Given the uncertainties associated with projecting matters into the future and numerous other factors outside the control of the Corporation, the Corporation believes that it is possible that it may incur asbestos liabilities for the period through 2011 and beyond in an amount in excess of the NERA projection. Based on currently available data and upon the analysis of NERA and Peterson Consulting, the Corporation does not believe that any such possible asbestos liabilities in excess of the NERA projection are reasonably likely to be material to the financial condition, results of operations or liquidity of the Corporation.

In August 1995, Fort James, at the time a publicly held corporation, transferred certain assets and liabilities of its communications paper and food packaging businesses to two newly formed companies, Crown Vantage, Inc. (“CV”), (a wholly-owned subsidiary of Fort James) and CV’s subsidiary Crown Paper Co. (“CP”). CP then entered into a $350 million credit facility with certain banks and issued $250 million face amount of senior subordinated notes. Approximately $483 million in proceeds from these financings were transferred to Fort James in payment for the transferred assets and other consideration. CV also issued to Fort James a pay-in-kind note with a face amount of $100 million. CV shares were then spun off to the Fort James shareholders and CV operated these businesses as a stand-alone company beginning in August 1995.

In March 2001 CP and CV filed for bankruptcy. Various creditors have indicated that the borrowings made by CP and CV, and the payments to Fort James for the assets transferred to CV and CP, caused those companies to become insolvent, and that the transfer of such assets therefore was a fraudulent conveyance. In April 2001, Fort James filed suit against CP and CV in Federal Bankruptcy Court in Oakland, California seeking a declaratory judgment that the transactions did not involve any fraudulent conveyance and that other parties and actions were the cause of the bankruptcy of CV and CP. In September 2001, CV filed suit against Fort James asserting, among other claims, that the transactions described above constituted fraudulent conveyances and seeking unspecified damages. Fort James does not believe that any of its actions in establishing CV or CP involved a fraudulent conveyance or caused the bankruptcy of those companies, and it intends to defend itself vigorously.

Although the ultimate outcome of these environmental matters and legal proceedings cannot be determined with certainty, based on presently available information management believes that adequate reserves have been established for probable losses with respect thereto. Management further believes that the ultimate outcome of such environmental matters and legal proceedings could be material to operating results in any given quarter or year but will not have a material adverse effect on the long-term results of operations, liquidity or consolidated financial position of the Corporation.

NOTE 15.    RELATED-PARTY TRANSACTIONS

For all periods prior to the merger of the Corporation’s timber and timberland business with Plum Creek (see Note 3), timber had been transferred from the Corporation’s timberlands at prices intended to reflect fair market prices based on prices paid by independent purchasers and sellers for similar kinds of timber.

During the second quarter of 1998, Georgia-Pacific Group and The Timber Company revised the operating policy, which they had agreed to in 1997, with respect to sales of timber by The Timber Company to the Georgia-Pacific Group. This revised policy was implemented on July 1, 1999 and remained in effect through 2000. Under the policy, The Timber Company was required to offer 70% of its projected annual harvest in Southeast Arkansas and Mississippi, and 80% of its projected annual harvest in most of its other Southern forests, to Georgia-Pacific Group, and Georgia-Pacific Group was required to purchase not less than 50% nor more than 70% of the projected annual harvests in Southeast Arkansas and Mississippi, and not less than 60% nor more than 80% of the projected annual harvest in other Southern forest basins. The provisions of the policy were intended to cause prices paid by Georgia-Pacific Group for timber sold by The Timber Company to reflect

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GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

market prices in particular forests, to allow Georgia-Pacific Group more flexibility in purchasing wood from third parties, and to allow The Timber Company flexibility in the timing of sales of its annual harvest on the open market.

In 2000, Georgia-Pacific Group and The Timber Company negotiated a new ten year timber supply agreement which became effective January 1, 2001 and was subject to an automatic ten year renewal period, unless either party delivers a timely termination notice. This agreement covers four key southern timber basins: Southeast Arkansas, Mississippi, Florida, and Southeast Georgia. Under the agreement, The Timber Company must offer to Georgia-Pacific Group specified percentages of its annual harvest, subject to absolute minimum and maximum limitations in each basin. Georgia-Pacific Group can elect between 36% and 51% of The Timber Company’s annual harvest each year in Mississippi, Florida and Southeast Georgia, and between 52% and 65% in Southeast Arkansas. The total annual volume ranged from a minimum of 3.3 million tons to a maximum of 4.2 million tons. The prices for such timber will be negotiated at arm’s length between The Timber Company and Georgia-Pacific Group every six months, and will be set by third party arbitration if the parties cannot agree.

In 2000 The Timber Company also entered into a ten year supply contract to deliver 50 million board feet annually of Douglas fir and Western Hemlock sawtimber to Georgia-Pacific Group’s sawmills at Coos Bay and Philomath, Oregon as well as 68 thousand green tons of pulpwood to Georgia-Pacific Group’s Toledo pulp mill and Coos Bay sawmill. Prices were based on prevailing market prices with recourse to arbitration if the parties do not agree that the pricing formula reflects market prices. In connection with the merger of the Corporation’s timber and timberland business with and into Plum Creek in 2001, the timber supply agreement and the supply contract was replaced with new agreements on substantially the same terms between the Corporation and certain subsidiaries of Plum Creek.

The Corporation is a 50% partner in a joint venture (“GA-MET”) with Metropolitan Life Insurance Company (“Metropolitan”). GA-MET owns and operates the Corporation’s main office building in Atlanta, Georgia. The Corporation accounts for its investment in GA-MET under the equity method.

At December 29, 2001, GA-MET had an outstanding mortgage loan payable to Metropolitan in the amount of $137 million. The note bears interest at 9.5%, requires monthly payments of principal and interest through 2011, and is secured by the land and building owned by the joint venture. In the event of foreclosure, each partner has severally guaranteed payment of one-half of any shortfall of collateral value to the outstanding secured indebtedness. Based on the present market conditions and building occupancy, the likelihood of any obligation to the Corporation with respect to this guarantee is considered remote.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 16.    UNAUDITED SELECTED QUARTERLY FINANCIAL DATA

	First Quarter					Second Quarter				Third Quarter					Fourth Quarter
	2001			2000		2001		2000		2001			2000		2001			2000
In millions, except per share Amounts
Net sales	$	6,317		$	5,519	$	6,603	$	5,589	$	6,306		$	5,432	$	5,790		$	5,510
Gross profit (net sales minus cost of sales)		1,277			1,250		1,501		1,260		1,500			1,137		1,360			1,071
(Loss) income before extraordinary loss and accounting change		(114	)		234		65		240		(167	)		162		(190	)		(131	)
Net (loss) income		(115	)		234		65		240		(167	)		162		(190	)		(131	)
Georgia-Pacific Group
Dividends declared per Share	$	0.125		$	0.125	$	0.125	$	0.125	$	0.125		$	0.125	$	0.125		$	0.125
Basic per share:
(Loss) income before extraordinary loss and accounting change		(0.60	)		1.13		0.13		1.21		(0.80	)		0.76		(0.81	)		(0.98	)
Net (loss) income		(0.60	)		1.13		0.13		1.21		(0.80	)		0.76		(0.81	)		(0.98	)
Diluted per share:
(Loss) income before extraordinary loss and accounting change		(0.60	)		1.11		0.13		1.20		(0.80	)		0.76		(0.81	)		(0.98	)
Net (loss) income		(0.60	)		1.11		0.13		1.20		(0.80	)		0.76		(0.81	)		(0.98	)
The Timber Company
Dividends declared per Share		0.25			0.25		0.25		0.25		0.25			0.25		–			0.25
Basic per share:
Income (loss) from discontinued operations		0.27			0.49		0.45		0.42		0.18			0.40		(0.04	)		0.70
Diluted per share:
Income (loss) from discontinued operations		0.27			0.49		0.44		0.42		0.18			0.40		(0.04	)		0.69
Price range of common stock
Georgia-Pacific Group
High	$	33.50		$	51.94	$	36.38	$	44.50	$	37.65		$	30.13	$	35.37		$	32.00
Low		26.56			31.69		27.27		25.69	$	25.76			21.88		25.39			19.31
The Timber Company
High		32.40			25.63		36.00		25.75		39.70			32.00		36.19			31.19
Low		27.85			20.75		28.45		21.63		31.30			21.56		32.20			25.94

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 17.    CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Fort James is an issuer of certain securities registered under the Securities Act of 1933, thus subjecting it to reporting requirements under Section 15(d) of the Securities Exchange Act of 1934. The following condensed consolidating financial information is presented in lieu of consolidated financial statements for Fort James because the securities are fully and unconditionally guaranteed by the Corporation and certain subsidiaries:

Consolidating Statement of Income

For the Year Ended December 29, 2001

	Georgia-Pacific Corp. other than Fort James			Fort James Corp.		Consolidating Adjustments			Consolidated Amounts
In millions
Net sales	$	18,748		$	6,629	$	(361	)	$	25,016
Costs and expenses
Cost of sales		15,276			4,463		(361	)		19,378
Selling and distribution		1,446			579		–			2,025
Depreciation and amortization		807			536		–			1,343
General and administrative		778			294		–			1,072
Interest		845			235		–			1,080
Other loss (income)		413			–		–			413
Total costs and expenses		19,565			6,107		(361	)		25,311
(Loss) income from continuing operations before income taxes		(817	)		522		–			(295	)
Provision (benefit) for income taxes		(59	)		240		–			181
(Loss) income from continuing operations		(758	)		282		–			(476	)
Income from discontinued operations, net of taxes		70			–		–			70
(Loss) income before extraordinary item and accounting change		(688	)		282		–			(406	)
Extraordinary loss from early retirement of debt, net of taxes		(12	)		–		–			(12	)
Cumulative effect of accounting change, net of taxes		11			–		–			11
Net (loss) income	$	(689	)	$	282	$	–		$	(407	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Income

For the Year Ended December 30, 2000

	Georgia-Pacific Corp. other than Fort James		Fort James Corp.		Consolidating Adjustments		Consolidated Amounts
In millions
Net sales	$	21,531	$	528		$ (9)	$	22,050
Costs and expenses
Cost of sales		17,020		321		(9)		17,332
Selling and distribution		1,510		90		–		1,600
Depreciation and amortization		855		55		–		910
General and administrative		828		28		–		856
Interest		571		24		–		595
Other loss		204		–		–		204
Total costs and expenses		20,988		518		(9)		21,497
Income from continuing operations before income taxes		543		10		–		553
Provision for income taxes		201		9		–		210
Income from continuing operations		342		1		–		343
Income from discontinued operations, net of taxes		162		–		–		162
Net income	$	504	$	1	$	–	$	505

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows

For the Year Ended December 29, 2001

	Georgia-Pacific Corp. other than Fort James			Fort James Corp.			Consolidating Adjustments		Consolidated Amounts
In millions
Cash provided by (used for) operations	$	677		$	805		$	–	$	1,482
Cash flows from investing activities:
Property, plant and equipment investments		(452	)		(287	)		–		(739	)
Timber and timberlands purchases		(31	)		–			–		(31	)
Acquisitions		(83	)		(50	)		–		(133	)
Proceeds from sales of assets		2,311			–			–		2,311
Other		(38	)		(28	)		–		(66	)
Cash provided by (used for) investing activities		1,707			(365	)		–		1,342
Cash flows from financing activities:
Net increase (decrease) in debt		(2,321	)		(502	)		–		(2,823	)
Net change in intercompany payable		(67	)		67			–		–
Common stock repurchased		–			–			–		–
Proceeds from option plan exercises		165			–			–		165
Cash dividends paid		(175	)		–			–		(175	)
Cash (used for) financing activities		(2,398	)		(435	)		–		(2,833	)
(Decrease) increase in cash		(14	)		5			–		(9	)
Balance at beginning of year		32			8			–		40
Balance at end of year	$	18		$	13		$	–	$	31

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows

For the Year Ended December 30, 2000

In millions	Georgia-Pacific Corp. other than Fort James			Fort James Corp.			Consolidating Adjustments		Consolidated Amounts
Cash provided by (used for) operations	$	1,573		$	(17	)	$	–	$	1,556
Cash flows from investing activities:
Property, plant and equipment investments		(870	)		(39	)		–		(909	)
Timber and timberlands purchases		(59	)		–			–		(59	)
Acquisitions		(2	)		(6,140	)		–		(6,142	)
Proceeds from sales of assets		422			–			–		422
Other		(40	)		(23	)		–		(63	)
Cash used for investing activities		(549	)		(6,202	)		–		(6,751	)
Cash flows from financing activities:
Net increase (decrease) in debt		6,432			(942	)		–		5,490
Net change in intercompany payable		(7,169	)		7,169			–		–
Common stock repurchased		(140	)		–			–		(140	)
Proceeds from option plan exercises		26			–			–		26
Cash dividends paid		(166	)		–			–		(166	)
Cash (used for) provided by financing activities		(1,017	)		6,227			–		5,210
Increase in cash		7			8			–		15
Balance at beginning of year		25			–			–		25
Balance at end of year	$	32		$	8		$	–	$	40

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Balance Sheet

As of December 29, 2001

	Georgia-Pacific Corp. other than Fort James			Fort James Corp.		Consolidating Adjustments		Consolidated Amounts
In millions
ASSETS
Current assets:
Cash	$	18		$	13	$	–	$	31
Receivables, less allowances		1,677			675		–		2,352
Inventories		1,590			922		–		2,512
Deferred income tax assets		42			59		–		101
Other current assets		360			104		–		464
Total current assets		3,687			1,773		–		5,460
Total property, plant and equipment, net		5,364			4,428		–		9,792
Goodwill, net		1,638			6,627		–		8,265
Other assets		2,041			806		–		2,847
Total assets	$	12,730		$	13,634	$	–	$	26,364
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	2,671		$	185	$	–	$	2,856
Accounts payable		1,128			502		–		1,630
Other current liabilities		772			552		–		1,324
Total current liabilities		4,571			1,239		–		5,810
Long-term debt, excluding current portion		7,700			1,658		–		9,358
Senior deferrable notes		863			–		–		863
Other long-term liabilities		2,792			790		–		3,582
Deferred income tax liabilities		769			1,077		–		1,846
Intercompany		(8,558	)		8,558		–		–
Shareholders’ equity		4,593			312		–		4,905
Total liabilities and shareholders’ equity	$	12,730		$	13,634	$	–	$	26,364

93

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Balance Sheet

As of December 30, 2000

	Georgia-Pacific Corp. other than Fort James			Fort James Corp.		Consolidating Adjustments		Consolidated Amounts
In millions
ASSETS
Current assets:
Cash	$	32		$	8	$	–	$	40
Receivables, less allowances		2,033			671		–		2,704
Inventories		2,003			890		–		2,893
Deferred income tax assets		88			88		–		176
Net assets of discontinued operations		145			–		–		145
Other current assets		52			397		–		449
Total current assets		4,353			2,054		–		6,407
Total property, plant and equipment, net		7,095			4,689		–		11,784
Goodwill, net		2,401			6,584		–		8,985
Other assets		1,548			694		–		2,242
Total assets	$	15,397		$	14,021	$	–	$	29,418
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	2,342		$	217	$	–	$	2,559
Accounts payable		1,206			602		–		1,808
Other current liabilities		791			518		–		1,309
Total current liabilities		4,339			1,337		–		5,676
Long-term debt, excluding current portion		10,234			2,121		–		12,355
Senior deferrable notes		863			–		–		863
Other long-term liabilities		1,880			767		–		2,647
Deferred income tax liabilities		1,131			1,024		–		2,155
Intercompany		(8,747	)		8,747		–		–
Shareholders’ equity		5,697			25		–		5,722
Total liabilities and shareholders’ equity	$	15,397		$	14,021	$	–	$	29,418

94

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

Selected Financial Data—Operations

	Year Ended
	December 29,			December 30,			January 1,			December 31,
	2001			2000			2000			1998			1997
In millions, except per share amounts and ratios
Operations:
Net sales	$	25,016		$	22,050		$	18,409		$	13,868		$	13,586
Costs and expenses:
Cost of sales		19,378			17,332			14,421			11,366			11,276
Selling and distribution		2,025			1,600			818			592			646
Depreciation and amortization		1,343			910			815			806			844
General and administrative		1,072			856			765			534			571
Interest		1,080			595			426			372			381
Other loss (income)		413			204			—			—			(14	)
Total costs and expenses		25,311			21,497			17,245			13,670			13,704
(Loss) income from continuing operations before income taxes		(295	)		553			1,164			198			(118	)
Provision (benefit) for income taxes		181			210			448			87			(32	)
(Loss) income from continuing operations		(476	)		343			716			111			(86	)
Income from discontinued operations, net of taxes		70			162			400			176			215
(Loss) income before extraordinary items and accounting change		(406	)		505			1,116			287			129
Extraordinary items and accounting change, net of taxes		(1	)		–			–			(13	)		(60	)
Net (loss) income	$	(407	)	$	505		$	1,116		$	274		$	69
Other statistical data:
Georgia-Pacific Group:
(Loss) income from continuing operations	$	(476	)	$	343		$	716		$	111		$	(86	)
Extraordinary items and accounting change, net of taxes		(1	)		–			–			(13	)		(60	)
Net (loss) income	$	(477	)	$	343		$	716		$	98		$	(146	)
Basic per share:
(Loss) income from continuing operations	$	(2.09	)	$	1.95		$	4.17		$	0.62		$	(0.47	)
Extraordinary items and accounting change, net of taxes		(0.01	)		–			–			(0.07	)		(0.33	)
Net (loss) income	$	(2.10	)	$	1.95		$	4.17		$	0.55		$	(0.80	)
Diluted per share:
(Loss) income from continuing operations	$	(2.09	)	$	1.94		$	4.07		$	0.61		$	(0.47	)
Extraordinary items and accounting change, net of taxes		(0.01	)		–			–			(0.07	)		(0.33	)
Net (loss) income	$	(2.10	)	$	1.94		$	4.07		$	0.54		$	(0.80	)
The Timber Company:
Income from discontinued operations, net of taxes	$	70		$	162		$	400		$	176		$	215
Basic per common share	$	0.86		$	2.01		$	4.75		$	1.95		$	2.35
Diluted per common share	$	0.86		$	2.00		$	4.73		$	1.94		$	2.33
Average number shares outstanding
Georgia-Pacific Group, basic		227.6			175.8			171.8			179.8			182.9
Georgia-Pacific Group, diluted		227.6			176.9			175.9			181.1			182.9
The Timber Company, basic		81.0			80.7			84.1			90.3			91.4
The Timber Company, diluted		81.7			81.1			84.6			90.8			92.1
Earnings to fixed charges		0.76			1.8			3.5			1.5			0.7
Effective income tax rate		100.0	%		38.0	%		38.5	%		43.9	%		27.1	%

95

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

Earnings to Fixed Charges

Income before income taxes, extraordinary items and accounting change plus total interest cost (interest expense plus capitalized interest) and one-third of rent expense, divided by total interest cost plus one one-third of rent expense.

Effective Income Tax Rate

Provision (benefit) for income taxes divided by income (loss) from continuing operations before income taxes.

96

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

Selected Financial Data—Financial Position, End of Year

	Year Ended
	December 29,			December 30,			January 1,			December 31,
	2001			2000			2000			1998			1997
In millions, except per share amounts, ratios, and percentages
Financial position, end of year:
Current assets	$	5,460		$	6,407		$	4,661		$	2,555		$	2,862
Property, plant and equipment, net		9,792			11,784			7,060			6,225			6,277
Goodwill, net		8,265			8,985			2,697			1,677			1,599
Other assets		2,847			2,242			1,087			990			992
Total assets	$	26,364		$	29,418		$	15,505		$	11,447		$	11,730
Current liabilities	$	5,810		$	5,676		$	3,849		$	2,402		$	2,727
Long-term debt		9,358			12,355			3,955			3,368			3,029
Senior deferrable notes		863			863			863			–			–
Other long-term liabilities		3,582			2,647			1,803			1,566			1,546
Deferred income taxes		1,846			2,155			1,160			987			959
Total liabilities	$	21,459		$	23,696		$	11,630		$	8,323		$	8,261
Shareholders’ equity	$	4,905		$	5,722		$	3,875		$	3,124		$	3,469
Other statistical data:
Property, plant and equipment investments	$	739		$	909		$	723		$	638		$	717
Timber and timberland purchases		31			59			78			59			44
Cash paid for acquisitions		133			6,142			1,658			112			–
Current ratio		1.1			1.1			1.2			1.1			1.1
Total debt to capital, book basis		52.2	%		56.7	%		42.8	%		43.5	%		41.8	%
Total debt to capital, market basis:
Georgia-Pacific Group		65.5	%		68.1	%		39.7	%		46.3	%		43.4	%
The Timber Company, discontinued operation		*			21.0	%		32.2	%		32.2	%		31.6	%
Per share market price:
Georgia-Pacific Corporation (through December 16, 1997):
High													$	108.56
Low													$	70.50
Period-end													$	85.13
Georgia-Pacific Group:
High	$	37.65		$	51.94		$	54.13		$	40.50		$	32.00
Low	$	25.39		$	19.31		$	29.34		$	18.69		$	29.50
Period-end	$	27.98		$	31.13		$	50.75		$	29.28		$	30.38
The Timber Company, discontinued operation:
High	$	39.70		$	32.00		$	27.19		$	27.25		$	25.88
Low	$	27.85		$	20.75		$	19.88		$	17.38		$	22.50
Period-end		*		$	29.94		$	24.63		$	23.81		$	22.69
Book value:
Georgia-Pacific Group	$	21.32		$	25.45		$	22.50		$	18.06		$	18.83
The Timber Company, discontinued operation		*		$	1.81		$	1.51		$	(0.98	)	$	(0.53	)
Shares of stock outstanding at year-end:
Georgia-Pacific Group		230.1			224.8			172.2			173.0			184.5
The Timber Company, discontinued operation		*			80.2			82.9			87.1			92.6
Dividends declared per share:
Georgia-Pacific Corporation													$	2.00
Georgia-Pacific Group	$	0.50		$	0.50		$	0.50		$	0.50
The Timber Company, discontinued operation	$	1.00		$	1.00		$	1.00		$	1.00

* The Corporation completed the spin off of The Timber Company and its merger with and into Plum Creek on October 6, 2001 (see Note 3 of the Notes to Consolidated Financial Statements). 1997 amounts are for the period from December 17, 1997 through December 31, 1997.

97

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Book Value Per Common Share

Shareholders’/parent’s equity divided by shares of common stock outstanding as of the end of the year.

Total Debt to Capital, Book Basis

Total debt divided by the sum of total debt, senior deferrable notes, deferred income taxes, net, other long-term liabilities and shareholders’/parent’s equity as of the end of the year. Total debt includes commercial paper and short-term notes, current portion of long-term debt, (all of which are included in “Current liabilities”), long-term debt and accounts receivable pledged.

Total Debt to Capital, Market Basis

Total debt divided by the sum of total debt and the market value of shareholders’/parent’s equity as of the end of the year. Total debt includes commercial paper and short-term notes, current portion of long-term debt, (all of which are included in “Current liabilities”), long-term debt and accounts receivable pledged. The market value of shareholders’/parent’s equity is the market price of common stock multiplied by the number of common stock shares outstanding.

Current Ratio

Current assets divided by current liabilities as of the end of the year.

98

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

Sales and Operating Profits by Operating Segment

	2001					2000					1999					1998					1997
In millions, except percentages
Net sales(a):
Consumer products:
Tissue	$	6,030		24	%	$	1,948		9	%	$	1,186		6	%	$	1,063		8	%	$	1,013		7	%
Dixie		859		3			77		–			–		–			–		–			–		–
Other		103		1			29		–			9		–			20		–			22		–
Total consumer products		6,992		28			2,054		9			1,195		6			1,083		8			1,035		7
Packaging
Containerboard		523		2			626		3			554		3			544		4			569		4
Packaging		1,959		8			2,020		9			1,892		10			1,617		12			1,315		10
Total packaging		2,482		10			2,646		12			2,446		13			2,161		16			1,884		14
Bleached pulp and paper:
Market pulp		763		3			1,052		5			828		5			815		6			955		7
Bleached board		241		1			195		1			198		1			182		1			219		2
Paper		1,147		5			1,137		5			1,347		7			1,622		12			1,625		12
Other		140		–			142		1			140		1			147		1			148		1
Total manufacturing		2,291		9			2,526		12			2,513		14			2,766		20			2,947		22
Paper distribution:
Fine paper		3,845		16			4,200		19			1,980		11			–		–			–		–
Supply systems		2,356		9			2,661		12			1,329		7			–		–			–		–
Other		–		–			–		–			22		–			–		–			–		–
Total paper distribution		6,201		25			6,861		31			3,331		18			–		–			–		–
Total bleached pulp and paper		8,492		34			9,387		43			5,844		32			2,766		20			2,947		22
Building products manufacturing:
Wood panels		1,015		4			1,120		5			1,233		7			1,095		8			981		7
Lumber		983		4			1,069		5			1,086		6			851		6			881		6
Gypsum products		621		2			903		4			1,189		6			992		7			885		7
Chemicals		481		2			461		2			445		2			455		3			482		4
Other		140		1			97		–			104		1			122		1			70		1
Total manufacturing		3,240		13			3,650		16			4,057		22			3,515		25			3,299		25
Building products distribution:
Wood panels		1,713		7			2,115		10			2,506		14			2,127		15			1,919		14
Lumber		1,354		5			1,473		7			1,662		9			1,471		11			1,639		12
Other		742		3			723		3			696		4			741		5			860		6
Total distribution		3,809		15			4,311		20			4,864		27			4,339		31			4,418		32
Total building products		7,049		28			7,961		36			8,921		49			7,854		56			7,717		57
Corporate and other(b)		1		–			2		–			3		–			4		–			3		–
Total net sales	$	25,016		100	%	$	22,050		100	%	$	18,409		100	%	$	13,868		100	%	$	13,586		100	%
Operating profits:
Consumer products	$	792		101	%	$	(17	)	(1	)%	$	131		8	%	$	129		23	%	$	145		55	%
Packaging		384		49			512		45			324		20			89		16			(23	)	(9	)
Bleached pulp and paper		69		9			509		44			181		11			(32	)	(6	)		19		7
Building products		150		19			382		33			1,205		76			608		107			324		123
Corporate and other(c)		(610	)	(78	)		(238	)	(21	)		(251	)	(15	)		(224	)	(40	)		(202	)	(76	)
Total operating profits	$	785		100	%	$	1,148		100	%	$	1,590		100	%	$	570		100	%	$	263		100	%

(a) Represents net sales to unaffiliated customers.

(b) Includes net sales from miscellaneous businesses.

(c) Includes some miscellaneous businesses, unallocated corporate operating expenses and the elimination of profit on intersegment sales.

99

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

For the Years Ended December 29, 2001, December 30, 2000 and January 1, 2000

Description	Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts			Deductions			Balance at End of Period
In Millions
Year ended December 29, 2001
Allowance for doubtful accounts	$	34	$	8	$	–		$	(3	)**	$	39
Restructuring reserves	$	55	$	57	$	109	****	$	(118	)	$	103
Year ended December 30, 2000
Allowance for doubtful accounts	$	25	$	28	$	–		$	(19	)**	$	34
Restructuring reserves	$	64	$	19	$	8	****	$	(36	)	$	55
Year ended January 1, 2000
Allowance for doubtful accounts	$	25	$	5	$	–		$	(5	)**	$	25
Restructuring reserves	$	2	$	2	$	98	***	$	(38	)	$	64

** Accounts written off

*** Reserves acquired

**** Net amounts charged to goodwill

100

ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

PART III

Except as to information with respect to executive officers, which is presented below under Item 10 to this Form 10-K, the information required by Part III of this Form 10-K is, pursuant to General Instruction G(3) of Form 10-K, incorporated by reference from the Corporation’s definitive Proxy Statement to be filed pursuant to Regulation 14A for the Corporation’s Annual Meeting of Shareholders scheduled to be held on May 7, 2002. Georgia-Pacific will, within 120 days of the end of its fiscal year, file with the Securities and Exchange Commission a definitive proxy statement pursuant to Regulation 14A.

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Additional information regarding the Corporation’s directors required by this Item is set forth in the Corporation’s Notice of 2002 Annual Meeting of Shareholders and Proxy Statement in the sections entitled “Nominees and Directors” and is incorporated herein by this reference thereto.

Executive Officers of Georgia-Pacific Corporation

The executive officers of Georgia-Pacific are as follows :

Name	Age	Date First Elected as an Officer	Position or Office
A. D. Correll	60	1988	Chairman, Chief Executive Officer, President and a Director
Patricia A. Barnard	52	1998	Executive Vice President—Human Resources
James E. Bostic, Jr.	54	1991	Executive Vice President—Environmental, Government Affairs and Communications
Danny W. Huff	51	1993	Executive Vice President—Finance and Chief Financial Officer
James F. Kelley	60	1993	Executive Vice President and General Counsel
David J. Paterson	47	1994	Executive Vice President—Pulp and Paperboard
Ronald L. Paul	58	1995	Executive Vice President—Wood Products and Distribution
John F. Rasor	58	1983	Executive Vice President—Wood Procurement, Gypsum and Industrial Wood Products
Lee M. Thomas	57	1993	Executive Vice President—Consumer Products
Charles C. Tufano	57	1998	President—Unisource
James E. Terrell	52	1989	Vice President and Controller

Alston D. Correll has been Chief Executive Officer of Georgia-Pacific since May 1993, Chairman since December 1993 and President since July 1991. Mr. Correll has been a director of the Corporation since May 1992.

Patricia A. Barnard has been Executive Vice President—Human Resources since January 2001. Prior to that time she served as Senior Vice President—Human Resources from March 1999 until January 2001 and Vice President—Compensation and Benefits from February 1998 until March 1999. Prior to that time, she served as Group Director—Human Resources, Paper & Chemicals from 1997 to 1998 and Group Director—Human Resources, Paper from 1995 until 1997.

101

James E. Bostic, Jr. has been Executive Vice President—Environmental, Government Affairs and Communications since January 2001. Prior to that time, he served as Senior Vice President—Environmental, Government Affairs and Communications from February 1995 until January 2001, Group Vice President—Paper from April 1992 until January 1995, Group Vice President—Butler Paper and Mail-Well from January 1992 to April 1992, and Vice President—Butler Paper and Mail-Well from January 1991 to January 1992.

Danny W. Huff has been Executive Vice President—Finance and Chief Financial Officer since November 1, 1999. Prior to that time, he served as Vice President and Treasurer from February, 1996 to November, 1999 and Treasurer from October 23, 1993 to February 1, 1996.

James F. Kelley has been Executive Vice President and General Counsel since August 2000. Prior to that time, he served as Senior Vice President—Law and General Counsel from December 1993 until August 2000.

David J. Paterson has been Executive Vice President – Pulp and Paperboard since August 2001. Prior to that time, he served as President—Paper from January 2001 until August 2001, Senior Vice President—Communication Papers from August 2000 until January 21, 2001 and Vice President—Sales and Marketing Pulp and Bleached Board from May 1994 until August 2000.

Ronald L. Paul has been Executive Vice President—Wood Products and Distribution since December 30, 1997. Prior to that time, he served as Executive Vice President—Wood Products from September 1997 until December 1997, Vice President—Structural Panels and Building Products Engineering from May 1996 until September 1997 and Vice President—Engineering and Technology—Building Products from May 1995 until May 1996.

John F. Rasor has been Executive Vice President—Wood Procurement, Gypsum and Industrial Wood Products since December 16, 1997. Prior to that time, he served as Executive Vice President—Forest Resources from January 1997 to December 1997, Senior Vice President—Forest Resources from February 1995 until December 1996, Group Vice President—Forest Resources from May 1992 through January 1995, Group Vice President—Timber from January 1992 to May 1992 and Vice President—Forest Resources from 1991 to January 1992.

Lee M. Thomas has been Executive Vice President—Consumer Products since November 2000. Prior to that time, he served as Executive Vice President—Paper and Chemicals from December 1997 until November 2000, Executive Vice President—Paper from January 1997 until December 1997, Senior Vice President—Paper from February 1995 until December 1996, Senior Vice President—Environmental, Government Affairs and Communications from February 1994 through January 1995, and Senior Vice President—Environmental and Government Affairs from March 1993 through January 1994.

Charles C. Tufano has been President—Unisource since January 2001. Prior to that time, he served as Senior Vice President—Paper Distribution from July 1999 until January 2001, Vice President—West, Distribution Division from February 1998 until July 1999 and Director—Printing Papers, Communication Papers Division from 1995 until 1998.

James E. Terrell was elected Vice President of the Corporation in January 1991 and has served as Controller since 1989.

The Corporation’s Board of Directors elects officers of the Corporation. The Chief Executive Officer has the authority to appoint one or more Vice Presidents to hold such office until the next annual organizational meeting of the Board. The Chief Executive Officer also has the authority to approve the compensation of officers at the Vice President level. The Compensation Committee of the Board of Directors determines the compensation of all other officers of the Corporation, including officers who are also directors of the Corporation. There are no other arrangements or understandings between the respective officers and any other person pursuant to which such officers are elected.

102

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ITEM 11.     EXECUTIVE COMPENSATION

The information required by this Item is set forth in the Corporation’s Notice of 2002 Annual Meeting of Shareholders and Proxy Statement in the sections entitled “Compensation Committee Report,” “Summary Compensation Table,” “Option and Performance Rights Grants in 2001” and “Agreements with Executive Officers” and is incorporated herein by reference thereto.

ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is set forth in the Corporation’s Notice of 2002 Annual Meeting and Proxy Statement in the section entitled “Ownership of Common Stock of Georgia-Pacific” and is incorporated herein by reference thereto.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not applicable.

PART IV

ITEM 14.     EXHIBITS AND FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as a part of this Form 10-K for the Corporation:

(1) The Consolidated Financial Statements, Notes to Consolidated Financial Statements and the Report of Independent Public Accountants for Georgia-Pacific Corporation and subsidiaries dated January 23, 2002 are presented under Item 8 of this Form 10-K.

(2) Financial Statement Schedules:

Valuation and Qualifying Accounts of Georgia-Pacific Corporation and subsidiaries and Georgia-Pacific Group for the years ended December 29, 2001, December 30, 2000 and January 1, 2000.

Schedules other than that listed above are omitted because they are not required, are inapplicable or the information is otherwise shown in the Corporation’s Consolidated Financial Statements or notes thereto.

(3) Exhibits

Number	Description
3.1(i)	Articles of Incorporation, restated as of December 16, 1997 (Filed as Exhibit 4.1 to the Corporation’s Registration Statement on Form S-8 as filed with the Commission on December 18, 1997, Commission File No. 333-42597, and incorporated herein by this reference thereto). (1)
3. 1(ii)	Articles of Amendment to Restated Articles of Incorporation (Filed as Exhibit 3.1 to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
3.2	Bylaws, as amended to date. (1)

103

Number	Description
4.1(i)	Restated Rights Agreement, dated as of December 16, 1997, between Georgia-Pacific Corporation and First Chicago Trust Company of New York, with form of Georgia-Pacific Group Rights Certificate attached as Exhibit A-i, form of Timber Group Rights Certificate attached as Exhibit A-2, Series B Preferred Stock Designation attached as Exhibit B-i and Series C Preferred Stock Designation attached as Exhibit B-2 (Filed as Exhibit 8 to the Corporation’s Registration Statement on Form 8-A as filed with the Commission on November 26, 1997, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
4.1(ii)	Amendment No. 1 to the Amended and Restated Rights Agreement, dated as of November 8, 1999 (Filed as Exhibit 4.3(ii) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
4.1(iii)	Amendment No. 1 (sic) to the Amended and Restated Rights Agreement, dated as of November 8, 1999 (Filed as Exhibit 1 to the Corporation’s Registration Statement on Form 8-A/A as filed with the Commission on October 2, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
4.1(iv)	Amendment No. 2 to the Amended and Restated Rights Agreement, dated as of July 18, 2000 (Filed as Exhibit 2 to the Corporation’s Registration Statement on Form 8-A/A as filed with the Commission on October 2, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
4.1(v)	Amendment No. 3 to the Amended and Restated Rights Agreement, dated as of September 26, 2001 (Filed as Exhibit 3 to the Corporation’s Registration Statement on Form 8-A/A as filed with the Commission on October 2, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
4.2 (i)	Indenture, dated as of March 1, 1983, between Georgia-Pacific Corporation and The Chase Manhattan Bank (National Association), Trustee (Filed as Exhibit 4.4(i) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
4.2(ii)	First Supplemental Indenture, dated as of July 27, 1988, among Georgia-Pacific Corporation, The Chase Manhattan Bank (National Association), Trustee, and Morgan Guaranty Trust Company of New York (Filed as Exhibit 4.4(ii) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
4.2(iii)	Agreement of Resignation, Appointment and Acceptance, dated as of January 31, 1992 by and among Georgia-Pacific Corporation, Morgan Guaranty Trust Company of New York and The Bank of New York, as Successor Trustee (Filed as Exhibit 4.4(iii) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
4.3	Form of Purchase Contract Agreement relating to Stock Purchase Contracts and Stock Purchase Units (Filed as Exhibit 4(p) to the Corporation’s Registration Statement on Form S-3 as filed with the Commission on June 30, 1999, Commission File No. 333-80757, and incorporated herein by this reference thereto). (1)
4.4	Form of Pledge Agreement for Stock Purchase Contracts and Stock Purchase Units (Filed as Exhibit 4(q) to the Corporation’s Registration Statement on Form S-3 as filed with the Commission on June 30, 1999, Commission File No. 333-80757, and incorporated herein by this reference thereto). (1)

104

Number	Description
4.5	Form of Remarketing Agreement between Georgia-Pacific Corporation and Morgan Stanley & Co. Incorporated (Filed as Exhibit 4(u) to the Corporation’s Registration Statement on Form S-3, as filed with the Commission on June 30, 1999, Commission File No. 333-80757, and incorporated herein by this reference thereto). (1)
4.6	Indenture between James River Corporation of Virginia and the Bank of New York, dated November 1, 1991 (Filed as Exhibit 4.1 to the Corporation’s Registration Statement on Form S-3, as filed with the Commission on November 4, 1991, Commission File No. 33-43335, and incorporated herein by this reference thereto).
4.7	First Supplemental Induenture, dated as of September 19, 1997 between Fort James Corporation and The Bank of New York.
4.8	Second Supplemental Indenture among Georgia-Pacific Corporation, Fort James Corporation, and The Bank of New York, dated February 19, 2001 (Filed as Exhibit 4.6 to the Corporation’s Annual Report on From 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
4.9	Form of Stock Purchase Units (included as Exhibits A and B of Exhibit 4.3) (Filed as Exhibit 4(v) to the Corporation’s Registration Statement on Form S-3, as filed with the Commission on June 30, 1999, Commission File No. 333-80757, and incorporated herein by this reference thereto). (1)
10.1	Directors Group Life Insurance Program (Filed as Exhibit 10.1 to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.2	Form of Officer Retirement Agreement (Officers Retirement Plan) (Filed as Exhibit 10.2 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.3(i)	Key Salaried Employees Group Insurance Plan—Pre-1987 Group (As Amended and Restated Effective January 1, 1987) (Filed as Exhibit 10.3(i) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.3(ii)	Amendment No. 1 (Effective January 1, 1991) to the Key Salaried Employees Group Insurance Plan—Pre-1987 Group (As Amended and Restated Effective January 1, 1987) (Filed as Exhibit 10.3(ii) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.3(iii)	Key Salaried Employees Group Insurance Plan—Post-1986 Group (Effective January 1, 1987) (Filed as Exhibit 10.3(iii) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.3(iv)	Amendment No. 1 (Effective January 1, 1991) to the Key Salaried Employees Group Insurance Plan—Post-1986 Group (Effective January 1, 1987) (Filed as Exhibit 10.3(iv) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*

105

Number	Description
10.3(v)	Amendment No. 2 to the Key Salaried Employees Group Insurance Plan—Post-1986 Group (effective January 1, 1987). (Filed as Exhibit 10.3(v) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.3(vi)	Amendment No. 3 to the Key Salaried Employees Group Insurance Plan—Post-1986 Group (effective August 1, 1994). (Filed as Exhibit 10.3(vi) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.3(vii)	Amendment No. 4 to the Key Salaried Employees Group Insurance Plan—Post-1986 Group (effective January 1, 1998) (Filed as Exhibit 10.3(vii) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.4	Economic Value Incentive Plan, as Amended and Restated effective January 21, 2001. (Filed as Exhibit 10.4 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.5	Amendment No. 1 to the Georgia-Pacific Corporation Economic Value Incentive Plan, as Amended and Restated by Action of the Compensation Committee on January 29, 2001 effective February 15, 2001. (Filed as Exhibit 10.5 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.6(i)	1995 Shareholder Value Incentive Plan, as Amended and Restated effective December 16, 1997. (Filed as Exhibit 10.8(iv) to the Corporation’s Amendment No. 2 to Registration Statement on Form S-4 as filed with the Commission on November 7, 1997, Commission File No. 333-35813, and incorporated herein by this reference thereto). (1)*
10.6(ii)	Amendment No. 1 to the Amended and Restated 1995 Shareholder Value Incentive Plan, effective May 5, 1998 (Filed as Exhibit 10.8(ii) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.6(iii)	Amendment No. 2 to the Amended and Restated 1995 Shareholder Value Incentive Plan, effective September 29, 1999 (Filed as Exhibit 10.8(iii) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.6(iv)	Amendment No. 3 to the Amended and Restated 1995 Shareholder Value Incentive Plan, effective March 24, 2000 (Filed as Exhibit 10.8(iv) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.6(v)	Amendment No. 4 to the Amended and Restated 1995 Shareholder Value Incentive Plan, effective July 18, 2000. (Filed as Exhibit 10.4 to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended July 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.6(vi)	Form of Replacement Option Under the 1995 Shareholder Value Incentive Plan (Georgia-Pacific Group stock) (1995 Grant) (Filed as Exhibit 99.11 to the Corporation’s Registration Statement on Form S-8 as filed with the Commission on December 18, 1997, Commission File No. 333-42597, and incorporated herein by this reference thereto). (1)*

106

Number	Description
10.6(vii)	Form of Replacement Option Under the 1995 Shareholder Value Incentive Plan (Timber Group stock) (1995 Grant) (Filed as Exhibit 99.12 to the Corporation’s Registration Statement on Form S-8 as filed with the Commission on December 18, 1997, Commission File No. 333-42597, and incorporated herein by this reference thereto). (1)*
10.6(viii)	Form of Replacement Option Under the 1995 Shareholder Value Incentive Plan (Georgia-Pacific Group stock) (1996 Grant) (Filed as Exhibit 99.13 to the Corporation’s Registration Statement on Form S-8 as filed with the Commission on December 18, 1997, Commission File No. 333-42597, and incorporated herein by this reference thereto). (1)*
10.6(ix)	Form of Replacement Option Under the 1995 Shareholder Value Incentive Plan (Timber Group stock) (1996 Grant) (Filed as Exhibit 99.14 to the Corporation’s Registration Statement on Form S-8 as filed with the Commission on December 18, 1997, Commission File No. 333-42597, and incorporated herein by this reference thereto). (1)*
10.6(x)	Form of Replacement Option Under the 1995 Shareholder Value Incentive Plan (Georgia-Pacific Group stock) (1997 Grant) (Filed as Exhibit 99.15 to the Corporation’s Registration Statement on Form S-8 as filed with the Commission on December 18, 1997, Commission File No. 333-42597, and incorporated herein by this reference thereto). (1)*
10.6(xi)	Form of Replacement Option Under the 1995 Shareholder Value Incentive Plan (Timber Group stock) (1997 Grant) (Filed as Exhibit 99.16 to the Corporation’s Registration Statement on Form S-8 as filed with the Commission on December 18, 1997, Commission File No. 333-42597, and incorporated herein by this reference thereto). (1)*
10.6(xii)	Form of Special Replacement Option Under the 1995 Shareholder Value Incentive Plan (Georgia-Pacific Group stock) (1997 Grant) (Filed as Exhibit 99.17 to the Corporation’s Registration Statement on Form S-8 as filed with the Commission on December 18, 1997, Commission File No. 333-42597, and incorporated herein by this reference thereto). (1)*
10.6(xiii)	Form of Special Replacement Option Under the 1995 Shareholder Value Incentive Plan (Timber Group stock) (1997 Grant) (Filed as Exhibit 99.18 to the Corporation’s Registration Statement on Form S-8 as filed with the Commission on December 18, 1997, Commission File No. 333-42597, and incorporated herein by this reference thereto). (1)*
10.7	Outside Directors Stock Plan (As in effect September 23, 1998, including Amendments No. 1 and 2). (Filed as Exhibit 10.7 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (l)*
10.8(i)	Directors Deferred Compensation Plan, effective September 22, 1998 (Filed as Exhibit 10.10(ii) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.8(ii)	Form of Deferral Agreement (Filed as Exhibit 10.10(i) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*

10.9(i) Amendment No 1 to the Change of Control Agreement for Gary A. Myers dated March 15, 1999 (Filed as Exhibit 10.1 to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended July 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*

107

Number	Description
10.9(ii)	Amendment No 1 to the Change of Control Agreement for Donald L. Glass dated March 15, 1999 (Filed as Exhibit 10.2 to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended July 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.9(iii)	Form of Change of Control Agreement (Filed as Exhibit 10.9(iii) to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (l)*
10.10(i)	Amended and Restated Receivables Purchase Agreement dated as of October 13, 1999, among G-P Receivables, Inc., as the Seller, and Georgia-Pacific Corporation, as the Collection Agent, and Canadian Imperial Bank of Commerce, Citibank, N.A., and Bank One, NA (Chicago Office), as the Secondary Purchasers, and Canadian Imperial Bank of Commerce, as the Administrative Agent (Filed as Exhibit 10.11(i) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.10(ii)	Amended and Restated Receivables Purchase Agreement dated as of October 13, 1999, among G-P Receivables, Inc., as the Seller, and Georgia-Pacific Corporation, as the Collection Agent, and Asset Securitization Cooperative Corporation, Corporate Asset Funding Company, Inc., and Falcon Asset Securitization Corporation, as the Purchasers, and Canadian Imperial Bank of Commerce, as the Administrative Agent (Filed as Exhibit 10.11(ii) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.10(iii)	Second Amended and Restated Receivables Purchase Agreement dated as of December 19, 2001, among G-P Receivables, Inc., as the Seller, and Georgia-Pacific Corporation, as the Collection Agent, and Citibank, N.A., Commerzbank AG (New York Branch), The Bank of Tokyo-Mitsubishi, LTD (New York Branch) and Wachovia Bank, N.A., as the Secondary Purchases and Citicorp North America, Inc., as the Administrative Agent.
10.10(iv)	Second Amended and Restated Receivables Purchase Agreement dated as of December 19, 2001, among G-P Receivables, Inc., as the Seller, Georgia-Pacific Corporation, as the Collection Agent, Blue Ridge Asset Funding Corporation, Corporate Receivables Corporation, Corporate Asset Funding Company, Inc., Four Winds Funding Corporation, and Victory Receivables Corporation, as the Purchasers, and Citicorp North America, Inc., as the Administrative Agent.
10.11(i)	Georgia-Pacific Corporation/Georgia-Pacific Group 1997 Long-Term Incentive Plan (Filed as Exhibit 10.10(i) to the Corporation’s Amendment No. 2 to Registration Statement on Form S-4 as filed with the Commission on November 7, 1997, Commission File No. 333-35813, and incorporated herein by this reference thereto). (1)*

10.11(ii) Amendment No. One to the Georgia-Pacific Group 1997 Long-Term Incentive Plan (Filed as Exhibit 10.12(ii) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*

10.11(iii) Amendment No. Two to the Georgia-Pacific Group 1997 Long-Term Incentive Plan (Filed as Exhibit 10.12(iii) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*

108

Number	Description
10.11(iv)	Amendment No. Three to the Georgia-Pacific Group 1997 Long-Term Incentive Plan (Filed as Exhibit 10.11(iv) to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.11(v)	Form of Revised Georgia-Pacific Group 1997 Long-Term Incentive Plan Option (Filed as Exhibit 10.1 to the Corporation’s Quarterly Report on Form l0-Q for the quarter ended March 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.11(vi)	Form of Revised Special Georgia-Pacific Group 1997 Long-Term Incentive Plan Option (Filed as Exhibit 10.2 to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, Commission File No. 001-03506,and incorporated herein by this reference thereto). (1)*
10.11(vii)	Form of Georgia-Pacific Group 1997 Long-Term Incentive Plan Performance Share Grant Agreement for the January 1, 1999 through December 31, 1999 Performance Period (January 28, 1999 Grant). (Filed as Exhibit 10.12(iv) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.11(viii)	Form of Georgia-Pacific Group 1997 Long-Term Incentive Plan Performance Share Grant Agreement for the January 1, 1999 through December 31, 2000 Performance Period (January 28, 1999 Grant). (Filed as Exhibit 10.12(v) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.11(ix)	Form of Georgia-Pacific Group 1997 Long-Term Incentive Plan Performance Share Grant Agreement for the January 1,1999 through December 31, 2001 Performance Period (January 28, 1999 Grant) (Filed as Exhibit l0.12(vi) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.11(x)	Form of Georgia-Pacific Corporation/Georgia-Pacific Group 1997 Long-Term Incentive Plan Performance Share Grant Agreement for the January 1, 2001 through December 31, 2003 Performance Period (January 29, 2001 Grant) (Filed as Exhibit 10.11(x) to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.11(xi)	Form of Georgia-Pacific Corporation/Georgia-Pacific Group 1997 Long-Term Incentive Plan Option (January 28, 1999 Grant) (Filed as Exhibit 10.12(vii) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.11(xii)	Form of Georgia-Pacific Corporation/Georgia-Pacific Group 1997 Long-Term Incentive Plan Option (January 21, 2000 Grant) (Filed as Exhibit 10.12(x) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated here by this reference thereto). (1)*
10.11(xiii)	Form of Georgia-Pacific Corporation/Georgia-Pacific Group 1997 Long-Term Incentive Plan Performance Share Grant Agreement for the January 1, 2000 though December 31, 2002 Performance Period (January 21, 2000 Grant) (Filed as Exhibit 10.12(xi) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated here by this reference thereto). (1)*

109

Number	Description
10.12(i)	Georgia-Pacific Corporation/Timber Group 1997 Long-Term Incentive Plan (Filed as Exhibit 10. 10(ii) to the Corporation’s Amendment No. 2 to Registration Statement on Form S-4 as filed with the Commission on November 7, 1997, Commission File No. 333-35813, and incorporated herein by this reference thereto). (1)*
10.12(ii)	Amendment No. 1 to the Timber Group 1997 Long-Term Incentive Plan (Filed as Exhibit 10.13(ii) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.12(iii)	Amendment No. 2 to the Timber Group 1997 Long-Term Incentive Plan (Filed as Exhibit 10.3 to the Corporation’s Quarter Report on Form 10-Q for the quarter ended July 18, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto).*
10.12(iv)	Form of Revised Timber Group 1997 Long-Term Incentive Plan Option (Filed as Exhibit 10.3 to the Corporation’s Quarterly Report on Form l0-Q for the quarter ended March 31, 1998, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.12(v)	Form of Timber Group 1997 Long-Term Incentive Plan Option (January 21, 2000 Grant) (Filed as Exhibit 10.13(iv) to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.13(i)	Fort James Corporation MIP Bonus Deferral Plan (Filed as Exhibit 99.1 to Fort James Corporation’s Registration Statement on Form S-8, Commission File No. 333-66715, dated November 3, 1998, and incorporated herein by this reference thereto). (1)*
10.13(ii)	Fort James Supplemental Deferral Plan 1999, Amendment and Restatement. (Filed as Exhibit 10.13(ii) to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.13(iii)	Fort James Corporation Stock Option Plan For Outside Directors, Amended and Restated as of February 18, 1999 (Filed as Exhibit 99.6 to the Corporation’s Registration Statement on Form S-8 dated December 7, 2000, Commission File No. 333-51442, and incorporated herein by this reference). (1)*
10.13(iv)	Fort James Corporation 1996 Stock Incentive Plan, 1997 Amendment and Restatement (Filed as Exhibit 10.13(iv) to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.13(v)	Fort James Corporation Split Dollar Life Insurance Plan (Effective date of January 1, 1998 (Filed as Exhibit 10.13(v) to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (l)*
10.13(vi)	Form of Fort James Corporation Restricted Stock Unit Award Agreement. (Filed as Exhibit 10.13(vi) to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*

110

Number	Description
10.13(vii)	Fort James Corporation Supplemental-Benefit Plan (Amended and Restated Effective January 1, 1999) (Filed as Exhibit 10.13(vii) to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)*
10.13(viii)(a)	Fort Howard Corporation Management Equity Plan (Filed as Exhibit 10.H with the Fort Howard Corporation’s Annual Report on Form 10-K for the year ended December 31, 1991, Commission File No. 001-06901, and incorporated herein by this reference).*
10.13(viii)(b)	Amendment dated December 28, 1993 to the Fort Howard Corporation Management Equity Plan (Filed as Exhibit 10.9(A) with the Fort Howard Corporation’s Annual Report on Form 10-K for the year ended December 31, 1993, Commission File No. 001-06901, and incorporated herein by this reference). (1)*
10.13(viii)(c)	Amendment dated March 1, 1995 to the Fort Howard Corporation Management Equity Plan (Filed as Exhibit 10.9(B) with the Fort Howard Corporation’s Annual Report on Form 10-K for the year ended December 31, 1994, Commission File No. 001-20473, and incorporated herein by this reference). (1)*
10.13(ix)(a)	Fort Howard Corporation 1995 Stock Incentive Plan (Filed as Exhibit 10.15 with the Fort Howard Corporation’s No. 1 to Registration Statement on Form S-1, Commission File No. 33-56573, dated February 8, 1995, and incorporated herein by this reference). (1)*
10.13(ix)(b)	Amendment No. 1 to Fort Howard Corporation 1995 Stock Incentive Plan (Filed as Exhibit 4.4 with the Fort Howard Corporation’s Registration Statement on Form S-8, Commission File No. 333-20959, dated February 3, 1997, and incorporated herein by this reference). (1)*
10.13(x)	James River Corporation of Virginia 1987 Stock Option Plan 1993 Amendment and Restatement (Filed as Exhibit 10(j) to James River Corporation’s Annual Report on Form 10-K for the fiscal year ended December 26, 1993, Commission File No. 001-06901, and incorporated herein by this reference). (1)*
10.14	Agreement and Plan of Merger dated as of May 25, 1999, among Unisource Worldwide, Inc., Georgia-Pacific Corporation and Atlanta Acquisition Corp. (Filed as Exhibit 99(c)(1) to the Schedule 14D-1 of Atlanta Acquisition Corp. and Georgia-Pacific Corporation, Commission File No. 005-51073, and incorporated herein by this reference thereto). (1)
10.15	Joint Venture Agreement among Georgia-Pacific Corporation, Chesapeake Corporation, Wisconsin Tissue Mills Inc. and Georgia-Pacific Tissue, LLC, dated as of October 4, 1999 (Filed as Exhibit 10.15 to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.16	Operating Agreement Georgia-Pacific Tissue, LLC, dated as of October 4, 1999, between Wisconsin Tissue Mills Inc. and Georgia-Pacific Corporation (Filed as Exhibit 10.16 to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)

111

Number	Description
10.17	Agreement and Plan of Merger, dated as of July 16, 2000, among Georgia-Pacific Corporation, Fenres Acquisition Corp. and Fort James Corporation (Filed as Exhibit 2 to the Corporation’s Form 8-K dated July 17, 2000, filed July 18, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.18(i)	Agreement and Plan of Merger, dated as of July 18, 2000, by and among Plum Creek Timber Company, Inc., a Delaware Corporation, Georgia-Pacific Corporation, a Georgia corporation and North American Timber Corp., NPI Timber, Inc., GNN Timber, Inc., LRFP Timber, Inc., and NPC Timber, Inc., each a Delaware corporation and a wholly owned subsidiary of Georgia-Pacific Corporation (Filed as Exhibit 2.1 to the Corporation’s Form 8-K as filed with the Commission on July 20, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.18(ii)	Amendment No. 1 to the Agreement and Plan of Merger, dated June 12, 2001 (Filed as Exhibit 2.1 to the Corporation’s Form 8-K dated June 12, 2001, filed June 14, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.19(i)	Voting Agreement and Consent dated as of July 18, 2000, by and among Plum Creek Timber Company, Inc., a Delaware corporation, Georgia-Pacific Corporation, a Georgia corporation and each of the security holders party thereto (Filed as Exhibit 9.1 to the Corporation’s Form 8-K as filed with the Commission on July 20, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.19(ii)	Amendment No. 1 to the Voting Agreement and Consent, dated June 12, 2001 (Filed as Exhibit 9.1 dated June 12, 2001, filed June 14, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.20(i)	Credit Agreement (Multi-Year Revolving Credit Facility), dated as of November 3, 2000, among Georgia-Pacific Corporation, the Lenders Named therein, Bank of America, N.A., as Agent and Issuing Bank, and Merrill Lynch Capital Corporation and Morgan Stanley Senior Funding Inc., as Co-Syndication Agents, Banc of America Securities LLC, Merrill Lynch Capital Corporation, and Morgan Stanley Senior Funding Inc., as Book Managers and Lead Arrangers (Filed as Exhibit 10.20 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by reference thereto). (1)
10.20(ii)	First Amendment to the Credit Agreement (Multi-Year Revolving Credit Facility), dated as of January 26, 2001. (Filed as Exhibit 10.1 to the Corporation’s Form 8-K dated March 15, 2001, filed March 15, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.20(iii)	Second Amendment to the Credit Agreement (Multi-Year Revolving Credit Facility), dated as of March 15, 2001 (Filed as Exhibit 10.2 to the Corporation’s Form 8-K dated March 15, 2001, filed March 15, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.20(iv)	Third Amendment to the Credit Agreement (Multi-Year Revolving Credit Facility), dated as of December 5, 2001 (Filed as Exhibit 10.1 to the Corporation’s Form 8-K dated December 6, 2001, filed December 12, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)

112

Number	Description
10.21(i)	Credit Agreement (18-Month Revolving Credit Facility), dated as of November 3, 2000, 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, Banc of America Securities LLC, Merrill Lynch Capital Corporation, and Morgan Stanley Senior Funding Inc., as Book Managers and Lead Arrangers (Filed as Exhibit 10.21 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by reference thereto). (1)
10.21(ii)	First Amendment to the Credit Agreement (18-Month Revolving Credit Facility), dated as of March 15, 2001 (Filed as Exhibit 10.3 to the Corporation’s Form 8-K dated March 15, 2001, filed March 15, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.21(iii)	Second Amendment to the Credit Agreement (18-Month Revolving Credit Facility), dated as of December 5, 2001 (Filed as Exhibit 10.2 to the Corporation’s Form 8-K dated December 6, 2001, filed December 12, 2001, Commission File No. 001-03506, and incorporated herein by this referenced thereto). (1)
10.22(i)	Credit Agreement (Asset Disposition Bridge Facility), dated as of November 3, 2000, 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, Banc of America Securities LLC, Merrill Lynch Capital Corporation, and Morgan Stanley Senior Funding Inc., as Book Managers and Lead Arrangers (Filed as Exhibit 10.22 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.22(ii)	First Amendment to the Credit Agreement (Asset Disposition Bridge Facility), dated as of March 15, 2001 (Filed as Exhibit 10.4 to the Corporation’s Form 8-K dated March 15, 2001, filed March 15, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.23(i)	Credit Agreement (Capital Markets Bridge Facility), dated as of November 3, 2000, 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, Banc of America Securities LLC, Merrill Lynch Capital Corporation, and Morgan Stanley Senior Funding Inc., as Book Managers and Lead Arrangers (Filed as Exhibit 10.23 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.23(ii)	First Amendment to the Credit Agreement (Capital Markets Bridge Facility), dated as of March 15, 2001 (Filed as Exhibit 10.5 to the Corporation’s Form 8-K dated March 15, 2001, filed March 15, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.23(iii)	Second Amendment to the Credit Agreement (Capital Markets Bridge Facility), dated as of December 12, 2001 (Filed as Exhibit 10-3 to the Corporation’s Form 8-K dated December 6, 2001, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)

113

Number	Description
10.24	Credit Agreement (Timber Disposition Bridge Facility), dated as of November 3, 2000, among North American Timber Corp., 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, Banc of America Securities LLC, Merrill Lynch Capital Corporation, and Morgan Stanley Senior Funding Inc., as Book Managers and Lead Arrangers (Filed as Exhibit 10.24 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.25	Form of Subsidiary Guaranty (Georgia-Pacific Corporation) (Multi-Year Revolving Credit Facility) (Filed as Exhibit 7.01(c) to Exhibit 10.20 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.26	Form of Subsidiary Guaranty (Georgia-Pacific Corporation) (18-Month Revolving Credit Facility) (Filed as Exhibit 6.01(c) to Exhibit 10.21 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.27	Form of Subsidiary Guaranty (Georgia-Pacific Corporation) (Asset Disposition Bridge Facility) (Filed as Exhibit 6.01(c) to Exhibit 10.22 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.28	Form of Subsidiary Guaranty (Georgia-Pacific Corporation) (Capital Markets Bridge Facility) (Filed as Exhibit 6.01(c) to Exhibit 10.23 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.29	Form of Subsidiary Guaranty (Georgia-Pacific Corporation) (Timber Disposition Bridge Facility) (Filed as Exhibit 7.13(a) to Exhibit 10.24 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.30	Georgia-Pacific Group 2000 Employee Stock Purchase Plan (Filed as Exhibit 10.21 to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.31	The Timber Company 2000 Employee Stock Purchase Plan (Filed as Exhibit 10.22 to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.32(i)	Georgia-Pacific Tissue, LLC 2000 Employee Stock Purchase Plan (Filed as Exhibit 10.23 to the Corporation’s Annual Report on Form 10-K for the year ended January 1, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.32(ii)	Georgia-Pacific Corporation – Georgia-Pacific Group 2001 Canadian Employees Stock Purchase Plan, Amended and Restated as of August 28, 1995 (Filed as Exhibit 99 to the Corporation’s Registration Statement on Form S-8, Commission File No. 333-44112, dated March 30, 2001, and incorporated herein by this reference thereto). (1)

114

Number	Description
10.33(i)	Securities Purchase Agreement, dated as of January 21, 2001, among Georgia-Pacific Corporation, as seller, Georgia-Pacific Finance, LLC, Svenska Cellulosa Aktiebolaget SCA (publ), and SCA Tissue, Inc. (Filed as Exhibit 10.32 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.33(ii)	Purchase Agreement by and among Georgia-Pacific Corporation, Certain Subsidiaries of Georgia-Pacific Corporation and Domtar, Inc., dated as of June 1, 2001. (1)
10.33(iii)	Amendment No. 1 to Purchase Agreement by and among Georgia-Pacific Corporation, Certain Subsidiaries of Georgia-Pacific Corporation and Domtar, Inc., dated as of August 3, 2001. (1)
10.34	Form of Master Timber Agreement between North American Timber Corporation, LRFP Timber, Inc., NPTC Timber Inc., GNN Timber, Inc., and GPW Timber, Inc., and Georgia-Pacific Corporation—Georgia-Pacific Group) (Filed as Exhibit 10.33 to the Corporation’s Annual Report on Form 10-K for the year ended December 30, 2000, Commission File No. 001-03506, and incorporated herein by this reference thereto). (1)
10.35(a)	Fort Howard Corporation Management Equity Participation Agreement (Filed as Exhibit 10.9 to Amendment No. 2 to Fort Howard Corporation’s Registration Statement on Form S-1 dated October 25, 1988, Commission File No. 33-23826, and incorporated herein by this reference thereto).*
10.35(b)	Letter Agreement dated June 27, 1990 modifying the Fort Howard Corporation Amended and Restated Management Equity Participation Agreement (Filed as Exhibit 10.V with the Fort Howard Corporation’s Annual Report on Form 10-K for the year ended December 31, 1990, Commission File No. 001-06901, and incorporated herein by this reference thereto).*
10.35(c)	Letter Agreement dated July 31, 1990 modifying the Fort Howard Corporation Amended and Restated Management Equity Participation Agreement (Filed as Exhibit 10.W with the Fort Howard Corporation’s Annual Report on Form 10-K for the year ended December 31, 1990, Commission File No. 001-06901, and incorporated herein by this reference thereto).*

10.35(d)	Letter Agreement dated February 7, 1991 modifying the Fort Howard Corporation Amended and Restated Management Equity Participation Agreement (Filed as Exhibit 10.GG with the Fort Howard Corporation’s Annual Report on Form 10-K for the year ended December 31, 1990, Commission File No. 001-06901, and incorporated herein by this reference thereto).*
10.35(e)	Letter Agreement dated February 7, 1991 modifying the Fort Howard Corporation Amended and Restated Management Equity Participation Agreement (Filed as Exhibit 10.HH with the Fort Howard Corporation’s Annual Report on Form 10-K for the year ended December 31, 1990, Commission File No. 001-06901, and incorporated herein by this reference thereto).*
10.35(f)	Letter Agreement dated December 28, 1993 modifying the Fort Howard Corporation Amended and Restated Management Equity Participation Agreement (Filed as Exhibit 4.3(f) with the Fort Howard Corporation’s Registration Statement on Form S-8 dated September 29, 1995, Commission File No. 33-63099, and incorporated herein by this reference thereto). (1)*

115

Number	Description
10.35(g)	Letter Agreement dated March 1, 1995 modifying the Fort Howard Corporation Amended and Restated Management Equity Participation Agreement (Filed as Exhibit 10.8(F) with the Fort Howard Corporation’s Annual Report on Form 10-K for the year ended December 31, 1994, Commission File No. 000-20473, and incorporated herein by this reference thereto). (1)*
12	Statements of Computation of Ratio of Earnings to Fixed Charges. (1)
21	Subsidiaries. (1)
23	Consent of Independent Public Accounts. (1)
99.1	Properties. (1)

* Compensatory plan or arrangement.

(1) Filed via EDGAR.

(b) Reports on Form 8-K

(i) On October 9, 2001, the Corporation filed a Current Report on Form 8-K under Items 2 and 7 thereof. The Report disclosed the Corporation’s redemption of all of the outstanding shares of Georgia-Pacific Corporation-Timber Company Common Stock, par value $0.80 per share (“Timber Common Stock”), in exchange for the common stock of six former subsidiaries of Georgia-Pacific (collectively, the “Spincos”), which collectively held all of the assets and liabilities attributed to Georgia-Pacific’s timber and timberlands business (“The Timber Company”), by issuing one unit (a “Unit”), consisting of one share of common stock of each Spinco, for each share of Timber Common Stock outstanding, effective as of the close of trading on the New York Stock Exchange on October 5, 2001. The Report also disclosed the subsequent merger of each of the Spincos with and into Plum Creek Timber Company, Inc., a Delaware corporation (“Plum Creek”), with Plum Creek as the surviving corporation (the “Mergers”) pursuant to the terms of the Agreement and Plan of Merger, dated as of July 18, 2000, as amended by Amendment No.1 to Agreement and Plan of Merger, dated as of June 12, 2001 (as amended, the “Merger Agreement”), by and among Plum Creek, Georgia-Pacific and the Spincos, each Unit was converted into the right to receive 1.37 shares of Plum Creek common stock, par value $.01 per share (“Plum Creek Common Stock”).

(ii) On October 18, 2001, the Corporation filed a Current Report on Form 8-K under Items 5 and 7 thereof. The Report disclosed the Corporation’s issuance of a press release on October 18, 2001 regarding earnings for the third quarter of 2001.

(iii) On December 12, 2001, the Corporation filed a Current Report on Form 8-K under Items 5 and 7 thereof. The Report filed amendments, as Exhibits 10.1 to 10.3 thereof, to the Corporation’s credit facilities filed as Exhibits 10.20 to 10.23 of the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 30, 2000, and their amendments filed as Exhibits 10.1 to 10.5 to the Corporation’s Current Report on Form 8-K for the report dated March 15, 2001.

(iv) On December 14, 2001, the Corporation filed a Current Report on Form 8-K/A, under Items 5 and 7. The Report amended the Corporation’s Current Report on Form 8-K for the report dated December 6, 2001, as filed on December 12, 2001, for the purpose of correcting a typographical error. The September 29, 2001 Interest Coverage Ratio was erroneously reported as being 2.8x. The correct number was 2.5x.

116

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GEORGIA-PACIFIC CORPORATION (Registrant)
By:	/s/    A. D. CORRELL
	(A. D. Correll, Chairman, Chief Executive Officer and President)

Date: March 20, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
As Officers or Directors of GEORGIA-PACIFIC CORPORATION
/s/    A. D. CORRELL (A. D. Correll)	Director, Chairman, Chief Executive Officer and President (Principal Executive Officer)	March 20, 2002
/s/    DANNY W. HUFF (Danny W. Huff)	Executive Vice President-Finance and Chief Financial Officer (Principal Financial Officer)	March 20, 2002
/s/    JAMES E. TERRELL (James E. Terrell)	Vice President and Controller (Principal Accounting Officer)	March 20, 2002
/s/    JAMES S. BALLOUN (James S. Balloun)	Director	March 20, 2002
/s/    BARBARA L. BOWLES (Barbara L. Bowles)	Director	March 20, 2002
/s/    Worley H. Clark, Jr. (Worley H. Clark, Jr.)	Director	March 22, 2002

117

Signature	Title	Date
/s/    JANE EVANS (Jane Evans)	Director	March 19, 2002
/s/    DONALD V. FITES (Donald V. Fites)	Director	March 21, 2002
/s/    RICHARD V. GIORDANO (Richard V. Giordano)	Director	March 20, 2002
/s/    DAVID R. GOODE (David R. Goode)	Director	March 19, 2002
/s/    M. Douglas Ivester (M. Douglas Ivester)	Director	March 22, 2002
/s/    LOUIS W. SULLIVAN (Louis W. Sullivan)	Director	March 20, 2002
/s/    JAMES B. WILLIAMS (James B. Williams)	Director	March 19, 2002
/s/    JOHN D. ZEGLIS (John D. Zeglis)	Director	March 21, 2002

118

                                INDEX TO EXHIBITS

Number      Description
- ------      -----------
3.2         Bylaws, as amended to date. (1)

4.7         First Supplemental Indenture among Fort James Corporation and The
            Bank of New York, dated February 19, 2001. (1)

10.10(iii)  Second Amended and Restated Receivables Purchase Agreement dated as
            of December 19, 2001, among G-P Receivables, Inc., as the Seller,
            and Georgia-Pacific Corporation, as the Collection Agent, and
            Citibank, N.A., Commerzbank AG (New York Branch), The Bank of
            Tokyo-Mitsubishi, LTD (New York Branch) and Wachovia Bank, N.A., as
            the Secondary Purchases and Citicorp North America, Inc., as the
            Administrative Agent. (1)

10.10(iv)   Second Amended and Restated Receivables Purchase Agreement dated as
            of December 19, 2001, among G-P Receivables, Inc., as the Seller,
            Georgia-Pacific Corporation, as the Collection Agent, Blue Ridge
            Asset Funding Corporation, Corporate Receivables Corporation,
            Corporate Asset Funding Company, Inc., Four Winds Funding
            Corporation, and Victory Receivables Corporation, as the Purchasers,
            and Citicorp North America, Inc., as the Administrative Agent. (1)

10.33(ii)   Purchase Agreement by and among Georgia-Pacific Corporation, Certain
            Subsidiaries of Georgia-Pacific Corporation and Domtar, Inc., dated
            as of June 1, 2001. (1)

10.33(iii)  Amendment No. 1 to Purchase Agreement by and among Georgia-Pacific
            Corporation, Certain Subsidiaries of Georgia-Pacific Corporation and
            Domtar, Inc., dated as of August 3, 2001. (1)

12          Statements of Computation of Ratio of Earnings to Fixed Charges. (1)

21          Subsidiaries. (1)

23          Consent of Independent Public Accounts. (1)

99.1        Properties. (1)
- ----------
(1)         Filed via EDGAR.

EX-3.2

                                                                     Exhibit 3.2

                                     BYLAWS

                                       OF

                           GEORGIA-PACIFIC CORPORATION


                                    ARTICLE I

                             SHAREHOLDERS' MEETINGS

         SECTION 1. Annual Meeting. The annual meeting of the shareholders for
                    --------------
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place, either within or
without the State of Georgia, on such date and at such time as the Board of
Directors may by resolution provide, or, if the Board of Directors fails to
provide, then such meeting shall be held at the principal executive office of
the Corporation at 11:00 A.M. on the first Tuesday in the month of May in each
year, or, if such date is a legal holiday, on the next following business day.
If an annual meeting of shareholders is not held as provided in this Section 1
of this Article I, any business, including the election of directors, that might
properly have been acted upon at such annual meeting may be acted upon at a
special meeting in lieu of the annual meeting held pursuant to these Bylaws or
held pursuant to a court order.

         SECTION 2. Special Meetings. Special meetings of the shareholders may
                    ----------------
be called at any time by the Chairman, any Vice Chairman, the President, the
Chief Executive Officer or the Board of Directors. In addition, special meetings
of shareholders shall be called by the Corporation as set forth in the
Corporation's Articles of Incorporation or upon written demand of the holders of
at least seventy-five percent (75%) of the voting power of the outstanding
capital stock of the Corporation entitled to vote on any issue proposed to be
considered at the proposed special meeting, voting as a separate voting group,
or upon the written demand of shareholders as provided in Section 1 (C) of
Article II hereof, any such written demand to be made in accordance with the
requirements of applicable law. Each special meeting shall be held at such
place, either within or without the State of Georgia, as the Board of Directors
may by resolution provide, or, if the Board of Directors fails to provide, then
such meeting shall be held at the principal executive office of the Corporation,
on such date and at such time as shall be fixed by the party calling the
meeting.

         SECTION 3. Notice of Meeting. Except as may otherwise be required or
                    -----------------
prohibited by law, written notice stating the place, day and hour of the meeting
of shareholders and, in case of a special meeting of shareholders, the purpose
or purposes for which the meeting is called, shall be delivered in the case of
an annual or special meeting of shareholders, not less than ten (10) nor more
than sixty (60) days before the date of the meeting either personally or by
mail, by the Corporation by or at the direction of the Chairman, any Vice
Chairman, the President, the Chief Executive Officer, the Secretary or the
officer or persons calling the meeting, to each shareholder of record entitled
to vote at such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail, addressed to the shareholder at his or
its address as it appears on the stock transfer books of the Corporation, with
first class postage thereon prepaid, or, if the Corporation has more than 500
shareholders of record entitled to vote at the meeting and the notice is mailed
not less than thirty (30) days before the date of the meeting, with postage
thereon prepaid for any other class of United States mail.



         SECTION 4. Waivers. Notwithstanding anything herein to the contrary,
                    -------
notice of a meeting of shareholders need not be given to any shareholder who
waives notice of such meeting in accordance with the Georgia Business
Corporation Code.

         SECTION 5. Voting Group. Voting group means all shares of one or more
                    ------------
classes or series that are entitled to vote and be counted together collectively
on a matter at a meeting of shareholders. All shares entitled to vote generally
on the matter are for that purpose a separate voting group.

         SECTION 6. Quorum. With respect to shares entitled to vote as a
                    ------
separate voting group on a matter at a meeting of shareholders, the presence, in
person or by proxy, of a majority of the votes entitled to be cast on the matter
by the voting group shall constitute a quorum of that voting group for action on
that matter unless the Articles of Incorporation, any designation of a class or
series of capital stock of the Corporation, or the Georgia Business Corporation
Code provides otherwise. Once a share is represented for any purpose at a
meeting, other than solely to object to holding the meeting or to transacting
business at the meeting, it is deemed present for quorum purposes for the
remainder of the meeting and for any adjournment of the meeting unless a new
record date is or must be set for the adjourned meeting.

         SECTION 7. Vote Required for Action. If a quorum exists, action on a
                    ------------------------
matter (other than the election of directors) by a voting group is approved if
the votes cast within the voting group favoring the action exceed the votes cast
opposing the action, unless the Articles of Incorporation, provisions of these
Bylaws validly adopted by the shareholders, or the Georgia Business Corporation
Code requires a greater number of affirmative votes. Unless otherwise provided
in the Articles of Incorporation, directors shall be elected by a plurality of
the votes cast by the shares entitled to vote in the election of directors at a
meeting at which a quorum is present. If the Articles of Incorporation or the
Georgia Business Corporation Code provide for voting by two or more voting
groups on a matter, action on that matter is taken only when voted upon by each
of those voting groups counted separately. Action may be taken by one voting
group on a matter even though no action is taken by another voting group
entitled to vote on the matter.

         SECTION 8. Voting of Shares. Unless the Articles of Incorporation, any
                    ----------------
designation of a class or series of capital stock of the Corporation, or the
Georgia Business Corporation Code provides otherwise, each outstanding share
having voting rights shall be entitled to one vote on each matter submitted to a
vote at a meeting of shareholders. Voting on all matters shall be by voice vote
or by show of hands unless any qualified voter, prior to the voting on any
matter, demands vote by ballot, in which case each ballot shall state the name
of the shareholder voting and the number of shares voted by him, and if the
ballot be cast by proxy, it shall also state the name of the proxy.

         SECTION 9. Proxies. A shareholder entitled to vote may vote in person
                    -------
or by proxy pursuant to an appointment of proxy executed in writing or
[delivered by electronic transmission or by any other method permitted by the
Official Code of Georgia Annotated.] An appointment of proxy shall be valid for
only one meeting to be specified therein, and any adjournments of such meeting,
but shall not be valid for more than eleven (11) months unless expressly
provided therein. If the validity of any appointment of proxy is questioned, it
must be submitted to the secretary of the meeting of shareholders for
examination or to a proxy officer or committee appointed by the person presiding
at the meeting. The secretary of the meeting or, if appointed, the proxy officer
or committee shall determine the validity or invalidity of any appointment of
proxy submitted, and reference by the secretary in the minutes of the meeting to
the

                                     - 2 -



regularity of an appointment of proxy shall be received as prima facie
evidence of the facts stated for the purpose of establishing the presence of a
quorum at the meeting and for all other purposes.

         SECTION 10. Presiding Officer. The Chief Executive Officer shall serve
                     -----------------
as the chairman of every meeting of shareholders unless another person is
elected by shareholders to serve as chairman at the meeting. The chairman shall
appoint any persons he deems necessary to assist with the meeting.

         SECTION 11. Adjournments. Whether or not a quorum is present to
                     ------------
organize a meeting, any meeting of shareholders (including an adjourned meeting)
may be adjourned by the holders of a majority of the voting power represented at
the meeting to reconvene at a specific time and place, but no later than 120
days after the date fixed for the original meeting unless the requirements of
the Georgia Business Corporation Code concerning the selection of a new record
date have been met. At any reconvened meeting within that time period, any
business may be transacted that could have been transacted at the meeting that
was adjourned. If notice of the adjourned meeting was properly given, it shall
not be necessary to give any notice of the reconvened meeting or of the business
to be transacted, if the date, time and place of the reconvened meeting are
announced at the meeting that was adjourned and before adjournment; provided,
however, that if a new record date is or must be fixed, notice of the reconvened
meeting must be given to persons who are shareholders as of the new record date.

         SECTION 12. Fixing of Record Date with Regard to Shareholder Action.
                     -------------------------------------------------------
For the purpose of determining shareholders entitled to notice of a
shareholders' meeting, to demand a special meeting, to vote, or to take any
other action, the Board of Directors may fix a future date as the record date,
which date shall be not more than seventy (70) days and, in case of a meeting of
shareholders, not less than ten (10) days prior to the date on which the
particular action, requiring a determination of shareholders, is to be taken. A
determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the
Board of Directors fixes a new record date, which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting. If no record date is fixed by the Board of Directors, the record date
shall be determined in accordance with the provisions of the Georgia Business
Corporation Code.

         SECTION 13. Shareholder Proposals. No proposal for a shareholder vote
                     ---------------------
(other than director nominations, to which Section 1(D) of Article II applies)
(a "Shareholder Proposal") shall be submitted by a shareholder, either pursuant
to Securities and Exchange Commission Rule 14a-8, 14a-4 or otherwise, to the
Corporation's shareholders unless the shareholder submitting such proposal (the
"Proponent") shall have filed a written notice setting forth with particularity
(i) the names and business addresses of the Proponent and all natural persons,
corporations, partnerships, trusts or any other type of legal entity or
recognized ownership vehicle (collectively, a "Person") acting in concert with
the Proponent; (ii) the name and address of the Proponent and the Persons
identified in clause (i), as they appear on the Corporation's books (if they so
appear); (iii) the class and number of shares of the Corporation beneficially
owned by the Proponent and the Persons identified in clause (i); (iv) a
description of the Shareholder Proposal containing all material information
relating thereto; and (v) such other information as the Board of Directors
reasonably determines is necessary or appropriate to enable the Board of
Directors and shareholders of the Corporation to consider the Shareholder
Proposal. Shareholder Proposals shall be delivered to the Secretary of the
Corporation at the principal executive office of the Corporation within the time
period specified in Securities and Exchange Commission Rule 14a-8(e)(2), or any
successor rule. The presiding officer at any shareholders' meeting may determine
that any Shareholder Proposal was not made in accordance with the procedures
prescribed in these Bylaws or is otherwise not in accordance with law, and if it
is so determined, such officer shall so declare at the meeting and the
Shareholder Proposal shall be disregarded.

                                     - 3 -



                                   ARTICLE II

                                    DIRECTORS

         SECTION 1.  Number, Election and Term of Office.
                     -----------------------------------

         (A) Number of Directors. The business and affairs of the Corporation
             -------------------
shall be managed and controlled by or under the authority of its Board of
Directors. In addition to the powers and authority expressly conferred upon it
by these Bylaws and the Articles of Incorporation, the Board of Directors may
exercise all such lawful acts and things as are not by law, by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the shareholders. The number of directors shall be twelve (12), but the number
may be increased or diminished by amendment of these Bylaws either by the Board
of Directors or by the affirmative vote of at least seventy-five percent (75%)
of the voting power of the outstanding capital stock of the Corporation entitled
to vote generally in the election of directors, voting as a separate voting
group. The directors shall be divided into three (3) classes, each composed, as
nearly as possible, of one-third of the total number of directors. In the event
that the number of directors shall not be evenly divisible by three (3), the
Board of Directors shall determine in which class or classes the remaining
director or directors, as the case may be, shall be included. The term of office
of each director shall be three (3) years; provided, that, of those directors
initially elected in classes, the term of office of directors of the first class
shall expire at the first annual meeting of the shareholders after their
election, that of the second class shall expire at the second annual meeting
after their election, and that of the third class shall expire at the third
annual meeting after their election. At each annual meeting of shareholders
subsequent to the initial election of directors in classes, directors shall be
elected for a full term of three (3) years to succeed those whose terms expire.
When the number of directors is increased and any newly created directorships
are filled by the Board of Directors, there shall be no classification of the
additional directors until the next election of directors by the shareholders.

         (B) Special Voting Rights. Anything in this Section 1 of this
             ---------------------
Article II to the contrary notwithstanding, if and whenever any class or series
of capital stock of the Corporation shall have the exclusive right, voting as a
separate voting group, to elect one or more directors of the Corporation, the
term of office of all directors in office when such voting rights shall vest in
such class or series (other than directors who were elected by vote of another
class or series of capital stock) shall terminate upon the election of any new
directors at any meeting of shareholders called for the purpose of electing
directors; and, while such voting rights are vested in any class or series of
capital stock, the directors shall not be divided into classes, and the term of
office of each director elected shall extend only until the next succeeding
annual meeting of shareholders.

         (C) Election of Directors Following Termination of Special Voting
             -------------------------------------------------------------
Rights. 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, the term of office of all such directors then in office shall
terminate upon the election of any new directors at a meeting of the
shareholders then entitled to vote for directors, which meeting may be held at
any time after the termination of such exclusive right and which meeting, if not
previously called, shall be called by the Secretary of the Corporation upon
written request of the holders of record of ten percent (10%) of the aggregate
voting power of the outstanding capital stock of the Corporation then entitled
to vote generally in the election of directors. At such election and thereafter,
unless and until a class or series of capital stock shall again have the
exclusive right, voting as a separate voting group, to vote for directors, the
directors shall again be divided into three (3) classes, as

                                     - 4 -



hereinabove provided, the term of office of each to be three (3) years;
provided, that the terms of office of those initially elected in classes shall
be as hereinabove provided.

         (D) Nominations for Election of Directors.
             -------------------------------------

         (i) Subject to the rights of holders of any class or series of capital
stock of the Corporation then outstanding, nominations for the election of
directors may be made by the affirmative vote of a majority of the entire Board
of Directors or by any shareholder of record entitled to vote generally in the
election of directors. However, any shareholder of record entitled to vote
generally in the election of directors may nominate one or more persons for
election as directors at a meeting only if written notice of such shareholder's
intent to make such nomination or nominations has been given, either by personal
delivery or by first class United States mail, postage prepaid, to the Secretary
of the Corporation not less than 60 days nor more than 75 days prior to the
meeting; provided, that in the event that less than 70 days' notice or prior
         --------  ----
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of meeting was mailed or such public disclosure was made, whichever first
occurs.

         (ii) Each notice to the Secretary under subsection (D)(i) above shall
set forth: (a) the name and address of record of the shareholder who intends to
make the nomination; (b) a representation that the shareholder is a holder of
record of shares of the Corporation's capital stock entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (c) the class and number of
shares of common stock held of record, owned beneficially, and represented by
proxy, by the shareholder, and each proposed nominee, as of the date of the
notice; (d) the name, age, business and residence addresses, and principal
occupation or employment of each proposed nominee; (e) a description of all
arrangements or understandings between the shareholder and each proposed nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the shareholder; (f) such
other information regarding each proposed nominee as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission; and (g) the written consent of each proposed
nominee to serve as a director of the Corporation if so elected. The Corporation
may require any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of such
proposed nominee to serve as a director of the Corporation.

         (iii) The chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.

         SECTION 2. Term. Subject to the provisions of the Articles of
                    ----
Incorporation and of Section 1 of this Article II, each director shall hold
office until the election and qualification of his successor or until his death
or until he shall resign or be removed from office as hereinafter provided.

         SECTION 3. Resignations. Any director of the Corporation may resign at
                    ------------
any time by giving written notice thereof to the Board of Directors, the
Chairman or the Corporation. Such resignation shall take effect at the time the
notice is delivered unless the notice specifies a later effective date; and,
unless otherwise specified with respect thereto, the acceptance of such
resignation shall not be necessary to make it effective.

                                     - 5 -



         SECTION 4. Removal of Directors. At any shareholders' meeting with
                    ---------------------
respect to which notice of such purpose has been given, the entire Board of
Directors or any individual director may be removed, with or without cause, by
the affirmative vote of the holders of seventy-five percent (75%) of the voting
power of the outstanding capital stock of the Corporation entitled to vote
generally in the election of directors, voting as a separate voting group.
Whenever the holders of the shares of any class or series of capital stock are
entitled to elect one or more directors by the provisions of the Articles of
Incorporation, the provisions of this Section 4 of this Article II shall apply,
in respect of the removal of a director or directors so elected, to the vote of
the holders of the outstanding shares of that class or series and not to the
vote of the outstanding shares as a whole. Removal action may be taken at any
shareholders' meeting with respect to which notice of such purpose has been
given.

         SECTION 5. Vacancies.
                    ----------

         (A) Director Elected by All Shareholders. Except as provided in
             ------------------------------------
Subsection 5(B) below, any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors, or by the sole remaining director,
as the case may be, or, if the vacancy is not so filled, 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.

         (B) Director Elected by Particular Class or Series. If a vacancy occurs
             ----------------------------------------------
with respect to a director elected by a particular class or series of shares
voting as a separate voting group, the vacancy may be filled by the remaining
director or directors elected by that class or series, or, if the vacancy is not
filled by such remaining director or directors, or if no such director remains,
by the holders of that class or series of shares.

         (C) Term of New Director. A director elected to fill a vacancy shall be
             --------------------
elected for the unexpired term of his predecessor in office. Any directorship to
be filled by reason of an increase in the number of directors may be filled by
the Board of Directors, but only for a term of office continuing until the next
election of directors by the shareholders and the election and qualification of
his successor.

         SECTION 6. Place of Meeting. Meetings of the Board of  Directors  or of
                    ----------------
any committee thereof may be held either within or without the State of Georgia.

         SECTION 7. Regular Meetings. The Board of Directors may, by resolution
                    ----------------
adopted by vote of a majority of the whole Board, from time to time, appoint the
time and place for holding regular meetings of the Board, if deemed advisable by
the Board; and such regular meetings shall, thereupon, be held at the time and
place so appointed, without the giving of any notice with regard thereto. In
case the day appointed for the regular meeting shall fall on a legal holiday,
such meeting shall be held on the next following business day, at the regular
appointed hour.

         SECTION 8. Special Meetings. Special meetings of the Board of Directors
                    ----------------
shall be held whenever called by the Chairman, by any Vice Chairman, by the
President, by the Chief Executive Officer, by the Chief Operating Officer, or by
any two directors. Notice of any such meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, not later than
three (3) days before the day on which the meeting is to be held, or shall be
sent to him at such place by telegram, telex, facsimile or cablegram, or be
delivered personally, or by telephone, not later than the day before the day on
which the meeting is to be held. Notice of a meeting of the Board of Directors
need not be given to any director who signs a waiver of notice either before or
after the meeting (in addition to any

                                     - 6 -



other form of waiver, such waiver may be evidenced by a telegram, telex,
facsimile or cablegram from a director). Attendance of a director at a meeting
shall constitute a waiver of notice of such meeting and waiver of any and all
objections to the place of the meeting, the time of the meeting or the manner in
which it has been called or convened, except when a director states, at the
beginning of the meeting (or promptly upon his arrival), any such objection or
objections to the transaction of business and does not thereafter vote for or
assent to action taken at the meeting. Neither the business to be transacted at,
nor the purpose of, any special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting. Except as is
otherwise indicated in the notice thereof, any and all business may be
transacted at any special meeting of the Board of Directors.

         SECTION 9. Quorum and Manner of Acting. Except as herein otherwise
                    ---------------------------
provided, two-fifths of the whole Board of Directors at a meeting duly assembled
shall constitute a quorum for the transaction of business, except that, if the
Chairman or the President is not present at any such meeting, a majority of the
whole Board of Directors shall be necessary to constitute a quorum; and, except
as otherwise required by statute or by the Bylaws, the act of a majority of the
directors present at any such meeting at which a quorum is present shall be the
act of the Board of Directors. In the absence of a quorum, a majority of the
directors present may adjourn the meeting from time to time, until a quorum is
present. No notice of any adjourned meeting need be given.

         SECTION 10. Participation by Conference Telephone. Any or all directors
                     -------------------------------------
may participate in a meeting of the Board of Directors or of a committee of the
Board of Directors through the use of any means of communication by which all
directors participating may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be present in
person at the meeting.

         SECTION 11. Action by Directors Without a Meeting. Unless the Articles
                     -------------------------------------
of Incorporation or these Bylaws provide otherwise, any action required or
permitted to be taken at any meeting of the Board of Directors or any action
that may be taken at a meeting of a committee of the Board of Directors may be
taken without a meeting if the action is taken by all the members of the Board
of Directors (or of the committee as the case may be). The action must be
evidenced by one or more written consents describing the action taken, signed by
each director (or each director serving on the committee, as the case may be),
and delivered to the Corporation for inclusion in the minutes or filing with the
corporate records.

         SECTION 12. Directors' Fees. In consideration of a director serving in
                     ---------------
such capacity, each director of the Corporation, other than directors who are
officers of the Corporation or any of its subsidiary companies, shall be
entitled to receive such compensation as the Board of Directors, by vote of a
majority of the whole Board, may from time to time determine. The Board of
Directors shall also have the authority to determine, from time to time, the
amount of compensation, if any, which shall be paid to its members for
attendance at any meeting of the Board or any committee thereof. A director may
also serve the Corporation in a capacity other than that of director and receive
compensation, as determined by the Board of Directors, for services rendered in
such other capacity.

                                     - 7 -



                                   ARTICLE III

                       EXECUTIVE AND GOVERNANCE COMMITTEE

         SECTION 1. Constitution and Powers. The Board of Directors may, by
                    -----------------------
resolution adopted by vote of a majority of the whole Board, designate from
among its members an Executive and Governance Committee, to consist of one or
more other directors, which Committee shall have and may exercise such powers
and responsibilities as shall be set forth in a charter including, but not
limited to, all the power of the Board of Directors in the management of the
business, affairs and property of the Corporation and the exercise of its
corporate powers, including the power to authorize the seal of the Corporation
to be affixed to all papers which may require it. So far as practicable, members
of the Executive and Governance Committee shall be designated at the
organization meeting of the Board of Directors, in each year, and, unless sooner
discharged by vote of a majority of the whole Board of Directors, shall hold
office until the organization meeting of the Board of Directors in the next
subsequent year and until their respective successors are appointed. The Board
of Directors shall designate one member of the Executive and Governance
Committee as Chairman of the Committee, but such designee shall not be
considered to be an officer of the Corporation by reason of such designation.
Anything herein to the contrary notwithstanding, the Executive and Governance
Committee shall not exercise the authority of the Board of Directors in
reference to: (1) approving or proposing to shareholders any action required by
applicable law to be approved by the shareholders of the Corporation; (2) the
filling of vacancies on the Board of Directors or any of its committees; (3)
amending the Articles of Incorporation of the Corporation, except to the extent
authorized in a resolution adopted by the Board of Directors, amending the
articles of incorporation to fix the designations, preferences, limitations and
relative rights of shares or to increase or decrease the number of shares
contained in a series of shares but not below the number of such shares then
issued; (4) the adoption, amendment or repeal of any Bylaws of the Corporation;
or (5) the approval of a plan of merger or consolidation, the sale, lease,
exchange or other disposition of all or substantially all the property and
assets of the Corporation, or a voluntary dissolution of the Corporation or a
revocation thereof.

         SECTION 2. Meetings. Regular meetings of the Executive and Governance
                    --------
Committee, of which no notice shall be necessary, shall be held on such days and
at such places as shall be fixed, from time to time, by resolution adopted by
vote of a majority of the Committee and communicated to all the members thereof.
Special meetings of the Executive and Governance Committee may be called by the
Chairman of the Committee at any time. Notice of each special meeting of the
Committee shall be sent to each member of the Committee by mail to his residence
or usual place of business not later than three (3) days before the day on which
the meeting is to be held, or shall be sent to him at such place by telegram,
telex, facsimile or cablegram, or be delivered personally, or by telephone, to
each member of the Committee not later than the day before the day on which the
meeting is to be held. Notice of any such meeting need not be given to any
member who signs a waiver of notice either before or after the meeting (in
addition to any other form of waiver, such waiver may be evidenced by a
telegram, telex, facsimile or cablegram from a member). Attendance of a member
at a meeting shall constitute a waiver of notice of such meeting and waiver of
any and all objections to the place of the meeting, the time of the meeting or
the manner in which it has been called or convened, except when a member states,
at the beginning of the meeting (or promptly upon his arrival), any such
objection or objections to the transaction of business. Neither the business to
be transacted at, nor the purpose of, any meeting of the Committee need be
specified in the notice or waiver of notice of such meeting. A majority of the
Executive and Governance Committee shall constitute a quorum for the transaction
of business, and the act of a majority of those present at a meeting, at which a
quorum is present, shall be the act of the Executive and Governance

                                     - 8 -



Committee. The members of the Executive and Governance Committee shall act only
as a committee, and the individual members shall have no power as such.

         SECTION 3. Records. The Executive and Governance Committee shall keep a
                    -------
record of its acts and proceedings and shall report the same promptly to the
Board of Directors. Such acts and proceedings shall be subject to review by the
Board of Directors, but no rights of third parties shall be affected by such
review. The Secretary of the Corporation, or, in his absence, an Assistant
Secretary, shall act as secretary to the Executive and Governance Committee; or
the Committee may, in its discretion, appoint its own secretary.

         SECTION 4.  Vacancies.  Any vacancy in the Executive  and  Governance
                     ---------
Committee shall be filled by vote of a majority of the whole Board of Directors.


                                   ARTICLE IV

                                OTHER COMMITTEES

         The Board of Directors, by resolution adopted by a majority of the
whole Board, may designate from among its members other committees in addition
to the Executive Committee, each consisting of two (2) or more directors and
each of which, to the extent provided in such resolution, shall have and may
exercise all the authority of the Board of Directors, provided that no such
committee shall have the authority of the Board of Directors in reference to:
(1) approving or proposing to shareholders any action required by applicable law
to be approved by the shareholders of the Corporation; (2) the filling of
vacancies on the Board of Directors or any of its committees; (3) amending the
Articles of Incorporation of the Corporation; (4) the adoption, amendment or
repeal of any Bylaws of the Corporation; or (5) the approval of a plan of merger
or consolidation, the sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the Corporation, or a voluntary
dissolution of the Corporation or a revocation thereof. The provisions of
Section 2 of Article III as to the Executive Committee and its deliberations
shall be applicable to any such other committee of the Board of Directors.

                                    ARTICLE V

                     OFFICERS AND AGENTS; POWERS AND DUTIES

         SECTION 1. Officers. The Board of Directors shall elect a Chairman (who
                    --------
shall be a director), a President, a Secretary and a Treasurer. The Board of
Directors may also elect one or more Vice Chairmen, one or more Vice Presidents
(one or more of whom may be designated an Executive Vice President and one or
more of whom may be designated a Senior Vice President and one or more of whom
may be designated a Group Vice President), a Controller and such other officers
and agents of the Corporation as from time to time may appear to be necessary or
advisable in the conduct of the affairs of the Corporation. The Board shall
designate from among such elected officers a Chief Executive Officer and may
designate from among such elected officers a Chief Operating Officer. Any two or
more offices may be held by the same person, except that the office of President
and the office of Secretary shall be held by separate persons. In addition to
the authority of the Board of Directors set forth in this Section 1, the Chief
Executive Officer shall have the authority to appoint one or more Vice
Presidents, none of whom may be designated an Executive Vice President, Senior
Vice President or Group Vice President (a

                                     - 9 -



"CEO Appointed Office"). Individuals appointed to CEO Appointed Offices by the
Chief Executive Officer shall be officers of the Corporation as fully as if
elected by the Board of Directors.

         SECTION 2. Term of Office. So far as practicable, all officers shall be
                    --------------
elected at the organization meeting of the Board of Directors in each year, and,
subject to the provisions of Section 3 of this Article V, each officer shall
hold office until the organization meeting of the Board of Directors in the next
subsequent year and until his successor has been elected and has qualified, or
until his earlier resignation, removal from office, or death.

         SECTION 3. Removal of Officers. Any officer may be removed at any time,
                    -------------------
either with or without cause, by the Board of Directors at any meeting. Any
officer holding a CEO Appointed Office, whether elected to such office by the
Board or appointed by the Chief Executive Officer, may be removed at any time,
either with or without cause, by the Chief Executive Officer, except for such
individuals holding CEO Appointed Offices who also hold any of the titles of
Controller, Treasurer or Secretary.

         SECTION 4. Vacancies. If any vacancy occurs in any office, the Board of
                    ---------
Directors may elect a successor to fill such vacancy for the remainder of the
term. If a vacancy occurs in any CEO Appointed Office, the Chief Executive
Officer may appoint a successor to fill such vacancy for the remainder of the
term.

         SECTION 5. Chief Executive Officer. The Chief Executive Officer shall,
                    -----------------------
under the direction of the Board of Directors, have general direction of the
Corporation's business, policies and affairs. He shall preside, when present, at
all meetings of the shareholders and, in the absence of the Chairman of the
Executive Committee, at all meetings of the Executive Committee. He, the Vice
Chairmen, the President and the Chief Operating Officer shall each have general
power to execute bonds, deeds and contracts in the name of the Corporation and
to affix the corporate seal; to sign stock certificates; and to remove or
suspend such employees or agents as shall not have been appointed by the Board
of Directors. In the absence or disability of the Chief Executive Officer, his
duties shall be performed and his powers may be exercised by the Chief Operating
Officer or by such other officer as shall be designated by the Board of
Directors.

         SECTION 6. Chief Operating Officer. The Chief Operating Officer shall,
                    -----------------------
under the direction of the Chief Executive Officer, have direct superintendence
of the Corporation's business, policies, properties and affairs. He shall have
such further powers and duties as from time to time may be conferred upon, or
assigned to, him by the Board of Directors or the Chief Executive Officer. In
the absence or disability of the Chief Executive Officer, the Chief Operating
Officer shall perform his duties and may exercise his powers.

         SECTION 7. Chairman. The Chairman shall preside, when present, at all
                    --------
meetings of the Board of Directors and shall have such other powers and duties
as from time to time may be conferred upon or assigned to him by the Board of
Directors or the Chief Executive Officer (if the Chairman is not the Chief
Executive Officer).

         SECTION 8. Vice Chairmen. Each of the several Vice Chairmen shall have
                    -------------
such powers and duties as from time to time may be conferred upon or assigned to
him by the Board of Directors or the Chief Executive Officer (if such Vice
Chairman is not the Chief Executive Officer).

                                     - 10 -



         SECTION 9. President. The President shall have such powers and duties
                    ---------
as from time to time may be conferred upon or assigned to him by the Board of
Directors or the Chief Executive Officer (if the President is not the Chief
Executive Officer).

         SECTION 10. Vice Presidents. The several Vice Presidents shall have
                     ---------------
such powers and duties as shall be assigned to or required of them, from time to
time, by the Board of Directors, the Chief Executive Officer or the Chief
Operating Officer.

         SECTION 11. Secretary. The Secretary shall attend to the giving of
                     ---------
notice of all meetings of shareholders and of the Board of Directors and shall
keep and attest true records of all proceedings thereat. He shall have the
responsibility of authenticating records of the Corporation. He shall have
charge of the corporate seal and have authority to attest any and all
instruments or writings to which the same may be affixed. He shall keep and
account for all books, documents, papers and records of the Corporation, except
those which are hereinafter directed to be in the charge of the Treasurer or the
Controller. He shall have authority to sign stock certificates and shall
generally perform all the duties usually appertaining to the office of secretary
of a corporation. In the absence of the Secretary, an Assistant Secretary or
Secretary pro tempore shall perform his duties.

         SECTION 12. Treasurer. The Treasurer shall have the care and custody of
                     ---------
all moneys, funds and securities of the Corporation and shall deposit or cause
to be deposited all funds of the Corporation in and with such depositories as
shall, from time to time, be designated by the Board of Directors or by such
officers of the Corporation as may be authorized by the Board of Directors to
make such designation. He shall have power to sign stock certificates; to
endorse for deposit or collection, or otherwise, all checks, drafts, notes,
bills of exchange or other commercial paper payable to the Corporation; and to
give proper receipts or discharges therefor.

         SECTION 13. Controller. The Controller shall keep complete and accurate
                     ----------
books of account relating to the business of the Corporation, including records
of all assets, liabilities, commitments, receipts, disbursements and other
financial transactions of the Corporation, and its divisions and subsidiaries.
He shall render a statement of the Corporation's financial condition whenever
required to do so by the Board of Directors, the Chief Executive Officer, the
Chief Operating Officer or the Executive Vice President - Finance.

         SECTION 14. Attorneys. The Board of Directors may, from time to time,
                     ---------
appoint one or more attorneys-in-fact to act for and in representation of the
Corporation, either generally or specially, judicially or extra-judicially, and
may delegate to any such attorney or attorneys-in-fact all or any powers which,
in the judgment of the Board of Directors, may be necessary, advisable,
convenient or suitable for exercise in any country or jurisdiction in the
administration or management of the business of the Corporation, or the defense
or enforcement of its rights, even though such powers be herein provided or
directed to be exercised by a designated officer of the Corporation, or by the
Board of Directors. The act of the Board of Directors in conferring any such
powers upon, or delegating the same to, any attorney-in-fact shall be conclusive
evidence in favor of any third person of the right of the Board of Directors so
to confer or delegate such powers; and the exercise by any attorney-in-fact of
any powers so conferred or delegated shall in all respects be binding upon the
Corporation.

         SECTION 15. Additional Powers and Duties. In addition to the foregoing
                     ----------------------------
especially enumerated duties and powers, the several officers of the Corporation
shall perform such other duties and exercise such further powers as may be
provided by these Bylaws or as the Board of Directors may, from time to time,
determine, or as may be assigned to them by any competent superior officer.


                                     - 11 -



         SECTION 16. Compensation.  The compensation of all officers of the
                     ------------
Corporation shall be fixed, from time to time, by the Board of Directors.

         SECTION 17. Designated Positions and Titles. The Chief Executive
                     -------------------------------
Officer may, from time to time, designate employees ("Designated Employees") to
serve in such designated capacities for the Corporation and to hold such nominal
titles (such as a designated officer of a group, division or of another area of
the business affairs of the Corporation) as the Chief Executive Officer may deem
appropriate. No individual designated pursuant to this Section 17 shall, by
reason of such designation, become an officer of the Corporation. Each
Designated Employee shall perform such duties and shall have such authority as
shall be delegated to him from time to time by the Chief Executive Officer. Any
title granted to any Designated Employee pursuant to this Section 17 may be
withdrawn, with or without cause, at any time by the Chief Executive Officer,
and any duty or authority delegated to any Designated Employee pursuant to this
Section 17 may be withdrawn, with or without cause, at any time by the Chief
Executive Officer.

         Section 18. Division President. The Division Presidents shall have such
                     ------------------
powers and duties as from time to time may be conferred upon or assigned to him
or her by the Board of Directors or the Chief Executive Officer. The position of
Division President is considered to be an officer of the Corporation and will be
reelected by the Board of Directors at its annual meeting.

                                   ARTICLE VI

                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

         SECTION 1. Indemnified Parties. Every person (and the heirs and
                    -------------------
personal representatives of such person) who is or was a director, officer,
employee or agent of the Corporation, or of any other corporation, partnership,
joint venture, trust or other enterprise in which he served as such at the
request of the Corporation, shall be indemnified by the Corporation in
accordance with the provisions of this Article VI against any and all liability
and expense (including, without limitation, counsel fees and disbursements, and
amounts of judgments, fines or penalties against, or amounts paid in settlement
by, a director, officer, employee or agent) actually and reasonably incurred by
him in connection with or resulting from any threatened, pending or completed
claim, action, suit or proceeding, whether civil, criminal, administrative, or
investigative or in connection with any appeal relating thereto, in which he may
become involved, as a party or otherwise, or with which he may be threatened, by
reason of his being or having been a director, officer, employee or agent of the
Corporation or such other corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action taken or omitted by him in his
capacity as such director, officer, employee or agent whether or not he
continues to be such at the time such liability or expense shall have been
incurred.

         SECTION 2. Indemnification As of Right. Every person (and the heirs and
                    ---------------------------
personal representatives of such person) referred to in Section I of this
Article VI, to the extent that such person has been successful on the merits or
otherwise with respect to any claim, action, matter, suit or proceeding of the
character described in Section 1, shall be entitled to indemnification as of
right for expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith.

         SECTION 3. Indemnification Based on Review. Except as provided in
                    -------------------------------
Section 2 of this Article VI, upon receipt of a claim for indemnification
hereunder, the Corporation shall proceed as follows, or as otherwise permitted
by applicable law. If the claim is made by a director or officer of the
Corporation,

                                     - 12 -



the Board of Directors, by a majority vote of a quorum consisting of directors
who were not parties to the applicable action, suit or proceeding, shall
determine whether the claimant met the applicable standard of conduct as set
forth in Subsections (A) and (B) below. If such quorum is not obtainable or,
even if obtainable, a quorum of disinterested directors so directs, such
determination shall be made by independent legal counsel (who may be the regular
inside or outside counsel of the Corporation) in a written opinion. If such
determination has not been made within 90 days after the claim is asserted, the
claimant shall have the right to require that the determination be submitted to
the shareholders at the next regular meeting of shareholders by vote of a
majority of the shares entitled to vote thereon. If a claim is made by a person
who is not a director or officer of the Corporation, the Chief Executive Officer
and the general counsel of the Corporation shall determine, subject to
applicable law, the manner in which there shall be made the determination as to
whether the claimant met the applicable standard of conduct as set forth in
Subsections (A) and (B) below. In the case of each claim for indemnification,
the Corporation shall pay the claim to the extent the determination is favorable
to the person making the claim.

         (A) In the case of a claim, action, suit or proceeding other than by or
in the right of the Corporation to procure a judgment in its favor, the
director, officer, employee or agent must have acted in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
in addition, in any criminal action or proceeding, had no reasonable cause to
believe that his conduct was unlawful. In addition, any director seeking
indemnification must not have been adjudged liable on the basis that any
personal benefit was received by him. For the purpose of this Subsection (A),
the termination of any claim, action, suit or proceeding, civil, criminal or
administrative, by judgment, order, settlement (either with or without court
approval) or conviction, or upon a plea of guilty or nolo contenders or its
equivalent, shall not create a presumption that a director, officer, employee or
agent did not meet the standards of conduct set forth in this Subsection.

         (B) In the case of a claim, action, suit or proceeding by or in the
right of the Corporation to procure a judgment in its favor, the director,
officer, employee or agent must have acted in good faith in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; provided, however, that no indemnification under this Subsection
(B) shall be made (1) with regard to any claim, issue or matter as to which such
director, officer, employee or agent shall have been adjudged to be liable to
the Corporation unless and only to the extent that the court in which such
action or suit was brought shall determine that, despite the adjudication of
liability but in view of all the circumstances of the case, such director,
officer, employee or agent is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper, or (2) for amounts paid, or
expenses incurred, in connection with the defense or settlement of any such
claim, action, suit or proceeding, unless a court of competent jurisdiction has
approved indemnification with regard to such amounts or expenses.

         SECTION 4. Advances. Expenses incurred with respect to any claim,
                    --------
action, suit or proceeding of the character described in Section 1 of this
Article VI shall be advanced by the Corporation prior to the final disposition
thereof upon receipt of an undertaking by or on behalf of the recipient to repay
such amount if it shall be ultimately determined that he is not entitled to
indemnification under this Article VI.

         SECTION 5. General. The rights of indemnification and advancement of
                    -------
expenses provided in this Article VI shall be in addition to any rights to which
any such director, officer, employee or other person may otherwise be entitled
by contract or as a matter of law. Each person who shall act as a director,
officer, employee or agent of the Corporation or of any other corporation
referred to in Section 1 of this Article VI, shall be deemed to be doing so in
reliance upon the right of indemnification provided for in this Article VI, and
this Article VI constitutes a contract between the Corporation and each of the


                                     - 13 -



persons from time to time entitled to indemnification hereunder, and the rights
of each such person hereunder may not be modified without the consent of such
person.

                                   ARTICLE VII

                           STOCK AND TRANSFER OF STOCK

         SECTION 1. Direct Registration of Shares. The Corporation may, with the
                    -----------------------------
Board of Directors' approval, participate in a direct registration system
approved by the Securities and Exchange Commission and by the New York Stock
Exchange or any securities exchange on which the stock of the Corporation may
from time to time be traded, whereby shares of capital stock of the Corporation
may be registered in the holder's name in uncertificated, book-entry form on the
books of the Corporation.

         SECTION 2. Stock Certificates. Except in the case of shares represented
                    ------------------
in book-entry form under a direct registration system contemplated in Section 1
of this Article VII, every shareholder shall be entitled to a certificate signed
by the Chairman, the President or a Vice President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer, certifying the
number of shares owned by him in the Corporation and that those shares are fully
paid and non-assessable. Where any such certificate is countersigned by either a
Transfer Agent or a Registrar (other than the Corporation or one of its
employees) designated by the Corporation for that purpose, any other signature
on such certificate may be a facsimile, engraved, stamped or printed. In case
any person who served as any such officer shall have signed any such certificate
or whose facsimile signature shall have been placed thereon shall have ceased to
hold such office prior to the issue of such certificate, such certificate may be
issued at the direction of the Corporation with the same effect as if such
person held such office at the date of the issue of such certificate.

         SECTION 3. Transfer Agents and Registrars. The Board of Directors may,
                    ------------------------------
in its discretion, appoint responsible banks or trust companies in such city or
cities as the Board may deem advisable, from time to time, to act as Transfer
Agents and Registrars of the stock of the Corporation; and, upon such
appointments being made, no stock certificate shall be valid until countersigned
by one of such Transfer Agents and registered by one of such Registrars.

         SECTION 4. Transfer of Stock. Except in the case of shares represented
                    -----------------
in book-entry form under a direct registration system contemplated in Section 1
of this Article VII, shares of stock may be transferred by delivery of the
certificates therefor, accompanied either by an assignment, in writing on the
back of the certificates or by written power of attorney to sell, assign and
transfer the same, signed by the record holder thereof; but no transfer shall
affect the right of the Corporation to pay any dividend upon the stock to the
holder of record thereof, or to treat the holder of record as the holder in fact
thereof for all purposes, and no transfer shall be valid, except between the
parties thereto, until such transfer shall have been made upon the books of the
Corporation.

         SECTION 5. Lost Certificates. In case any certificate of stock shall be
                    -----------------
lost, stolen or destroyed, the Board of Directors or the Executive Committee, in
its discretion, may authorize the issue of a substitute certificate in place of
the certificate so lost, stolen or destroyed, and may cause such substitute
certificate to be countersigned by the appropriate Transfer Agent and registered
by the appropriate Registrar; provided, that, in each such case, the applicant
for a substitute certificate shall furnish to the Corporation, or to its
Transfer Agents and Registrars, satisfactory evidence of the loss, theft or


                                     - 14 -



destruction of such certificate and of the ownership thereof, and also such
security or indemnity as may be required by any of such parties.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         SECTION 1. Inspection of Books and Records. The Board of Directors
                    -------------------------------
shall have power to determine which accounts, books and records of the
Corporation shall be opened to the inspection of shareholders, except those as
may by law specifically be made open to inspection, and shall have power to fix
reasonable rules and regulations not in conflict with the applicable law for the
inspection of accounts, books and records which by law or by determination of
the Board of Directors shall be open to inspection. Without the prior approval
of the Board of Directors in its discretion, the right of inspection set forth
in Section 14-2-1602(c) of the Georgia Business Corporation Code shall not be
available to any shareholder owning two percent or less of the shares
outstanding.

         SECTION 2. Fiscal Year. The fiscal year of the Corporation shall end on
                    -----------
the Saturday closest to December 31. The quarterly periods shall be on a 13 week
basis ending on a Saturday.

         SECTION 3. Surety Bonds. Such officers or agents of the Corporation as
                    ------------
the Board of Directors may direct, from time to time, shall be bonded for the
faithful performance of their duties, in such amounts and by such surety
companies as the Board of Directors may determine. The premiums on such bonds
shall be paid by the Corporation, and the bonds so furnished shall be in the
custody of the Secretary.

         SECTION 4. Signature of Negotiable Instruments. All bills, notes,
                    -----------------------------------
checks or other instruments for the payment of money shall be signed or
countersigned by such officers and in such manner as, from time to time, may be
prescribed by resolution (whether general or special) of the Board of Directors.

         SECTION 5. Conflict with Articles of Incorporation. In the event that
                    ---------------------------------------
any provision of these Bylaws conflicts with any provision of the Articles of
Incorporation, the Articles of Incorporation shall govern.

         SECTION 6. Election of Certain Provisions of Georgia Business
                    --------------------------------------------------
Corporation Code. All requirements and provisions of Parts 2 and 3 of Article 11
- ----------------
of the Georgia Business Corporation Code, as may be in effect from time to time,
including any successor statutes, shall be applicable to any "business
combination" (as respectively defined in Parts 2 and 3 of such Article 11) of
the Corporation.

                                   ARTICLE IX

                                   AMENDMENTS

         Subject to the provisions of the Georgia Business Corporation Code, the
Board of Directors shall have the power to alter, amend or repeal these Bylaws
or to adopt new bylaws, but any bylaws adopted by the Board of Directors may be
altered, amended or repealed, and new bylaws adopted, by the shareholders. The
shareholders may prescribe that any bylaw or bylaws adopted by them shall not be
altered, amended or repealed by the Board of Directors. Action by the directors
with respect to the

                                     - 15 -



Bylaws shall be taken by an affirmative vote of a majority
of all of the directors then in office. Except as provided in the Articles of
Incorporation, action by the shareholders with respect to the Bylaws shall be
taken by an affirmative vote of the holders of a majority of the voting power of
the outstanding capital stock of the Corporation entitled to vote generally in
the election of directors, voting as a separate voting group.

           The undersigned Secretary of Georgia-Pacific Corporation, a Georgia
corporation, hereby certifies that the foregoing is a true and complete copy of
the Bylaws of the said Corporation, as at present in full force and effect.

           Witness the hand of the undersigned and the seal of the said
Corporation effective this 1st day of February, 2002.


                                           /s/ Kenneth F. Khoury
                                           -------------------------------------
                                           Kenneth F. Khoury
                                           Vice President, Deputy General
                                             Counsel and Secretary

                                     - 16 -

EX-4.7

                                                                     EXHIBIT 4.7

                          FIRST SUPPLEMENTAL INDENTURE

         FIRST SUPPLEMENTAL INDENTURE dated as of September 19, 1997 between
FORT JAMES CORPORATION, formerly James River Corporation of Virginia, a
corporation duly organized and existing under the laws of the Commonwealth of
Virginia (the "Company") and THE BANK OF NEW YORK, a New York corporation, as
Trustee (the "Trustee").

                             RECITALS OF THE COMPANY

         WHEREAS, the Company has heretofore executed and delivered to the
Trustee a certain Indenture, dated as of November 1, 1991 (the "Original
Indenture"), pursuant to which one or more series of unsecured debentures,
securities or other evidences of indebtedness of the Company (the "Securities")
may be issued from time to time; and

         WHEREAS, Section 901 of the Original Indenture provides that, without
the consent of any Holders of Securities or coupons, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into an indenture supplemental to the Original Indenture for the
purpose, among other things, of (i) changing or eliminating any of the
provisions of the Original Indenture, provided that such change or elimination
shall become effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is entitled
to the benefit of such provision; (ii) establishing the form or terms of
Securities of any series and any related coupons as permitted by Sections 201
and 301 of the Original Indenture; or (iii) making any other provisions with
respect to matters or questions arising under the Original Indenture, provided
that such actions shall not adversely affect the interest of the Holders of
Securities of any series or any related coupons in any material respect; and

         WHEREAS, the Company, pursuant to the foregoing authority, desires to
amend and supplement the Original Indenture in certain respects.

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, it is
mutually agreed, for the equal and proportionate benefit of all Holders of
Securities of any series originally issued after the date hereof, as follows:

                                   ARTICLE ONE

         The Original Indenture is supplemented and amended in the following
respects:

         1. The introductory paragraph of the Original Indenture is hereby
amended by inserting the words "Fort James Corporation, formerly" prior to the
words "James River Corporation of Virginia."





         2. Section 301 of the Original Indenture is amended by deleting the
word "and" after the semicolon in clause 16 and inserting after clause 16 the
following:

            "(17) provisions, if any granting special rights to the
            Holders of Securities of the series upon the occurrence of
            such events as may be specified;
            (18) any deletions from, modifications of or additions to the
            Events of Default or covenants (including any deletions from,
            modifications of or additions to Section 1010) of the Company with
            respect to Securities of the series, whether or not such Events of
            Default or covenants are consistent with the Events of Default or
            covenants set forth herein;
            (19) whether, under what circumstances and the currency in which
            the Company will pay additional amounts as contemplated by Section
            1010 on the Securities of the series to any Holder who is not a
            United States person (including any modification to the definition
            of such term) in respect of any tax, assessment or governmental
            charge and, if so, whether the Company will have the option to
            redeem such Securities rather than pay such additional amounts
            (and the terms of any such option); and"

         In addition clause 17 of Section 301 of the Original Indenture is
renumbered as clause 20.

         3. Clause 5 of Section 501 of the Original Indenture is amended by
deleting the phrase "at least $10,000,000 aggregate principal amount of
indebtedness for borrowed money" and replacing it with the phrase "at least
$25,000,000 individually or $50,000,000 in the aggregate of principal amount of
indebtedness for borrowed money" and by deleting the period at the end of such
clause and inserting in lieu thereof "; or".

         4. Clause 8 of Section 501 of the Original Indenture is hereby
renumbered as clause 9, and the following is added as a new clause 8 of Section
501 of the Original Indenture:

            "(8) failure within 60 days to pay, bond or otherwise
            discharge any uninsured final judgment or court order
            rendered against the Company or any Subsidiary requiring the
            payment of money in excess of $50,000,000 which is not stayed
            on appeal or is not otherwise being contested in good faith".

         5. After Section 906 of the Original Indenture, the following is added
as Section 907 of the Original Indenture:

            "Section 907.  Notice of Supplemental Indentures.

                     Promptly after the execution by the Company and the
             Trustee of any supplemental indenture pursuant to the
             provisions of Section 902, the Company shall give notice
             thereof to the Holders of the Outstanding Securities
             affected, in the manner provided for in Section 106, setting
             forth in general terms the substance of such supplemental
             indenture."

                                       2




         6.  Subsection (a) of Section 1006 of the Original Indenture is hereby
amended as follows:

             (a) The words "create or assume" are deleted and replaced
             with the words "create, incur, assume or guarantee" in each
             place in which they appear.

             (b) In additional, the words "indebtedness that is secured by
             a" are added prior to the word "mortgage" in the third line,
             and the words "indebtedness that is secured by" are added
             prior to the words "any of the following" at the end of the
             paragraph.

         7.  Clause (vii) of subsection 1006(a) of the Original Indenture is
hereby amended by adding at the end thereof the phrase "or liens existing at the
date of the original issuance of the Securities of a Series".

         8.  The current clause (xiii) of subsection 1006(a) of the Original
Indenture is renumbered as clause (xiv) and the following is added as clause
(xiii) of subsection 1006(a) of the Original Indenture:

             "(xiii) guarantees of indebtedness that are secured by a lien on
             Principal  Property located outside of the United States;"

         In addition, the reference in clause (xiii) of subsection 1006(a) of
the Original Indenture (now renumbered clause (xiv) of subsection 1006(a)
pursuant to this supplement) to clause (xii) shall be amended to be "this clause
(xiv)".

         9.  Clause (ii) of subsection 1006(b) of the Original Indenture is
deleted and replaced with the following:

             "(ii) "Consolidated Net Tangible Assets" means the total of
             all assets at their net book value (after deducting related
             depreciation, depletion, amortization and all other valuation
             reserves which, in accordance with generally accepted
             accounting principles, should be set aside in connection with
             the business conducted) after deducting therefrom (A) all
             current liabilities and (B) the value of all goodwill,
             tradenames, trademarks, patents and other intangible assets,
             in each case net of applicable amortization, as appearing on
             a consolidated balance sheet of the Company and its
             consolidated Subsidiaries, prepared in accordance with
             generally accepted accounting principles."

        10.  Clause (iii) of  subsection  1006(b) o of the Original  Indenture
is amended by inserting  after the word "means" the following:  ", without
duplication." In addition,  the following shall be inserted in the provision of
clause (iii) of subsection (b), after the phrase "shall not include:"


                                       3




             "any guarantee of indebtedness secured by a lien on a
             Principal Property located outside of the United States or
             any guarantee by any Restricted Subsidiary the primary assets
             of which are Principal Properties located outside of the
             United States, or".

        11.  Clause (iv) of subsection 1006(b) of the Original Indenture is
deleted and replaced with the following:

             "(iv) Principal Property" means any manufacturing plant,
             research facility or warehouse owned or leased by the Company
             or any Restricted Subsidiary which has a net book value
             exceeding 2.5% of Consolidated Net Tangible Assets, but not
             including (1) any property which in the opinion of the
             Company is not of material importance to the total business
             conducted by the Company as an entirety or (2) any portion of
             a particular property which is similarly found not to be of
             material importance to the use or operation of such
             property."

        12.  The following is added at the end of Section 1006 of the Original
Indenture as a new subsection (c):

             "(c) For purposes of this Section 1006, the giving of a
             guarantee which is secured by a lien on a Principal Property
             (including shares of capital stock or indebtedness), other
             than a Principal Property located outside of the United
             States, of a Restricted Subsidiary, and the creation of a
             lien on a Principal Property (including shares of capital
             stock or indebtedness) of the Company or any Restricted
             Subsidiary to secure indebtedness which existed prior to the
             creation of such lien, shall be deemed to involve the
             creation of indebtedness in an amount equal to, with
             duplication, the principal amount secured by such lien."

        13. In the second line of Section 1007 of the Original Indenture, the
words "after the date of this Original Indenture" are inserted before the word
"enter."

        14.  Section 1008 of the Original Indenture is deleted and replaced with
the following:

             "Section 1008. Exemption from Limitation on Liens and Sale and
             Lease-Back Transactions.

             Notwithstanding the provisions of Sections 1006, 1007 and 1009,
             the Company or any Restricted Subsidiary may, without equally
             and ratably securing the Outstanding Securities, create, incur,
             assume or guarantee indebtedness secured by liens and enter into
             Sale and Lease-Back Transactions which would otherwise be
             restricted by such provisions, provided that at the time such
             indebtedness secured by liens is created, incurred, assumed or
             guaranteed or such Sale and Lease-Back transaction is entered
             into (and after giving effect to the transactions, to the
             receipt and

                                       4




             application of the net proceeds thereof and the retirement of
             any indebtedness which is concurrently being retired out of such
             proceeds) the sum of the aggregate indebtedness secured by such
             liens plus the Attributable Debt of all Sale and Lease-Back
             Transactions then outstanding shall not exceed 10% of
             Consolidated Net Tangible Assets, as determined in accordance
             with the most recent published consolidated balance sheet of the
             Company."

        15. The Original Indenture is hereby amended by deleting the term
"James River Corporation of Virginia" and replacing it with the term "Fort James
Corporation" in each place in which such term appears in Exhibits A through G.1
to the Original Indenture. Likewise, the cover page to the Original Indenture
and the reference table listing "Certain Sections of this Indenture relating to
Section 310 through 318 of the Trust Indenture Act of 1939" are hereby amended
by deleting the term "James River Corporation of Virginia" and replacing it with
the term "Fort James Corporation" in each place in which such term appears.

                                   ARTICLE TWO

         1. All terms used in this Supplemental Indenture which are defined in
the Original Indenture and not otherwise defined herein shall have the meanings
assigned to such terms in the Original Indenture.

         2. All of the provisions of this Supplemental Indenture shall be deemed
to be incorporated in, and made a part of, the Original Indenture; and the
Original Indenture, as supplemented by this Supplemental Indenture, shall be
read, taken and construed as one and the same instrument and shall be binding
upon all the Holders of Securities of any series originally issued after the
date hereof.

         3. This Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and same instrument.

         4. All covenants and agreements in this Supplemental Indenture by the
Company and the Trustee shall bind their respective successors and assigns,
whether so expressed or not.

         5. In case any provision in this Supplemental Indenture shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

         6. Nothing in this Supplemental Indenture, express or implied, shall
give any person, other than the parties hereto and their successors hereunder
and the Holders of Securities of any series originally issued after the date
hereof, any benefit or any legal or equitable right, remedy or claim under this
Supplemental Indenture. This Supplemental Indenture only applies to series of
Securities originally issued after the date hereof. Except as expressly
supplemented or amended as set forth in this Supplemental Indenture, the
Original Indenture is hereby ratified and confirmed, and all the terms,
provisions and conditions thereof shall be and continue in full force

                                       5



and effect. The Trustee accepts the trusts created by the Original Indenture, as
amended and supplemented by this Supplemental Indenture, and agrees to perform
the same upon the terms and conditions in the Original Indenture as amended and
supplemented by this Supplemental Indenture.

         7. This Supplemental Indenture shall be construed and governed by and
in accordance with the laws of the State of New York without regard to its
conflict of laws principles.

                                       6




         IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the date and year first above written.


                                            FORT JAMES CORPORATION


                                            By:  /s/ Clifford A. Cutchins, IV
                                                 ------------------------------
                                                 Name:  Clifford A. Cutchins, IV
                                                 Title:  Sr. Vice President

(Seal)

Attest:



/s/ Susan O. Self
- ------------------------------------
Name:  Susan O. Self
Title:  Assistant Corporate Secretary


                                            THE BANK OF NEW YORK


                                            By:  /s/ Mary LaGumina
                                                 -----------------------------
                                                 Name:  Mary LaGumina
                                                 Title:  Asst. Vice President

                                       7

EX-10.10(III)

                                                             Exhibit 10.10(iii)


                                  $900,000,000

           SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

                          Dated as of December 19, 2001

                                      Among

                              G-P RECEIVABLES, INC.

                                  as the Seller
                                  -------------

                           GEORGIA-PACIFIC CORPORATION

                             as the Collection Agent
                             -----------------------

                                 CITIBANK, N.A.
                        COMMERZBANK AG (NEW YORK BRANCH)
               THE BANK OF TOKYO-MITSUBISHI, LTD (NEW YORK BRANCH)
                                       AND
                               WACHOVIA BANK, N.A.

                           as the Secondary Purchasers
                           ---------------------------

                                       and

                          CITICORP NORTH AMERICA, INC.

                           as the Administrative Agent
                           ---------------------------



                                TABLE OF CONTENTS



                                                                                                              Page No.
                                                                                                              --------
                                                                                                           
                             ARTICLE I. DEFINITIONS

SECTION 1.01             Certain Defined Terms....................................................................1
                         ---------------------
SECTION 1.02             Defined Terms Incorporated by Reference..................................................5
                         ---------------------------------------
SECTION 1.03             Other Terms..............................................................................6
                         -----------

                 ARTICLE II. AMOUNTS AND TERMS OF THE PURCHASES

SECTION 2.01             Purchase Facility........................................................................6
                         -----------------
SECTION 2.02             Making Purchases.........................................................................9
                         ----------------
SECTION 2.03             Incorporation by Reference...............................................................9
                         --------------------------
SECTION 2.04             Incorporation by Reference..............................................................10
                         --------------------------
SECTION 2.05             Fees....................................................................................10
                         ----
SECTION 2.06             Incorporation by Reference..............................................................10
                         --------------------------
SECTION 2.07             Incorporation by Reference..............................................................10
                         --------------------------
SECTION 2.08             Yield Protection........................................................................10
                         ----------------
SECTION 2.09             Incorporation by Reference..............................................................11
                         --------------------------
SECTION 2.10             Incorporation by Reference..............................................................11
                         --------------------------

                      ARTICLE III. CONDITIONS OF PURCHASES

SECTION 3.01             Conditions Precedent to Initial Purchase................................................12
                         ----------------------------------------
SECTION 3.02             Conditions Precedent to All Purchases and Reinvestments.................................12
                         -------------------------------------------------------

                   ARTICLE IV. REPRESENTATIONS AND WARRANTIES

SECTION 4.01             Incorporation by Reference..............................................................13
                         --------------------------

                              ARTICLE V. COVENANTS

SECTION 5.01             Incorporation by Reference..............................................................13
                         --------------------------

                    ARTICLE VI. ADMINISTRATION AND COLLECTION

SECTION 6.01             Designation of Collection Agent.........................................................14
                         -------------------------------
SECTION 6.02             Duties of Collection Agent..............................................................14
                         --------------------------
SECTION 6.03             Rights of the Administrative Agent......................................................16
                         ----------------------------------
SECTION 6.04             Responsibilities of the Seller..........................................................17
                         ------------------------------


                                       i


                                                                                                           
SECTION 6.05             Further Actions Evidencing Purchases....................................................17
                         ------------------------------------
SECTION 6.06             Collection Agent Fee....................................................................18
                         --------------------

                       ARTICLE VII. EVENTS OF TERMINATION

SECTION 7.01             Incorporation by Reference; Additional Events of Termination............................18
                         ------------------------------------------------------------

                          ARTICLE VIII. INDEMNIFICATION

SECTION 8.01             Indemnities by the Seller...............................................................20
                         -------------------------
SECTION 8.02             Contribution............................................................................22
                         ------------

                      ARTICLE IX. THE ADMINISTRATIVE AGENT

SECTION 9.01             Authorization and Action................................................................23
                         ------------------------
SECTION 9.02             UCC Filings.............................................................................23
                         -----------
SECTION 9.03             Administrative Agent's Reliance, Etc....................................................23
                         -------------------------------------
SECTION 9.04             Citicorp and Affiliates.................................................................24
                         -----------------------
SECTION 9.05             Secondary Purchasers' Purchase Decisions................................................24
                         ----------------------------------------
SECTION 9.06             Indemnification.........................................................................24
                         ---------------
SECTION 9.07             Successor Administrative Agent..........................................................25
                         ------------------------------

                  ARTICLE X. ASSIGNMENT OF RECEIVABLE INTERESTS

SECTION 10.01            Assignment..............................................................................25
                         ----------
SECTION 10.02            Effects of Assignment...................................................................26
                         ---------------------
SECTION 10.03            Additional Secondary Purchasers.........................................................27
                         -------------------------------

                            ARTICLE XI. MISCELLANEOUS

SECTION 11.01            Amendments, Etc.........................................................................27
                         ---------------
SECTION 11.02            Notices, Etc............................................................................27
                         ------------
SECTION 11.03            Assignability; Termination..............................................................27
                         --------------------------
SECTION 11.04            Costs, Expenses and Taxes...............................................................28
                         -------------------------
SECTION 11.05            Confidentiality.........................................................................29
                         ---------------
SECTION 11.06            No Recourse.............................................................................29
                         -----------
SECTION 11.07            Governing Law; Execution in Counterparts................................................29
                         ----------------------------------------
SECTION 11.08            Construction of Agreement...............................................................29
                         -------------------------
SECTION 11.09            Actions by Secondary Purchasers.........................................................30
                         -------------------------------



                                       ii



EXHIBITS
- --------

EXHIBIT A      Form of Assignment Agreement

EXHIBIT B      Addendum to Agreement

                                      iii



          AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT dated as of
December 19, 2001 among G-P Receivables, Inc., a Delaware corporation (the
"Seller"), GEORGIA-PACIFIC CORPORATION, a Georgia corporation (the "Collection
 ------                                                             ----------
Agent"), CITIBANK, N.A. ("Citibank"), COMMERZBANK AG (NEW YORK BRANCH)
- -----                     --------
("Commerzbank"), THE BANK OF TOKYO-MITSUBISHI, LTD. (NEW YORK BRANCH) ("BTM")
  -----------                                                           ---
and WACHOVIA BANK, N.A. ("Wachovia") (each of Citibank, Commerzbank, BTM and
                          --------
Wachovia, individually, a "Secondary Purchaser", and, collectively, the
                           -------------------
"Secondary Purchasers") and CITICORP NORTH AMERICA, INC. ("Citicorp"), as agent
 --------------------                                      --------
(the "Administrative Agent") for the Secondary Purchasers. Unless defined
      --------------------
elsewhere herein, capitalized terms used in this Agreement shall have the
meanings assigned to such terms in Article I hereof.

                                   ARTICLE I.
                                   DEFINITIONS

     SECTION 1.01 Certain Defined Terms.
                  ---------------------

     As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):

     "Addendum" means an addendum to this Agreement, in substantially the form
of Exhibit B hereto, pursuant to which an Additional Secondary Purchaser becomes
a party to this Agreement.

     "Additional Secondary Purchaser" means each Secondary Purchaser as shall
become a party to this Agreement by execution of an Addendum pursuant to Section
10.03 hereof.

     "Adjusted LIBOR Rate" means, with respect to a Secondary Purchaser for any
Fixed Period, the rate per annum obtained by dividing (a) the arithmetic average
(rounded upwards, if necessary, to the nearest multiple of one-sixteenth of one
percent per annum) of (i) the offered rates for deposits in United States
dollars which appear on the display designated as page "LIBO" (or any successor
page quoting the offered rates for United States dollars in the London interbank
market) on the Reuter Monitor Money Rates Service, or (ii) if such rates are not
obtainable from the Reuter Monitor Money Rates Service, the respective rates
notified to the Secondary Purchaser by each of the Reference Banks as the rate
at which it would offer deposits in United States dollars to prime banks in the
London interbank market, in either case for a period equal to such Fixed Period
as such Secondary Purchaser shall select and in an amount comparable to the
aggregate amount of Capital of the Receivable Interest to be funded or
maintained at or about 11:00 a.m. (London time) on the second Business Day
before (and for value on) the first day of such period by (b) a percentage equal
to (i) 100% minus (ii) the Eurodollar Reserve Percentage for such Fixed Period.

     "Aggregate Capital" means, at the time of any determination thereof with
respect to a Secondary Purchaser, the sum of the Capital for all Receivable
Interests of such Secondary Purchaser.



     "Base Rate" means, for any day, a fluctuating rate per annum equal to the
rate of interest in effect for such day as publicly announced from time to time
by the Administrative Agent as its "prime rate." Such rate is a rate set by the
Administrative Agent based upon various factors including the Administrative
Agent's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate. Any change in such rate announced by the
Administrative Agent shall take effect at the opening of business on the day
specified in the public announcement of such change.

     "Capital" of any Receivable Interest owned by a Secondary Purchaser means
the original amount paid by such Secondary Purchaser to the Seller or to a
Purchaser (in connection with an assignment as contemplated by Section 2.02(c)),
as the case may be, for such Receivable Interest at the time of its purchase by
such Secondary Purchaser pursuant to this Agreement, or such amount divided or
combined in accordance with Section 2.07, in each case reduced from time to time
by Collections distributed on account of such Capital pursuant to Section 2.04;
provided, that if such Capital shall have been reduced by any distribution and
- --------
thereafter all or a portion of such distribution is rescinded or must otherwise
be returned for any reason, such Capital shall be increased by the amount of
such rescinded or returned distribution, as though it had not been made;
provided, further, that such Capital shall not be reduced for the purposes of
- --------  -------
this Agreement to the extent and so long as Collections to be used to effect an
Optional Reduction or a Mandatory Reduction are retained by the Collection Agent
(if the Seller or an Affiliate thereof).

     "Collection Agent" means at any time the Person (which may include the
Administrative Agent) then authorized pursuant to Article VI to service,
administer and collect Pool Receivables.

     "Collection Agent Fee" has the meaning specified in Section 6.06.

     "Commitment" means (i) for all Secondary Purchasers in the aggregate an
amount equal to $900,000,000 initially, or such lesser amount as shall reflect
any reduction pursuant to Section 2.01(b) and (ii) for each Secondary Purchaser,
its Pro Rata Share of such aggregate amount. References to the unused portion of
the Commitment shall mean, at any time, the Commitment in effect at such time,
less the sum of the Total Aggregate Capital under this Agreement and the "Total
Aggregate Capital" under the Primary Purchase Agreement.

     "Eurodollar Reserve Percentage" for any Secondary Purchaser and for any
Fixed Period means the reserve percentage applicable to such Secondary Purchaser
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) (or, if more than one such percentage
shall be so applicable, the weighted daily averages of such percentages for
those days in such Fixed Period during which any such percentage shall be so
applicable) for determining the maximum reserve requirement of such Secondary
Purchaser (including, but not limited to, any emergency, supplemental or other
marginal reserve requirement) with respect to liabilities consisting of or
including Eurocurrency liabilities (as that term is defined in Regulation D of
the Board of Governors of the Federal Reserve System as in effect from time to
time) having a term equal to such Fixed Period.

                                       2



     "Event of Termination" has the meaning specified in Article VII.

     "Expiration Date" has the meaning specified in Section 2.01(j).

     "Facility Termination Date" means the earliest to occur of (i) the
Expiration Date, as determined pursuant to Section 2.01(j), (ii) the date of the
occurrence of an Event of Termination under Section 7.01(i), (iii) the date the
Facility Termination Date is declared pursuant to Section 7.01 or (iv) the date
the Commitment is reduced or falls to zero.

     "Investor Rate" for any Settlement Period for any Receivable Interest
means:

     (a) a rate equal to the weighted average of the Adjusted LIBOR Rates for
the Fixed Periods occurring within such Settlement Period or portion thereof,
plus the total spread in effect for such day over the "Offshore Rate" for an
"Offshore Rate Loan" (each as defined in the Revolving Credit Facility) under
the Revolving Credit Facility, notified to the Seller and the Collection Agent
by the Secondary Purchaser on the first day of each of such Fixed Periods, or
such other rate as such Secondary Purchaser and the Seller shall agree to in
writing.

     (b) if such Receivable Interest is acquired by the Secondary Purchaser
pursuant to Section 2.01(d) hereof, with respect to each day during such
Settlement Period which is either the first, second or third day immediately
following the day notice is given by the Related Purchaser of the assignment of
such Receivable Interest, the Base Rate in effect for such day.

     (c) if during any Settlement Period more than one of the above-mentioned
rates shall be applicable, then the "Investor Rate" for such Settlement Period
shall be the daily weighted average of such applicable rates.

     (d) for any Settlement Period for any Receivable Interest following an
Event of Termination, the "Investor Rate" shall be the Base Rate in effect for
such period plus 2.00%.

     "Liquidation Fee" means, for any Secondary Purchaser and for any Settlement
Period during which a Liquidation Day occurs, the amount, if any, by which (i)
the additional Yield (calculated without taking into account any Liquidation Fee
or any shortened duration of a Fixed Period pursuant to clause (ii) of the
definition thereof) which would have accrued during the remainder of such
Settlement Period on all reductions of Capital of the Receivable Interest during
such Settlement Period exceeds (ii) the income received by such Secondary
Purchaser's investing the proceeds of such reductions of Capital.

     "Liquidation Yield" means, for any Receivable Interest on any date, an
amount equal to the product of (1) the Capital of such Receivable Interest on
such date, (2) the Adjusted LIBOR Rate for such Receivable Interest for a 30-day
Fixed Period to commence on such date multiplied by 1.5 and (3) a fraction
having the sum of the Average Maturity plus the Collection Delay Period (each as
in effect at such date) as its numerator and 360 as its denominator.

     "Originator" means Georgia-Pacific and any direct or indirect Subsidiary of
Georgia-Pacific party to a Transfer Agreement and approved by the Purchasers (as
of the date hereof being those Subsidiaries specified on Schedule V of the
Primary Purchase Agreement).

                                       3



     "Potential Termination Event" means an event which, with the passage of
time or notice or both, would constitute an Event of Termination.

     "Primary Purchase Agreement" means that certain Amended and Restated
Receivables Purchase Agreement dated as of December 19, 2001 among the Seller,
the Purchasers and the Administrative Agent, as the same may, from time to time,
be amended, modified or supplemented.

     "Pro Rata Share" means, for each Secondary Purchaser, the "Pro Rata Share"
of the Related Purchaser under the Primary Purchase Agreement.

     "Purchase" has the meaning specified in Section 2.01(a).

     "Reference Banks" means Citibank, Commerzbank, BTM and Wachovia, or such
other banks as the Secondary Purchasers shall designate with the consent of the
Seller.

     "Related Purchaser" means, with respect to each Purchaser set forth below,
the Person set forth opposite its name, or, in the case of any Additional
Purchaser under the Primary Purchase Agreement, the Person specified as such
Additional Purchaser's Related Purchaser.

CAFCO                              Citibank, N.A.
CRC                                Citibank, N.A.
Four Winds                         Commerzbank AG (New York Branch)
Victory                            The Bank of Tokyo-Mitsubishi, Ltd. (New York
                                   Branch)
Blue Ridge                         Wachovia Bank, N.A.

     "Required Secondary Purchasers" means, at a particular time, Secondary
Purchasers the aggregate Commitment of which equals at least 66.666666% of the
overall Commitment; provided, that the Commitment for any Purchaser that has
breached a material provision of this Agreement shall be zero for so long as
such breach has not been cured.

     "Subsidiary" means, with respect to any Person, any partnership,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity of which more than 50%
of the outstanding equity interests having ordinary voting power to elect a
majority of the board of directors (or others performing a comparable function)
of such entity is at the time directly or indirectly owned by such Person, by
such Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.

     "Total Aggregate Capital" means, at any time of determination, the sum of
the Aggregate Capital for the Secondary Purchasers.

     "Unused Commitment" means, with respect to any Secondary Purchaser, the
Commitment of such Secondary Purchaser less the Aggregate Capital of such
Secondary Purchaser and the "Aggregate Capital" of the Related Purchaser under
the Primary Purchase Agreement.

     "Yield" means for each Receivable Interest for any Settlement Period

                                       4



                                IR x C x ED + LF
                                         --
                                        360

where:

C        =           the daily average  (calculated  at the close of business
                     each day) Capital of such Receivable Interest during
                     such Settlement Period

IR       =           Investor Rate for such Receivable Interest for such
                     Settlement Period

ED       =           the actual number of days elapsed during such
                     Settlement Period

LF       =           the  Liquidation  Fee, if any, for such  Receivable
                     Interest for such  Settlement Period;

provided, that no provision of this Agreement shall require the payment or
- --------
permit the collection of Yield in excess of the maximum permitted by applicable
law; and provided, further, that Yield for any Receivable Interest shall not be
         --------  -------
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.

     SECTION 1.02 Defined Terms Incorporated by Reference. Unless otherwise
                  ---------------------------------------
defined in this Agreement and subject to the modifications herein set forth,
capitalized terms used in this Agreement or in any provisions of the Primary
Purchase Agreement incorporated in this Agreement by reference shall have the
meanings given to them in the Primary Purchase Agreement. Without limiting the
foregoing, the defined terms "Consent and Acknowledgement", "Credit and
Collection Policy", "Default Ratio", "Depositary Bank", "Depositary Notice",
"Investor Report", "Lock-Box Agreement", "Lock-Box Bank", "Originator" and
"Transfer Agreement" are hereby incorporated by reference together with the
related Exhibit E, Schedule III, Schedule VI, Schedule II, Exhibit A, Exhibit B,
Schedule I, Schedule IV and Exhibit C, respectively, of the Primary Purchase
Agreement, as well as Schedule V thereto. All references to "the Administrative
Agent" in provisions of the Primary Purchase Agreement incorporated in this
Agreement by reference shall, without further reference, mean Citicorp
(including its successors and assigns) as Administrative Agent under this
Agreement. Each use of the word "hereunder", "herein" or "hereof" in the
provisions of the Primary Purchase Agreement incorporated in this Agreement by
reference shall, without further reference, be deemed to be a reference to this
Agreement. Unless the context otherwise requires, any reference to a
"Purchaser", the "Required Purchasers" or the "Purchasers" under the Primary
Purchase Agreement shall be deemed to be a reference to a "Secondary Purchaser",
the "Required Secondary Purchasers" or the "Secondary Purchasers" hereunder, and
any reference to any Purchaser individually by name shall be deemed to be a
reference to the "Related Purchaser" hereunder. Furthermore, all references in
such incorporated provisions to "Collections", "Contract", "Net Receivables Pool
Balance", "Pool Receivable", "Receivables Pool" and "Related Security" shall
mean the Collections, a Contract, the Net Receivables Pool Balance, a

                                        5



Pool Receivable, the Receivables Pool and the Related Security under this
Agreement, respectively. To the extent any word or phrase is defined in this
Agreement, any such word or phrase appearing in provisions so incorporated by
reference from the Primary Purchase Agreement shall have the meaning given to it
in this Agreement. The incorporation by reference into this Agreement from the
Primary Purchase Agreement is for convenience only, and this Agreement and the
Primary Purchase Agreement shall at all times be, and be treated as, separate
and distinct agreements. Incorporations by reference in this Agreement from the
Primary Purchase Agreement shall not be affected or impaired by any subsequent
expiration or termination of the Primary Purchase Agreement, nor by any
amendment thereof or waiver thereunder unless the parties hereto shall have
consented to such amendment or waiver in writing.

     SECTION 1.03 Other Terms. All accounting terms not specifically defined
                  -----------
herein shall be construed in accordance with generally accepted accounting
principles. All terms used in Article 9 of the UCC in the State of New York, and
not specifically defined herein, are used herein as defined in such Article 9.

                                  ARTICLE II.
                       AMOUNTS AND TERMS OF THE PURCHASES

     SECTION 2.01 Purchase Facility.
                  -----------------

     (a) Each Secondary Purchaser, in the event that its Related Purchaser shall
have failed to make a "Purchase" of like amount, term and tenor which was
requested by the Seller, or shall have ceased to make reinvestments, in either
case under the Primary Purchase Agreement, subject to the other terms and
conditions hereinafter set forth, hereby purchases Receivable Interests from the
Seller from time to time during the period from the date hereof to the Facility
Termination Date. Under no circumstances shall a Secondary Purchaser make any
Purchase if after giving effect to such Purchase, such Secondary Purchaser's
Aggregate Capital, together with the Related Purchaser's "Aggregate Capital"
under the Primary Purchase Agreement, would exceed such Secondary Purchaser's
Commitment. Notwithstanding anything to the contrary contained herein, until
such time as the parties expressly agree, all Purchases of Receivable Interests
hereunder and under the Primary Purchase Agreement shall be made with respect to
a single Receivables Pool.

     (b) The Seller may, upon at least five Business Days' notice to the
Administrative Agent and the Secondary Purchasers, terminate in whole or reduce
in part the unused portion of the Commitment; provided, that each partial
reduction shall be in the amount of at least $5,000,000 or an integral multiple
thereof and shall be applied pro rata among the Secondary Purchasers according
to their Pro Rata Shares; provided, further, that any partial reduction of the
                          --------  -------
Commitment for any Secondary Purchaser must not result in a remaining Commitment
of less than $25,000,000 or the Commitment for such Secondary Purchaser shall be
reduced to zero. Any reductions in the Commitment pursuant to this subsection
(b) shall be permanent.

     (c) The Seller may, upon at least five Business Days' written notice to the
Administrative Agent and the Secondary Purchasers specifying an Optional
Reduction Amount

                                       6



and an Optional Reduction Effective Date, effect an Optional Reduction.
Commencing on the Optional Reduction Effective Date, the Collection Agent shall
cease the reinvestment of Collections for a period of time such that after
giving effect to the amount of Collections which are not reinvested in
accordance with the provisions of Section 2.04(b)(ii), the amount of Total
Aggregate Capital on the day immediately preceding the Optional Reduction
Effective Date is reduced by an amount equal to the Optional Reduction Amount.
Any Optional Reduction under this subsection (c) shall be applied pro rata among
the Secondary Purchasers according to their Pro Rata Shares. The Seller shall
indemnify any Secondary Purchaser for all losses, expenses and liabilities, if
any (including, without limitation, any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds required by any
Secondary Purchaser in connection with such Secondary Purchaser's funding or
maintenance of the Receivable Interests), which such Secondary Purchaser may
sustain as a result of any Optional Reduction pursuant to this subsection (c).

     (d) The Secondary Purchasers recognize and agree that their respective Pro
Rata Shares shall be reallocated in accordance with any reallocation of the "Pro
Rata Shares" of the Purchasers under the Primary Purchase Agreement. If, as a
result of any reallocation, a Secondary Purchaser's Aggregate Capital exceeds
its Pro Rata Share (as reallocated) of the Commitment, such Secondary Purchaser
shall transfer a Receivable Interest or Receivables Interest computed on the
basis of such excess Capital to the Secondary Purchaser or Secondary Purchasers
whose Pro Rata Share has increased as a result of such reallocation in exchange
for a cash payment in an amount equal to the aggregate Capital of the Receivable
Interests so transferred.

     (e) The Seller may, upon thirty days' prior written notice to the
Administrative Agent and the Secondary Purchasers and the written signed consent
of the Administrative Agent and the Secondary Purchasers, cease purchasing
Receivables from any Originator, and after the Seller ceases purchasing
Receivables from such Originator, such Originator shall no longer have the
obligations of an Originator for all purposes of this Agreement other than with
respect to those obligations which are expressly intended to survive the
termination of this Agreement, including, without limitation, the indemnities
contained in Section 8.01 as incorporated by reference in the Consent and
Acknowledgement to which such Originator is a party. If, as a result of the
Seller's decision to cease purchasing Receivables from any Originator, the
Required Secondary Purchasers determine, in their sole discretion, that the
Events of Termination in Section 7.01(j) or the Reserve are no longer reasonable
or protective, the Secondary Purchasers may modify the provisions of such
Section 7.01(j) or the Reserve with the consent of the Seller (which consent
shall not be unreasonably withheld or delayed).

     (f) The Seller may, upon thirty days' prior written notice to the
Administrative Agent and the Secondary Purchasers and the written signed consent
of the Administrative Agent and the Secondary Purchasers (which consent shall
not be unreasonably withheld or delayed), cease purchasing from any Originator
all Receivables generated by any division of such Originator (an "Originator
                                                                  ----------
Division"), and after the Seller ceases purchasing from such Originator
- --------
Division, all Receivables generated by such Originator Division, any agreement
arising thereafter between such Originator and an Obligor pursuant to or under
which such Obligor shall be obligated to pay for merchandise, insurance or
services provided by such Originator Division, shall not be a "Contract" for
purposes of this Agreement; provided, that any Contract generated by such
                            --------

                                       7



Originator Division prior to the date the Seller ceases purchasing such
Originator Division's Receivables shall remain a "Contract" under this
Agreement. If, as a result of the Seller's decision to cease purchasing from any
Originator all Receivables generated by an Originator Division pursuant to this
Section 2.01(f), the Required Secondary Purchasers determine, in their sole
discretion, that the Events of Termination in Section 7.01(j) or the Reserve are
no longer reasonable or protective, the Secondary Purchasers may modify the
provisions of such Section 7.01(j) or the Reserve with the consent of the Seller
(which consent shall not be unreasonably withheld or delayed).

     (g) The Seller may, upon ninety days' prior written notice to the
Administrative Agent and the Secondary Purchasers and the written signed consent
of the Administrative Agent and the Secondary Purchasers, commence purchasing
from any Originator all Receivables generated by any Originator Division, and
after the Seller commences purchasing from such Originator all Receivables
generated by such Originator Division, all related agreements between the
Originator and an Obligor pursuant to or under which such Obligor shall be
obligated to pay for merchandise, insurance or service provided by such
Originator Division shall be "Contracts" for purposes of this Agreement. If, as
a result of the Seller's decision to commence purchasing from any Originator all
Receivables generated by an Originator Division pursuant to this Section
2.01(g), the Required Secondary Purchasers determine, in their sole discretion,
that the Events of Termination in Section 7.01(j) or the Reserve are no longer
reasonable or protective, the Secondary Purchasers may modify the provisions of
such Section 7.01(j) or the Reserve with the consent of the Seller (which
consent shall not be unreasonably withheld or delayed).

     (h) If Georgia-Pacific sells or otherwise conveys or disposes of the stock
of any Originator, upon the effective date of such sale, such Originator shall
no longer be an Originator under the Primary Purchase Agreement; provided, that
                                                                 --------  ----
if the Required Secondary Purchasers determine, in their sole discretion, that
the Events of Termination in Section 7.01(j) or the Reserve are no longer
reasonable or protective as a result of such sale, the Secondary Purchasers may
modify the provisions of such Section 7.01(j) or the Reserve with the consent of
the Seller (which consent shall not be unreasonably withheld or delayed).

     (i) If Georgia-Pacific Corporation, Fort James Operating Company or any
Restricted Transferee is an Originator and such Originator sells or otherwise
disposes of all or a substantial portion of its assets to any Person other than
another Originator, the Seller shall deliver to the Secondary Purchasers at the
time of such sale a pro forma Investor Report eliminating therefrom the
Receivables of Georgia-Pacific Corporation, Fort James Operating Company or such
Restricted Transferee, as applicable. If, based upon such report, the Required
Secondary Purchasers determine, in their sole discretion, that the Events of
Termination in Section 7.01(j) or the Reserve are no longer reasonable or
protective as a result of such sale, the Secondary Purchasers may modify the
provisions of such Section 7.01(j) or the Reserve with the consent of the Seller
(which consent shall not be unreasonably withheld or delayed).

     (j) The Expiration Date shall be 364 days from the date hereof; provided,
that the Expiration Date may be extended for an additional 364-day period at the
end of each 364-day period from the date hereof if the Seller gives each
Secondary Purchaser written notice not later than 90 days prior to each such
period (beginning with the first such period) and each Secondary Purchaser
provides the Seller with its written consent to such extension not later than 60
days

                                       8



after receipt of the Seller's notice; provided, however, that such extension of
                                      --------  -------
the Expiration Date shall not occur unless each Purchaser consents to similarly
extend the "Facility Termination Date" of the Primary Purchase Agreement.

     SECTION 2.02 Making Purchases.
                  ----------------

     (a) Each Purchase shall be made on at least three Business Days' notice
from the Seller to each Secondary Purchaser. Each such notice shall specify (i)
the amount requested to be paid to the Seller (which shall not be less than
$5,000,000), and (ii) the date of such Purchase (which shall be a Business Day).
Any notice from the Seller to a Related Purchaser to make a "Purchase" under the
Primary Purchase Agreement shall be deemed to satisfy the notice provisions
hereof. No Secondary Purchaser shall be responsible for any failure by any other
Secondary Purchaser to perform its obligations to make a Purchase hereunder nor
shall the Commitment of any Secondary Purchaser be increased or decreased as a
result of such failure.

     (b) On the date of each Purchase, each Secondary Purchaser shall (but only
to the extent its respective Related Purchaser shall not have funded a Purchase
under the Primary Purchase Agreement), upon satisfaction of the applicable
conditions set forth in Section 3.01 and Section 3.02, make available to the
Seller in same day funds, at the Seller's account with Bank One, account number
10-31343, an amount equal to the initial Capital of such Receivable Interest
purchased by such Secondary Purchaser. Each notice given by the Seller pursuant
to subsection (a) above (other than a notice given under the Primary Purchase
Agreement which is deemed to be notice hereunder) shall be irrevocable and
binding on the Seller and the Seller shall indemnify each Secondary Purchaser
against any loss or expense incurred by such Secondary Purchaser as a result of
any failure by the Seller to accept the amount requested to be paid by such
Secondary Purchaser, including, without limitation, any loss (including loss of
anticipated profits) or expense incurred by such Secondary Purchaser by reason
of the liquidation or reemployment of funds acquired or requested by such
Secondary Purchaser to fund such requested amount.

     (c) Each Secondary Purchaser hereby agrees that it may, in its sole
discretion, subject to the satisfaction of the applicable conditions set forth
in Section 3.01 and Section 3.02 hereof and upon the request of such Secondary
Purchaser's Related Purchaser, acquire by assignment from such Related Purchaser
any "Receivable Interest" owned and maintained by such Related Purchaser under
the Primary Purchase Agreement. The Seller hereby agrees that each such
acquisition, if any, shall be considered to be a Purchase requested by the
Seller for all purposes hereunder other than with respect to the obligation of
the Secondary Purchasers to deliver funds to the Seller in respect of such
acquisition and with respect to the requirement of three Business Days' notice
of a Purchase being given by the Seller. The Seller hereby acknowledges that the
Secondary Purchasers may provide Liquidity Facilities to such Secondary
Purchaser's Related Purchaser and nothing in this Section 2.02(c) shall preclude
the assignment by a Purchaser to such Secondary Purchaser under a Liquidity
Facility of any such "Receivable Interest" or any borrowing under any Liquidity
Facility in respect of any such "Receivable Interest" in accordance with the
terms and conditions thereof.

     SECTION 2.03 Incorporation by Reference. Section 2.03 of the Primary
                  --------------------------
Purchase Agreement is hereby incorporated herein by reference, except that each
reference therein to the

                                       9



"Reinvestment Termination Date" shall be deemed to be a reference to the
"Facility Termination Date".

     SECTION 2.04 Incorporation by Reference. Section 2.04 of the Primary
                  --------------------------
Purchase Agreement is hereby incorporated herein by reference.

     SECTION 2.05 Fees. The Seller shall pay to the Secondary Purchasers fees in
                  ----
the amounts and at the times specified in the Fee Letter.

     (a) The Collection Agent (if other than the Seller) shall be paid a
Collection Agent Fee as set forth in Section 6.06 hereof.

     (b) The Seller shall pay to the Administrative Agent a fee as separately
agreed between the Seller and the Administrative Agent.

     SECTION 2.06 Incorporation by Reference. Section 2.06 of the Primary
                  --------------------------
Purchase Agreement is hereby incorporated herein by reference.

     SECTION 2.07 Incorporation by Reference. Section 2.07 of the Primary
                  --------------------------
Purchase Agreement is hereby incorporated herein by reference.

     SECTION 2.08 Yield Protection.
                  ----------------

     (a) If, after the date hereof, the adoption of any applicable law, rule or
regulation, or any change therein, including Regulation D of the Board of
Governors of the Federal Reserve System, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Secondary Purchaser or any Person controlling any Secondary Purchaser, or
any permitted assignee under this Agreement (each of which being an "Affected
Party") with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency,

         (A)  shall subject an Affected Party to any tax (except for taxes on
the overall net income of such Affected Party), duty or other charge with
respect to the Receivable Interests or any right to make purchases, or shall
change the basis of taxation of payments to an Affected Party of its Capital or
Yield or any other amounts due under this Agreement in respect of its Capital or
its rights, if any, to make purchases; or

         (B)  shall impose, modify or deem applicable any reserve requirement
(including, without limitation, any reserve requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve requirement,
if any, included in the determination of Yield), special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Affected Party; or

         (C)  shall impose any other condition affecting the Receivable
Interests or the Secondary Purchaser's rights, if any, to make purchases;

                                       10



and the result of any of the foregoing is (i) to increase the cost to, or, in
the case of Regulation D referred to above, to impose a cost on an Affected
Party funding or making or maintaining any Receivable Interest, or (ii) to
reduce the amount of any sum received or receivable by an Affected Party under
this Agreement with respect thereto, then within ten days after demand by such
Affected Party (which demand shall be accompanied by a statement setting forth
the basis for such demand), the Seller shall pay directly to such Affected Party
such additional amount or amounts as will compensate such Affected Party for
such additional or increased cost incurred or such reduction suffered.

     (b) If an Affected Party shall reasonably determine that the adoption of
any applicable law, rule, regulation, directive or guideline regarding capital
adequacy, or any change in or phase-in of any applicable law, rule, regulation,
directive or guideline or in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by an Affected Party
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on the capital of any
Affected Party as a consequence of its obligations hereunder or arising in
connection herewith to a level below that which any such Affected Party could
have achieved but for such adoption, change or compliance (taking into
consideration the policies of such Affected Party with respect to capital
adequacy) by an amount deemed by such Affected Party to be material, then from
time to time, within ten days after demand by such Affected Party, the Seller
shall pay to such Affected Party such additional amount or amounts as will
compensate such Affected Party for such reduction.

     (c) Each Affected Party will promptly notify the Seller of any event of
which it has knowledge occurring after the date hereof which will entitle such
Affected Party to compensation pursuant to this Section 2.08. If an Affected
Party fails to give such notice within 90 days after it obtains actual knowledge
of such event and such result, such Affected Party shall be entitled to
compensation pursuant to this Section 2.08 only to the extent such additional
amount or reduction accrues on or after the date 90 days prior to the date on
which such Affected Party gives such notice.

     (d) In determining any amount provided for in this Section 2.08, the
Affected Party may use any reasonable averaging and attribution methods. Any
Affected Party making a claim under this Section 2.08 shall submit to the Seller
a certificate as to such additional or increased cost or reduction, which
certificate shall be conclusive absent demonstrable error; provided, that the
                                                           --------
failure to deliver any such certificate shall not affect the Affected Party's
right to payment hereunder unless notice as required by Section 2.08(c) has not
been given.

     SECTION 2.09 Incorporation by Reference. Section 2.09 of the Primary
                  --------------------------
Purchase Agreement is hereby incorporated herein by reference.

     SECTION 2.10 Incorporation by Reference. Section 2.10 of the Primary
                  --------------------------
Purchase Agreement is hereby incorporated herein by reference.

                                       11



                                  ARTICLE III.
                             CONDITIONS OF PURCHASES

     SECTION 3.01 Conditions Precedent to Initial Purchase. The initial Purchase
                  ----------------------------------------
of Receivable Interests under this Agreement is subject to the conditions
precedent that the Secondary Purchasers shall have received on or before the
date of such Purchase the following, each (unless otherwise indicated) dated
such date and in form and substance satisfactory to the Secondary Purchasers and
the Administrative Agent:

     (a) Certificates of the Secretary or Assistant Secretary of the Seller and
each Originator certifying the names and true signatures of their respective
officers authorized to sign this Agreement, the Certificates and the other
documents to be delivered by them hereunder or in connection herewith, evidence
of authorization of the transactions contemplated hereby, the articles of
incorporation or formation (attached and appropriately certified by the
Secretary of State of the Seller's and each Originator's jurisdiction of
incorporation or formation) and the by-laws and all amendments thereto of the
Seller and each Originator.

     (b) Executed financing statements (including any assignments of and
amendments to financing statements previously filed), to be filed on or before
the date of such initial Purchase under the UCC of all jurisdictions that the
Secondary Purchasers or the Administrative Agent may deem necessary or desirable
in order (i) to perfect the ownership interests contemplated by this Agreement
and (ii) to perfect the ownership interests of the Seller in the receivables
purchased by the Seller from the Originators pursuant to the Transfer
Agreements.

     (c) Executed UCC termination statements, if any, necessary to release all
security interests and other rights of any Person (other than the Purchasers and
the Secondary Purchasers) in the Receivables, Contracts or Related Security
previously granted by the Seller or any Originator.

     (d) Evidence (including Uniform Commercial Code search reports) that all
Receivables and all proceeds thereof are free and clear of liens, security
interests, claims and encumbrances other than those held by the Purchasers and
the Secondary Purchasers.

     (e) An executed Transfer Agreement and Consent and Acknowledgment from each
Originator.

     (f) A favorable opinion of counsel for the Seller and for each Originator
as to such matters as the Purchasers or the Administrative Agent may reasonably
request, including, without limitation, bankruptcy opinions with respect to
"true sale" and nonconsolidation.

     SECTION 3.02 Conditions Precedent to All Purchases and Reinvestments. Each
                  -------------------------------------------------------
Purchase (including the initial Purchase and each acceptance of an assignment
pursuant to Section 2.02(c) hereof) and each reinvestment shall be subject to
the further conditions precedent that (a) in the case of each Purchase, the
Collection Agent shall have delivered to the Secondary Purchasers and the
Administrative Agent on or prior to the date of such Purchase, in form and
substance satisfactory to the Secondary Purchasers, all Investor Reports as and
when due under Section 6.02(g) and, on or prior to the date of the initial
Purchase, an Investor Report containing then current information acceptable to
the Secondary Purchasers, and (b) on the date of each

                                       12



Purchase or reinvestment, all conditions specified in respect thereof under
Article II hereof shall have been complied with and the following statements
shall be true (and acceptance of the proceeds of such Purchase or reinvestment
shall be deemed a representation and warranty by the Seller that such statements
are then true):

               (i)   the representations and warranties contained in Article IV
     are correct on and as of the date of such Purchase or reinvestment as
     though made on and as of such date,

               (ii)  no event has occurred and is continuing, or would result
     from such Purchase or reinvestment, that constitutes an Event of
     Termination or a Potential Termination Event,

               (iii) the Facility Termination Date shall not have occurred,

               (iv)  the Internal Revenue Service shall not have filed a notice
     of lien pursuant to Section 6323 of the Code with regard to any assets of
     the Seller or any Originator, and the Pension Benefit Guaranty Corporation
     shall not have filed a notice of lien pursuant to Section 4068 of ERISA
     with regard to any assets of the Seller or any Originator, unless such
     liens (1) have been suspended or (2) are being contested in good faith by
     the Seller or such Originator and have been bonded in the full amount
     thereof; provided, however, that with respect to any Originator, the amount
              --------  -------
     of such lien shall be greater than $50,000,000, and

               (v)   in the case of any particular Secondary Purchaser, its
     respective Related Purchaser shall have failed to make a "Purchase" of like
     amount, term and tenor which was requested by the Seller, or shall have
     ceased to make reinvestments, in either case under the Primary Purchase
     Agreement,

and (c) the Secondary Purchasers shall have received such other approvals,
opinions or documents as they may reasonably request.

                                  ARTICLE IV.
                         REPRESENTATIONS AND WARRANTIES

     SECTION 4.01 Incorporation by Reference. Article IV of the Primary Purchase
                  --------------------------
Agreement is hereby incorporated herein by reference, except that each reference
to the "Secondary Purchase Agreement" shall be deemed to be a reference to the
"Primary Purchase Agreement."

                                   ARTICLE V.
                                    COVENANTS

     SECTION 5.01 Incorporation by Reference. Article V of the Primary Purchase
                  --------------------------
Agreement is hereby incorporated herein by reference, except that each reference
therein to the

                                       13



"Secondary Purchase Agreement" shall be deemed to be a reference to the "Primary
Purchase Agreement."

                                  ARTICLE VI.
                          ADMINISTRATION AND COLLECTION

     SECTION 6.01 Designation of Collection Agent. The administration and
                  -------------------------------
collection of the Pool Receivables shall be conducted by such Person (the
"Collection Agent") so designated from time to time in accordance with this
Section 6.01. Georgia-Pacific is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Collection Agent pursuant to the
terms of this Agreement. The Secondary Purchasers may at any time designate as
Collection Agent any Person (including a Secondary Purchaser or a Purchaser) to
succeed Georgia-Pacific or any successor Collection Agent, if such Person shall
consent and agree to the terms hereof. Unless the Required Secondary Purchasers
determine in their sole discretion that it would be impractical or inadvisable
to do so, the Secondary Purchasers shall give the Seller and the Collection
Agent at least five Business Days' notice of any such designation. The
Collection Agent may, with the prior consent of the Secondary Purchasers,
subcontract with any other Person for the administration and collection of all
or a significant portion of the Pool Receivables; provided, that the Collection
                                                  --------
Agent may, so long as it is the Seller, subcontract with an Originator for the
administration and collection of the Pool Receivables without the consent of the
Secondary Purchasers; provided, further, that Georgia-Pacific may, without the
                      --------  -------
consent of the Secondary Purchasers, subcontract with any other Person for the
administration and collection of Pool Receivables as authorized by the Credit
and Collection Policy. Any such subcontract shall not affect the Collection
Agent's liability for performance of its duties and obligations pursuant to the
terms hereof.

     SECTION 6.02 Duties of Collection Agent.
                  --------------------------

     (a) The Collection Agent shall take or cause to be taken all such actions
as may be necessary or advisable to collect each Pool Receivable from time to
time, all in accordance with applicable laws, rules and regulations, with
reasonable care and diligence, and in accordance with the Credit and Collection
Policy. Each of the Seller, each Secondary Purchaser and the Administrative
Agent hereby appoints the Collection Agent, from time to time designated
pursuant to Section 6.01 hereof, as agent for itself and for the owners of
Receivable Interests to enforce their respective rights and interests in the
Pool Receivables, the Related Security and the related Contracts.

     (b) The Collection Agent shall administer the Collections in accordance
with the procedures described herein and in Section 2.04. The Collection Agent
shall set aside and hold in trust for the account of the Seller and each
Secondary Purchaser, their respective shares of the Collections of Pool
Receivables in accordance with Section 2.04 but shall not be required, except
either upon the request of the Administrative Agent acting at the direction of
the Required Secondary Purchasers or upon the occurrence and during the
continuance of an Event of Termination or a Potential Termination Event, to
segregate the funds constituting each Secondary Purchaser's share of such
Collections from the general funds of the Collection Agent or the Seller prior
to the remittance thereof in accordance with Section 2.04. If the Collection

                                       14



Agent shall be required to segregate Collections pursuant to the proceeding
sentence, the Collection Agent shall segregate and deposit with a bank (which
may be Citibank, Commerzbank, BTM, or Wachovia) designated by each Secondary
Purchaser such allocable share of Collections of Pool Receivables set aside for
such Secondary Purchaser on the first Business Day following receipt by the
Collection Agent of such Collections.

     (c) If no Event of Termination or Potential Termination Event shall have
occurred, the Collection Agent, may, in accordance with the Credit and
Collection Policy, extend the maturity or adjust the Outstanding Balance of any
Receivable as the Collection Agent deems appropriate to maximize Collections in
respect thereof; provided, that the extension or adjustment by the Collection
Agent of a Receivable which is a Defaulted Receivable or a Delinquent Receivable
shall not change the status of such Receivable for purposes of this Agreement.

     (d) The Collection Agent shall hold in trust for the Seller and the
Secondary Purchasers, in accordance with their respective interests, all Records
that evidence or relate to Pool Receivables and shall, as soon as practicable
upon demand of the Administrative Agent acting at the direction of the Required
Secondary Purchasers, deliver or make available to the Administrative Agent all
Records in its possession which evidence or relate to Pool Receivables.

     (e) The Collection Agent, shall as soon as practicable following receipt
thereof, turn over to the Seller (i) that portion of Collections of Pool
Receivables representing the Seller's undivided fractional ownership interest
therein, less all reasonable out-of-pocket costs and expenses of the Collection
Agent of servicing, administering and collecting the Pool Receivables to the
extent not covered by the Collection Agent Fee received by it, and (ii) any cash
collections or other cash proceeds received with respect to Receivables not
constituting Pool Receivables.

     (f) The Collection Agent shall, from time to time at the request of a
Secondary Purchaser, furnish to such Secondary Purchaser (promptly after any
such request) a calculation of the amounts set aside for such Secondary
Purchaser pursuant to Section 2.04 hereof.

     (g) On or prior to each Investor Report Date, the Collection Agent shall
prepare and forward to each Secondary Purchaser and the Administrative Agent (i)
an Investor Report relating to each Receivable Interest outstanding on the
immediately preceding Settlement Date, and (ii) if requested by a Secondary
Purchaser, a listing by Obligor of all Pool Receivables outstanding on such
Settlement Date, together with an analysis of the aging of such Pool Receivables
by Obligor and such additional information as may be reasonably requested by
such Secondary Purchaser. Prior to the occurrence of an Event of Termination or
a Potential Termination Event, the Collection Agent will use its best efforts to
provide the Secondary Purchasers and the Administrative Agent with the
information in clauses (i) and (ii) above on a more frequent basis if reasonably
requested by the Required Secondary Purchasers. Following an Event of
Termination or a Potential Termination Event, the Collection Agent will provide
the Secondary Purchasers and the Administrative Agent with the information in
clauses (i) and (ii) above on a more frequent basis if required by the Required
Secondary Purchasers.

     (h) The Collection Agent will, to the extent permitted by applicable law
and with respect to any amount not paid by the Collection Agent when required to
be paid hereunder, pay

                                       15



on demand interest to each Secondary Purchaser at a rate per annum equal to 2%
above the Base Rate, provided, however, that such interest rate will not at any
                     --------  -------
time exceed the maximum rate permitted by applicable law.

     (i) The Collection Agent's authorization under this Agreement will
terminate after the Facility Termination Date, upon payment in full of all
amounts payable to the Secondary Purchasers and the Collection Agent under this
Agreement.

     Section 6.03 Rights of the Administrative Agent.
                  ----------------------------------

     (a) Upon five days notice to the Seller, unless the Required Secondary
Purchasers determine in their sole discretion that it would be impracticable or
inadvisable to give such notice, the Administrative Agent at the direction of
the Required Secondary Purchasers is authorized at any time to date and to
deliver to the Lock-Box Banks, the Lock-Box Notices and to the Depositary Banks,
the Depositary Notices delivered hereunder. The Seller hereby transfers to the
Administrative Agent, effective when the Administrative Agent delivers such
Lock-Box Notices or such Depositary Notices, as the case may be, the exclusive
ownership and control of such Lock-Box Accounts or such Depositary Accounts. The
Seller shall, and shall cause each Originator to, take any actions reasonably
requested by the Administrative Agent to effect such transfer. In case any
authorized signatory of the Seller or any Originator whose signature appears on
a Lock-Box Notice or a Depositary Notice shall cease to have such authority
before the delivery of such Lock-Box Notice or such Depositary Notice, such
signature shall nevertheless be valid as if such authority had remained in
force. The Administrative Agent at the direction of the Required Secondary
Purchasers may notify the Obligors of Pool Receivables, at any time and at the
Seller's expense, of the ownership of Receivable Interests under this Agreement
and may also direct that payments of all amounts due or that become due under
any or all Receivables be made directly to the Administrative Agent or its
designee. In furtherance of the foregoing, the Administrative Agent shall, upon
the direction of the Required Secondary Purchasers, be entitled to take all such
actions as it deems necessary or advisable to exercise dominion and control over
the collection and servicing of the Pool Receivables including such action as
shall be necessary or desirable to cause all cash, checks and other instruments
constituting Collections of Pool Receivables to come into the possession of the
Administrative Agent rather than the Seller. Unless the Required Secondary
Purchasers determine in their sole discretion that it would be impractical or
inadvisable to do so, the Secondary Purchasers must give the Seller five days
prior notice of any such action.

     (b) At any time following the designation of a Collection Agent other than
Georgia-Pacific pursuant to Section 6.01:

               (i)  The Administrative Agent may, and at the direction of the
     Required Secondary Purchasers shall, direct the Obligors of Pool
     Receivables that all payments thereunder be made directly to the
     Administrative Agent or its designee.

               (ii) The Seller shall, and shall cause each Originator to, at the
     Administrative Agent's request and at the expense of the Seller and the
     Originators, notify each Obligor of Pool Receivables of the ownership of
     Receivable Interests under

                                     16



     this Agreement and direct that payments be made directly to the
     Administrative Agent or a designee of the Administrative Agent approved by
     the Required Secondary Purchasers.

               (iii) The Seller shall, and shall cause each Originator to, at
     the Administrative Agent's request (which shall be at the direction of the
     Required Secondary Purchasers) and at the expense of the Seller and the
     Originators, (A) assemble all of the Records that evidence or relate to the
     Pool Receivables, and the related Contracts and Related Security, or that
     are otherwise necessary or desirable to collect the Pool Receivables, and
     shall make the same available to the Administrative Agent or its designee,
     at a place selected by the Administrative Agent, and (B) segregate all
     cash, checks and other instruments received by it from time to time
     constituting Collections of Pool Receivables in a manner acceptable to the
     Administrative Agent and the Required Secondary Purchasers and, promptly
     upon receipt, remit all such cash, checks and instruments, duly endorsed or
     with duly executed instruments of transfer, to the Administrative Agent or
     its designee.

               (iv)  The Seller hereby authorizes the Administrative Agent to
     take any and all steps in the Seller's name and on behalf of the Seller
     that are necessary or desirable, in the determination of the Administrative
     Agent and the Required Secondary Purchasers, to collect amounts due under
     the Pool Receivables, including, without limitation, endorsing the Seller's
     name on checks and other instruments representing Collections of Pool
     Receivables and enforcing the Pool Receivables and the Related Security and
     related Contracts.

     SECTION 6.04 Responsibilities of the Seller. Anything herein to the
                  ------------------------------
contrary notwithstanding:

     (a) The Seller shall, and shall cause each Originator to, perform its
obligations under the Contracts related to the Pool Receivables to the same
extent as if Receivable Interests and Receivables had not been sold and the
exercise by the Administrative Agent and by the Secondary Purchasers of their
rights hereunder shall not release the Collection Agent, the Seller or any
Originator from any of their duties or obligations with respect to any Pool
Receivables or under the related Contracts; and

     (b) Neither the Administrative Agent nor the Secondary Purchasers shall
have any obligation or liability with respect to any Pool Receivables or related
Contracts, nor shall any of them be obligated to perform the obligations of the
Seller or any Originator thereunder.

     SECTION 6.05 Further Actions Evidencing Purchases.
                  ------------------------------------

     (a) The Seller shall, and shall cause each Originator to, from time to
time, at their expense, promptly execute and deliver all further instruments and
documents, and take all further actions, that may be necessary or desirable, or
that the Administrative Agent or any Secondary Purchaser may reasonably request,
to perfect, protect or more fully evidence the Receivable Interests purchased
hereunder, or to enable any Secondary Purchaser

                                     17



or the Administrative Agent to exercise and enforce their respective rights and
remedies hereunder. Without limiting the foregoing, the Seller and each
Originator will upon the request of any Secondary Purchaser or the
Administrative Agent (i) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments and documents,
that may be necessary or desirable, or that any Secondary Purchaser or the
Administrative Agent may reasonably request, to perfect, protect or evidence
such Receivable Interests; (ii) mark conspicuously each invoice evidencing each
Pool Receivable and the related Contract with a legend, acceptable to the
Secondary Purchasers, evidencing that Receivable Interests therein have been
sold; and (iii) mark its master data processing records evidencing such Pool
Receivables and related Contracts with a legend, acceptable to the Secondary
Purchasers, evidencing that Receivable Interests therein have been sold;
provided that the actions specified in clauses (ii) and (iii) may be directed by
the Required Secondary Purchasers or the Administrative Agent only upon the
occurrence of an Event of Termination or a Potential Termination Event.

     (b) The Seller authorizes the Administrative Agent to file financing or
continuation statements, and amendments thereto, relating to the Pool
Receivables and the Related Security, the related Contracts and the Collections
with respect thereto without the signature of the Seller where permitted by law.
A photocopy or other reproduction of this Agreement shall be sufficient as a
financing statement where permitted by law.

     (c) If the Collection Agent fails to perform any of its obligations
hereunder, any Secondary Purchaser or the Administrative Agent may (but shall
not be required to) perform, or cause performance of, such obligation; and such
Secondary Purchaser's or the Administrative Agent's costs and expenses incurred
in connection therewith shall be payable by the Seller (if the Collection Agent
that fails to so perform is Georgia-Pacific or an Affiliate thereof) as provided
in Section 8.01 or Section 9.04, as applicable.

     SECTION 6.06 Collection Agent Fee. The Collection Agent shall be paid a
                  --------------------
collection fee (the "Collection Agent Fee") of 1% per annum on the average daily
amount of the Total Aggregate Capital payable monthly in arrears on each
Settlement Date. The Collection Agent Fee shall be payable only from Collections
pursuant to, and subject to the priority of payment set forth in, Section 2.04.
Notwithstanding anything contained in this Section 6.06 to the contrary, the
Collection Agent Fee payable hereunder shall be reduced to the extent and in the
amount of the "Collection Agent Fee" paid to the Collection Agent under the
Primary Purchase Agreement.

                                  ARTICLE VII.
                              EVENTS OF TERMINATION

     SECTION 7.01 Incorporation by Reference; Additional Events of Termination.
                  ------------------------------------------------------------
If any of the events specified in subsection (a) or subsection (b) below
("Events of Termination") shall occur and be continuing:

     (a) The text set forth in Sections 7.01(a) through (q) of the Primary
Purchase Agreement is incorporated herein by reference as if set forth herein in
its entirety, except that each reference to the "Secondary Purchase Agreement"
shall be deemed to be a reference to the "Primary Purchase Agreement", each use
of the word "hereunder", "hereof" or "herein" shall be deemed to be a reference
to this Agreement and any reference to a "Purchaser", the "Required

                                     18



Purchasers" or the "Purchasers" shall be deemed to be a reference to a
"Secondary Purchaser", the "Required Secondary Purchasers" or the "Secondary
Purchasers"); or

     (b) the occurrence or declaration of an "Event of Termination" under the
Primary Purchase Agreement, unless cured or waived;

then, and in any such event, at the direction of the Required Secondary
Purchasers, the Administrative Agent shall, by notice to the Seller, take either
or both of the following actions: (x) declare the Facility Termination Date to
have occurred (in which case the Facility Termination Date shall be deemed to
have occurred), and (y) designate another Person to succeed Georgia-Pacific as
the Collection Agent, subject to the approval of the Secondary Purchasers;
provided, that automatically upon the occurrence of any event (without any
- --------
requirement for the passage of time or the giving of notice) described in
subsection (i) of this Section 7.01, the Facility Termination Date shall occur.
Upon any such declaration or designation or upon any such automatic termination,
(i) each Receivables Pool shall be fixed as of the Business Day immediately
preceding the Facility Termination Date and the Collection Agent shall prepare
and forward to each Secondary Purchaser and the Administrative Agent, within one
Business Day after the Facility Termination Date, an Investor Report relating to
each Receivable Interest outstanding on the Business Day immediately preceding
the Facility Termination Date, and (ii) the Secondary Purchasers and the
Administrative Agent shall have, in addition to the rights and remedies which
they may have under this Agreement, all other rights and remedies provided after
default under the UCC and under other applicable law, which rights and remedies
shall be cumulative.

                                     19



                                  ARTICLE VIII.
                                 INDEMNIFICATION

     SECTION 8.01 Indemnities by the Seller. Without limiting any other rights
                  -------------------------
that the Administrative Agent or the Secondary Purchasers or any Affiliate
thereof and their respective officers, directors, employees and agents (each, an
"Indemnified Party") may have hereunder or under applicable law, the Seller
hereby agrees to indemnify each Indemnified Party from and against any and all
claims, losses and liabilities (including reasonable attorneys fees and
expenses) (all of the foregoing being collectively referred to as "Indemnified
Amounts") arising out of or resulting from this Agreement or the use of proceeds
of purchases or reinvestments or the ownership of Receivable Interests or in
respect of any Receivable or any Contract, excluding, however, (a) Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of such Indemnified Party, (b) recourse for uncollectible Receivables
(except to the extent the Seller has recourse against the Originator with
respect to such Receivable on grounds other than the noncollectability of the
Receivable) or (c) except as set forth below, any income taxes incurred by such
Indemnified Party arising out of or as a result of this Agreement or the
ownership of Receivable Interests or in respect of any Receivable or any
Contract. Without limitation of the generality of the foregoing, the Seller
shall pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following:

               (i)   the creation of a Receivable Interest in any Pool
     Receivable which is not at the date of the creation of such Receivable
     Interest an Eligible Receivable;

               (ii)  reliance on any representation or warranty made or deemed
     made by the Seller or any Originator (or any of their respective
     Responsible Officers) or any statement made by any Responsible Officer of
     the Seller or any Originator under or in connection with this Agreement
     which shall have been incorrect when made;

               (iii) the failure by the Seller or any Originator to comply with
     any applicable law, rule or regulation;

               (iv)  the failure to vest in a Secondary Purchaser an undivided
     percentage ownership interest, to the extent of such Secondary Purchaser's
     Receivable Interest, in the Receivables (including, without limitation,
     Receivables of Government Obligors) in, or purporting to be in, the
     Receivables Pool and the Related Security and Collections in respect
     thereof, free and clear of any Adverse Claim other than as authorized
     hereunder;

               (v)   the failure to vest in the Seller all right, title and
     interest in the Receivables purchased by the Seller from any Originator
     pursuant to a Transfer Agreement, free and clear of any Adverse Claim other
     than as authorized hereunder;

               (vi)  the failure to have filed, or any delay in filing,
     financing statements or other similar instruments or documents under the
     applicable jurisdiction, or under applicable law with respect to the
     UCC of any assignment of Receivables of Government

                                     20



     Obligors or other applicable laws with respect to any Receivables in, or
     purporting to be in, the Receivables Pool and the Related Security and
     Collections in respect thereof, whether at the time of any purchase or
     reinvestment or at any subsequent time;

               (vii)  any dispute, claim, offset or defense (other than
     discharge in bankruptcy of the Obligor) of the Obligor to the payment of
     any Receivable in, or purporting to be in, the Receivables Pool (including,
     without limitation, a defense based on such Receivable or the related
     Contract not being a legal, valid and binding obligation of such Obligor
     enforceable against it in accordance with its terms), or any other claim
     resulting from the sale of the merchandise or service related to such
     Receivable or the furnishing or failure to furnish such merchandise or
     services;

               (viii) any failure of the Seller or the Collection Agent (if
     Georgia-Pacific or an Affiliate thereof), to perform their respective
     duties or obligations in accordance with the provisions of this Agreement;

               (ix)   any products liability claim arising out of or in
     connection with merchandise, insurance or services which are the subject
     of any Contract;

               (x)    any loss incurred by any Secondary Purchaser as a result
     of the Outstanding Balance of all Pool Receivables from the same Obligor,
     expressed as a percentage of the aggregate Outstanding Balance of Eligible
     Receivables, being in excess of the Concentration Limit or, if applicable,
     Special Concentration Limit for such Obligor;

               (xi)   the commingling of Collections of Pool Receivables at any
     time with other funds;

               (xii)  any action or omission by the Seller or the Collection
     Agent (if Georgia-Pacific or an Affiliate thereof), reducing or impairing
     the rights of a Secondary Purchaser with respect to any Pool Receivable or
     the value of any Pool Receivable, except in accordance with the Credit and
     Collection Policy;

               (xiii) any failure of the Seller to give reasonably equivalent
     value to any Originator in consideration of the transfer by such Originator
     to the Seller of any Receivables, or any attempt by any Person to void any
     such transfer under statutory provisions or common law or equitable action,
     including, without limitation, any provision of the Bankruptcy Code;

               (xiv)  any reductions in the amount of a Pool Receivable the
     Obligor of which is a Government Obligor, and the Related Security and
     Collections with respect thereto, as the result of appropriation by the
     government or the inability to collect any amount from a Government
     Obligor;

               (xv)   any inability to collect the full Outstanding Balance of a
     Pool Receivable which was entitled to an Administrative Priority as a
     result of the Obligor's bankruptcy and which was included as an Eligible
     Receivable as a result of such Administrative Priority;

                                     21



               (xvi)   any investigation, litigation or proceeding related to or
     arising from this Agreement, the transactions contemplated hereby, the use
     of the proceeds of the Purchase, the ownership of the Receivable Interests
     or any Pool Receivable, Related Security or Contract or any other
     investigation, litigation or proceeding relating to the Seller or any
     Originator in which any Indemnified Party becomes involved as a result of
     any of the transactions contemplated hereby;

               (xvii)  all losses, expenses and liabilities, if any (including,
     without limitation, any loss or expense incurred by reason of the
     liquidation or reemployment of deposits or other funds acquired by any
     Secondary Purchaser in connection with such Secondary Purchaser's funding
     or maintenance of the Receivable Interests) which such Secondary Purchaser
     may sustain as the result of the termination or reduction of any Receivable
     Interest or the failure by the Seller or the Collection Agent (if
     Georgia-Pacific or an Affiliate thereof) to make any payment of Capital
     when due;

               (xviii) any inability to litigate any claim against any Obligor
     in respect of any Pool Receivable as a result of such Obligor being immune
     from civil and commercial law and suit on the grounds of sovereignty or
     otherwise from any legal action, suit or proceeding;

               (xix)   any Event of Termination described in clause (i) of
     Section 7.01;

               (xx)    any loss incurred by any Secondary Purchaser on any Pool
     Receivable of a Government Obligor; or

               (xxi)   any Taxes (other than Excluded Taxes) (A) which may
     asserted or imposed in respect of a Pool Receivable and sales thereof or
     the receipt of Collections or other proceeds with respect to a Pool
     Receivable or any Related Security, (B) which may arise by reason of the
     investment or ownership or the sale or other disposition of any Receivable
     Interest, or any other interest in a Pool Receivable or any Related
     Security or (C) which may arise otherwise by reason of the execution,
     delivery, performance or enforcement of the Sale Documents; except that,
     notwithstanding the foregoing exclusion related to Excluded Taxes, in the
     event that the conveyance of the Receivable Interests and the Related
     Security and the other obligations of the Seller hereunder are for any
     reason determined not to be treated as indebtedness of the Seller for
     income or franchise tax purposes, the Seller shall indemnify each
     Indemnified Party in respect of such additional amounts in respect of such
     Taxes as may be described in clauses (A), (B) or (C), with such amounts
     being calculated on an after-tax basis, as are imposed on or incurred by an
     Indemnified Party to the extent that such Taxes would not have been imposed
     or incurred (or would have been imposed or incurred at different times) had
     the obligations of the Seller hereunder been treated as indebtedness for
     such income or franchise tax purposes, as applicable.

     SECTION 8.02 Contribution. If for any reason the indemnification provided
                  ------------
above in Section 8.01 (and subject to the exceptions set forth therein) is
unavailable to an Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then the Seller shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, claim or liability

                                     22



in such proportion as is appropriate to reflect not only the relative benefits
received by such Indemnified Party on the one hand and the Seller on the other
hand but also the relative fault of such Indemnified Party as well as any other
relevant equitable considerations.

                                  ARTICLE IX.
                            THE ADMINISTRATIVE AGENT

     SECTION 9.01 Authorization and Action. Each Secondary Purchaser hereby
                  ------------------------
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Administrative Agent by the terms hereof together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement, the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of any Secondary Purchaser, the Required Secondary
Purchasers or all of the Secondary Purchasers (and all references in this
Agreement to the "Secondary Purchasers" shall be deemed to mean "all of the
Secondary Purchasers") as provided by this Agreement and such instructions shall
be binding upon all parties hereto and all assignees of the Secondary
Purchasers; provided, however, that the Administrative Agent shall not be
            --------  -------
required to take any action which exposes the Administrative Agent to personal
liability or which is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Secondary Purchaser prompt notice of
each notice given to it by the Seller, or by it to the Seller, pursuant to the
terms of this Agreement. The appointment and authority of the Administrative
Agent hereunder shall terminate at the later to occur of (i) the payment to (A)
each Secondary Purchaser of its Aggregate Capital, accrued and unpaid Yield and
all other amounts due to such Secondary Purchaser hereunder and (B) the
Administrative Agent of all amounts due hereunder and (ii) the Facility
Termination Date.

     SECTION 9.02 UCC Filings. The Secondary Purchasers and the Seller expressly
                  -----------
recognize and agree that the Administrative Agent may be listed as the assignee
or secured party of record on the various UCC filings required to be made
hereunder in order to perfect the transfer of the Receivable Interests from the
Seller to the Secondary Purchasers, that such listing shall be for
administrative convenience only in creating a record or nominee owner to take
certain actions hereunder on behalf of the Secondary Purchasers and that such
listing will not affect in any way the status of the Secondary Purchasers as the
beneficial owners of the Receivable Interests. In addition, such listing shall
impose no duties on the Administrative Agent other than those expressly and
specifically undertaken in accordance with the provisions of this Article IX. In
furtherance of the foregoing, each Secondary Purchaser shall be entitled to
enforce its rights created under this Agreement without the need to conduct such
enforcement through the Administrative Agent except as provided herein.

     SECTION 9.03 Administrative Agent's Reliance, Etc. Neither the
                  ------------------------------------
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent (i) may consult with legal counsel
(including counsel for the

                                     23



Seller), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (ii)
makes no warranty or representation to any Person and shall not be responsible
to any Person for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement; (iii) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement on the part of the Seller,
or of any Transfer Agreement on the part of the Seller or the Originator a party
thereto, or to inspect the property (including the books and records) of the
Seller or any Originator; (iv) shall not be responsible to any Secondary
Purchaser for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any Transfer Agreement or
any other instrument or document furnished pursuant hereto; and (v) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by facsimile,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.

     SECTION 9.04 Citicorp and Affiliates. With respect to any Pool Receivable
                  -----------------------
owned by Citicorp, Citicorp shall have the same rights and powers under this
Agreement and any document delivered pursuant hereto as would any Secondary
Purchaser and may exercise the same as though it were not the Administrative
Agent. Citicorp and its Affiliates may generally engage in any kind of business
with the Seller, any Originator or any Obligor and any of their respective
Affiliates and any Person who may do business with or own securities of the
Seller, any Originator or any Obligor or any of their respective Affiliates, all
as if Citicorp were not the Administrative Agent and without any duty to account
therefor to any Secondary Purchaser.

     SECTION 9.05 Secondary Purchasers' Purchase Decisions. Each Secondary
                  ----------------------------------------
Purchaser acknowledges that it has, independently and without reliance upon the
Administrative Agent, any of its Affiliates or any other Secondary Purchaser and
based on such documents and information as it has deemed appropriate, made its
own evaluation and decision to enter into this Agreement and, if it so
determines, to purchase undivided ownership interests in Pool Receivables
hereunder. Each Secondary Purchaser also acknowledges that it will,
independently and without reliance upon the Administrative Agent, any of its
Affiliates or any other Secondary Purchaser and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
decisions in taking or not taking action under this Agreement.

     SECTION 9.06 Indemnification. Each Secondary Purchaser agrees to indemnify
                   --------------
the Administrative Agent (to the extent not reimbursed by the Seller), ratably
according to the ratio its Commitment bears to the aggregate Commitment of the
Secondary Purchasers, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Administrative Agent in any way relating to or
arising out of this Agreement or any action taken or omitted by the
Administrative Agent under this Agreement, provided that a Secondary Purchaser
                                           --------
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, each
Secondary Purchaser agrees to reimburse the Administrative Agent, ratably
according to the ratio its Commitment bears to the aggregate Commitment of the
Secondary Purchasers, promptly upon demand, for any out-of-

                                     24



pocket expenses (including reasonable counsel fees) incurred by the
Administrative Agent in connection with the administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, to the extent that such expenses are incurred in the interests
of or otherwise in respect of the Secondary Purchasers hereunder and are
approved by the Secondary Purchasers and to the extent that the Administrative
Agent is not reimbursed for such expenses by the Seller.

     SECTION 9.07  Successor Administrative Agent. The Administrative Agent may
                   ------------------------------
resign at any time by giving 30 days' written notice thereof to the Secondary
Purchasers, the Seller, the Collection Agent and the Purchasers and may be
removed at any time with or without cause by the Required Secondary Purchasers.
Upon any such resignation or removal, the Secondary Purchasers shall have the
right to appoint a successor Administrative Agent approved by the Seller (which
approval will not be unreasonably withheld or delayed). If no successor
Administrative Agent shall have been so appointed by the Secondary Purchasers,
and shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Secondary
Purchasers' removal of the Administrative Agent, then Georgia-Pacific shall
appoint a Secondary Purchaser or such other Person approved by the Purchasers
(which approval will not be unreasonably withheld or delayed) as a successor
Administrative Agent. If such successor Administrative Agent is not a Secondary
Purchaser, such successor Administrative Agent shall be (a) either (i) a
commercial bank having a combined capital and surplus of at least $250,000,000
or (ii) an Affiliate of such bank and (b) experienced in the types of
transactions contemplated by this Agreement. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent,
the provisions of this Article IX shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement.

                                   ARTICLE X.
                       ASSIGNMENT OF RECEIVABLE INTERESTS

     SECTION 10.01 Assignment. Each Secondary Purchaser (with respect to any
                   ----------
Receivable Interest) may (i) without the consent of the Seller, assign to
another Secondary Purchaser, any Purchaser or to any vehicle administered by a
Secondary Purchaser which vehicle is rated at least P-1 by Moody's and either
(A) A-1 by S&P or (B) F1 by Fitch and (ii) with the prior written consent of the
Seller (which consent shall not be unreasonably withheld or delayed), to any
other Person (such Person, and the Persons described in clause (i) above,
referred to herein as "Assignees"), and any such Assignee, may, without the
written consent of the Seller, assign to any Person described in clause (i)
hereof and may, with the prior written consent of the Seller (which consent
shall not be unreasonably withheld or delayed), assign to any other Person, its
Commitment or any Receivable Interest, in either case, in whole or in part;
provided, however, that any assignment of a Secondary Purchaser's Commitment to
a Purchaser or to any vehicle organized by a Secondary Purchaser pursuant to
clause (i) above at a time when

                                     25



such Purchaser or such vehicle cannot issue a commitment to make Purchases shall
be made only with the prior written consent of the Seller (which consent shall
not be unreasonably withheld or delayed). Upon any assignment of a Receivable
Interest, (i) the Assignee shall become the owner of such Receivable Interest
for all purposes of this Agreement and (ii) the assignor thereof (the
"Assignor") shall relinquish its rights with respect to such Receivable Interest
for all purposes of this Agreement. Any assignments hereunder shall be upon such
terms and conditions as the Assignor and the Assignee may mutually agree. The
parties thereto shall deliver to the Administrative Agent an assignment
agreement, in substantially the form of Exhibit B hereto (an "Assignment"), duly
executed by such parties, and such Assignor shall promptly execute and deliver
all further instruments and documents, and take all further action, that the
Assignee may reasonably request in order to perfect, protect or more fully
evidence the Assignee's right, title and interest in and to any Receivable
Interest assigned hereunder, and to enable the Assignee to exercise or enforce
any rights hereunder . Upon any assignment pursuant to this Section 10.01, the
Assignee thereof shall have all of the rights and obligations (and only such
rights and obligations) of the owner of a Receivable Interest hereunder and
shall be subject to the same terms and conditions hereunder with respect to its
ownership of a Receivable Interest; provided that, an Assignee (other than an
                                    --------
assignee described in clause (i) of the first sentence of this Section 10.01)
shall not assume any other rights or obligations of a Secondary Purchaser
hereunder without the consent of the Secondary Purchasers (which consent shall
not be unreasonably withheld or delayed). The Administrative Agent shall provide
notice to the Seller of any assignment hereunder.

     SECTION 10.02 Effects of Assignment. By executing and delivering an
                   ---------------------
Assignment, the Assignor thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment, the Assignor makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other agreement, instrument or document furnished pursuant
hereto; (ii) the Assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Seller or any
Originator or the performance or observance by the Seller or any Originator of
any of its obligations under this Agreement (in the case of the Seller) or the
Transfer Agreements (in the case of the Seller and the Originators) or other
agreement, instrument or document furnished pursuant hereto; (iii) such Assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01 and such other agreements,
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and to purchase the
pertinent Receivable Interests; (iv) such Assignee will, independently and
without reliance upon the Administrative Agent, any Secondary Purchaser, any
Purchaser or any of their Affiliates or such Assignor and based on such
agreements, documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such Assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; (vi)
such Assignee appoints as its agent the Collection Agent from time to time
designated pursuant to Section 6.01 to enforce its respective rights and
interests in and under the pertinent Receivable Interests and the Related
Security and

                                     26



related Contracts; and (vii) such Assignee agrees that it will not institute
against any Secondary Purchaser any proceeding of the type referred to in
Section 7.01(i) of the Primary Purchase Agreement.

     SECTION 10.03 Additional Secondary Purchasers. Unless an Event of
                   -------------------------------
Termination or event which, with the giving of notice or the passage of time or
both would constitute an Event of Termination shall have occurred and be
continuing, the Secondary Purchasers may, upon at least three (3) Business Days'
prior written notice to the Seller and the Administrative Agent, cause an
Additional Secondary Purchaser to become a party to this Agreement as a
Secondary Purchaser in respect of its respective Related Purchaser by complying
with the provisions of this Section 10.03. Each such notice shall set forth the
name of the Additional Secondary Purchaser, the respective Related Purchaser,
the Commitment to be acquired by such Additional Secondary Purchaser and the
desired effective date of such Additional Secondary Purchaser becoming a party
to this Agreement. Each Additional Secondary Purchaser shall, upon the execution
of an Addendum by the applicable Secondary Purchasers, such Additional Secondary
Purchaser, the Administrative Agent and the Seller, become a party to this
Agreement from and after the date of such execution with the same effect as if
such Additional Secondary Purchaser had been an original party hereunder.

                                   ARTICLE XI.
                                  MISCELLANEOUS

     SECTION 11.01 Amendments, Etc. No amendment or waiver of any provision of
                   ---------------
this Agreement or consent to any departure by the Seller or the Collection Agent
therefrom shall be effective unless in a writing signed by all of the Secondary
Purchasers or, where permitted under this Agreement, the Required Secondary
Purchasers, and then such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
                                                                       --------
however, that no amendment or waiver of Section 6.03 or of any other provision
- -------
of this Agreement which affects the rights or obligations of the Administrative
Agent shall be effective unless signed by the Administrative Agent. No failure
on the part of the Secondary Purchasers or the Administrative Agent to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.

     SECTION 11.02 Notices, Etc. All notices and other communications hereunder
                   ------------
shall, unless otherwise stated herein, be in writing (including facsimile
communication) and shall be delivered or sent by facsimile, to each party
hereto, at its address set forth under its name on the signature pages hereof or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. Notices and communications by facsimile shall be
effective when sent, and notices and communications sent by other means shall be
effective when received.

     SECTION 11.03 Assignability; Termination.
                   --------------------------

     (a) This Agreement and each Secondary Purchaser's rights herein (including
ownership of each Receivable Interest) shall be assignable by such Secondary
Purchaser and its

                                     27



respective successors and assigns in accordance with Section 10.01. The term
"Secondary Purchaser" shall include any owner by assignment or otherwise of a
Receivable Interest but shall not include any Person to whom a participation is
granted. Neither the Seller nor the Collection Agent may assign its rights
hereunder or any interest herein without the prior written consent of the
Secondary Purchasers, except, in the case of the Collection Agent, as otherwise
provided in Article VI hereof.

     (b) Any Secondary Purchaser may grant participations to any Person without
the consent or knowledge of the Seller, any other Secondary Purchaser or the
Administrative Agent; provided, that such grant will not affect the obligation,
                      --------
if any, of such Secondary Purchaser hereunder nor the obligations of the Seller
hereunder.

     (c) The provisions of Sections 8.01, 11.04, 11.05, 11.06 and 11.07 survive
any termination of this Agreement.

     SECTION 11.04 Costs, Expenses and Taxes.
                   -------------------------

     (a) In addition to the rights of indemnification granted under Section 8.01
hereof, the Seller agrees to pay on demand all reasonable costs and expenses
actually incurred in connection with the preparation, execution, delivery and
administration (including periodic auditing of Pool Receivables) of this
Agreement and the other documents and agreements to be delivered hereunder,
including, without limitation, (i) the reasonable fees and expenses of Latham &
Watkins, counsel for the Secondary Purchasers, actually incurred with respect to
the preparation, execution and delivery of this Agreement, the Primary Purchase
Agreement and the other documents and agreements to be delivered hereunder or
thereunder; (ii) the reasonable fees and out-of-pocket expenses of counsel for
the Administrative Agent actually incurred with respect to administration of
this Agreement, including without limitation, advising the Administrative Agent
as to its rights and remedies hereunder; and (iii) all costs and expenses, if
any (including reasonable counsel fees and expenses), actually incurred in
connection with the enforcement or amendment of this Agreement and the other
documents and agreements to be delivered hereunder.

     (b) In addition, the Seller shall pay on demand any and all stamp and other
taxes and fees payable in connection with the execution, delivery, filing and
recording of this Agreement or the other documents or agreements to be delivered
hereunder, and agrees to save each Indemnified Party harmless from and against
any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.

     (c) The Seller also shall pay on demand all other reasonable costs,
expenses and all taxes (excluding income taxes) actually incurred by a Secondary
Purchaser or any stockholder of a Secondary Purchaser ("Other Costs"), including
                                                        -----------
(i) the costs of auditing such Secondary Purchaser's books by certified public
accountants, (ii) the taxes (excluding income taxes) resulting from such
Secondary Purchaser's operations and (iii) the reasonable fees and out-of-pocket
expenses of counsel for such Secondary Purchaser or any counsel for any
shareholder of such Secondary Purchaser with respect to advising such Secondary
Purchaser or shareholder as to rights and remedies under this Agreement, the
enforcement of this Agreement or advising such Secondary Purchaser or
shareholder as to matters relating to such Secondary Purchaser's

                                     28



operations; provided, that the Seller and any other persons who from time to
            --------
time sell receivables or interests therein to such Secondary Purchaser ("Other
                                                                         -----
Sellers") each shall be liable for such Other Costs ratably in accordance with
- -------
the usage under their respective facilities; provided, further, that (i) if such
                                             --------  -------
Other Costs are attributable to the Seller and not attributable to any Other
Seller, the Seller shall be solely liable for such Other Costs and (ii) if such
Other Costs are attributable to any Other Seller and not attributable to the
Seller in any way, the Seller shall not be liable for any of such Other Costs.

     SECTION 11.05 Confidentiality. Unless otherwise required by applicable law,
                   ---------------
rule or regulation or by court order or process, the Seller and the Collection
Agent agree to maintain the confidentiality of this Agreement (and all drafts
thereof) in communications with third parties and otherwise; provided, that this
                                                             --------
Agreement may be disclosed to the Seller's and the Collection Agent's legal
counsel and auditors if they agree to hold it confidential.

     SECTION 11.06 No Recourse. The obligations of each Secondary Purchaser
                   -----------
under this Agreement or any other agreement, instrument, document or certificate
executed and delivered by or issued by such Secondary Purchaser or any officer
thereof in connection herewith are solely the corporate obligations of such
Secondary Purchaser. No recourse shall be had for payment of any fee or other
obligation or claim arising out of or relating to this Agreement or any other
agreement, instrument, document or certificate executed and delivered or issued
by such Secondary Purchaser or any officer in connection herewith, against any
stockholder, employee, officer, director or incorporator of such Secondary
Purchaser. The provisions of this Section 11.07 shall survive the termination of
this Agreement.

     SECTION 11.07 Governing Law; Execution in Counterparts.
                   ----------------------------------------

     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK (INCLUDING ITS APPLICABLE CONFLICT OF LAWS
RULES).

     (b) This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement.

     SECTION 11.08 Construction of Agreement. It is the intention of each
                   -------------------------
Transfer Agreement that the conveyance by the applicable Originator to the
Seller of Receivables shall constitute a purchase and sale and not a secured
loan. It is the intention of this Agreement that the Purchases and reinvestments
shall convey to the Secondary Purchasers, to the extent of their Receivable
Interests, undivided ownership interests in the Pool Receivables and that each
such transaction shall constitute a purchase and sale and not a secured loan.
If, notwithstanding such intention, the conveyance of Receivables from any
Originator to the Seller pursuant to a Transfer Agreement shall ever be
characterized as a secured loan and not a sale, then the Seller shall be deemed
to have transferred to the Secondary Purchasers, in addition to the Receivable
Interests, all of the Seller's right, title and interest in, to and under the
obligations of such Originator deemed to be secured by a pledge of such
Receivables, and, in such event, this Agreement and the filings of the UCC
statements referred to in Section 3.01(b) shall be deemed to have granted
(subject to the exceptions set forth in Section 4.01 of the Primary Purchase
Agreement), to the

                                     29



Secondary Purchasers a duly perfected security interest prior to all other liens
on and security interests in all of the Seller's right, title, and interest in,
to and under the obligations of such Originator to the Seller deemed to be
secured by such pledge. If the conveyance of the Receivable Interests from the
Seller to the Secondary Purchasers shall ever be characterized as a secured loan
and not a sale, it is the intention of this Agreement that this Agreement shall
constitute a security agreement under applicable law, and that the Seller shall
be deemed to have granted to the Secondary Purchasers a duly perfected security
interest in all of the Seller's right, title and interest in, to and under the
Pool Receivables, all payments on or with respect to such Pool Receivables, all
other rights relating to and payments made in respect of the Pool Receivables,
and all proceeds of any thereof prior to all other liens on and security
interests therein. Although such ownership or security interest may be perfected
in the name of each Secondary Purchaser, the Administrative Agent shall be
deemed to be an independent custodian for purposes of perfection of the
ownership or security interest granted to the Seller hereunder, and such
ownership or security interest may also be perfected in the name of the
Administrative Agent, for the benefit of the Secondary Purchasers.

     SECTION 11.09 Actions by Secondary Purchasers. The Secondary Purchasers
                   -------------------------------
expressly recognize and agree that in making any determination or taking any
action hereunder which is required to be made or taken by the Required Secondary
Purchasers or all of the Secondary Purchasers, the Purchasers shall be treated
as if they were Secondary Purchasers hereunder and no determination or action
hereunder shall be made or taken which would be inconsistent with or contrary to
a determination or action made or taken under the Primary Purchase Agreement.

                                     30



     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

                                   SELLER:

                                   G-P RECEIVABLES, INC.


                                   By:        /s/ Phillip M. Johnson
                                          ------------------------------------
                                          Name:   Phillip M. Johnson
                                          Title:  Vice President and Treasurer

                                        133 Peachtree Street, N.E.
                                        Atlanta, Georgia 30348-5605
                                        Attention: Treasurer
                                        Facsimile No.: (404) 827-7076


                                   COLLECTION AGENT:


                                   GEORGIA-PACIFIC CORPORATION:


                                   By:        /s/ Phillip M. Johnson
                                          ------------------------------------
                                          Name:   Phillip M. Johnson
                                          Title:  Vice President and Treasurer

                                        133 Peachtree Street, N.E.
                                        Atlanta, Georgia 30348-5605
                                        Attention: Treasurer
                                        Facsimile No.: (404) 827-7076



                                      SECONDARY PURCHASERS:

                                      CITIBANK, N.A.


                                      By:    /s/ David J. Donofrio
                                             -----------------------------------
                                             Name: David J. Donofrio
                                             Title: Attorney-In-Fact

                                           399 Park Avenue
                                           New York, New York 10043
                                           Attention:
                                           Facsimile No.:


                                      COMMERZBANK AG (NEW YORK BRANCH)


                                      By:    /s/ James F. Ahern
                                             -----------------------------------
                                             Name: James F. Ahern
                                             Title: Senior Vice President


                                      By:    /s/ Tom Ausfahl
                                             -----------------------------------
                                             Name: Tom Ausfahl
                                             Title: Vice President

                                           Address:
                                           Attention: James Ahern
                                           Facsimile No.:


                                      THE BANK OF TOKYO-MITSUBISHI, LTD.
                                      (NEW YORK BRANCH)


                                      By:    /s/ Mark R. Marrow
                                             -----------------------------------



                                             Name:   Mark R. Marrow
                                             Title:  Authorized Signature

                                           1251 Avenue of the Americas
                                           New York, New York 10020
                                           Attention: Securitization Group
                                           Facsimile No.: (212) 782-6448

                                      WACHOVIA BANK, N.A.


                                      By:    /s/ W. Adrian Jordan
                                          --------------------------------------

                                             Name:   W. Adrian Jordan
                                             Title:  Senior Vice President

                                           [Address]
                                           Attention:
                                           Facsimile No.:



                                      ADMINISTRATIVE AGENT:

                                      CITICORP NORTH AMERICA, INC.,
                                          as Administrative Agent


                                      By:        /s/ David J. Donofrio
                                             -----------------------------------
                                             Name:   David J. Donofrio
                                             Title:  Vice President

                                           Sears Tower
                                           233 South Wacker Drive
                                           86th Floor
                                           Chicago, IL 60606
                                           Attention: David Donofrio
                                           Facsimile No.:

EX-10.10(IV)

                                                               Exhibit 10.10(iv)


                                  $900,000,000

                           SECOND AMENDED AND RESTATED
                         RECEIVABLES PURCHASE AGREEMENT

                          Dated as of December 19, 2001

                                      Among

                              G-P RECEIVABLES, INC.

                                  as the Seller
                                  -------------

                           GEORGIA-PACIFIC CORPORATION

                             as the Collection Agent
                             -----------------------

                      BLUE RIDGE ASSET FUNDING CORPORATION
                       CORPORATE RECEIVABLES CORPORATION,
                     CORPORATE ASSET FUNDING COMPANY, INC.,
                         FOUR WINDS FUNDING CORPORATION,
                                       AND
                        VICTORY RECEIVABLES CORPORATION,

                                as the Purchasers
                                -----------------

                                       and

                          CITICORP NORTH AMERICA, INC.

                           as the Administrative Agent
                           ---------------------------



                                TABLE OF CONTENTS



Section                                                                                                   Page
- -------                                                                                                   ----

                             ARTICLE I. DEFINITIONS

                                                                                                      
SECTION 1.01     Certain Defined Terms.......................................................................1
SECTION 1.02     Other Terms................................................................................19

                 ARTICLE II. AMOUNTS AND TERMS OF THE PURCHASES

SECTION 2.01     Purchase Facility..........................................................................19
SECTION 2.02     Making Purchases...........................................................................22
SECTION 2.03     Receivable Interest Percentage.............................................................22
SECTION 2.04     Settlement Procedures......................................................................23
SECTION 2.05     Fees.......................................................................................26
SECTION 2.06     Payments and Computations, Etc.............................................................26
SECTION 2.07     Dividing or Combining Receivable Interests.................................................26
SECTION 2.08     Yield Protection...........................................................................27
SECTION 2.09     Sharing of Payments, Etc...................................................................28
SECTION 2.10     Effect of Early Payments...................................................................28

                      ARTICLE III. CONDITIONS OF PURCHASES

SECTION 3.01     Conditions Precedent to Initial Purchase...................................................29
SECTION 3.02     Conditions Precedent to All Purchases and Reinvestments....................................30

                   ARTICLE IV. REPRESENTATIONS AND WARRANTIES

SECTION 4.01     Representations and Warranties of the Seller and the Collection Agent......................31

                              ARTICLE V. COVENANTS

SECTION 5.01     Covenants of the Seller and the Collection Agent...........................................35

                    ARTICLE VI. ADMINISTRATION AND COLLECTION

SECTION 6.01     Designation of Collection Agent............................................................42
SECTION 6.02     Duties of Collection Agent.................................................................42


                                       i



                                                                                                     
SECTION 6.03     Rights of the Administrative Agent.........................................................44
SECTION 6.04     Responsibilities of the Seller.............................................................45
SECTION 6.05     Further Actions Evidencing Purchases.......................................................45
SECTION 6.06     Collection Agent Fee.......................................................................46

                       ARTICLE VII. EVENTS OF TERMINATION

SECTION 7.01     Events of Termination......................................................................46

                          ARTICLE VIII. INDEMNIFICATION

SECTION 8.01     Indemnities by the Seller..................................................................50
SECTION 8.02     Contribution...............................................................................52

                      ARTICLE IX. THE ADMINISTRATIVE AGENT

SECTION 9.01     Authorization and Action...................................................................53
SECTION 9.02     UCC Filings................................................................................53
SECTION 9.03     Administrative Agent's Reliance, Etc.......................................................53
SECTION 9.04     Citicorp and Affiliates....................................................................54
SECTION 9.05     Purchasers' Purchase Decisions.............................................................54
SECTION 9.06     Successor Administrative Agent.............................................................54

                  ARTICLE X. ASSIGNMENT OF RECEIVABLE INTERESTS

SECTION 10.01    Assignment.................................................................................55
SECTION 10.02    Effects of Assignment......................................................................55
SECTION 10.03    Additional Purchasers......................................................................56

                            ARTICLE XI. MISCELLANEOUS

SECTION 11.01    Amendments, Etc............................................................................56
SECTION 11.02    Notices, Etc...............................................................................57
SECTION 11.03    Assignability; Termination.................................................................57
SECTION 11.04    Costs, Expenses and Taxes..................................................................57
SECTION 11.05    No Proceedings.............................................................................58
SECTION 11.06    Confidentiality............................................................................58
SECTION 11.07    No Recourse................................................................................58



                                       ii



                                                                                                     
SECTION 11.08    Governing Law; Execution in Counterparts...................................................59
SECTION 11.09    Construction of Agreement..................................................................59



                                      iii



                                    SCHEDULES

SCHEDULE I                -         Lock-Box Banks

SCHEDULE II               -         Depositary Banks

SCHEDULE III              -         Credit and Collection Policy

SCHEDULE IV               -         Originators

SCHEDULE V                -         Georgia-Pacific's Interests in Originators

SCHEDULE VI               -         Defaulted Receivables


                                     EXHIBITS

EXHIBIT A                 -         Form of Investor Report

EXHIBIT B                 -         Form of Lock-Box Agreement

EXHIBIT C                 -         Form of Transfer Agreement

EXHIBIT D                 -         Form of Assignment Agreement

EXHIBIT E                 -         Form of Consent and Acknowledgment

EXHIBIT F                           Addendum to Agreement

                                       iv



          SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT dated as of
December 19, 2001 among G-P Receivables, Inc., a Delaware corporation (the
"Seller"), GEORGIA-PACIFIC CORPORATION, a Georgia corporation
 ------
("Georgia-Pacific"), Blue Ridge Asset Funding Corporation ("Blue Ridge"),
  ---------------                                           ----------
CORPORATE ASSET FUNDING COMPANY, INC. ("CAFCO"), CORPORATE RECEIVABLES
                                        -----
CORPORATION ("CRC"), FOUR WINDS FUNDING CORPORATION ("Four Winds"), VICTORY
              ---                                     ----------
RECEIVABLES CORPORATION ("Victory") (each of Blue Ridge, CAFCO, CRC, Four Winds
                          -------
and Victory and their respective successors and permitted assigns, individually,
a Purchaser, and, collectively, the "Purchasers"), and CITICORP NORTH AMERICA,
                                     ----------
INC. ("Citicorp"), as agent (the "Administrative Agent") for the Purchasers.
       --------                   --------------------
Unless defined elsewhere herein, capitalized terms used in this Agreement shall
have the meanings assigned to such terms in Article I hereof.

                                   ARTICLE I.
                                   DEFINITIONS

          SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
                       ---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

          "Addendum" means an addendum to this Agreement, in substantially the
           --------
form of Exhibit F hereto, pursuant to which an Additional Purchaser becomes a
party to this Agreement.

          "Additional Purchaser" means each Purchaser as shall become a party to
           --------------------
this Agreement by execution of an Addendum pursuant to Section 10.03 hereof.

          "Adjusted LIBOR Rate" means, with respect to a Purchaser for any Fixed
           -------------------
Period, the rate per annum obtained by dividing (a) the arithmetic average
(rounded upwards, if necessary, to the nearest multiple of one-sixteenth of one
percent per annum) of (i) the offered rates for deposits in United States
dollars which appear on the display designated as page "LIBO" (or any successor
page quoting the offered rates for United States dollars in the London interbank
market) on the Reuter Monitor Money Rates Service, or (ii) if such rates are not
obtainable from the Reuter Monitor Money Rates Service, the respective rates
notified to the Purchaser by each of the Reference Banks as the rate at which it
would offer deposits in United States dollars to prime banks in the London
interbank market, in either case for a period equal to such Fixed Period as such
Purchaser shall select and in an amount comparable to the aggregate amount of
Capital of the Receivable Interest to be funded or maintained at or about 11:00
a.m. (London time) on the second Business Day before (and for value on) the
first day of such period by (b) a percentage equal to (i) 100% minus (ii) the
Eurodollar Reserve Percentage for such Fixed Period.

          "Administrative Priority" means an administrative priority granted
           -----------------------
under Section 364(a) of the Bankruptcy Code.

          "Adverse Claim" means a lien, security interest, claim or other charge
           -------------
or encumbrance, or any other type of preferential arrangement.

          "Affected Party" has the meaning specified in Section 2.08(a) hereof.
           --------------



          "Affiliate" means, as to any Person, any other Person that, directly
           ---------
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person.

          "Affiliated Obligor" means any Obligor that is an Affiliate of another
           ------------------
Obligor.

          "Aggregate Capital" means, at the time of any determination thereof
           -----------------
with respect to a Purchaser, the sum of the Capital for all Receivable Interests
of such Purchaser.

          "Assignment" has the meaning specified in Section 10.01(a).
           ----------

          "Average Maturity" means, on any day, that period (expressed in days)
           ----------------
equal to the weighted average maturity of the Pool Receivables, as calculated by
the Collection Agent and as set forth in the most recent Investor Report;
provided, however, that if any Purchaser shall reasonably disagree with any such
- --------  -------
calculation, the Purchasers may recalculate the Average Maturity with respect to
such day (which calculation shall be conclusive absent demonstrative error).

          "Bankruptcy Code" means Title 11 of the United States Code (11
           ---------------

U.S.C. Sections 101 et seq.), as amended from time to time, or any successor
                    -- ---
statute.

          "Bankrupt Receivable" means a Receivable the Obligor of which has
           -------------------
taken any action, or suffered to occur any event, of the type described in
Section 7.01(i).

          "Base Rate" means, for any day, a fluctuating rate per annum equal to
           ---------
the rate of interest in effect for such day as publicly announced from time to
time by the Administrative Agent as its "prime rate." Such rate is a rate set by
the Administrative Agent based upon various factors including the Administrative
Agent's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate. Any change in such rate announced by the
Administrative Agent shall take effect at the opening of business on the day
specified in the public announcement of such change.

          "Business Day" means any day on which banks are not authorized or
           ------------
required to close in Chicago, Illinois or New York, New York and, if the
applicable Business Day relates to any computation or payment to be made with
respect to the Adjusted LIBOR Rate, any day on which dealings in dollar deposits
are carried on in the London interbank market.

          "Capital" of any Receivable Interest owned by a Purchaser means the
           -------
original amount paid by such Purchaser to the Seller for such Receivable
Interest at the time of its purchase by such Purchaser pursuant to this
Agreement, or such amount divided or combined in accordance with Section 2.07,
in each case reduced from time to time by Collections distributed on account of
such Capital pursuant to Section 2.04; provided, that if such Capital shall have
been reduced by any distribution and thereafter all or a portion of such
distribution is rescinded or must otherwise be returned for any reason, such
Capital shall be increased by the amount of such rescinded or returned
distribution, as though it had not been made; provided, further, that such
Capital shall not be reduced for the purposes of this Agreement to the extent
and so long as

                                       2



Collections to be used to effect an Optional Reduction or a Mandatory Reduction
are retained by the Collection Agent (if the Seller or an Affiliate thereof).

          "Capital Lease Obligations" of any Person means the obligations of
           -------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

          "Code" means the Internal Revenue Code of 1986, as amended from time
           ----
to time.

          "Collection Agent" means at any time the Person (which may include the
           ----------------
Administrative Agent) then authorized pursuant to Article VI to service,
administer and collect Pool Receivables.

          "Collection Agent Fee" has the meaning specified in Section 6.06.
           --------------------

          "Collection Agent Fee Reserve" means, on any date, the sum of (i) 1%
           ----------------------------
of the Total Aggregate Capital on such date plus (ii) the accrued and unpaid
Collection Agent Fee on such date.

          "Collection Delay Period" means 10 days or such other number of days
           -----------------------
as the Administrative Agent may select (acting upon the direction of the
Required Purchasers) upon three Business Days' notice to the Seller.

          "Collections" means, with respect to any Pool Receivable, all cash
           -----------
collections and other cash proceeds in respect of such Pool Receivable,
including, without limitation, all cash proceeds of Related Security with
respect to such Pool Receivable, and any Collection of such Pool Receivable
deemed to have been received pursuant to Section 2.04(d).

          "Concentration Limit" means, at any time, for any Obligor, 3.33% of
           -------------------
the Total Aggregate Capital outstanding at such time, or such other amount (a
"Special Concentration Limit") for such Obligor designated by the Administrative
Agent in a writing delivered to the Seller at the instruction of all of the
Purchasers; provided, that in the case of an Obligor with any Affiliated
            --------
Obligor, the Concentration Limit shall be calculated as if such Obligor and such
Affiliated Obligor are one Obligor; provided, further, that the Administrative
                                    --------  -------
Agent (acting upon the instructions of any Purchaser) may, upon not less than
three Business Days' notice to the Seller, cancel any Special Concentration
Limit.

          "Consent and Acknowledgment" means the agreement, in substantially the
           --------------------------
form attached hereto as Exhibit E, by each Originator in favor of the
Purchasers, the Secondary Purchasers and the Seller pursuant to which such
Originator consents to and acknowledges the transactions contemplated hereby.

          "Contract" means an agreement between an Originator and an Obligor,
           --------
substantially in a form permitted by the Credit and Collection Policy, pursuant
to or under which

                                       3



such Obligor shall be obligated to pay for merchandise, goods, insurance or
services from time to time.

          "Contractual Dilution" means, with respect to any Receivable, the
           --------------------
aggregate amount of Dilutions which have occurred as a result of the application
of credits issued to the related Obligor as cash discounts or other rebates,
refunds or incentives pursuant to contractual terms of sale under which such
Obligor is entitled to a stipulated maximum discount upon satisfaction of one or
more conditions.

          "Contractual Dilution Ratio" means, as of any date of determination, a
           --------------------------
fraction, expressed as a percentage, the numerator of which is the aggregate
amount of Contractual Dilution for the most recently completed calendar month
and the denominator of which is the aggregate sales of the Originators for the
prior calendar month.

          "Credit and Collection Policy" means those receivables credit and
           ----------------------------
collection policies and practices of the Originators in effect on the date
hereof and approved by the Purchasers, summarized on Schedule III hereto, as the
same may be modified in strict compliance with this Agreement.

          "Current Default Ratio" means, at the time any determination thereof
           ---------------------
is to be made, a fraction, expressed as a percentage, the numerator of which is
the aggregate Outstanding Balance of all Pool Receivables that were Defaulted
Receivables at such time and the denominator of which is the aggregate
Outstanding Balance of all Pool Receivables at such time.

          "Dealer Fee" means, with respect to a Purchaser, any and all
           ----------
commissions of placement agents and commercial paper dealers in respect of Notes
issued by such Purchaser to fund the purchase or maintenance by such Purchaser
of any Receivable Interest.

          "Debt" of any Person means, without duplication, (a) all obligations
           ----
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (d) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding accounts
payable incurred in the ordinary course of business), (e) all Debt of others
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Debt secured thereby has been
assumed, (f) all Guarantees by such Person of Debt of others, (g) all Capital
Lease Obligations of such Person, (h) all obligations, contingent or otherwise,
of such Person as an account party in respect of letters of credit and letters
of guaranty, (i) liabilities in respect of unfunded vested benefits under plans
covered by Title IV or ERISA and (j) all obligations, contingent or otherwise,
of such Person in respect of bankers' acceptances. The Debt of any Person shall
include the Debt of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Debt provide that such Person is
not liable therefor.

                                       4



          "Default Ratio" means, at the time any determination thereof is to be
           -------------
made, a fraction, expressed as a percentage, the numerator of which is 1/3 of
the aggregate Outstanding Balance of all Pool Receivables that were Defaulted
Receivables on the last Business Day of the month most recently ended and the
last Business Day of each of the immediately preceding two (2) calendar months
or that would have been Defaulted Receivables on such last Business Days had
they not been written off the books of the Seller or an Originator during such
months (such Outstanding Balances of such Defaulted Receivables for the three
(3) calendar months immediately preceding the date hereof as set forth on
Schedule VI hereto), and the denominator of which is 1/3 of the aggregate
Outstanding Balance of all Pool Receivables on the last Business Day of the
month most recently ended and the last Business Day of each of the immediately
preceding two (2) calendar months (such Outstanding Balances for the three (3)
calendar months immediately preceding the date hereof as set forth on Schedule
VI hereto).

          "Defaulted Receivable" means a Receivable:
           --------------------

          (i)   as to which any payment, or part thereof, remains unpaid for
     more than 60 days from the original due date of such Receivable;

          (ii)  which is a Bankrupt Receivable and (a) is not entitled to the
     benefit of an Administrative Priority (regardless of the Outstanding
     Balance of such Receivable) or (b) the Outstanding Balance of which,
     together with all other Bankrupt Receivables of the same Obligor, is
     greater than $500,000 (whether or not one or more of such Bankrupt
     Receivables is entitled to an Administrative Priority); or

          (iii) which, consistent with the Credit and Collection Policy, would
     be written off the Seller's or an Originator's books as uncollectible.

          "Delinquency Ratio" means, at the time any determination thereof is to
           -----------------
be made, the ratio, expressed as a percentage, computed by dividing (i) 1/3 of
the aggregate Outstanding Balance of all Pool Receivables that were Delinquent
Receivables on the last Business Day of the month most recently ended and the
last Business Day of each of the immediately preceding two (2) calendar months
by (ii) 1/3 of the aggregate Outstanding Balance of all Pool Receivables on the
last Business Day of the month most recently ended and the last Business Day of
each of the immediately preceding two (2) calendar months.

          "Delinquent Receivable" means a Receivable as to which any payment, or
           ---------------------
part thereof, remains unpaid for 30 days or more from the original due date
thereof.

          "Depositary Account" means a depositary account maintained at a
           ------------------
Depositary Bank, the primary purpose of which is to receive the proceeds of
Collections from the Seller or an Originator.

          "Depositary Bank" means, at any time, any of the banks holding one or
           ---------------
more Depositary Accounts (as of the date hereof being those banks specified on
Schedule II hereof).

          "Depositary Notice" means a notice, in substantially the form of
           -----------------
Exhibit F, from the Seller or Originator to a Depositary Bank.

                                       5



          "Designated Obligor" means, at any time, each Obligor; provided,
           ------------------                                    --------
however, that any Obligor shall, upon not less than three Business Days' notice
- -------
given to the Seller by the Administrative Agent at the instruction of any
Purchaser, cease to be a Designated Obligor.

          "Dilution Horizon Ratio" means, as of any date of determination, a
           ----------------------
fraction, expressed as a percentage, the numerator of which is the sum of (i)
the aggregate sales of the Originators for the most recently ended calendar
month, plus (ii) one-half of the aggregate sales of the Originators for the
calendar month prior to such calendar month, and the denominator of which is the
aggregate Outstanding Balance of all Eligible Receivables as of the last day of
the most recently ended calendar month.

          "Dilution Ratio" means, as of any date of determination, a fraction,
           --------------
expressed as a percentage, the numerator of which is the sum of (i) the
aggregate amount of Contractual Dilution for the most recently completed
calendar month, plus (ii) the aggregate amount of Non-Contractual Dilution for
the most recently completed calendar month, and the denominator of which is the
aggregate sales of the Originators for the prior calendar month.

          "Dilution Reserve" means, as of any date, the product of (1) the
           ----------------
quotient of (x) the Dilution Reserve Percentage on such date and (y) 1 minus
such Dilution Reserve Percentage, and (2) the Total Aggregate Capital on such
date.

          "Dilution Reserve Percentage" means, as of any date of determination,
           ---------------------------
the amount equal to

          [(2.0     x ANCDR + {(HNCDR-ANCDR) x (HNCDR / ANCDR)} + ACDR] x DHR

                    where:

          ANCDR =   the average of the Non-Contractual Dilution Ratios for the
                    preceding 12 months

          HNCDR =   the highest of the Non-Contractual Dilution Ratios over
                    the preceding 12 months

          DHR =     the Dilution Horizon Ratio

          ACDR =    the average of the Contractual Dilution Ratios for the
                    preceding 12 months

          "Dilutions" means the aggregate amount of any reductions and
           ---------
cancellations of Receivables which have been reduced or canceled, respectively,
for any reason other than that (1) the Obligors have made payments thereon or
(2) the Seller has charged-off such Receivables for credit reasons in accordance
with the Credit and Collection Policy.

                                       6



          "Eligible Receivable" means, at any time, a Receivable:
           -------------------

          (i)    the Obligor of which is not an Affiliate of any of the parties
     hereto;

          (ii)   which, at the time of the initial creation of a Receivable
     Interest therein under this Agreement is not a Defaulted Receivable;

          (iii)  which is an obligation representing all or part of the sales
     price of merchandise, insurance and services within the meaning of Section
     3(c)(5) of the Investment Company Act of 1940, as amended, and the nature
     of which is such that its purchase with the proceeds of notes would
     constitute a "current transaction" within the meaning of Section 3(a)(3) of
     the Securities Act of 1933, as amended;

          (iv)   which is an "account" within the meaning of Section 9-106 of

     the UCC of the applicable jurisdiction governing the perfection of the
     interest in such Receivable created by a Receivable Interest;

          (v)    which arises in the ordinary course of an Originator's business
     under a Contract which, together with such Receivable, is in full force and
     effect and constitutes the legal, valid and binding obligation of the
     Obligor of such Receivable and is not subject to any known dispute, offset,
     counterclaim or defense whatsoever or any Adverse Claim other than those of
     the Purchasers, the Secondary Purchasers and the Administrative Agent;

          (vi)   which, together with the Contract related thereto, does not
     contravene or violate in any respect any laws, rules or regulations
     applicable thereto (including, without limitation, laws, rules and
     regulations relating to usury, truth in lending, fair credit billing, fair
     credit reporting, equal credit opportunity, fair debt collection practices
     and privacy) (other than any contravention or violation which would not
     have a material adverse effect on the collectibility of such Receivable in
     the full Outstanding Balance thereof) and with respect to which no party to
     the Contract related thereto is in violation of any such law, rule or
     regulation in any respect (other than any contravention or violation which
     would not have a material adverse effect on the collectibility of such
     Receivable in the full Outstanding Balance thereof);

          (vii)  which satisfies all applicable requirements of the Credit and
     Collection Policy;

          (viii) as to which, at the time of the initial creation of a
     Receivable Interest therein under this Agreement, the Administrative Agent,
     at the instruction of any Purchaser, has not notified the Seller that such
     Receivable (or class of Receivables) is no longer acceptable for purchase
     by the Purchasers hereunder;

          (ix)   as to which all right, title and interest of an Originator in
     such Receivable was transferred to the Seller from such Originator pursuant
     to a Transfer Agreement;

          (x)    which is denominated and payable in United States dollars in
     the United States;

                                       7



          (xi)   the Obligor of which is not the Obligor of any Receivable which
     has been referred to the collection department of the Seller or an
     Originator;

          (xii)  as to which the Seller has good and marketable title thereto,
     freely assignable by the Seller to the Administrative Agent for the benefit
     of the Purchasers;

          (xiii) which, if a Bankrupt Receivable, is entitled to the benefit of
     an Administrative Priority and the Outstanding Balance of which, together
     with all other Bankrupt Receivables of the same Obligor entitled to the
     benefit of an Administrative Priority, is equal to or less than $500,000;

          (xiv)  the Obligor of which is a U.S. resident; and

          (xv)   which, if the Originator of which is Fort James Operating
     Company, is not due from a Government Obligor.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
           -----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

          "ERISA Affiliate" means any trade or business (whether or not
           ---------------
incorporated) that is treated as a single employer with the Seller under Section
414 of the Code.

          "Eurodollar Reserve Percentage" for any Purchaser and for any Fixed
           -----------------------------
Period means the reserve percentage applicable to such Purchaser, its Related
Secondary Purchaser or the bank or banks providing liquidity, back-up purchase
or credit support for the Purchaser during such Fixed Period under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) (or, if more than one such percentage shall be so applicable,
the weighted daily averages of such percentages for those days in such Fixed
Period during which any such percentage shall be so applicable) for determining
the maximum reserve requirement of such Purchaser, its Related Secondary
Purchaser or the bank or banks providing liquidity, back-up purchase or credit
support for the Purchaser (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) with respect to liabilities
consisting of or including Eurocurrency liabilities (as that term is defined in
Regulation D of the Board of Governors of the Federal Reserve System as in
effect from time to time) having a term equal to such Fixed Period.

          "Event of Termination" has the meaning specified in Article VII.
           --------------------

          "Excluded Taxes" means, with respect to an Indemnified Party, Taxes
           --------------
which are (a) both (i) imposed by the jurisdiction in which such Indemnified
Party is organized or by any other taxing authority of a United States
jurisdiction as a result of such Indemnified Party doing business or maintaining
an office in such jurisdiction (other than any such taxes that the Indemnified
Party establishes would not have been imposed but for (A) such Indemnified
Party's having executed or enforced a Sale Document or (B) any of the
transactions contemplated herein or in the other Sale Documents) and (ii)
imposed on, based on or measured by net pre-tax income, capital or net worth of
such Indemnified Party (other than Taxes that are, or are in the nature of,
sales, use, rental, property or value added or similar taxes) or (b) any Tax,
assignment or other governmental charge attributable to and which would not have
been imposed but for the

                                       8



failure of an Indemnified Party to deliver to the Seller the applicable tax
forms properly completed and duly executed by such Indemnified Party
establishing such party's exemption from, or eligibility for, a reduced rate of
any such tax or assessment.

          "Facility Termination Date" has the meaning specified in Section
           -------------------------
2.01(j).

          "Fee Letter" means that certain letter agreement among the Seller, the
           ----------
Purchasers and the Secondary Purchasers dated December 19, 2001, as the same
may, from time to time, be amended, modified or supplemented.

          "Fitch" means Fitch Inc., and any successor thereto.
           -----

          "Fixed Period" means, with respect to any Receivable Interest in
           ------------
respect of which Yield is computed by reference to the Adjusted LIBOR Rate, a
period from one to and including 30 days, as a Purchaser, after consultation
with the Seller, shall select, provided, that (i) any Fixed Period (other than
                               --------
of one day) which would otherwise end on a day which is not a Business Day shall
be extended to the next succeeding Business Day, except that if such extension
would cause the last day of such Fixed Period to occur in the next succeeding
month, the last day of such Fixed Period shall occur on the immediately
preceding Business Day; and (ii) in the case of any Fixed Period for any
Receivable Interest which commences before the Facility Termination Date for
such Receivable Interest and would otherwise end on a date occurring after such
Facility Termination Date, such Fixed Period shall end on such Facility
Termination Date.

          "GAAP" means generally accepted accounting principles in the United
           ----
States of America.

          "Government Obligor" means any Obligor that is an agency, a
           ------------------
department, an instrumentality or a political subdivision of the United States
or of any state or local government.

          "Government Obligor Concentration Limit" means 5% or such other
           --------------------------------------
percentage as shall be designated by the Administrative Agent in a writing
delivered to the Seller at the instruction of the Purchasers.

          "Guarantee" of or by any Person (the "guarantor") means any
           ---------                            ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Debt or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
      ---------------
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or
other obligation or to purchase (or to advance or supply funds for the purchase
of ) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Debt or
other obligation of the payment thereof or (c) to maintain working capital,
equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Debt or other
obligation; provided, that the term Guarantee shall not include endorsements for
            --------
collection or deposit in the ordinary course of business. The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability

                                       9



in respect thereof determined in good faith by the guarantor (assuming the
guarantor is required to perform thereunder).

          "Indemnified Party" has the meaning specified in Section 8.01.

          "Investor Rate" for any day in a Settlement Period for any Receivable
           -------------
Interest means

          (a)   in the case of any Purchaser other than Victory or Four Winds,
the weighted average of

          (i)   the weighted average, determined on such day, of the sum of (a)
     the discount rates on all Notes of such Purchaser issued at a discount
     outstanding on such day (other than Notes the proceeds of which are used by
     such Purchaser to (x) purchase receivables (other than the Receivables), or
     extend financing secured thereby, at a fixed interest rate or (y) conduct
     any arbitrage activities of such Purchaser) plus (b) the Dealer Fee with
     respect to such Purchaser plus (c) other costs associated with funding
     small or odd-lot amounts with respect to all receivable purchase or loan
     facilities which are funded by Notes of such Purchaser (other then Notes
     the proceeds of which are used by such Purchaser for the purposes described
     in clauses (x) and (y) above), converted to an annual yield-equivalent rate
     on the basis of a 360-day year;

          (ii)  the weighted average, determined on such day, of the sum of (a)
     the annual interest rates payable on all interest-bearing Notes of such
     Purchaser outstanding on such day (other than the Notes the proceeds of
     which are used by such Purchaser for the purposes described in clauses (x)
     and (y) of paragraph (i) above) plus (b) the Dealer Fee with respect to
     such Purchaser plus (c) other costs associated with funding small or
     odd-lot amounts with respect to all receivable purchase or loan facilities
     which are funded by Notes of such Purchaser (other then Notes the proceeds
     of which are used by such Purchaser for the purposes described in clauses
     (x) and (y) in paragraph (i) above), on the basis of a 360-day year; and

          (iii) the weighted average, determined on such day, of the Adjusted
     LIBOR Rate on such day, plus the total spread in effect for such day over
     the "Offshore Rate" for an "Offshore Rate Loan" (each as defined in the
     Revolving Credit Facility) under the Revolving Credit Facility, to the
     extent that such Purchaser has any borrowings outstanding under a Liquidity
     Facility on such day or such Purchaser is the provider of such Liquidity
     Facility, on the basis of a 360-day year;

          (b)   in the case of Victory or Four Winds, the all-in cost to Victory
or Four Winds, as the case may be, including discount, dealer commissions and
such other amounts as Victory's conduit agent or Four Wind's Conduit Agent, as
applicable, determines to be reasonable of issuing commercial paper notes to
fund Victory's Receivable Interest or Four Wind's Receivable Interest, as the
case may be; provided, that, to the extent Victory or Four Winds shall not issue
commercial paper notes to fund its respective Receivable Interest, the Investor
Rate for Victory or Four Winds, as applicable, shall be (i) with respect to each
day during a Settlement Period which is either the first, second or third day on
which Victory or Four

                                       10



Winds, as applicable, does not so fund its respective Receivable Interest, the
Base Rate in effect for such day and (ii) with respect to any other day during a
Settlement Period, the rate specified in clause (a)(iii) above; and

          (c)   In addition to the foregoing, if the Seller shall request any
Purchase (other than a reinvestment Purchase) during any period of time
determined by the Administrative Agent in its sole discretion to result in
incrementally higher costs applicable to such Purchase, the Capital associated
with any such Purchase shall, during such period, be deemed to be funded by a
Purchaser in a special pool (which may include capital associated with other
receivable purchase or loan facilities) for purposes of determining such
additional costs.

          "Investor Report" means a report, in substantially the form of Exhibit
           ---------------
A hereto (appropriately completed), furnished by the Collection Agent to each
Purchaser and the Administrative Agent pursuant to Section 6.02(g) hereof.

          "Investor Report Date" means, with respect to each Settlement Period,
           --------------------
the 23rd day of the month immediately following a Settlement Date (or if such
day is not a Business Day, the next succeeding Business Day) or such other date
or dates as shall be notified to the Seller from time to time by the
Administrative Agent at the direction of the Required Purchasers.

          "Liquidation Day" means, for any Receivable Interest, (i) each day
           ---------------
during a Settlement Period for such Receivable Interest on which the conditions
set forth in Section 3.02 are not satisfied (or expressly waived by the
Purchasers), provided such conditions remain unsatisfied (or are not expressly
             --------
waived by the Purchasers) during such Settlement Period, or (ii) each day which
occurs on or after the Reinvestment Termination Date for such Receivable
Interest.

          "Liquidity Facilities" means each of the committed loan facilities,
           --------------------
lines of credit and other financial accommodations (including, without
limitation, asset purchase agreements) available to a Purchaser to provide
liquidity in support of such Purchaser's Notes and medium-term notes.

          "Liquidation Fee" means, for any Purchaser and for any Settlement
           ---------------
Period during which a Liquidation Day occurs, the amount, if any, by which (i)
the additional Yield (calculated without taking into account any Liquidation Fee
or any shortened duration of a Fixed Period pursuant to clause (ii) of the
definition thereof) which would have accrued during the remainder of such
Settlement Period on all reductions of Capital of the Receivable Interest during
such Settlement Period exceeds (ii) the income received by such Purchaser's
investing the proceeds of such reductions of Capital.

          "Liquidation Yield Reserve" means, on any date, an amount equal to the
           -------------------------
product of (1) the Total Aggregate Capital on such date, (2) the Adjusted LIBOR
Rate for a 30-day Fixed Period to commence on such date multiplied by 1.5 and
(3) a fraction having the sum of the Average Maturity plus the Collection Delay
Period (each as in effect at such date) as its numerator and 360 as its
denominator.

          "Lock-Box Account" means a lock-box account maintained at a Lock-Box
           ----------------
Bank, the primary purpose of which is to receive Collections.

                                       11



          "Lock-Box Agreement" means an agreement, in substantially the form of
           ------------------
Exhibit B, among an Originator, the Administrative Agent and a Lock-Box Bank.

          "Lock-Box Bank" means, at any time, any of the banks holding one or
           -------------
more Lock-Box Accounts (as of the date hereof being those specified on Schedule
I hereof).

          "Lock-Box Notice" means a notice, in substantially the form of
           ---------------
Attachment A to Exhibit B, from the Seller or an Originator to any Lock-Box
Bank.

          "Loss Reserve" means, on any date, the product of (a) a fraction
           ------------
expressed as a percentage, the numerator of which will equal 300% of the greater
of (i) the Concentration Limit for any Obligor (other than any Special
Concentration Limit) and (ii) the Default Ratio as of such date and the
denominator of which will equal 1 minus the numerator and (b) the Total
Aggregate Capital on such date.

          "Loss-to-Liquidation Ratio" means, at the time of any determination
           -------------------------
thereof, a fraction, expressed as a percentage, the numerator of which is equal
to 1/3 of the aggregate Outstanding Balance (net of recoveries) of all
Receivables that were written-off of the books of the Seller or an Originator as
uncollectible in accordance with the Credit and Collection Policy during the
month most recently ended and during the immediately preceding two calendar
months and the denominator of which is equal to 1/3 of the aggregate Collections
received during the month most recently ended and during the immediately
preceding two calendar months less the aggregate amount of Collections deemed to
have been received during such period pursuant to Section 2.04(d).

          "Mandatory Reduction" means the required reduction of the Aggregate
           -------------------
Capital of a Purchaser as a result of the occurrence of a Mandatory Reduction
Day.

          "Mandatory Reduction Amount" means, with respect to the Receivable
           --------------------------
Interests of any Purchaser on any Mandatory Reduction Day, the lowest dollar
amount of a reduction in the Aggregate Capital of such Purchaser which is
necessary to cause such Receivable Interests (if greater than the Pro Rata Share
of such Purchaser to reduce to an amount equal to the Pro Rata Share of such
Purchaser.

          "Mandatory Reduction Day" means each day during a Settlement Period on
           -----------------------
which the Receivable Interests of a Purchaser exceed an amount equal to the Pro
Rata Share of such Purchaser.

          "Moody's" means Moody's Investors Service, Inc., and any successor
           -------
thereto.

          "Net Receivables Pool Balance" means, at any time with respect to any
           ----------------------------
Receivables Pool, the Outstanding Balance of Eligible Receivables then in the
Receivables Pool reduced by the sum of (i) the Outstanding Balance of such
Eligible Receivables that have become Defaulted Receivables, (ii) the aggregate
amount by which the Outstanding Balance of Eligible Receivables (other than
Defaulted Receivables) of each Obligor then in the Receivables Pool exceeds the
Concentration Limit or Special Concentration Limit for such Obligor, (iii) the
result of the aggregate amount by which the Outstanding Balance of Eligible
Receivables (other than Defaulted Receivables) of all Government Obligors then
in the Receivables Pool exceeds

                                       12



the product of (A) the Government Obligor Concentration Limit and (B) the
Outstanding Balance of the Eligible Receivables then in the Receivables Pool,
less the amount specified in clause (ii) with respect to any Government Obligor,
(iv) the aggregate amount of any cash Collections received from Obligors but not
yet applied to reduce the aggregate outstanding balance of Receivables (to the
extent that such unapplied cash has not already been considered in the
determination of Eligible Receivables) and (v) amounts representing total
accruals for annual and semi-annual rebates earned by, but not yet paid to,
Obligors, to the extent such amounts have not already been considered in the
determination of Eligible Receivables.

          "Non-Contractual Dilution" means, with respect to any Receivable, the
           ------------------------
aggregate amount of Dilutions, which have occurred for any reason other than as
a result of Contractual Dilution.

          "Non-Contractual Dilution Ratio" means, as of any date of
           ------------------------------
determination, a fraction, expressed as a percentage, the numerator of which is
the aggregate amount of Non-Contractual Dilution for the most recently completed
calendar month and the denominator of which is the aggregate sales of the
Originators for the prior calendar month.

          "Notes" means, with respect to a Purchaser, commercial paper notes or
           -----
other short-term promissory notes issued by such Purchaser in the United States
commercial paper market from time to time.

          "Obligor" means a Person obligated to make payments pursuant to a
           -------
Contract.

          "Optional Reduction" means the election of the Seller to reduce the
           ------------------
Total Aggregate Capital by directing the Collection Agent and the Purchasers to
terminate temporarily the reinvestment of Collections.

          "Optional Reduction Amount" means the dollar amount specified in a
           -------------------------
notice given by the Seller in accordance with Section 2.01(c) hereof as being
the amount by which the Seller would like to reduce temporarily the Total
Aggregate Capital.

          "Optional Reduction Day" means for each Receivable Interest, each day
           ----------------------
during a Settlement Period on which a portion of the Collections which would
ordinarily be reinvested as a return of the Capital thereof are paid to the
Purchaser or held by the Collection Agent for the account of such Purchaser in
order to effect the reduction of the Capital with respect thereto.

          "Optional Reduction Effective Date" means the day on which the
           ---------------------------------
Purchasers and the Collection Agent shall commence the temporary termination of
reinvestments of Collections pursuant to Section 2.01(c) hereof.

          "Originator" means Georgia-Pacific and any direct or indirect
           ----------
Subsidiary of Georgia-Pacific party to a Transfer Agreement and approved by the
Purchasers (as of the date hereof being those subsidiaries specified on Schedule
IV hereof).

          "Outstanding Balance" of any Receivable at any time means the then
           -------------------
outstanding principal balance thereof.

                                       13



          "Paydown Letter" means the agreement among the Seller,
           --------------
Georgia-Pacific, CRC, CAFCO and Citibank providing for the repurchase by the
Seller of certain receivable interests held by each of CRC and CAFCO pursuant to
that certain Amended and Restated Receivables Purchase Agreement, dated as of
October 13, 1999, as amended, among the Seller, the Collection Agent, CAFCO,
CRC, Falcon Asset Securitization Corporation and the Administrative Agent.

          "Payoff Letter" means the agreement among the Seller, Georgia-Pacific,
           -------------
Falcon Asset Securitization Corporation and Bank One, N.A. (Chicago Office)
providing for the repurchase by the Seller of all receivable interests held by
Falcon Asset Securitization Corporation pursuant to that certain Amended and
Restated Receivables Purchase Agreement, dated as of October 13, 1999, as
amended, among the Seller, the Collection Agent, CAFCO, CRC, Falcon Asset
Securitization Corporation and the Administrative Agent.

          "Person" means an individual, partnership, corporation (including a
           ------
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.

          "Pool Receivable" means a Receivable in a Receivables Pool.
           ---------------

          "Potential Termination Event" means an event which, with the passage
           ---------------------------
of time or notice or both, would constitute an Event of Termination.

          "Pro Rata Share" means, for each Purchaser, the percentage set forth
           --------------
below opposite such Purchaser's name, or such other percentage for such
Purchaser as shall result from any reallocation in accordance with Section
2.01(d):

Blue Ridge             27.777778%
CAFCO                  20.000000%
CRC                    13.333333%
Four Winds             22.222222%
Victory                16.666667%

          "Provisional Liquidation Day" means each day that would be a
           ---------------------------
Liquidation Day but for the proviso in clause (i) of the definition of
"Liquidation Day."

          "Purchase" has the meaning specified in Section 2.01(a).
           --------

          "Purchase Limit" means, for all Purchasers in the aggregate, an amount
           --------------
equal to $900,000,000 initially, or such lesser amount as shall reflect any
reduction pursuant to Section 2.01(b), and for each Purchaser, its Pro Rata
Share of such aggregate amount. References to the unused portion of the Purchase
Limit shall mean, at any time, the Purchase Limit in effect at such time, less
the sum of the Total Aggregate Capital under this Agreement and the "Total
Aggregate Capital" under the Secondary Purchase Agreement. Furthermore, on any
day on which the Seller reduces the unused portion of (or terminates) the
"Commitment" under the Secondary Purchase Agreement, the Purchase Limit
automatically shall reduce by the same amount (or so terminate).

                                       14



          "Receivable" means the indebtedness of any Obligor under a Contract
           ----------
(other than a Contract with respect to the sale by an Originator of gypsum at
the minehead) and includes the right to payment of any interest or finance
charges and other obligations of such Obligor with respect thereto.

          "Receivable Interest" means, at any time, an undivided percentage
           -------------------
ownership interest of a Purchaser in (i) all then outstanding Pool Receivables
arising prior to the time of the most recent computation or recomputation of
such undivided percentage interest pursuant to Section 2.03, (ii) all Related
Security with respect to such Pool Receivables, and (iii) all Collections with
respect to, and other proceeds of, such Pool Receivables. Such undivided
percentage interest shall be a fraction, expressed as a percentage, the
numerator of which is the sum of (i) the Capital of such Receivable Interest at
the time of computation and (ii) a number equal to the product of (x) the
Reserve and (y) a fraction, expressed as a percentage, the numerator of which is
the Capital of such Receivable Interest, and the denominator of which is the
Total Aggregate Capital, and the denominator of which is the Net Receivables
Pool Balance at the time of computation. Each Receivable Interest shall be
determined from time to time pursuant to the provisions of Section 2.03.

          "Receivables Pool" means at any time the aggregation of each then
           ----------------
outstanding Receivable in respect of which the Obligor is a Designated Obligor
at such time or was a Designated Obligor on the date of the initial creation of
an interest in such Receivable under this Agreement.

          "Records" means, with respect to any Receivable, all Contracts and
           -------
other documents, books, records and other information (including, without
limitation, computer programs, tapes, disks, punch cards, data processing
software and related property and rights) relating to such Receivable and the
related Obligor.

          "Reference Banks" means Citibank, N.A., The Bank of Tokyo-Mitsubishi,
           ---------------
Ltd. (New York Branch), Commerzbank AG (New York Branch), Wachovia Bank, N.A.,
or such other banks as the Purchasers shall designate with the consent of the
Seller.

          "Reinvestment Termination Date" means, with respect to any Receivable
           -----------------------------
Interest, that Business Day which the Administrative Agent at the instruction of
any Purchaser so designates by notice to the Seller as being the first day on
which reinvestments will not be made with respect to such Receivable Interest.

          "Related Secondary Purchaser" means, with respect to each Purchaser
           ---------------------------
set forth below, the Person set forth opposite its name, or, in the case of any
Additional Secondary Purchaser under the Secondary Purchase Agreement, the
Person specified as such Additional Secondary Purchaser's Related Purchaser.

Blue Ridge                         Wachovia Bank, N.A.

CAFCO                              Citibank, N.A.

CRC                                Citibank, N.A.

Four Winds                         Commerzbank AG (New York Branch)

                                       15



Victory                            The Bank of Tokyo-Mitsubishi, Ltd. (New York
                                   Branch)

          "Related Security" means with respect to any Receivable:
           ----------------

          (i)   all of the Seller's interest in any merchandise (including
     returned merchandise) relating to any sale giving rise to such Receivable;

          (ii)  all other security interests or liens and property subject
     thereto from time to time purporting to secure payment of such Receivable,
     whether pursuant to the Contract related to such Receivable or otherwise,
     together with all financing statements describing any collateral securing
     such Receivable;

          (iii) all guaranties, insurance and other agreements or arrangements
     of whatever character from time to time supporting or securing payment of
     such Receivable whether pursuant to the Contract related to such Receivable
     or otherwise; and

          (iv)  all Records relating to such Receivable.

          "Required Purchasers" means, at a particular time, the Purchasers, the
           -------------------
aggregate Purchase Limit of which equals at least 66.666666% of the overall
Purchase Limit; provided, that the Purchase Limit for any Purchaser that has
                --------
breached a material provision of this Agreement shall be zero for so long as
such breach has not been cured.

          "Reserve" means, on any date, the sum of (a) the Loss Reserve on such
           -------
date, (b) the Liquidation Yield Reserve on such date, (c) the Collection Agent
Fee Reserve, if any, on such date, and (d) the Dilution Reserve on such date.

          "Responsible Officer" means, as to the Seller and the Originators, any
           -------------------
officer (including, for the purpose of this Agreement, any assistant secretary
and any assistant treasurer) of such entity or any person designated in writing
by any such officer.

          "Restricted Transferee" means any Originator that is a direct or
           ---------------------
indirect transferee of all or a substantial portion of (i) the assets of
Georgia-Pacific Corporation or Fort James Operating Company or (ii) any assets
that were at any time from and after the date hereof assets of Georgia-Pacific
Corporation or Fort James Operating Company.

          "Revolving Credit Facility" means that certain Credit Agreement
           -------------------------
(Multi-Year Revolving Credit Facility) dated as of November 3, 2000, as amended
(as the same may from time to time be amended, supplemented or restated) among
Georgia-Pacific, the lenders named therein, Bank of America, N.A. as agent and
issuing bank, Merrill Lynch Capital Corporation and Morgan Stanley Senior
Funding Inc. as co-syndication agents and Banc of America Securities LLC,
Merrill Lynch Capital Corporation and Morgan Stanley Senior Funding Inc. as book
managers and lead arrangers.

          "S&P" means Standard & Poor's Rating Services, a division of McGraw
           ---
Hill Companies, Inc., and any successor thereto.

                                       16



          "Sale Documents" means this Agreement, the Secondary Purchase
           --------------
Agreement, the Transfer Agreement, the Consent and Acknowledgment, each Lock-Box
Agreement and the other documents delivered in connection herewith or therewith.

          "Secondary Purchase Agreement" means the Second Amended and Restated
           ----------------------------
Receivables Purchase Agreement, dated as of the date hereof, among the Seller,
Georgia-Pacific, the Secondary Purchasers and Citicorp, as administrative agent,
as the same may, from time to time, be amended, modified or supplemented.

          "Secondary Purchasers" means collectively Citibank, N.A., The Bank of
           --------------------
Tokyo-Mitsubishi, Ltd. (New York Branch), Commerzbank AG (New York Branch),
Wachovia Bank, N.A. and any "Additional Secondary Purchaser" under the Secondary
Purchase Agreement.

          "Settlement Date" means, the following:
           ---------------

          (a) with respect to any Settlement Period in which the Investor Rate
is determined in accordance with paragraphs (a)(i), (a)(ii) or (b) of the
definition "Investor Rate", the date which is the second Business Day following
the end of such Settlement Period;

          (b) with respect to any Settlement Period in which the Investor Rate
is determined in accordance with paragraph (a)(iii) of the definition "Investor
Rate", the last day of such Settlement Period;

          (c) if the Required Purchasers determine, in their sole discretion,
that (i) an Event of Termination or Potential Termination Event has occurred or
(ii) a Purchaser's commercial paper program is being liquidated, each day
designated as a Settlement Date by the Required Purchasers;

          (d) each Business Day on which a Purchaser's Investment is reduced in
accordance with Section 2.01(b), (c) or (d); and

          (e) any date on which a reduction in the Total Aggregate Capital is
required to prevent the sum of the Total Aggregate Capital and the "Total
Aggregate Capital" under the Secondary Purchase Agreement from exceeding the
Purchase Limit.

          "Settlement Period" means a period equal to one calendar month,
           -----------------
provided, however, that the first Settlement Period shall commence on the date
hereof and terminate on the last day of the calendar month in which such
Settlement Period commenced.

          "Solvent" means, when used with respect to any Person, that, as of any
           -------
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise," as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they

                                       17



mature. For purposes of this definition, (i) "debt" means liability on a
"claim," and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured.

          "Subsidiary" means, with respect to any Person, any partnership,
           ----------
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity of which more than 50%
of the outstanding equity interests having ordinary voting power to elect a
majority of the board of directors (or others performing a comparable function)
of such entity is at the time directly or indirectly owned by such Person, by
such Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.

          "Taxes" means all license and registration fees and all income, gross
           -----
receipts, rental, franchise, excise, occupational, capital, value added, sales,
use, ad valorem (real and personal), property (real and personal) and excise
taxes, fees, levies, imposts, charges or withholdings of any nature whatsoever,
together with any assessments, penalties, fines, additions to tax and interest
thereon, by any federal, state or local government or taxing authority in the
United States or by any foreign government, foreign governmental subdivision or
other foreign or international taxing authority.

          "Termination Date" means the earlier of (i) the Reinvestment
           ----------------
Termination Date and (ii) the Facility Termination Date.

          "Total Aggregate Capital" means, at any time of determination, the sum
           -----------------------
of the Aggregate Capital for the Purchasers.

          "Transfer Agreement" means each agreement, in substantially the form
           ------------------
attached hereto as Exhibit C, between the Seller and each Originator pursuant to
which the Seller will purchase Receivables from the Originators.

          "UCC" means the Uniform Commercial Code as from time to time in effect
           ---
in the specified jurisdiction.

          "Yield" means for each Receivable Interest for any Settlement Period
           -----

                                 IR x C x ED  + LF
                                          --
                                          360

          where:

                 C        =      the daily average (calculated at the close of
                                 business each day) Capital of such Receivable
                                 Interest during such Settlement Period

                                       18



                 IR       =      Investor Rate for such Receivable Interest
                                 for such Settlement Period

                 ED       =      the actual number of days elapsed during such
                                 Settlement Period

                 LF       =      the Liquidation Fee, if any, for such
                                 Receivable Interest for such Settlement
                                 Period;

provided, that no provision of this Agreement shall require the payment or
- --------
permit the collection of Yield in excess of the maximum permitted by applicable
law; and provided, further, that Yield for any Receivable Interest shall not be
         --------  -------
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.

          SECTION 1.02 Other Terms. All accounting terms not specifically
                       -----------
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9.

                                  ARTICLE II.
                       AMOUNTS AND TERMS OF THE PURCHASES

          SECTION 2.01 Purchase Facility.
                       -----------------

          (a) On the terms and conditions hereinafter set forth, each Purchaser
may, in its sole discretion, purchase Receivable Interests from the Seller from
time to time during the period from the date hereof to the Termination Date and
such Purchase shall be deemed consummated upon payment of the Purchase Price in
accordance with Section 2.02(b). Each purchase (each, a "Purchase") of
Receivable Interests with respect to a Receivables Pool requested by the Seller
shall be made by the Purchasers electing to Purchase at such time simultaneously
and ratably according to their respective Pro Rata Shares. Under no
circumstances shall a Purchaser make any Purchase if after giving effect to such
Purchase, such Purchaser's Aggregate Capital, together with the Related
Secondary Purchaser's "Aggregate Capital" under the Secondary Purchase
Agreement, would exceed such Purchaser's Purchase Limit. Notwithstanding
anything to the contrary contained herein, until such time as the parties
expressly agree, all Purchases of Receivable Interests hereunder and under the
Secondary Purchase Agreement shall be made with respect to a single Receivables
Pool.

          (b) The Seller may, upon at least five Business Days' notice to the
Administrative Agent and the Purchasers, terminate in whole or reduce in part
the unused portion of the Purchase Limit; provided, that each partial reduction
                                          --------
shall be in the amount of at least $5,000,000 or an integral multiple thereof
and shall be applied pro rata among the Purchasers according to their Pro Rata
Shares; provided, further, that any partial reduction of the Purchase Limit for
        --------  -------
any Purchaser must not result in a remaining Purchase Limit of less than
$25,000,000 or the Purchase Limit for such Purchaser shall be reduced to zero.
Any reductions in the Purchase Limit pursuant to this subsection (b) shall be
permanent.

                                       19



          (c) The Seller may, upon at least five Business Days' written notice
to the Administrative Agent and the Purchasers specifying an Optional Reduction
Amount and an Optional Reduction Effective Date, effect an Optional Reduction.
Commencing on the Optional Reduction Effective Date, the Collection Agent shall
cease the reinvestment of Collections for a period of time such that after
giving effect to the amount of Collections which are not reinvested in
accordance with the provisions of Section 2.04(b)(ii), the amount of Total
Aggregate Capital on the day immediately preceding the Optional Reduction
Effective Date is reduced by an amount equal to the Optional Reduction Amount.
Any Optional Reduction under this subsection (c) shall be applied pro rata among
the Purchasers according to their Pro Rata Shares. The Seller shall indemnify
any Purchaser for all losses, expenses and liabilities, if any (including,
without limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds required by any Purchaser in connection
with such Purchaser's funding or maintenance of the Receivable Interests), which
such Purchaser may sustain as a result of any Optional Reduction pursuant to
this subsection (c).

          (d) The Seller may, upon 60 days' prior written notice to the
Purchasers, request the reallocation of the Pro Rata Shares of the Purchasers;
provided, however, that the Seller shall not be able to request such
- --------
reallocation after the occurrence of an Event of Termination or a Potential
Termination Event. Any reallocation of a Purchaser's Pro Rata Share as in effect
prior to such reallocation which increases the Purchase Limit of such Purchaser
shall be at the sole discretion of such Purchaser and shall be effective only if
the Related Secondary Purchaser increases its "Commitment" under the Secondary
Purchase Agreement by an amount corresponding to the amount of the increase, if
any, in the Purchaser's Purchase Limit arising from such reallocation. If, as a
result of any reallocation, a Purchaser's Aggregate Capital exceeds its Pro Rata
Share (as proposed to be reallocated) of the Purchase Limit, such Purchaser
shall transfer a Receivable Interest or Receivables Interest computed on the
basis of such excess Capital to the Purchaser or Purchasers whose Pro Rata Share
has increased as a result of such reallocation in exchange for a cash payment in
an amount equal to the aggregate Capital of the Receivable Interests so
transferred.

          (e) The Seller may, upon thirty days' prior written notice to the
Administrative Agent and the Purchasers and the written signed consent of the
Administrative Agent and the Purchasers, cease purchasing Receivables from any
Originator, and after the Seller ceases purchasing Receivables from such
Originator, such Originator shall no longer have the obligations of an
Originator for all purposes of this Agreement other than with respect to those
obligations which are expressly intended to survive the termination of this
Agreement, including, without limitation, the indemnities contained in Section
8.01 as incorporated by reference in the Consent and Acknowledgement to which
such Originator is a party. If, as a result of the Seller's decision to cease
purchasing Receivables from any Originator, the Required Purchasers determine,
in their sole discretion, that the Events of Termination in Section 7.01(j) or
the Reserve are no longer reasonable or protective, the Purchasers may modify
the provisions of such Section 7.01(j) or the Reserve with the consent of the
Seller (which consent shall not be unreasonably withheld or delayed).

          (f) The Seller may, upon thirty days' prior written notice to the
Administrative Agent and the Purchasers and the written signed consent of the
Administrative Agent and the Purchasers (which consent shall not be unreasonably
withheld or delayed), cease

                                       20



purchasing from any Originator all Receivables generated by any division of such
Originator (an "Originator Division"), and after the Seller ceases purchasing
                -------------------
from such Originator all Receivables generated by such Originator Division, any
agreement arising thereafter between such Originator and an Obligor pursuant to
or under which such Obligor shall be obligated to pay for merchandise, insurance
or services provided by such Originator Division, shall not be a "Contract" for
purposes of this Agreement; provided, that any Contract generated by such
                            --------
Originator Division prior to the date the Seller ceases purchasing such
Originator Division's Receivables shall remain a "Contract" for purposes of this
Agreement. If, as a result of the Seller's decision to cease purchasing from any
Originator all Receivables generated by an Originator Division pursuant to this
Section 2.01(f), the Required Purchasers determine, in their sole discretion,
that the Events of Termination in Section 7.01(j) or the Reserve are no longer
reasonable or protective, the Purchasers may modify the provisions of such
Section 7.01(j) or the Reserve with the consent of the Seller (which consent
shall not be unreasonably withheld or delayed).

          (g) The Seller may, upon ninety days' prior written notice to the
Administrative Agent and the Purchasers and the written signed consent of the
Administrative Agent and the Purchasers, commence purchasing from any Originator
all Receivables generated by any Originator Division, and after the Seller
commences purchasing from such Originator all Receivables generated by such
Originator Division, all related agreements between the Originator, and an
Obligor pursuant to or under which such Obligor shall be obligated to pay for
merchandise, insurance or service provided by such Originator Division shall be
"Contracts" for all purposes of this Agreement. If, as a result of the Seller's
decision to commence purchasing from any Originator all Receivables generated by
an Originator Division pursuant to this Section 2.01(g), the Required Purchasers
determine, in their sole discretion, that the Events of Termination in Section
7.01(j) or the Reserve are no longer reasonable or protective, the Purchasers
may modify the provisions of such Section 7.01(j) or the Reserve with the
consent of the Seller (which consent shall not be unreasonably withheld or
delayed).

          (h) If Georgia-Pacific sells or otherwise conveys or disposes of the
stock of any Originator, upon the effective date of such sale, such Originator
shall no longer be an Originator under this Agreement; provided, that, if the
                                                       --------------
Required Purchasers determine, in their sole discretion, that the Events of
Termination in Section 7.01(j) or the Reserve are no longer reasonable or
protective as a result of such sale, the Purchasers may modify the provisions of
such Section 7.01(j) or the Reserve with the consent of the Seller (which
consent shall not be unreasonably withheld or delayed).

          (i) If Georgia-Pacific Corporation, Fort James Operating Company or
any Restricted Transferee is an Originator and such Originator sells or
otherwise disposes of all or a substantial portion of its assets to any Person
other than another Originator, the Seller shall deliver to the Purchasers at the
time of such sale a pro forma Investor Report eliminating therefrom the
Receivables of Georgia-Pacific Corporation, Fort James Operating Company or such
Restricted Transferee, as applicable. If, based upon such report, the Required
Purchasers determine, in their sole discretion, that the Events of Termination
in Section 7.01(j) or the Reserve are no longer reasonable or protective as a
result of such sale, the Purchasers may modify the provisions of such Section
7.01(j) or the Reserve with the consent of the Seller (which consent shall not
be unreasonably withheld or delayed).

                                       21



          (j) The Facility Termination Date shall be 364 days from the date
hereof; provided, that the Facility Termination Date may be extended for an
additional 364-day period at the end of each 364-day period from the date hereof
if the Seller gives each Purchaser written notice no more than 90 days prior to
each such annual anniversary (beginning with the first such period) and each
Purchaser provides the Seller with its written consent to such extension not
later than 60 days after receipt of the Seller's notice.

          SECTION 2.02 Making Purchases.
                       ----------------

          (a) Each Purchase shall be made on at least three Business Days'
notice from the Seller to each Purchaser. Each such notice shall specify (i) the
amount requested to be paid to the Seller (which shall not be less than
$5,000,000), and (ii) the date of such Purchase (which shall be a Business Day).
Each Purchaser shall notify the Seller whether it has determined to make such
Purchase not later than 10:00 A.M., New York City time, on the second Business
Day prior to the proposed purchase date.

          (b) On the date of each Purchase, each Purchaser shall, upon
satisfaction of the applicable conditions set forth in Section 3.01 and Section
3.02, make available to the Seller in same day funds, at the Seller's account
with Bank One, account number 10-31343, an amount equal to the initial Capital
of such Receivable Interest purchased by the Purchaser. Each notice given by the
Seller pursuant to subsection (a) above shall be irrevocable and binding on the
Seller and the Seller shall indemnify each Purchaser against any loss or expense
incurred by such Purchaser as a result of any failure by the Seller to accept
the amount requested to be paid by such Purchaser, including, without
limitation, any loss (including loss of anticipated profits) or expense incurred
by such Purchaser by reason of the liquidation or reemployment of funds acquired
or requested by such Purchaser to fund such requested amount.

          SECTION 2.03 Receivable Interest Percentage.
                       ------------------------------

          (a) Each Receivable Interest shall be initially computed on its date
of purchase. Thereafter, until the Reinvestment Termination Date for such
Receivable Interest, such Receivable Interest shall be automatically recomputed
(or deemed to be recomputed) on each day other than a Liquidation Day. Any
Receivable Interest as computed (or deemed recomputed) as of the close of
business on the day immediately succeeding the Reinvestment Termination Date for
such Receivable Interest shall remain constant at all times after such
Reinvestment Termination Date. Such Receivable Interest shall become zero when
the Capital thereof, Yield thereon and all other amounts due and payable to the
Purchasers and the Agent under and in connection with this Agreement shall have
been paid in full and the Collection Agent (if not the Seller or an Affiliate
thereof) shall have received the accrued Collection Agent Fee thereon.

          (b) If any Receivable Interest would otherwise be reduced on any day
on account of newly arising Pool Receivables, the Purchasers may prevent such
reduction by notifying the Collection Agent on such day that the Receivables
Pool and the Net Receivables Pool Balance for such Receivable Interest will
include, with respect to Receivables arising as Pool Receivables on such day,
only such number or portion of such Receivables as shall cause such Receivable
Interest to remain constant. The remainder of such Receivables or portion

                                       22



thereof shall be treated as Receivables arising on the next succeeding Business
Day (subject to reapplication of this subsection (b)).

          (c) If any Investor Report indicates that the last day of the prior
Settlement Period was a Mandatory Reduction Day, the Collection Agent shall
promptly notify the Purchasers and the Seller and shall specify the Mandatory
Reduction Amount. In addition, if on any Business Day the Seller knows such day
to be a Mandatory Reduction Day, it shall promptly notify the Purchasers and the
Collection Agent and shall specify the Mandatory Reduction Amount. On the
Business Day next succeeding the Investor Report Date or such notification to
the Purchasers and the Collection Agent, unless the Seller can demonstrate to
the satisfaction of the Purchasers that such day is not a Mandatory Reduction
Day, the Seller shall pay to each Purchaser its full Mandatory Reduction Amount
to the extent that the Mandatory Reduction Amount represents Collections which
should have been set aside and held in the trust for such Purchaser pursuant to
Section 2.04 hereof but were previously deemed to be reinvested on behalf of
such Purchaser. If the full Mandatory Reduction Amount is not so paid, the
Collection Agent shall continue the suspension of the reinvestment of
Collections on each Mandatory Reduction Day until such time that, after giving
effect to the amount of Collections which are not reinvested in accordance with
the provisions of Section 2.04(b)(ii) and the recomputation of the Receivable
Interests pursuant to Section 2.03, the amount of the Aggregate Capital of such
Purchaser on the day immediately preceding any Mandatory Reduction Day is
reduced by an amount equal to the Mandatory Reduction Amount for such Mandatory
Reduction Day. The Seller shall indemnify any Purchaser for all losses, expenses
and liabilities, if any (including, without limitation, any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Purchaser in connection with such Purchaser's funding or
maintenance of the Receivable Interests), which such Purchaser may sustain as a
result of any Mandatory Reduction.

          SECTION 2.04 Settlement Procedures.
                       ---------------------

          (a) Collection of the Pool Receivables shall be administered by the
Collection Agent in accordance with the terms of this Agreement. The Seller
shall provide to the Collection Agent on a timely basis all information needed
for such administration, including notice of the occurrence of any Liquidation
Day or Provisional Liquidation Day and current computations of each Receivable
Interest.

          (b) The Collection Agent shall, on each day on which Collections of
Pool Receivables are received by it with respect to any Receivable Interest
owned by a Purchaser:

          (i) set aside and hold in trust for such Purchaser, out of the
     percentage of such Collections represented by such Receivable Interest, an
     amount equal to such Purchaser's Yield and Pro Rata Share of the Collection
     Agent Fee and fees payable pursuant to the Fee Letter, if any, accrued
     through such day for such Receivable Interest and not previously set aside;
     provided, that notwithstanding the preceding clause, unless the
     --------
     Administrative Agent shall have given notice at the direction of the
     Required Purchasers to the contrary, such amounts may be commingled with
     the Collection Agent's other funds prior to their payment to the
     Purchasers;

                                       23



          (ii)  if such day is neither a Liquidation Day nor a Provisional
     Liquidation Day nor an Optional Reduction Day nor a Mandatory Reduction
     Day, reinvest on behalf of such Purchaser (such reinvestment to be deemed a
     Purchase of a Receivable Interest by such Purchaser) the remainder of such
     percentage of Collections, to the extent representing a return of Capital,
     by recomputation of such Receivable Interest pursuant to Section 2.03;

          (iii) if such day is a Liquidation Day or a Provisional Liquidation
     Day, refrain from making reinvestments and set aside and hold in trust for
     such Purchaser the entire remainder of such percentage of Collections;
     provided, that amounts set aside and held in trust on any Provisional
     --------
     Liquidation Day that is subsequently determined not to be a Liquidation Day
     thereupon shall, to the extent representing a return of Capital, be
     reinvested in accordance with the preceding subsection (ii);

          (iv)  if such day is an Optional Reduction Day, set aside and hold in
     trust for the Purchaser the entire remainder of such percentage of
     Collections or, if the remainder of such Collections exceeds the remaining
     amount of the Optional Reduction Amount, the portion of the remainder of
     such Collections equal to such remaining amount of the Optional Reduction
     Amount; provided, that, notwithstanding the preceding clause, unless the
             --------
     Administrative Agent shall have given notice at the direction of the
     Required Purchasers to the contrary, such amounts may be commingled with
     the Collection Agent's other funds prior to their payment to the
     Purchasers;

          (v)   if such day is a Mandatory Reduction Day, set aside and hold in
     trust for the Purchaser the entire remainder of such percentage of
     Collections, or if the remainder of such Collections exceeds the remaining
     amount of the Mandatory Reduction Amount for such day, the portion of the
     remainder of such Collections equal to such remaining amount of the
     Mandatory Reduction Amount; provided, that, notwithstanding the preceding
                                 --------
     clause, unless the Administrative Agent shall have given notice at the
     direction of the Required Purchasers to the contrary, such amounts may be
     commingled with the Collection Agent's other funds prior to their payment
     to the Purchasers; and

          (vi)  release to the Seller for its own account any Collections in
     excess of such amounts allocated pursuant to subsections (i) through (v)
     above.

          (c)   The Collection Agent shall deposit into an account designated by
each Purchaser, on each Settlement Date, unless the Required Purchasers, in
their sole discretion, require more frequent deposits, all amounts held by the
Collection Agent for each Purchaser in accordance with Section 2.04(b), unless
deposited earlier as provided in the next succeeding sentence; provided,
                                                               --------
however, if Collections have been commingled with the Collection Agent's other
- -------
funds prior to their payment to the Purchasers as permitted by the terms of this
Agreement, any deposits made pursuant to the preceding clause shall be made by
the Collection Agent from and to the extent of the Collections with respect to a
Receivable Interest owned by such Purchaser. If a Liquidation Day or a
Provisional Liquidation Day has occurred and is continuing, all amounts held by
the Collection Agent for each Purchaser in accordance with Section 2.04(b) shall
be deposited on the first Business Day following receipt by the Collection Agent
into an account designated by such Purchaser. The aggregate amount so deposited
with

                                       24



respect to a Receivable Interest owned by a Purchaser shall not exceed the sum
of such Purchaser's Capital of, and accrued Yield and Pro Rata Share of the
Collection Agent Fee, if any, on such Receivable Interest plus the aggregate of
any other amounts then owed by the Seller to such Purchaser hereunder. If the
amounts so deposited are insufficient to pay in full all amounts due to such
Purchaser hereunder, such amounts shall be applied in the following order of
priority (whether or not such funds are sufficient to pay in full all such
amounts): first to the Collection Agent (if other than Georgia-Pacific or its
designee) in payment of all accrued and unpaid Collection Agent Fee, if any,
second to such Purchaser in payment in full of all accrued and unpaid Yield,
third to such Purchaser in reduction to zero of the Aggregate Capital of such
Purchaser, fourth to such Purchaser in payment of any other amounts owed by the
Seller to such Purchaser under this Agreement, fifth to the Administrative Agent
in payment of amounts owed by the Seller to the Administrative Agent under this
Agreement and sixth to the Collection Agent (if Georgia-Pacific or its
designee).

          After the Capital and Yield with respect to a Receivable Interest, and
any other amounts payable by the Seller to the Purchasers or the Administrative
Agent hereunder, have been paid in full, all additional Collections with respect
to such Receivable Interest shall be paid to the Seller for its own account.

          (d)   For the purposes of this Section 2.04:

          (i)   if on any day the Outstanding Balance of any Pool Receivable is
     reduced or adjusted as a result of any defective, rejected, returned,
     repossessed or foreclosed merchandise or services, or any cash discount or
     other adjustment made by the Seller or an Originator, or any right of
     setoff is exercised by the Obligor thereunder, the Seller shall be deemed
     to have received on such day a Collection of such Pool Receivable in the
     amount of such reduction or adjustment;

          (ii)  if on any day either (w) any of the representations or
     warranties contained in Sections 4.01(h) or 4.01(n) are no longer true with
     respect to any Pool Receivable, (x) the Seller shall fail to perform or
     observe any term, covenant or agreement contained in Section 5.01(d), or
     (y) the Seller or any Originator or the Collection Agent (if
     Georgia-Pacific or an Affiliate thereof) shall extend, amend or otherwise
     modify the terms of any Pool Receivable, or amend, modify or waive the
     terms or conditions of the Contract under which such Pool Receivable arises
     in a manner which materially and adversely affects the collectibility of
     such Pool Receivable, the Seller shall be deemed to have received on such
     day a Collection of such Pool Receivable in full;

          (iii) except as provided in subsection (i) or (ii) of this Section
     2.04(d), or as otherwise required by applicable law or the relevant
     Contract, all Collections received from an Obligor of any Receivable shall
     be applied to the Receivables of such Obligor in order of the age of such
     Receivables, starting with the oldest such Receivable, unless such Obligor
     designates its payment for application to specific Receivables; and

          (iv)  if and to the extent any Purchaser shall be required for any
     reason to pay over to an Obligor any amount received on its behalf
     hereunder, such amount shall be deemed not to have been so received but
     rather to have been retained by the Seller and,

                                       25



     accordingly, such Purchaser shall have a claim against the Seller for such
     amount, payable when and to the extent that any distribution from or on
     behalf of such Obligor is made in respect thereof.

          SECTION 2.05 Fees.
                       ----

          (a) The Seller shall pay to the Purchasers fees in the amounts and at
the times specified in the Fee Letter.

          (b) The Collection Agent shall be paid a Collection Agent Fee as set
forth in Section 6.06 hereof.

          (c) The Seller shall pay to the Administrative Agent a fee as
separately agreed between the Seller and the Administrative Agent.

          Each Purchaser shall, on the first Business Day of each calendar
month, provide to the Seller and the Collection Agent a statement specifying,
for the most recently completed Settlement Period, the amount and calculation of
such Purchaser's Yield and Pro Rata Share of the fees payable pursuant to the
Fee Letter. The failure of any Purchaser to provide any such statement to the
Seller or the Collection Agent shall not relieve the Seller of its obligations
to pay such Purchaser's Yield or Pro Rata Share of such fees.

          SECTION 2.06 Payments and Computations, Etc.
                       ------------------------------

          (a) All amounts to be paid or deposited by the Seller or the
Collection Agent hereunder shall be paid or deposited no later than 3:00 P.M.
(New York City time) on the day when due in same day funds to each Purchaser's
account (as designated by each such Purchaser).

          (b) The Seller shall, to the extent permitted by law, pay on demand
from time to time interest on any amount not paid or deposited by the Seller or
the Collection Agent when due hereunder at an interest rate per annum equal to
2% per annum above the Base Rate in effect from time to time; provided, however,
                                                              --------  -------
that such interest rate shall not at any time exceed the maximum rate permitted
by applicable law.

          (c) All computations of interest under subsection (b) above and all
computations of Yield, fees, and other amounts hereunder shall be made on the
basis of a year of 360 days and the actual number of days elapsed. Whenever any
payment or deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
such payment or deposit.

          SECTION 2.07 Dividing or Combining Receivable Interests. The Seller
                       ------------------------------------------
may, on notice to and consent by a Purchaser received at least three Business
Days prior to the last day of any Settlement Period, divide any Receivable
Interest of such Purchaser into two or more Receivable Interests having
aggregate Capital equal to the Capital of such divided Receivable Interest. The
Seller may, on notice to and consent by a Purchaser received at least three
Business Days prior to the last day of any Settlement Period either (i) combine
two or more existing Receivable Interests of such Purchaser or (ii) combine an
existing Receivable Interest or existing

                                       26



Receivable Interests and a proposed Receivable Interest, all of such Purchaser,
in each case on such last day into a single Receivable Interest having Capital
equal to the aggregate Capital of such existing Receivable Interest or such
existing Receivable Interests and such proposed Receivable Interest, as the case
may be.

          SECTION 2.08 Yield Protection.
                       ----------------

          (a) If, after the date hereof, the adoption of any applicable law,
rule or regulation, or any change therein, including Regulation D of the Board
of Governors of the Federal Reserve System, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Purchaser or any Person controlling any thereof, any permitted
assignee under this Agreement or any Person maintaining any liquidity, purchase
or credit enhancement facility for any Purchaser (each of which being an
"Affected Party") with any request or directive (whether or not having the force
 --------------
of law) of any such authority, central bank or comparable agency,

               (A) shall subject an Affected Party to any tax (except for taxes
on the overall net income of such Affected Party), duty or other charge with
respect to the Receivable Interests or any right to make purchases, or shall
change the basis of taxation of payments to an Affected Party of its Capital or
Yield or any other amounts due under this Agreement in respect of its Capital or
its rights, if any, to make purchases; or

               (B) shall impose, modify or deem applicable any reserve
requirement (including, without limitation, any reserve requirement imposed by
the Board of Governors of the Federal Reserve System, but excluding any reserve
requirement, if any, included in the determination of Yield), special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Affected Party; or

               (C) shall impose any other condition affecting the Receivable
Interests or the Purchaser's rights, if any, to make purchases;

and the result of any of the foregoing is (i) to increase the cost to, or, in
the case of Regulation D referred to above, to impose a cost on an Affected
Party funding or making or maintaining any Receivable Interest, or (ii) to
reduce the amount of any sum received or receivable by an Affected Party under
this Agreement with respect thereto, then within ten days after demand by such
Affected Party (which demand shall be accompanied by a statement setting forth
the basis for such demand), the Seller shall pay directly to such Affected Party
such additional amount or amounts as will compensate such Affected Party for
such additional or increased cost incurred or such reduction suffered.

          (b) If an Affected Party shall reasonably determine that the adoption
of any applicable law, rule, regulation, directive or guideline regarding
capital adequacy, or any change in or phase-in of any applicable law, rule,
regulation, directive or guideline or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by an Affected
Party with any request or directive regarding capital adequacy (whether or not

                                       27



having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of any Affected Party as a consequence of its obligations hereunder or
arising in connection herewith to a level below that which any such Affected
Party could have achieved but for such adoption, change or compliance (taking
into consideration the policies of such Affected Party with respect to capital
adequacy) by an amount deemed by such Affected Party to be material, then from
time to time, within ten days after demand by such Affected Party, the Seller
shall pay to such Affected Party such additional amount or amounts as will
compensate such Affected Party for such reduction.

          (c) Each Affected Party will promptly notify the Seller of any event
of which it has knowledge occurring after the date hereof which will entitle
such Affected Party to compensation pursuant to this Section 2.08. If an
Affected Party fails to give such notice within 90 days after it obtains actual
knowledge of such event and such result, such Affected Party shall be entitled
to compensation pursuant to this Section 2.08 only to the extent such additional
amount or reduction accrues on or after the date 90 days prior to the date on
which such Affected Party gives such notice.

          (d) In determining any amount provided for in this Section 2.08, the
Affected Party may use any reasonable averaging and attribution methods. Any
Affected Party making a claim under this Section 2.08 shall submit to the Seller
a certificate as to such additional or increased cost or reduction, which
certificate shall be conclusive absent demonstrable error; provided, that the
failure to deliver any such certificate shall not affect the Affected Party's
right to payment hereunder unless notice as required by Section 2.08(c) has not
been given.

          SECTION 2.09 Sharing of Payments, Etc. If any Purchaser shall obtain
                       ------------------------
any payment (whether voluntary, involuntary, through the exercise of any right
of setoff, or otherwise) on account of Pool Receivables covered by a Receivable
Interest (other than pursuant to Section 2.08) in excess of payments on account
of Pool Receivables allocable to such Receivable Interest, such Purchaser shall
forthwith purchase from the other Purchasers such participations in the Pool
Receivables as shall be necessary to cause such purchasing Purchaser to share
the excess payment ratably with each of them, provided, however, that if all or
                                              --------  -------
any portion of each excess payment is thereafter recovered from such purchasing
Purchaser, such purchase from each Purchaser shall be rescinded and such
Purchaser shall repay to the purchasing Purchaser the purchase price to the
extent of such recovery together with an amount equal to each Purchaser's Pro
Rata Share of any interest or other amount paid or payable by the purchasing
Purchaser in respect of the total amount so recovered.

          SECTION 2.10 Effect of Early Payments. In the event any Purchaser: (i)
                       ------------------------
has the Capital of a Receivable Interest reduced without compliance by the
Seller with the notice requirements hereunder, (ii) does not become subject to a
Mandatory Reduction or an Optional Reduction upon the occurrence of a Mandatory
Reduction Day or an Optional Reduction Day or (iii) in the case of Victory, such
reduction occurs in an amount greater than the face value of Victory's
commercial paper notes issued to fund its Receivable Interest and which mature
on the date of such reduction, then the Seller agrees to pay to the relevant
Purchaser an amount equal to the excess, if any, of:

                                       28



          (A) Yield that would have accrued during the remainder of the
Settlement Period or the tranche periods for Notes determined by such Purchaser
to relate to such Receivable Interest (as applicable) subsequent to the date of
such reduction (or in respect of clause (ii) above, the date such Mandatory
Reduction or Optional Reduction took effect pursuant to the occurrence of a
Mandatory Reduction Day or an Optional Reduction Day) on such Capital if such
reduction or such Mandatory Reduction Day or Optional Reduction Day had not
occurred,

          over

          (B) the income, if any, actually received during the remainder of such
period by such Purchaser from investing the amount received as a reduction of
such Capital, in accordance with such Purchaser's normal investment policies.

All payments made pursuant to this Section 2.10 shall be due and payable
hereunder upon demand. The determinations made by any Purchaser pursuant to this
Section 2.10 shall be binding absent demonstrable error.

                                  ARTICLE III.
                             CONDITIONS OF PURCHASES

          SECTION 3.01 Conditions Precedent to Initial Purchase. The initial
                       ----------------------------------------
Purchase of Receivable Interests under this Agreement is subject to the
conditions precedent that the Purchasers shall have received on or before the
date of such Purchase the following, each (unless otherwise indicated) dated
such date and in form and substance satisfactory to the Purchasers and the
Administrative Agent:

          (a) Certificates of the Secretary or Assistant Secretary of the Seller
and each Originator certifying the names and true signatures of their respective
officers authorized to sign this Agreement and the other documents to be
delivered by them hereunder or in connection herewith, evidence of authorization
of the transactions contemplated hereby, the articles of incorporation or
formation (attached and appropriately certified by the Secretary of State of the
Seller's and each Originator's jurisdiction of incorporation or formation) and
the by-laws and all amendments thereto of the Seller and each Originator.

          (b) Executed financing statements (including any assignments of and
amendments to financing statements previously filed), to be filed on or before
the date of such initial Purchase under the UCC of all jurisdictions that the
Purchasers or the Administrative Agent may deem necessary or desirable in order
(i) to perfect the ownership interests contemplated by this Agreement and (ii)
to perfect the ownership interests of the Seller in the receivables purchased by
the Seller from the Originators pursuant to the Transfer Agreements.

          (c) Executed UCC termination statements, if any, necessary to release
all security interests and other rights of any Person (other than the Purchasers
and the Secondary Purchasers) in the Receivables, Contracts or Related Security
previously granted by the Seller or any Originator.

                                       29



          (d) Evidence (including Uniform Commercial Code search reports) that
all Receivables and all proceeds thereof are free and clear of liens, security
interests, claims and encumbrances other than those held by the Purchasers and
the Secondary Purchasers.

          (e) An executed Transfer Agreement and Consent and Acknowledgment from
each Originator.

          (f) A favorable opinion of counsel for the Seller and for each
Originator as to such matters as the Purchasers or the Administrative Agent may
reasonably request, including, without limitation, bankruptcy opinions with
respect to "true sale" and nonconsolidation.

          (g) An executed Payoff Letter and evidence of the payment of all
amounts payable thereunder.

          (h) An executed Paydown Letter and evidence of the payment of all
amounts payable thereunder.

          SECTION 3.02 Conditions Precedent to All Purchases and Reinvestments.
                       -------------------------------------------------------
Each Purchase (including the initial Purchase) and each reinvestment shall be
subject to the further conditions precedent that (a) in the case of each
Purchase, the Collection Agent shall have delivered to the Purchasers and the
Administrative Agent on or prior to the date of such Purchase, in form and
substance satisfactory to the Purchasers, all Investor Reports as and when due
under Section 6.02(g) and, on or prior to the date of the initial Purchase, an
Investor Report containing then current information acceptable to the
Purchasers, and (b) on the date of each Purchase or reinvestment, the following
statements shall be true (and acceptance of the proceeds of such Purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):

          (i) the representations and warranties contained in Article IV are
correct on and as of the date of such Purchase or reinvestment as though made on
and as of such date,

          (ii) no event has occurred and is continuing, or would result from
such Purchase or reinvestment, that constitutes an Event of Termination or a
Potential Termination Event,

          (iii) the Internal Revenue Service shall not have filed a notice of
lien pursuant to Section 6323 of the Code with regard to any assets of the
Seller or any Originator, and the Pension Benefit Guaranty Corporation shall not
have filed a notice of lien pursuant to Section 4068 of ERISA with regard to any
assets of the Seller or any Originator, unless such liens (1) have been
suspended or (2) are being contested in good faith by the Seller or such
Originator and have been bonded in the full amount thereof; provided, however,
                                                            --------  -------
that with respect to any Originator, the amount of such lien shall be greater
than $50,000,000, and

          (iv) the Facility Termination Date shall not have occurred,

                                       30



and (c) the Purchasers shall have received such other approvals, opinions or
documents as they may reasonably request.

                                  ARTICLE IV.
                         REPRESENTATIONS AND WARRANTIES

          SECTION 4.01 Representations and Warranties of the Seller and the
                       ----------------------------------------------------
Collection Agent. Each of the Seller and the Collection Agent makes, with
- ----------------
respect to itself, the following representations and warranties to each
Purchaser and the Administrative Agent on the date of each Purchase and on the
date of each reinvestment as follows:

          (a) It is duly incorporated, validly existing and in good standing
under the laws of its state of incorporation, and is duly qualified to do
business, and is in good standing, in every jurisdiction where the nature of its
business or the ownership of its properties requires it to be so qualified where
the failure to be so qualified could materially adversely affect its ability to
perform its obligations hereunder or under any Transfer Agreement or the
Secondary Purchase Agreement. As of the date hereof, Georgia-Pacific owns
directly or indirectly 100% of the issued and outstanding common stock of the
Seller.

          (b) The execution, delivery and performance by the Seller and the
Collection Agent of the Sale Documents to which it is a party, and the Seller's
use of the proceeds of purchases and reinvestments, are within its corporate
powers, have been duly authorized by all necessary corporate action, do not
contravene or violate (i) its certificate of incorporation or articles of
incorporation or by-laws; or (ii) any law, rule or regulation or any contractual
restriction binding on or affecting it the breach of which could reasonably be
expected to have a material adverse effect on the Receivables or the transaction
contemplated hereby, or as may restrict or limit the assignment of Receivables
of Government Obligors, and do not result in or require the creation of any lien
(other than pursuant hereto and pursuant to the Secondary Purchase Agreement)
upon or with respect to any of its properties; and no transaction contemplated
hereby requires compliance with any bulk sales act or similar law. Each Sale
Document to which the Seller or the Collection Agent is a party has been duly
executed, authorized and delivered by the Seller or the Collection Agent, as the
case may be.

          (c) Other than the filings of the financing statements under the UCC
of the jurisdictions that the Purchasers or the Administrative Agent deem
necessary, all of which, on or prior to the date of the initial Purchase
hereunder, will have been duly made and be in full force and effect, and other
than such filings, registrations and notices as may be required under applicable
law with respect to the assignment of Receivables of Government Obligors no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for the due execution,
delivery and performance by the Seller or the Collection Agent of this Agreement
or any other Sale Document to which the Seller or the Collection Agent is a
party or for the perfection of or exercise by the Purchaser of its rights and
remedies under this Agreement or any other Sale Document to be delivered
hereunder.

          (d) Each of this Agreement and each other Sale Document to which the
Seller or the Collection Agent is a party constitutes the legal, valid and
binding obligation of the Seller and the Collection Agent, respectively,
enforceable against the Seller and the Collection Agent in

                                       31



accordance with their terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally.

          (e) The unaudited consolidated financial statements of the Collection
Agent and its subsidiaries as of September 29, 2001, copies of which have been
furnished to the Purchasers, fairly present the financial condition of the
Collection Agent and its subsidiaries as of such date and the consolidated
results of their operations for the period ended on such date, and have been
prepared in accordance with GAAP consistently applied in all material respects
by the Collection Agent and its subsidiaries throughout the period involved,
except as set forth in the notes thereto and there has been no material adverse
change in such financial position or operations as they existed as of such date.

          (f) There is no pending or threatened action or proceeding affecting
the Seller or the Collection Agent or any of their respective subsidiaries or
properties before any court, governmental agency or arbitrator which could
reasonably be expected to materially adversely affect (i) the financial
condition or operations of the Seller or the Collection Agent and its
subsidiaries or (ii) the ability of the Seller or the Collection Agent to
perform their obligations under this Agreement or any other Sale Document to
which it is a party or (iii) the legality, validity or enforceability of this
Agreement or any other Sale Document to which it is a party or (iv) any
Purchaser's interest in the Pool Receivables generally or in any significant
portion of the Pool Receivables, the Related Security or the Collections with
respect thereto, or (v) the collectibility of the Pool Receivables generally or
of any significant portion of the Pool Receivables. Neither the Seller nor the
Collection Agent is in default with respect to any order of any court,
arbitrator or governmental body. No Event of Termination, or event which, with
the passage of time or the giving of notice, or both, would be an Event of
Termination, is continuing.

          (g) No proceeds of any purchase or reinvestment will be used (i) for a
purpose which violates, or would be inconsistent with regulations T, U or X
promulgated by the Board of Governors of the Federal Reserve System from time to
time or (ii) to acquire any security in any transaction which is subject to
Section 13 and 14 of the Securities Exchange Act of 1934, as amended.

          (h) Immediately prior to a Purchase hereunder, the Seller shall be the
legal and beneficial owner of the Pool Receivables and Related Security with
respect thereto (except with respect to Related Security and with respect to
Receivables of Government Obligors, the transfer of which may be limited by
applicable law), free and clear of any Adverse Claim, except as created by this
Agreement and the Secondary Purchase Agreement and the documents entered into in
connection herewith and therewith. This Agreement is effective to, and shall,
upon each purchase or reinvestment, transfer to each Purchaser (and each
Purchaser shall acquire from the Seller) a valid and perfected first priority
undivided percentage ownership interest to the extent of such Purchaser's
Receivable Interest in each Pool Receivable existing or hereafter arising and in
the Related Security and Collections with respect thereto, except as may be
limited by applicable law with respect to the Related Security and with respect
to Receivables of Government Obligors, free and clear of any Adverse Claim,
except as created by this Agreement and the Secondary Purchase Agreement and the
documents entered into in connection herewith

                                       32



and therewith. No effective financing statement or other instrument similar in
effect covering any Contract or any Pool Receivable or the Related Security or
Collections with respect thereto is on file in any recording office, except
those filed in favor of the Administrative Agent pursuant to this Agreement and
the Secondary Purchase Agreement and those filed in favor of the Seller pursuant
to a Transfer Agreement. Upon the filing of UCC-1 financing statements naming
the Administrative Agent as secured party and the Seller as debtor, the
Administrative Agent, as agent for the Purchasers, shall have a first priority
perfected security interest in the Pool Receivables, Related Security and
Collections, to the extent of each Purchaser's Receivable Interest, to the
extent a security interest in such items of property can be perfected under the
UCC.

          (i) Prior to a transfer pursuant to a Transfer Agreement, the related
Originator shall be the legal and beneficial owner of the Receivables and the
Related Security sold to the Seller pursuant to such Transfer Agreement free and
clear of any Adverse Claim. Each Transfer Agreement is effective to, and shall,
upon the creation of a Receivable owing to such Originator party to such
Transfer Agreement, transfer to the Seller (and the Seller shall acquire) from
such Originator all right, title and interest of such Originator in each such
Receivable and in the Related Security and Collections with respect thereto,
except as may be limited by applicable law with respect to the Related Security
and with respect to Receivables of Government Obligors, free and clear of any
Adverse Claim, except as contemplated by this Agreement and the Secondary
Purchase Agreement.

          (j) Each Investor Report (if prepared by the Seller, an Originator or
one of their Affiliates, or to the extent that information contained therein is
supplied by the Seller, an Originator or an Affiliate), information, exhibit,
financial statement, document, book, record or report (other than projections
prepared in good faith) furnished or to be furnished at any time by a
Responsible Officer of the Seller or an Originator to the Administrative Agent
or the Purchasers in connection with this Agreement was, is, or will be accurate
in all material respects as of its date or (except as otherwise disclosed to the
Administrative Agent or the Purchasers, as the case may be, at such time) as of
the date so furnished, and no such document contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.

          (k) As of the date hereof, (i) the Seller's jurisdiction of
incorporation is the State of Delaware, (ii) the jurisdiction of incorporation
or formation of each of the Originators is as stated in the related Transfer
Agreement and (iii) the office where the Seller keeps its records concerning the
Receivables is located at the address referred to in Section 11.02 hereof.

          (l) The names and addresses of all Lock-Box Banks and Depositary
Banks, together with the account numbers of the Lock-Box Accounts and the
Depositary Accounts of the Seller and the Originators at such Lock-Box Banks and
such Depositary Banks, are, as of the date hereof, specified in Schedule I
hereto and Schedule II hereto, respectively (or at such other Lock-Box Banks or
Depositary Banks and/or with such other Lock-Box Accounts or Depositary Accounts
as have been notified to the Administrative Agent and the Purchasers in writing
in accordance herewith).

                                       33



          (m) Each purchase of a Receivable Interest and each reinvestment of
Collections in Pool Receivables hereunder, and each Purchase by the Seller from
an Originator of a Receivable under the Transfer Agreement to which such
Originator is a party, will constitute (i) a "current transaction" within the
meaning of Section 3(a)(3) of the Securities Act of 1933, as amended, and (ii) a
purchase or other acquisition of notes, drafts, acceptances, open accounts
receivable or other obligations representing part or all of the sales price of
merchandise, insurance or services within the meaning of Section 3(c)(5) of the
Investment Company Act of 1940, as amended.

          (n) Each Pool Receivable at the time it first becomes covered by a
Receivable Interest, shall be an Eligible Receivable. Each Pool Receivable used
in computing the Net Receivables Pool Balance shall, at the time of such
computation, be an Eligible Receivable. No event has occurred which materially
and adversely affects the collectibility of the Pool Receivables generally or
the collectibility of a significant portion of the Pool Receivables.

          (o) No event has occurred which could reasonably be expected to
materially adversely affect the operations of the Seller or the Collection Agent
and its subsidiaries considered on a consolidated basis as it existed as of
September 29, 2001 or the ability of the Seller or the Collection Agent to
perform its duty to collect the Pool Receivables or the ability of the Seller or
the Collection Agent to perform its obligations under this Agreement or any
other Sale Document to which it is a party.

          (p) With respect to each Receivable sold by an Originator to the
Seller and included in a Receivables Pool, the Seller shall have paid or
promised to pay to such Originator at the time of such sale an amount equal to
the Outstanding Balance of such Receivable.

          (q) The Seller and each Originator are treating the conveyance of the
Receivables Interest in the Receivables, the Related Security and the
Collections under this Agreement and each sale of a Receivable under the
Transfer Agreements, respectively, as a sale for purposes of GAAP.

          (r) Neither the Seller nor the Collection Agent has extended or
modified the terms of any Pool Receivable or the invoice under which any such
Pool Receivable arose except in accordance with the Credit and Collection
Policy.

          (s) The obligations of the Seller hereunder to make payment in respect
of fees payable to the Purchasers, deemed Collections under Section 2.04(d) and
indemnities rank at least equally with Debt of the Seller which is not
contractually subordinated.

          (t) Neither the Seller nor the Collection Agent has granted any Person
dominion and control of any Lock-Box Account or Depositary Account, or the right
to take dominion and control of any Lock-Box Account or Depositary Account at a
future time or upon the occurrence of a future event.

          (u) The transactions under this Agreement and the other Sale Documents
executed and delivered by the Seller do not and will not render the Seller not
Solvent.

                                       34



          (v) The Seller and the Collection Agent have filed or caused to be
filed all tax returns which, to their knowledge, are required to be filed or has
filed timely extensions therefor. The Seller and the Collection Agent have paid
all taxes and all assessments made against them or any of its property when due
and payable (other than any amount of tax the validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in accordance with GAAP have been provided on the books of the
Seller or the Collection Agent, as the case may be), and no tax lien has been
filed and, to the Seller's or the Collection Agent's knowledge, no claim is
being asserted, with respect to any such tax, fee or other charge, provided,
                                                                   --------
that, with respect to the Collection Agent (if Georgia-Pacific), the amount of
such claim is at least $75,000,000.

          (w) Since September 29, 2001, there have been no changes to the Credit
and Collection Policy which could reasonably be expected to have materially
adversely affect the collectibility of any Receivable.

          (x) Neither the Seller nor the Collection Agent is an "investment
company" or a company controlled by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.

          (y) The Seller is treating the conveyance of the Receivable Interests
and the Related Security as indebtedness for purposes of Federal income
taxation.

          Upon discovery by the Seller, the Collection Agent, any Purchaser or
the Administrative Agent of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the others.

                                   ARTICLE V.
                                    COVENANTS

          SECTION 5.01 Covenants of the Seller and the Collection Agent. Until
                       ------------------------------------------------
the date on which no Capital of any Receivable Interest shall be outstanding and
no further Purchases are to be made under this Agreement:

          (a) Compliance with Laws, Etc. Each of the Seller and the Collection
              -------------------------
Agent shall comply in all material respects with its certificate of
incorporation and by-laws and all applicable laws, rules, regulations and orders
with respect to it, its properties, and all Receivables in which the Purchasers
have a Receivable Interest, and shall preserve and maintain its corporate
existence, rights, franchises, qualifications, and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where the failure to be
so qualified could materially adversely affect its ability to perform its
obligations hereunder and under the other Sale Documents to which it is a party.

          (b) Offices, Records and Books of Accounts. The Seller shall not
              --------------------------------------
change the jurisdiction of its incorporation, except upon 30 days' prior written
notice to the Administrative Agent and the Purchasers to a jurisdiction where
all action required by Section 6.05(a) shall have been taken. The Seller and the
Collection Agent shall maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Pool Receivables and related Contracts in the event of the
destruction of the originals thereof),

                                       35



and keep and maintain all documents, books, records and other information
reasonably necessary or advisable for the collection of all Pool Receivables
(including, without limitation, records adequate to permit the daily
identification of each Pool Receivable and all Collections of and adjustments to
each existing Pool Receivable).

          (c) Performance and Compliance with Contracts and Credit and
              --------------------------------------------------------
Collection Policy. The Seller and the Collection Agent shall, at their own
- -----------------
respective expense, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by them under
the Contracts related to the Pool Receivables, and timely and fully comply in
all material respects with the Credit and Collection Policy in regard to each
Pool Receivable and the related Contract.

          (d) Sales, Liens, Etc. Neither the Seller nor the Collection Agent
              -----------------
shall sell, assign (by operation of law or otherwise) or otherwise dispose of,
or create or suffer to exist any Adverse Claim (other than as contemplated
hereunder) upon or with respect to, any Pool Receivable, Related Security
(except returned or reclaimed merchandise), related Contract or Collections, or
upon or with respect to any account to which any Collections of any Pool
Receivable are sent, or assign any right to receive income in respect thereof,
except as contemplated hereunder and under the Secondary Purchase Agreement and
the Transfer Agreements.

          (e) Extension or Amendment of Receivables. Except as provided in
              -------------------------------------
Section 6.02(c), neither the Seller nor the Collection Agent shall extend, amend
or otherwise modify the terms of any Pool Receivable, or amend, modify or waive
any term or condition of any Contract related thereto other than in accordance
with the Credit and Collection Policy, except with the prior written consent of
the Required Purchasers.

          (f) Change in Business or Credit and Collection Policy. Neither the
              --------------------------------------------------
Seller nor the Collection Agent shall make any change in the character of its
business or in the Credit and Collection Policy that could, in either case, have
a material adverse effect on (i) its business or properties, (ii) the ability of
the Seller or the Collection Agent to perform its obligations under this
Agreement or any Sale Document to which it is a party or (iii) the
collectibility of the Pool Receivables generally or of any significant portion
of the Pool Receivables.

          (g) Audits. The Seller and the Collection Agent shall, at any
              ------
reasonable time, permit each Purchaser, or its agents or representatives, (i) to
examine and make copies of and abstracts from all Records in the possession or
under the control of the Seller or the Collection Agent relating to Pool
Receivables and the Related Security, including, without limitation, the related
Contracts, and (ii) to visit and inspect the offices and properties of the
Seller and the Collection Agent for the purpose of examining such materials
described in clause (i) above, and to discuss matters relating to the Seller's
and the Collection Agent's financial condition or the Pool Receivables and the
Related Security or the Seller's or the Collection Agent's performance hereunder
or under the Contracts with any of the officers or employees of the Seller or
the Collection Agent having knowledge of such matters.

          (h) Change in Payment Instructions to Obligors. The Seller and the
              ------------------------------------------
Collection Agent shall not, and shall not permit any Originator to, add or
terminate any bank as a

                                       36



Lock-Box Bank or a Depositary Bank from those listed in Schedule I hereto or
Schedule II hereto, respectively, or make any change in its instructions to
Obligors regarding payments to be made to the Seller, the Collection Agent or an
Originator or payments to be made to any Lock-Box Bank or Depositary Bank,
unless the Administrative Agent and the Purchasers shall have received, at least
10 days before the proposed effective date therefor, written notice of such
addition, termination or change and, with respect to the addition of the
Lock-Box Bank, an executed Lock-Box Agreement from, and undated executed copies
of Lock-Box Notices to, such new Lock-Box Bank, and with respect to a Depositary
Bank, undated executed copies of Depositary Notices; provided, however, that the
                                                     --------  -------
Seller, the Collection Agent or an Originator shall be permitted to make changes
in instructions to Obligors regarding payments if such new instructions require
such Obligor to make payments to another existing Lock-Box Account or Depositary
Account.

          (i) Deposits to Depositary Accounts. The Seller shall, and shall cause
              -------------------------------
each Originator to, deposit, or cause to be deposited, all Collections of Pool
Receivables received by the Seller or an Originator into Lock-Box Accounts or
Depositary Accounts within two (2) Business Days of the receipt thereof.

          (j) Reporting Requirements. The Seller will provide to the Purchasers
              ----------------------
the following:

          (i) as soon as available and in any event within 45 days after the end
     of the first three quarters of each fiscal year of Georgia-Pacific, balance
     sheets of Georgia-Pacific and its subsidiaries as of the end of such
     quarter and statements of income and cash flows of Georgia-Pacific and its
     subsidiaries for the period commencing at the end of the previous fiscal
     year and ending with the end of such quarter, certified by the chief
     financial officer of Georgia-Pacific;

          (ii) as soon as available and in any event within 90 days after the
     end of each fiscal year of Georgia-Pacific, a copy of the annual report for
     such year for Georgia-Pacific and its subsidiaries, containing audited
     financial statements for such year certified in a manner acceptable to the
     Purchasers by Arthur Andersen & Co. or other independent public accountants
     of recognized national standing acceptable to the Purchasers;

          (iii) as soon as possible and in any event within five days after (i)
     the occurrence of each Event of Termination or Potential Termination Event
     of which the Seller has knowledge, (ii) any material change in the Credit
     and Collection Policy or (iii) any action, proceeding or judgment affecting
     the Seller or any Originator which could reasonably be expected to
     materially adversely affect the Seller's or such Originator's (x) financial
     condition or operations or (y) ability to perform their respective
     obligations under the Sale Documents, or which could reasonably be expected
     to affect the legality, validity or enforceability of any Sale Document or
     of the Receivables Interest or the interest of the Seller in Receivables
     purchased from any Originator under the Transfer Agreement, a statement of
     a Responsible Officer of the Seller or his designee setting forth details
     thereof and the action that the Originator has taken and proposes to take
     with respect thereto, it being understood that the Originator shall
     implement such reasonable

                                       37



     procedures as shall be designed to ensure that the Treasurer shall promptly
     become aware of any Event of Termination or Potential Termination Event;

          (iv) promptly after the sending or filing thereof, copies of all
     reports that Georgia-Pacific sends to any of its security holders or its
     creditors and copies of all reports and registration statements that
     Georgia-Pacific or any subsidiary files with the Securities and Exchange
     Commission or any national securities exchange;

          (v) promptly after the filing or receipt thereof, copies of all
     material reports and notices which the Seller, Georgia-Pacific or any ERISA
     Affiliate files with or receives from the Internal Revenue Service under
     ERISA or files with or receives from the Pension Benefit Guaranty
     Corporation or the United States Department of Labor;

          (vi) promptly after the receipt thereof, copies of any notice of a tax
     lien against any property of the Seller or any Originator which the Seller
     or such Originator receives from the Internal Revenue Service;

          (vii) at least 45 Business Days prior to any change in the Seller's or
     an Originator's name, a notice setting forth the proposed name and the
     effective date thereof;

          (viii) on or prior to each Investor Report Date, a certificate signed
     by a Responsible Officer of the Seller or his designee showing the
     calculations necessary to determine compliance with this Agreement and
     stating that, unless a statement required by clause (iii) above has been
     furnished, to the best of his knowledge, after due inquiry, no Event of
     Termination or Potential Termination Event has occurred; and

          (ix) such other information documents, records or reports in respect
     of the Receivables or the condition or operations, financial or otherwise,
     of the Seller, Georgia-Pacific or any of its subsidiaries as the Purchasers
     or the Administrative Agent may from time to time reasonably request.

          (k) Purchase of Receivables from an Originator. With respect to any
              ------------------------------------------
Receivable sold by an Originator to the Seller and included in the Receivables
Pool, the Seller has paid or will have promised to pay such Originator an amount
equal to the Outstanding Balance of such Receivable.

          (l) Collections Received by an Originator. Upon notification from the
              -------------------------------------
Administrative Agent, acting at the instruction of the Required Purchasers, the
Seller will cause each Originator to hold in trust and promptly turn over to the
Collection Agent any Collections received by such Originator on the Seller's
behalf.

          (m) Change in Transfer Agreements. The Seller shall not, and shall not
              -----------------------------
permit any Originator to, amend, modify or waive any term or condition of this
Agreement or any Transfer Agreement or replace the "Servicer" under any Transfer
Agreement without the consent of all of the Purchasers.

                                       38



          (n) UCC Filings. The Seller shall, and shall cause each Originator to,
              -----------
file and maintain in effect all filings, and take all such other actions, as may
be necessary to protect the validity and perfection of the Receivable Interest
and the Seller's interest in the Receivables purchased from such Originator
pursuant to a Transfer Agreement.

          (o) Compliance with GAAP. The Seller shall treat the conveyance of the
              --------------------
Receivable Interests in the Receivables and the Collections under this Agreement
as a sale for purposes of GAAP.

          (p) Deposit of Collections. The Seller shall not, and shall not permit
              ----------------------
any Originator to, deposit or otherwise credit, or cause or permit to be so
deposited or credited, to any Lock-Box Accounts or Depositary Accounts cash or
cash proceeds other than Collections.

          (q) No Modification. The Seller shall not amend or modify Articles
              ---------------
Third, Sixth, Seventh, Eighth, Eleventh or Twelfth of the Seller's certificate
of incorporation or Sections 1 and 2 of Article III or Article VIII of the
Seller's by-laws.

          (r) Debt. The Seller shall not create, incur, assume or suffer to
              ----
exist any Debt or other liability whatsoever, except (i) obligations incurred
under or expressly contemplated by this Agreement, the Secondary Purchase
Agreement or the Transfer Agreements, (ii) liabilities incident to the
maintenance of its existence in good standing or (iii) operating expenses
arising in the ordinary course of business.

          (s) Loans. The Seller shall not make or suffer to exist any loans or
              -----
advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or securities
or evidences of Debt, acquisition of the business or assets, or otherwise) in,
any Person.

          (t) Dissolution. The Seller shall not enter into any transaction of
              -----------
merger or consolidation, or liquidate or dissolve itself (or suffer any
liquidation or dissolution), or acquire or be acquired by any Person, or convey,
sell, lease or otherwise dispose of all or substantially all of its property or
business, or cause or consent to an involuntary petition of bankruptcy to be
filed against it, except as provided for in this Agreement and the Secondary
Purchase Agreement.

          (u) Indentures, Mortgages, etc. The Seller shall not become a party
              --------------------------
to, or permit any of its properties to be bound by, any indenture, mortgage,
instrument, contract, agreement, lease or other undertaking, except this
Agreement, the Secondary Purchase Agreement and the other agreements executed
and delivered by the Seller in connection herewith and therewith.

          (v) Restriction of Contract. The Seller shall not enter into, or be a
              -----------------------
party to, any transaction with any of its Affiliates, except (i) the
transactions permitted or contemplated by this Agreement, the Secondary Purchase
Agreement and the Transfer Agreement, and (ii) other transactions (including,
without limitation, the lease of office space or computer equipment or software
by the Seller to or from an Affiliate) (A) in the ordinary course of business,
(B) pursuant to the reasonable requirements of the Seller's business, and (C)
upon fair and reasonable terms that are no less favorable to the Seller than
could be obtained in a comparable arm's-length transaction with a Person not an
Affiliate of the Seller.

                                       39



          (w) Agreed Procedures. On or before 12 months from the execution date
              -----------------
of this Agreement and annually thereafter, a firm of nationally recognized
independent certified public accountants (who may render other services to the
Collection Agent or the Seller) shall furnish a report (which report shall
cover, initially, the period from the date of this Agreement to June 30, 2002,
and thereafter the 12-month period ending on June 30 of each subsequent year) to
each Purchaser to the effect that they have applied such procedures as the
Purchasers may reasonably request and examined certain documents and records
relating to the servicing of the Pool Receivables under this Agreement and that,
based upon such procedures, nothing has come to the attention of such
accountants that caused them to believe that the servicing (including, without
limitation, the allocation of the Collections) has not been conducted in
compliance with the terms of this agreement, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set forth in such
statement, and in addition, each report shall set forth the procedures
performed. Any reasonable costs incurred by such accountants in connection with
the preparation and furnishing of such report shall be paid by the Seller
promptly upon receipt by the Seller of an invoice therefor.

          (x) Separate Entity. The Seller hereby acknowledges that the
              ---------------
Purchasers are entering into the transactions contemplated by this Agreement in
reliance upon the Seller's identity as a separate legal entity from
Georgia-Pacific or any affiliate of Georgia-Pacific (a "GP Entity"). Therefore,
from and after the date of execution and delivery of this Agreement, the Seller
shall take all reasonable steps, including, without limitation, all steps that
the Purchasers may from time to time reasonably request, to maintain the
Seller's identity as a separate legal entity with assets and liabilities
distinct from those of any other GP Entity and not just a division of any GP
Entity. Without limiting the generality of the foregoing and in addition to and
consistent with the covenant set forth above, the Seller shall:

          (i) require that all full-time employees of the Seller identify
     themselves as such and not as employees of any GP Entity (including,
     without limitation, by means of providing appropriate employees with
     business identification cards identifying such employees as the Seller's
     employees);

          (ii) compensate all employees, consultants and agents directly, from
     the Seller's bank accounts, for services provided to the Seller by such
     employees, consultants and agents and, to the extent any employee,
     consultant or agent of the Seller is also an employee, consultant or agent
     of any GP Entity, allocate the compensation of such employee, consultant or
     agent between the Seller and such GP Entity on a basis which reflects the
     services rendered to the Seller and such GP Entity;

          (iii) allocate all overhead expenses (including, without limitation,
     telephone and other utility charges) for items shared between the Seller
     and any GP Entity on the basis of actual use to the extent practicable and,
     to the extent such allocation is not practicable, on a basis reasonably
     related to actual use;

          (iv) at all times have at least one member of its Board of Directors
     who is not (A) a director, officer, employee or affiliate of any GP Entity,
     (B) a direct or indirect legal or beneficial owner of more than one percent
     (1%) of the capital stock of any GP Entity, (C) a creditor, supplier,
     employee, officer, director, member of the immediate

                                       40



     family, manager or contractor of any GP Entity, or (D) a person who
     controls (whether directly, indirectly or otherwise) any GP Entity or any
     creditor, supplier, employee, officer, director, manager or contractor of
     any GP Entity (such member, an "Independent Director"); provided, however,
                                                              --------  -------
     that a member of the Board of Directors who otherwise meets the description
     of an Independent Director shall not be disqualified from serving as an
     Independent Director if he or she is also an independent director of
     another corporation that is a GP Entity with a certificate or articles of
     incorporation substantially similar to the certificate of incorporation of
     the Seller;

          (v) ensure that the following corporate actions are duly authorized by
     unanimous vote of its Board of Directors: (i) dissolve or liquidate, in
     whole or in part, or institute proceedings to be adjudicated bankrupt or
     insolvent, (ii) consent to the institution of bankruptcy or insolvency
     proceedings against the Corporation, (iii) file a petition seeking or
     consenting to reorganization or relief under any applicable federal or
     state law relating to bankruptcy or insolvency, (iv) consent to the
     appointment of a receiver, trustee, liquidator, sequestrator or assignee or
     other similar official for it or a substantial part of its property, (v)
     make a general assignment for the benefit of creditors, (vi) admit in
     writing to the inability to pay its debts generally as they become due,
     (vii) merge or consolidate with any other entity, or otherwise acquire
     substantially all of the assets of any other entity, (viii) take any
     corporate action in furtherance of the actions set forth in clauses (i)
     through (vii) of this paragraph, (ix) any amendment to Article THIRD,
     Article SIXTH, Article EIGHTH or Article TWELFTH of the Seller's
     certificate of incorporation, or (x) any amendment to the its certificate
     of incorporation which would add corporate purposes in addition to or in
     conflict with article THIRD of its certificate of incorporation;

          (vi) maintain the Seller's books and records separate from those of
     any GP Entity;

          (vii) prepare its financial statements separately from those of other
     GP Entities and insure that any consolidated financial statements of any GP
     Entity that include the Seller have detailed notes clearly stating that the
     Seller is a separate corporate entity and that its assets will be available
     first and foremost to satisfy the claims of its creditors;

          (viii) not commingle funds or other assets of the Seller with those of
     any other GP Entity and not maintain bank accounts or other depository
     accounts to which any GP Entity is an account party, into which any GP
     Entity makes deposits or from which any GP Entity has the power to make
     withdrawals;

          (ix) not permit any GP Entity to pay any of the Seller's operating
     expenses (except pursuant to allocation arrangements that comply with the
     requirements of subparagraph (iii) of this Section 5.01(x)); and

          (x) not permit the Seller to be named as an insured on the insurance
     policy covering the property of any GP Entity, or enter into an agreement
     with the holder of such policy whereby in the event of a loss in connection
     with such property, proceeds are paid to the Seller.

                                       41



          (y) Coverage Ratio. The Seller shall not permit at any time the
              --------------
Receivable Interests of any Purchaser to exceed such Purchaser's Pro Rata Share
or the aggregate Receivable Interest of all of the Purchasers to exceed 100%.

          (z) Name Change. The Seller shall not change its name, except upon 45
              -----------
Business Days' prior written notice to the Administrative Agent and the
Purchaser and the taking of all action required by Section 6.05(a).

          (aa) Modification of Terms. The Seller agrees that, if within 30 days
               ---------------------
of the delivery of the Investor Report in March 2002, the Required Purchasers
determine, in their sole discretion, that the Events of Termination in Section
7.01(j) or the Reserve are no longer reasonable or protective and so notify the
Seller in writing before the expiration of such 30-day period, the Purchasers
may modify the provisions of such Section 7.01(j) or the Reserve with the
consent of the Seller (which consent shall not be unreasonably withheld or
delayed).

                                   ARTICLE VI.
                          ADMINISTRATION AND COLLECTION

          SECTION 6.01 Designation of Collection Agent. The administration and
                       -------------------------------
collection of the Pool Receivables shall be conducted by such Person (the
"Collection Agent") so designated from time to time in accordance with this
Section 6.01. Georgia-Pacific is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Collection Agent pursuant to the
terms of this Agreement. The Purchasers may at any time designate as Collection
Agent any Person (including a Purchaser or a Secondary Purchaser) to succeed
Georgia-Pacific or any successor Collection Agent, if such Person shall consent
and agree to the terms hereof. Unless the Required Purchasers determine in their
sole discretion that it would be impractical or inadvisable to do so, the
Purchasers shall give the Seller and the Collection Agent at least five Business
Days' notice of any such designation. The Collection Agent may, with the prior
consent of the Purchasers, subcontract with any other Person for the
administration and collection of all or a significant portion of the Pool
Receivables; provided, that the Collection Agent may, so long as it is
             --------
Georgia-Pacific, subcontract with an Originator for the administration and
collection of the Pool Receivables without the consent of the Purchasers;
provided, further, that Georgia-Pacific may, without the consent of the
- --------  -------
Purchasers, subcontract with any other Person for the administration and
collection of Pool Receivables as authorized by the Credit and Collection
Policy. Any such subcontract shall not affect the Collection Agent's liability
for performance of its duties and obligations pursuant to the terms hereof.

          SECTION 6.02 Duties of Collection Agent.
                       --------------------------

          (a) The Collection Agent shall take or cause to be taken all such
actions as may be necessary or advisable to collect each Pool Receivable from
time to time, all in accordance with applicable laws, rules and regulations,
with reasonable care and diligence, and in accordance with the Credit and
Collection Policy. Each of the Seller, each Purchaser and the Administrative
Agent hereby appoints the Collection Agent, from time to time designated
pursuant to Section 6.01 hereof, as agent for itself and for the owners of
Receivable Interests to enforce their respective rights and interests in the
Pool Receivables, the Related Security and the related Contracts.

                                       42



          (b) The Collection Agent shall administer the Collections in
accordance with the procedures described herein and in Section 2.04. The
Collection Agent shall set aside and hold in trust for the account of the Seller
and each Purchaser, their respective shares of the Collections of Pool
Receivables in accordance with Section 2.04 but shall not be required, except
either upon the request of the Administrative Agent acting at the direction of
the Required Purchasers or upon the occurrence and during the continuance of an
Event of Termination or a Potential Termination Event, to segregate the funds
constituting each Purchaser's share of such Collections from the general funds
of the Collection Agent or the Seller prior to the remittance thereof in
accordance with Section 2.04. If the Collection Agent shall be required to
segregate Collections pursuant to the proceeding sentence, the Collection Agent
shall segregate and deposit with a bank (which may be Citibank, N.A., The Bank
of Tokyo-Mitsubishi, Ltd. (New York Branch), Commerzbank AG (New York Branch) or
Wachovia Bank, N.A.) designated by each Purchaser such allocable share of
Collections of Pool Receivables set aside for such Purchaser on the first
Business Day following receipt by the Collection Agent of such Collections.

          (c) If no Event of Termination or Potential Termination Event shall
have occurred, the Collection Agent, may, in accordance with the Credit and
Collection Policy, extend the maturity or adjust the Outstanding Balance of any
Receivable as the Collection Agent deems appropriate to maximize Collections in
respect thereof; provided, that the extension or adjustment by the Collection
                 --------
Agent of a Receivable which is a Defaulted Receivable or a Delinquent Receivable
shall not change the status of such Receivable for purposes of this Agreement.

          (d) The Collection Agent shall hold in trust for the Seller and the
Purchasers, in accordance with their respective interests, all Records that
evidence or relate to Pool Receivables and shall, as soon as practicable upon
demand of the Administrative Agent acting at the direction of the Required
Purchasers, deliver or make available to the Administrative Agent all Records in
its possession which evidence or relate to Pool Receivables.

          (e) The Collection Agent, shall as soon as practicable following
receipt thereof, turn over to the Seller (i) that portion of Collections of Pool
Receivables representing the Seller's undivided fractional ownership interest
therein, less all reasonable out-of-pocket costs and expenses of the Collection
Agent of servicing, administering and collecting the Pool Receivables to the
extent not covered by the Collection Agent Fee received by it, and (ii) any cash
collections or other cash proceeds received with respect to Receivables not
constituting Pool Receivables.

          (f) The Collection Agent shall, from time to time at the request of a
Purchaser, furnish to such Purchaser (promptly after any such request) a
calculation of the amounts set aside for such Purchaser pursuant to Section 2.04
hereof.

          (g) On or prior to each Investor Report Date, the Collection Agent
shall prepare and forward to each Purchaser and the Administrative Agent (i) an
Investor Report relating to each Receivable Interest outstanding on the
immediately preceding Settlement Date, and (ii) if requested by a Purchaser, a
listing by Obligor of all Pool Receivables outstanding on such Settlement Date,
together with an analysis of the aging of such Pool Receivables by Obligor and
such additional information as may be reasonably requested by such Purchaser.
Prior to the

                                       43



occurrence of an Event of Termination or a Potential Termination Event, the
Collection Agent will use its best efforts to provide the Purchasers and the
Administrative Agent with the information in clauses (i) and (ii) above on a
more frequent basis if requested by any of the Purchasers. Following an Event of
Termination or a Potential Termination Event, the Collection Agent will provide
the Purchasers and the Administrative Agent with the information in clauses (i)
and (ii) above on a more frequent basis if required by the Required Purchasers.

          (h) The Collection Agent will, to the extent permitted by applicable
law and with respect to any amount not paid by the Collection Agent when
required to be paid hereunder, pay on demand interest to each Purchaser at a
rate per annum equal to 2% above the Base Rate, provided, however, that such
                                                --------  -------
interest rate will not at any time exceed the maximum rate permitted by
applicable law.

          (i) The Collection Agent's authorization under this Agreement will
terminate after the Facility Termination Date, upon payment in full of all
amounts payable to the Purchasers and the Collection Agent under this Agreement.

          SECTION 6.03 Rights of the Administrative Agent.
                       ----------------------------------

          (a) Upon five days notice to the Seller, unless the Required
Purchasers determine in their sole discretion that it would be impracticable or
inadvisable to give such notice, the Administrative Agent at the direction of
the Required Purchasers is authorized at any time to date and to deliver to the
Lock-Box Banks, the Lock-Box Notices and to the Depositary Banks, the Depositary
Notices delivered hereunder. The Seller hereby transfers to the Administrative
Agent, effective when the Administrative Agent delivers such Lock-Box Notices or
such Depositary Notices, as the case may be, the exclusive ownership and control
of such Lock-Box Accounts or such Depositary Accounts. The Seller shall, and
shall cause each Originator to, take any actions reasonably requested by the
Administrative Agent to effect such transfer. In case any authorized signatory
of the Seller or any Originator whose signature appears on a Lock-Box Notice or
a Depositary Notice shall cease to have such authority before the delivery of
such Lock-Box Notice or such Depositary Notice, such signature shall
nevertheless be valid as if such authority had remained in force. The
Administrative Agent at the direction of the Required Purchasers may notify the
Obligors of Pool Receivables, at any time and at the Seller's expense, of the
ownership of Receivable Interests under this Agreement and may also direct that
payments of all amounts due or that become due under any or all Receivables be
made directly to the Administrative Agent or its designee. In furtherance of the
foregoing, the Administrative Agent shall, upon the direction of the Required
Purchasers, be entitled to take all such actions as it deems necessary or
advisable to exercise dominion and control over the collection and servicing of
the Pool Receivables including such action as shall be necessary or desirable to
cause all cash, checks and other instruments constituting Collections of Pool
Receivables to come into the possession of the Administrative Agent rather than
the Seller. Unless the Required Purchasers determine in their sole discretion
that it would be impractical or inadvisable to do so, the Purchasers must give
the Seller five days prior notice of any such action.

          (b) At any time following the designation of a Collection Agent other
than Georgia-Pacific pursuant to Section 6.01:

                                       44



          (i) The Administrative Agent may, and at the direction of the Required
     Purchasers shall, direct the Obligors of Pool Receivables that all payments
     thereunder be made directly to the Administrative Agent or its designee.

          (ii) The Seller shall, and shall cause each Originator to, at the
     Administrative Agent's request and at the expense of the Seller and the
     Originators, notify each Obligor of Pool Receivables of the ownership of
     Receivable Interests under this Agreement and direct that payments be made
     directly to the Administrative Agent or a designee of the Administrative
     Agent approved by the Required Purchasers.

          (iii) The Seller shall, and shall cause each Originator to, at the
     Administrative Agent's request (which shall be at the direction of the
     Required Purchasers) and at the expense of the Seller and the Originators,
     (A) assemble all of the Records that evidence or relate to the Pool
     Receivables, and the related Contracts and Related Security, or that are
     otherwise necessary or desirable to collect the Pool Receivables, and shall
     make the same available to the Administrative Agent or its designee, at a
     place selected by the Administrative Agent, and (B) segregate all cash,
     checks and other instruments received by it from time to time constituting
     Collections of Pool Receivables in a manner acceptable to the
     Administrative Agent and the Required Purchasers and, promptly upon
     receipt, remit all such cash, checks and instruments, duly endorsed or with
     duly executed instruments of transfer, to the Administrative Agent or its
     designee.

          (iv) The Seller hereby authorizes the Administrative Agent to take any
     and all steps in the Seller's name and on behalf of the Seller that are
     necessary or desirable, in the determination of the Administrative Agent
     and the Required Purchasers, to collect amounts due under the Pool
     Receivables, including, without limitation, endorsing the Seller's name on
     checks and other instruments representing Collections of Pool Receivables
     and enforcing the Pool Receivables and the Related Security and related
     Contracts.

          SECTION 6.04 Responsibilities of the Seller. Anything herein to the
                       ------------------------------
contrary notwithstanding:

          (a) The Seller shall, and shall cause each Originator to, perform its
obligations under the Contracts related to the Pool Receivables to the same
extent as if Receivable Interests and Receivables had not been sold and the
exercise by the Administrative Agent and by the Purchasers of their rights
hereunder shall not release the Collection Agent, the Seller or any Originator
from any of their duties or obligations with respect to any Pool Receivables or
under the related Contracts; and

          (b) Neither the Administrative Agent nor the Purchasers shall have any
obligation or liability with respect to any Pool Receivables or related
Contracts, nor shall any of them be obligated to perform the obligations of the
Seller or any Originator thereunder.

          SECTION 6.05 Further Actions Evidencing Purchases.
                       ------------------------------------

          (a) The Seller shall, and shall cause each Originator to, from time to
time, at their expense, promptly execute and deliver all further instruments and
documents, and take all

                                       45



further actions, that may be necessary or desirable, or that the Administrative
Agent or any Purchaser may reasonably request, to perfect, protect or more fully
evidence the Receivable Interests purchased hereunder, or to enable any
Purchaser or the Administrative Agent to exercise and enforce their respective
rights and remedies hereunder. Without limiting the foregoing, the Seller and
each Originator will upon the request of any Purchaser or the Administrative
Agent (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments and documents, that may be
necessary or desirable, or that any Purchaser or the Administrative Agent may
reasonably request, to perfect, protect or evidence such Receivable Interests;
(ii) mark conspicuously each invoice evidencing each Pool Receivable and the
related Contract with a legend, acceptable to the Purchasers, evidencing that
Receivable Interests therein have been sold; and (iii) mark its master data
processing records evidencing such Pool Receivables and related Contracts with a
legend, acceptable to the Purchasers, evidencing that Receivable Interests
therein have been sold; provided that the actions specified in clauses (ii) and
                        --------
(iii) may be directed by the Required Purchasers or the Administrative Agent
only upon the occurrence of an Event of Termination or a Potential Termination
Event.

          (b) The Seller authorizes the Administrative Agent to file financing
or continuation statements, and amendments thereto, relating to the Pool
Receivables and the Related Security, the related Contracts and the Collections
with respect thereto without the signature of the Seller where permitted by law.
A photocopy or other reproduction of this Agreement shall be sufficient as a
financing statement where permitted by law.

          (c) If the Collection Agent fails to perform any of its obligations
hereunder, any Purchaser or the Administrative Agent may (but shall not be
required to) perform, or cause performance of, such obligation; and such
Purchaser's or the Administrative Agent's costs and expenses incurred in
connection therewith shall be payable by the Seller (if the Collection Agent
that fails to so perform is Georgia-Pacific or an Affiliate thereof) as provided
in Section 8.01 or Section 9.04, as applicable.

          SECTION 6.06 Collection Agent Fee. The Collection Agent shall be paid
                       --------------------
a collection fee (the "Collection Agent Fee") of 1% per annum on the average
daily amount of the Total Aggregate Capital payable monthly in arrears on each
Settlement Date. The Collection Agent Fee shall be payable only from Collections
pursuant to, and subject to the priority of payment set forth in, Section 2.04.

                                  ARTICLE VII.
                              EVENTS OF TERMINATION

          SECTION 7.01 Events of Termination. If any of the following events
                       ---------------------
("Events of Termination") shall occur and be continuing:

          (a) The Seller or the Collection Agent (if Georgia-Pacific or an
Affiliate thereof) shall fail (i) to perform or observe any term, covenant or
agreement hereunder (other than as referred to in clause (ii) and (iii) of this
subsection (a) or in Sections 5.01(c), 5.01(j) or 5.01(m)) and such failure
shall remain unremedied for three Business Days or (ii) to make any payment or
deposit required hereunder on the first Business Day after the due date thereof
or (iii)

                                       46



to perform or observe any term, covenant or agreement contained in Section
5.01(y) hereof and such failure shall remain unremedied for two Business Days;
or

          (b) The Seller or the Collection Agent (if Georgia-Pacific or an
Affiliate thereof) shall fail to transfer to the Purchasers when requested any
rights pursuant hereto which the Seller or such Collection Agent then has; or

          (c) Any representation or warranty made or deemed made by the Seller
or the Collection Agent (if Georgia-Pacific or an Affiliate thereof) (or any of
its Responsible Officers) in this Agreement or by any Originator (or any of its
Responsible Officers) in the Transfer Agreement or the Consent and
Acknowledgement to which it is a party or in any information or report delivered
by a Responsible Officer of the Seller or any Originator or the Collection Agent
(if Georgia-Pacific or an Affiliate thereof) pursuant hereto shall prove to have
been incorrect or untrue when made or deemed made or delivered; or

          (d) The Seller or the Collection Agent (if Georgia-Pacific or an
Affiliate thereof) shall fail to perform or observe any term, covenant or
agreement contained in Sections 5.01(c), 5.01(j) or 5.01(m) hereof or any term,
covenant or agreement contained in any Transfer Agreement; or

          (e) An Originator shall fail to perform or observe any term, covenant
or agreement contained in the Consent and Acknowledgment or the Transfer
Agreement to which such Originator is a party (other than a term, covenant or
agreement the breach of which would give rise to an Event of Termination
described in subsection (h) below), on its part to be performed or observed and
any such failure shall remain unremedied for 15 days after the earlier of (i)
the time the Seller or such Originator becomes aware or should have become aware
of such failure and (ii) the date written notice thereof shall have been given
to the Seller or such Originator, as the case may be, by any Purchaser or the
Administrative Agent; or

          (f) The Seller or any Originator shall fail to pay when due any amount
in respect of any Debt and such failure shall continue after any applicable
grace period, or any other event shall occur or condition shall exist in respect
of such Debt and shall continue after any applicable grace period, the effect of
which is to cause (or permit any holder thereof to cause) such Debt to become
due and payable prior to the stated maturity thereof; provided, however, that
                                                      --------  -------
with respect to any Originator the amount of such Debt is at least $75,000,000;
or

          (g) Any purchase or any reinvestment pursuant hereto shall for any
reason (other than pursuant to the terms hereof) cease to create, or any
Receivable Interest shall for any reason cease to be, a valid and perfected
first priority undivided percentage ownership interest in Receivables to the
extent of any Purchaser's Receivable Interest in each applicable Pool Receivable
and the Related Security and Collections with respect thereto, or this Agreement
shall for any reason cease to evidence the transfer to a Purchaser (or its
assignees or transferees) of legal and equitable right, title and interest to,
and ownership of, an undivided percentage ownership interest in any Pool
Receivable to the extent of such Purchaser's Receivable Interest or cease to
evidence in any Purchaser legal and equitable title to, and ownership of, an
undivided percentage ownership interest in such Receivable and the Related
Security and Collection to the extent of the Receivable Interest of such
Purchaser, except as may be limited by applicable law

                                       47



with respect to the Related Security and with respect to Pool Receivables of
Government Obligors; or

          (h) Any purchase pursuant to any Transfer Agreement shall for any
reason (other than pursuant to the term thereof) cease to create, or an interest
in any Receivable shall cease to be, a valid and perfected first priority
undivided percentage ownership interest in such Receivable and the Related
Security and Collections with respect thereto or the Transfer Agreement shall
for any reason cease to evidence the transfer to the Seller of all legal and
equitable right, title and interest of the relevant Originator to, and ownership
of, an undivided percentage ownership in any Receivable, except as may be
limited by applicable law with respect to the Related Security and with respect
to Receivables of Government Obligors; or

          (i) The Seller, any Originator or the Collection Agent (if
Georgia-Pacific or an Affiliate thereof) shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Seller, any Originator or
the Collection Agent (if Georgia-Pacific or an Affiliate thereof) seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 45 days, or any
of the actions sought in such proceeding (including an order for relief against,
or the appointment of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall occur; or the Seller
or any Originator shall take any corporate action to authorize any of the
actions set forth above in this subsection (i); or

          (j) As of any Settlement Date, the Default Ratio shall exceed 7.0%, or
the Delinquency Ratio shall exceed 10.0%, or the Loss-to-Liquidation Ratio shall
exceed .50%, or the average of the Dilution Ratios for the immediately preceding
three calendar months shall exceed 10.0%, or the Average Maturity for the
related Settlement Period shall exceed 40 days; or

          (k) There shall have occurred any material adverse change in the
financial condition or operations of Georgia-Pacific and its subsidiaries, taken
as a whole, as they existed as of September 29, 2001; or there shall have
occurred any event which has a reasonable likelihood of having a material
adverse effect on the collectibility of the Pool Receivables generally or any
significant portion of the Pool Receivables or the ability of the Seller, any
Originator or the Collection Agent to perform its duty to collect Pool
Receivables generally or otherwise perform its respective obligations hereunder
or under any Transfer Agreements or under any Consent and Acknowledgment; or

          (l) The Pension Benefit Guaranty Corporation shall file a notice of
lien pursuant to Section 4068 of ERISA with regard to any of the assets of the
Seller or any ERISA Affiliate, and such liens have not been suspended or have
not been bonded in the full amount thereof and are not being contested in good
faith by the Seller or such ERISA Affiliate; provided,
                                             --------

                                       48



however, that with respect to any Originator, the amount of such lien shall be
- -------
greater than $50,000,000; or

          (m) Georgia-Pacific's long-term senior unsecured debt rating shall be
withdrawn or shall fall below (i) "BBB-" (but not below "BB+") by S&P and "Baa3"
(but not below "Ba1") by Moody's or (ii) "BB+" by S&P or "Ba1" by Moody's; or

          (n) There shall have occurred a change of control of Georgia-Pacific,
the Seller or any Originator; provided, however, that a change of control of an
                              --------  -------
Originator shall not be an Event of Termination if after such change of control
Georgia-Pacific indirectly controls such Originator. A "change of control" shall
mean (i) with respect to Georgia-Pacific, the acquisition by any Person of 20%
of either (A) the then outstanding common shares of Georgia-Pacific or (B) the
combined voting rights of the then outstanding voting securities of
Georgia-Pacific, (ii) with respect to the Seller, the failure of Georgia-Pacific
to own directly or indirectly, 100% of either (A) the then outstanding common
shares of the Seller or (B) the combined voting rights of the then outstanding
voting securities of the Seller or (iii) with respect to any Originator, the
failure of Georgia-Pacific to own directly or indirectly at least 50% of either
(A) the then outstanding common shares of any Originator or (B) the combined
voting rights of the then outstanding voting securities of any Originator; or

          (o) The failure of the Seller and the Purchasers to agree on the
amendment of subsection (j) of this Section 7.01 or the Reserve as contemplated
by Section 2.01(e) upon the Seller's decision to cease purchasing Receivables
from any Originator, by Section 2.01(f) upon the Seller's decision to cease
purchasing Receivables from any Originator Division, by Section 2.01(g) upon the
Seller's decision to commence purchasing Receivables from any Originator
Division, by Section 2.01(h) upon the sale by Georgia-Pacific of the stock of
any Originator, by Section 2.01(i) upon the sale or other disposition by any
Originator of all or a substantial portion of its assets and by Section 5.01(aa)
upon the notification to the Seller as set forth therein, in each case after the
expiration of a period of 30 days after such cessation, such sale or such
notice, as the case may be; or

          (p) The occurrence or declaration of an "Event of Termination" under
the Secondary Purchase Agreement, unless the same shall be cured or waived; or

          (q) The occurrence or declaration of an "Event of Termination" under
any Transfer Agreement, unless the same shall be cured or waived with the
consent of all of the Purchasers;

then, and in any such event, at the direction of the Required Purchasers, the
Administrative Agent shall, by notice to the Seller, designate another Person to
succeed Georgia-Pacific as the Collection Agent, subject to the approval of the
Purchasers; provided, that automatically upon the occurrence of any event
            --------
(without any requirement for the passage of time or the giving of notice)
described in subsection (i) of this Section 7.01, the Termination Date shall
occur. Upon the occurrence of any Event of Termination, the Purchasers and the
Administrative Agent shall have, in addition to the rights and remedies which
they may have under this Agreement, all other rights and remedies provided after
default under the UCC and under other applicable law, which rights and remedies
shall be cumulative.

                                       49



                                  ARTICLE VIII.
                                 INDEMNIFICATION

          SECTION 8.01 Indemnities by the Seller. Without limiting any other
                       -------------------------
rights that the Administrative Agent or the Purchasers or any Affiliate thereof
or any other Affected Party and their respective officers, directors, employees
and agents (each, an "Indemnified Party") may have hereunder or under applicable
                      ------------------
law, the Seller hereby agrees to indemnify each Indemnified Party from and
against any and all claims, losses and liabilities (including reasonable
attorneys fees and expenses) (all of the foregoing being collectively referred
to as "Indemnified Amounts") arising out of or resulting from this Agreement or
       -------------------
the use of proceeds of purchases or reinvestments or the ownership of Receivable
Interests or in respect of any Receivable or any Contract, excluding, however,
(a) Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of such Indemnified Party, (b) recourse for uncollectible
Receivables (except to the extent the Seller has recourse against the Originator
with respect to such Receivable on grounds other than the noncollectability of
the Receivable) or (c) except as set forth below, any income taxes incurred by
such Indemnified Party arising out of or as a result of this Agreement or the
ownership of Receivable Interests or in respect of any Receivable or any
Contract. Without limitation of the generality of the foregoing, the Seller
shall pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following:

          (i) the creation of a Receivable Interest in any Pool Receivable which
     is not at the date of the creation of such Receivable Interest an Eligible
     Receivable;

          (ii) reliance on any representation or warranty made or deemed made by
     the Seller or any Originator (or any of their respective Responsible
     Officers) or any statement made by any Responsible Officer of the Seller or
     any Originator under or in connection with this Agreement which shall have
     been incorrect when made;

          (iii) the failure by the Seller or any Originator to comply with any
     applicable law, rule or regulation;

          (iv) the failure to vest in a Purchaser an undivided percentage
     ownership interest, to the extent of such Purchaser's Receivable Interest,
     in the Receivables (including, without limitation, Receivables of
     Government Obligors) in, or purporting to be in, the Receivables Pool and
     the Related Security and Collections in respect thereof, free and clear of
     any Adverse Claim other than as authorized hereunder;

          (v) the failure to vest in the Seller all right, title and interest in
     the Receivables purchased by the Seller from any Originator pursuant to a
     Transfer Agreement, free and clear of any Adverse Claim other than as
     authorized hereunder;

          (vi) the failure to have filed, or any delay in filing, financing
     statements or other similar instruments or documents under the UCC of any
     applicable jurisdiction, under applicable law with respect to the
     assignment of Receivables of Government Obligors or other applicable laws
     with respect to any Receivables in, or purporting to be

                                       50



     in, the Receivables Pool and the Related Security and Collections in
     respect thereof, whether at the time of any purchase or reinvestment or at
     any subsequent time;

          (vii) any dispute, claim, offset or defense (other than discharge in
     bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
     in, or purporting to be in, the Receivables Pool (including, without
     limitation, a defense based on such Receivable or the related Contract not
     being a legal, valid and binding obligation of such Obligor enforceable
     against it in accordance with its terms), or any other claim resulting from
     the sale of the merchandise or service related to such Receivable or the
     furnishing or failure to furnish such merchandise or services;

          (viii) any failure of the Seller or the Collection Agent (if
     Georgia-Pacific or an Affiliate thereof), to perform their respective
     duties or obligations in accordance with the provisions of this Agreement;

          (ix) any products liability claim arising out of or in connection with
     merchandise, insurance or services which are the subject of any Contract;

          (x) any loss incurred by any Purchaser as a result of the Outstanding
     Balance of all Pool Receivables from the same Obligor, expressed as a
     percentage of the aggregate Outstanding Balance of Eligible Receivables,
     being in excess of the Concentration Limit or, if applicable, Special
     Concentration Limit for such Obligor;

          (xi) the commingling of Collections of Pool Receivables at any time
     with other funds;

          (xii) any action or omission by the Seller or the Collection Agent (if
     Georgia-Pacific or an Affiliate thereof) reducing or impairing the rights
     of a Purchaser with respect to any Pool Receivable or the value of any Pool
     Receivable, except in accordance with the Credit and Collection Policy;

          (xiii) any failure of the Seller to give reasonably equivalent value
     to any Originator in consideration of the transfer by such Originator to
     the Seller of any Receivables, or any attempt by any Person to void any
     such transfer under statutory provisions or common law or equitable action,
     including, without limitation, any provision of the Bankruptcy Code;

          (xiv) any reductions in the amount of a Pool Receivable the Obligor of
     which is a Government Obligor, and the Related Security and Collections
     with respect thereto, as the result of appropriation by the government or
     the inability to collect any amount from a Government Obligor;

          (xv) any inability to collect the full Outstanding Balance of a Pool
     Receivable which was entitled to an Administrative Priority as a result of
     the Obligor's bankruptcy and which was included as an Eligible Receivable
     as a result of such Administrative Priority;

                                       51



          (xvi) any investigation, litigation or proceeding related to or
     arising from this Agreement, the transactions contemplated hereby, the use
     of the proceeds of the Purchase, the ownership of the Receivable Interests
     or any Pool Receivable, Related Security or Contract or any other
     investigation, litigation or proceeding relating to the Seller or any
     Originator in which any Indemnified Party becomes involved as a result of
     any of the transactions contemplated hereby;

          (xvii) all losses, expenses and liabilities, if any (including,
     without limitation, any loss or expense incurred by reason of the
     liquidation or reemployment of deposits or other funds acquired by any
     Purchaser in connection with such Purchaser's funding or maintenance of the
     Receivable Interests) which such Purchaser may sustain as the result of the
     termination or reduction of any Receivable Interest or the failure by the
     Seller or the Collection Agent (if Georgia-Pacific or an Affiliate thereof)
     to make any payment of Capital when due;

          (xviii) any inability to litigate any claim against any Obligor in
     respect of any Pool Receivable as a result of such Obligor being immune
     from civil and commercial law and suit on the grounds of sovereignty or
     otherwise from any legal action, suit or proceeding;

          (xix) any Event of Termination described in clause (i) of Section
     7.01;

          (xx) any loss incurred by any Purchaser on any Pool Receivable of a
     Government Obligor; or

          (xxi) any Taxes (other than Excluded Taxes) (A) which may asserted or
     imposed in respect of a Pool Receivable and sales thereof or the receipt of
     Collections or other proceeds with respect to a Pool Receivable or any
     Related Security, (B) which may arise by reason of the investment or
     ownership or the sale or other disposition of any Receivable Interest, or
     any other interest in a Pool Receivable or any Related Security or (C)
     which may arise otherwise by reason of the execution, delivery, performance
     or enforcement of the Sale Documents; except that, notwithstanding the
     foregoing exclusion related to Excluded Taxes, in the event that the
     conveyance of the Receivable Interests and the Related Security and the
     other obligations of the Seller hereunder are for any reason determined not
     to be treated as indebtedness of the Seller for income or franchise tax
     purposes, the Seller shall indemnify each Indemnified Party in respect of
     such additional amounts in respect of such Taxes as may be described in
     clauses (A), (B) or (C), with such amounts being calculated on an after-tax
     basis, as are imposed on or incurred by an Indemnified Party to the extent
     that such Taxes would not have been imposed or incurred (or would have been
     imposed or incurred at different times) had the obligations of the Seller
     hereunder been treated as indebtedness for such income or franchise tax
     purposes, as applicable.

          SECTION 8.02 Contribution. If for any reason the indemnification
                       ------------
provided above in Section 8.01 (and subject to the exceptions set forth therein)
is unavailable to an Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then the Seller shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, claim

                                       52



or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Indemnified Party on the one hand and the
Seller on the other hand but also the relative fault of such Indemnified Party
as well as any other relevant equitable considerations.

                                  ARTICLE IX.
                            THE ADMINISTRATIVE AGENT

          SECTION 9.01 Authorization and Action. Each Purchaser hereby appoints
                       ------------------------
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement, the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of any Purchaser, the Required Purchasers or all of the
Purchasers (and all references in this Agreement to the "Purchasers" shall be
deemed to mean "all of the Purchasers") as provided by this Agreement and such
instructions shall be binding upon all parties hereto and all assignees of the
Purchasers; provided, however, that the Administrative Agent shall not be
            --------  -------
required to take any action which exposes the Administrative Agent to personal
liability or which is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Purchaser prompt notice of each
notice given to it by the Seller, or by it to the Seller, pursuant to the terms
of this Agreement. The appointment and authority of the Administrative Agent
hereunder shall terminate at the later to occur of (i) the payment to (A) each
Purchaser of its Aggregate Capital, accrued and unpaid Yield and all other
amounts due to such Purchaser hereunder and (B) the Administrative Agent of all
amounts due hereunder and (ii) the Facility Termination Date.

          SECTION 9.02 UCC Filings. The Purchasers and the Seller expressly
                       -----------
recognize and agree that the Administrative Agent may be listed as the assignee
or secured party of record on the various UCC filings required to be made
hereunder in order to perfect the transfer of the Receivable Interests from the
Seller to the Purchasers, that such listing shall be for administrative
convenience only in creating a record or nominee owner to take certain actions
hereunder on behalf of the Purchasers and that such listing will not affect in
any way the status of the Purchasers as the beneficial owners of the Receivable
Interests. In addition, such listing shall impose no duties on the
Administrative Agent other than those expressly and specifically undertaken in
accordance with the provisions of this Article IX. In furtherance of the
foregoing, each Purchaser shall be entitled to enforce its rights created under
this Agreement without the need to conduct such enforcement through the
Administrative Agent except as provided herein.

          SECTION 9.03 Administrative Agent's Reliance, Etc. Neither the
                       ------------------------------------
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent (i) may consult with legal counsel
(including counsel for the Seller), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (ii) makes no warranty or representation to any Person
and shall not be responsible to any Person for any statements,

                                       53



warranties or representations (whether written or oral) made in or in connection
with this Agreement; (iii) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement on the part of the Seller, or of any Transfer Agreement on the
part of the Seller or the Originator a party thereto, or to inspect the property
(including the books and records) of the Seller or any Originator; (iv) shall
not be responsible to any Purchaser for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
Transfer Agreement or any other instrument or document furnished pursuant
hereto; and (v) shall incur no liability under or in respect of this Agreement
by acting upon any notice, consent, certificate or other instrument or writing
(which may be by facsimile, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.

          SECTION 9.04 Citicorp and Affiliates. With respect to any Pool
                       -----------------------
Receivable owned by Citicorp, Citicorp shall have the same rights and powers
under this Agreement and any document delivered pursuant hereto as would any
Purchaser and may exercise the same as though it were not the Administrative
Agent. Citicorp and its Affiliates may generally engage in any kind of business
with the Seller, any Originator or any Obligor and any of their respective
Affiliates and any Person who may do business with or own securities of the
Seller, any Originator or any Obligor or any of their respective Affiliates, all
as if Citicorp were not the Administrative Agent and without any duty to account
therefor to any Purchaser.

          SECTION 9.05 Purchasers' Purchase Decisions. Each Purchaser
                       ------------------------------
acknowledges that it has, independently and without reliance upon the
Administrative Agent, any of its Affiliates or any other Purchaser and based on
such documents and information as it has deemed appropriate, made its own
evaluation and decision to enter into this Agreement and, if it so determines,
to purchase undivided ownership interests in Pool Receivables hereunder. Each
Purchaser also acknowledges that it will, independently and without reliance
upon the Administrative Agent, any of its Affiliates or any other Purchaser and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own decisions in taking or not taking action under
this Agreement.

          SECTION 9.06 Successor Administrative Agent. The Administrative Agent
                       ------------------------------
may resign at any time by giving 30 days' written notice thereof to the
Purchasers, the Seller, the Collection Agent and the Secondary Purchasers and
may be removed at any time with or without cause by the Required Purchasers.
Upon any such resignation or removal, the Purchasers shall have the right to
appoint a successor Administrative Agent approved by the Seller (which approval
will not be unreasonably withheld or delayed). If no successor Administrative
Agent shall have been so appointed by the Purchasers, and shall have accepted
such appointment, within 30 days after the retiring Administrative Agent's
giving of notice of resignation or the Purchasers' removal of the Administrative
Agent, then Georgia-Pacific shall appoint a Secondary Purchaser or such other
Person approved by the Purchasers (which approval will not be unreasonably
withheld or delayed) as a successor Administrative Agent. If such successor
Administrative Agent is not a Secondary Purchaser, such successor Administrative
Agent shall be (a) either (i) a commercial bank having a combined capital and
surplus of at least $250,000,000 or (ii) an Affiliate of such bank and (b)
experienced in the types of transactions contemplated by this Agreement. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent

                                       54



shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Article IX shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.

                                   ARTICLE X.
                       ASSIGNMENT OF RECEIVABLE INTERESTS

          SECTION 10.01 Assignment. Each Purchaser (with respect to any
                        ----------
Receivable Interest) may (i) without the consent of the Seller, grant a security
interest therein to its program collateral agent, (ii) without the consent of
the Seller, assign to another Purchaser, any Secondary Purchaser, any of its
liquidity providers or to any vehicle administered by a Secondary Purchaser
which vehicle is rated at least P-1 by Moody's and either (A) A-1 by S&P or (B)
F1 by Fitch and (iii) with the prior written consent of the Seller (which
consent shall not be unreasonably withheld or delayed), assign to any other
Person (such Person, and the Persons described in clause (ii) above, referred to
herein as "Assignees"), and any such Assignee, may, without the written consent
of the Seller, assign to any Person described in clause (ii) hereof and may,
with the prior written consent of the Seller (which consent shall not be
unreasonably withheld or delayed), assign to any other Person, any Receivable
Interest. Upon any assignment of a Receivable Interest, (i) the Assignee shall
become the owner of such Receivable Interest for all purposes of this Agreement
and (ii) the assignor thereof (the "Assignor") shall relinquish its rights with
respect to such Receivable Interest for all purposes of this Agreement. Any
assignments hereunder shall be upon such terms and conditions as the Assignor
and the Assignee may mutually agree. The parties thereto shall deliver to the
Administrative Agent an assignment agreement, in substantially the form of
Exhibit D hereto (an "Assignment"), duly executed by such parties, and such
Assignor shall promptly execute and deliver all further instruments and
documents, and take all further action, that the Assignee may reasonably request
in order to perfect, protect or more fully evidence the Assignee's right, title
and interest in and to any Receivable Interest assigned hereunder, and to enable
the Assignee to exercise or enforce any rights hereunder. Upon any assignment
pursuant to this Section 10.01, the Assignee thereof shall have all of the
rights and obligations (and only such rights and obligations) of the owner of a
Receivable Interest hereunder and shall be subject to the same terms and
conditions hereunder with respect to its ownership of a Receivable Interest;
provided that, an Assignee (other than an assignee described in clause (i) of
the first sentence of this Section 10.01) shall not assume any other rights or
obligations of a Purchaser hereunder without the consent of the Purchasers
(which consent shall not be unreasonably withheld or delayed). The
Administrative Agent shall provide notice to the Seller of any assignment
hereunder.

          SECTION 10.02 Effects of Assignment. By executing and delivering an
                        ---------------------
Assignment, the Assignor thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment, the Assignor makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, or any other agreement, instrument or document furnished pursuant
hereto; (ii) the

                                       55



Assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, or any
other agreement, instrument or document furnished pursuant hereto; (ii) the
Assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Seller or any Originator or the
performance or observance by the Seller or any Originator of any of its
obligations under this Agreement (in the case of the Seller) or the Transfer
Agreements (in the case of the Seller and the Originators) or other agreement,
instrument or document furnished pursuant hereto; (iii) such Assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.01 and such other agreements,
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and to purchaser the
pertinent Receivable Interests; (iv) such Assignee will, independently and
without reliance upon the Administrative Agent, any Purchaser, any Secondary
Purchaser or any of their Affiliates or such Assignor and based on such
agreements, documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such Assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; (vi)
such Assignee appoints as its agent the Collection Agent from time to time
designated pursuant to Section 6.01 to enforce its respective rights and
interests in and under the pertinent Receivable Interests and the Related
Security and related Contracts; and (vii) such Assignee agrees that it will not
institute against any Purchaser any proceeding of the type referred to in
Section 7.01(i).

          SECTION 10.03 Additional Purchasers. Unless an Event of Termination or
                        ---------------------
event which, with the giving of notice or the passage of time or both would
constitute an Event of Termination shall have occurred and be continuing, the
Purchasers may, upon at least three (3) Business Days' prior written notice to
the Seller and the Administrative Agent, cause an Additional Purchaser to become
a party to this Agreement by complying with the provisions of this Section
10.03. Each such notice shall set forth the name of the Additional Purchaser,
the Pro Rata Share to be acquired by such Additional Purchaser and the desired
effective date of such Additional Purchaser becoming a party to this Agreement.
Each Additional Purchaser shall, upon the execution of an Addendum by the
Purchasers, such Additional Purchaser, the Administrative Agent and the Seller,
become a party to this Agreement from and after the date of such execution with
the same effect as if such Additional Purchaser had been an original party
hereunder.

                                   ARTICLE XI.
                                  MISCELLANEOUS

          SECTION 11.01 Amendments, Etc. No amendment or waiver of any provision
                        ---------------
of this Agreement or consent to any departure by the Seller or the Collection
Agent therefrom shall be effective unless in a writing signed by all of the
Purchasers or, where permitted under this Agreement, the Required Purchasers,
and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
                                                                --------
however, that no amendment or waiver of Section 6.03 or of any other provision
- -------
of this Agreement which affects the rights or obligations of the Administrative
Agent shall be effective unless signed by the Administrative Agent. No failure
on the part of the Purchasers or the Administrative Agent to exercise, and no
delay in exercising, any right hereunder shall operate as

                                       56



a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right.

          SECTION 11.02 Notices, Etc.
                        ------------

          (a) All notices and other communications hereunder shall, unless
otherwise stated herein, be in writing (including facsimile communication) and
shall be delivered or sent by facsimile, to each party hereto, at its address
set forth under its name on the signature pages hereof or at such other address
as shall be designated by such party in a written notice to the other parties
hereto. Notices and communications by facsimile shall be effective when sent,
and notices and communications sent by other means shall be effective when
received.

          (b) Any notice to or from, or action or consent by, any Purchaser
hereunder shall be sufficient if given to or by, or taken, received or consented
to by its respective program administrator (or by any sub-agent thereof) on its
behalf.

          SECTION 11.03 Assignability; Termination.
                        --------------------------

          (a) This Agreement and each Purchaser's rights herein (including
ownership of each Receivable Interest) shall be assignable by such Purchaser and
its respective successors and assigns in accordance with Section 10.01. The term
"Purchaser" shall include any owner by assignment or otherwise of a Receivable
Interest but shall not include any Person to whom a participation is granted.
Neither the Seller nor the Collection Agent may assign its rights hereunder or
any interest herein without the prior written consent of the Purchasers, except,
in the case of the Collection Agent, as otherwise provided in Article VI hereof.

          (b) Any Purchaser may grant participations to any Person without the
consent or knowledge of the Seller, any other Purchaser or the Administrative
Agent; provided, that such grant will not affect the obligation, if any, of such
Purchaser hereunder nor the obligations of the Seller hereunder.

          (c) The provisions of Sections 8.01, 11.04, 11.05, 11.06 and 11.07
survive any termination of this Agreement.

          SECTION 11.04 Costs, Expenses and Taxes.
                        -------------------------

          (a) In addition to the rights of indemnification granted under Section
8.01 hereof, the Seller agrees to pay on demand all reasonable costs and
expenses in connection with the preparation, execution, delivery and
administration (including periodic auditing of Pool Receivables) of this
Agreement and the other documents and agreements to be delivered hereunder,
including, without limitation, (i) the reasonable fees and expenses of Latham &
Watkins, counsel for the Purchasers, actually incurred with respect to the
preparation, execution and delivery of this Agreement, the Secondary Purchase
Agreement and the other documents and agreements to be delivered hereunder or
thereunder; (ii) the reasonable fees and out-of-pocket expenses of counsel for
the Administrative Agent actually incurred with respect to administration of
this Agreement, including without limitation, advising the Administrative Agent
as to its rights and remedies hereunder; and (iii) all costs and expenses, if
any (including reasonable

                                       57



counsel fees and expenses), actually incurred in connection with the enforcement
or amendment of this Agreement and the other documents and agreements to be
delivered hereunder.

          (b) In addition, the Seller shall pay on demand (i) any and all
reasonable costs and expenses actually incurred by any issuing and paying agent
or other Person responsible for the administration of each Purchaser's
commercial paper program in connection with the preparation, completion,
issuance, delivery or payment of commercial paper notes issued to fund the
purchase or maintenance of any Receivable Interest, and (ii) any and all stamp
and other taxes and fees payable in connection with the execution, delivery,
filing and recording of this Agreement or the other documents or agreements to
be delivered hereunder, and agrees to save each Indemnified Party harmless from
and against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.

          (c) The Seller also shall pay on demand all other reasonable costs and
expenses and all taxes (excluding income taxes) actually incurred by a Purchaser
or any stockholder of a Purchaser ("Other Costs"), including (i) the costs of
                                    -----------
auditing such Purchaser's books by certified public accountants and of rating
such Purchaser's commercial paper by independent financial rating agencies, (ii)
the taxes (excluding income taxes) resulting from such Purchaser's operations
and (iii) the reasonable fees and out-of-pocket expenses of counsel for such
Purchaser or any counsel for any shareholder of such Purchaser with respect to
advising such Purchaser or shareholder as to rights and remedies under this
Agreement, the enforcement of this Agreement or advising such Purchaser or
shareholder as to matters relating to such Purchaser's operations; provided,
                                                                   --------
that the Seller and any other persons who from time to time sell receivables or
interests therein to such Purchaser ("Other Sellers") each shall be liable for
                                      -------------
such Other Costs ratably in accordance with the usage under their respective
facilities; provided, further, that (i) if such Other Costs are attributable to
            --------  -------
the Seller and not attributable to any Other Seller, the Seller shall be solely
liable for such Other Costs and (ii) if such Other Costs are attributable to any
Other Seller and not attributable to the Seller in any way, the Seller shall not
be liable for any of such Other Costs.

          SECTION 11.05 No Proceedings. The Seller, the Collection Agent and the
                        --------------
Administrative Agent each hereby agrees that it will not institute or join
against any Purchaser any proceeding of the type referred to in Section 7.01(i).

          SECTION 11.06 Confidentiality. Unless otherwise required by applicable
                        ---------------
law, rule or regulation or by court order or process, the Seller and the
Collection Agent agree to maintain the confidentiality of this Agreement (and
all drafts thereof) in communications with third parties and otherwise;
provided, that this Agreement may be disclosed to the Seller's and the
- --------
Collection Agent's legal counsel and auditors if they agree to hold it
confidential.

          SECTION 11.07 No Recourse. The obligations of each Purchaser under
                        -----------
this Agreement or any other agreement, instrument, document or certificate
executed and delivered by or issued by such Purchaser or any officer thereof in
connection herewith are solely the corporate obligations of such Purchaser. No
recourse shall be had for payment of any fee or other obligation or claim
arising out of or relating to this Agreement or any other agreement, instrument,
document or certificate executed and delivered or issued by such Purchaser or
any officer in connection herewith, against any stockholder, employee, officer,
director or

                                       58



incorporator of such Purchaser. The provisions of this Section 11.07 shall
survive the termination of this Agreement.

          Notwithstanding the generality of the foregoing, no recourse shall be
had for the payment of any amount owing in respect of any obligation of, or
claim against, Victory arising out of or based upon this Agreement or any other
related agreement against J H Management Corporation or against any stockholder,
employee, officer, director or incorporator of Victory or J H Management
Corporation; provided, however, that the foregoing shall not relieve any such
             --------  -------
person or entity from any liability that may otherwise arise as a result of the
willful misconduct or intentional misrepresentation of such person or entity.
The parties hereto further agree that Bankers Trust Company shall have no
obligation, in its capacity as program administrator for Victory or otherwise,
to take any actions hereunder if Bankers Trust Company is relieved of its
obligations as program administrator for Victory.

          SECTION 11.08 Governing Law; Execution in Counterparts.
                        ----------------------------------------

          (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK (INCLUDING ITS APPLICABLE CONFLICT OF
LAWS RULES).

          (b) This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement.

          SECTION 11.09 Construction of Agreement. It is the intention of each
                        -------------------------
Transfer Agreement that the conveyance by the applicable Originator to the
Seller of Receivables shall constitute a purchase and sale and not a secured
loan. It is the intention of this Agreement that the Purchases and reinvestments
shall convey to the Purchasers, to the extent of their Receivable Interests,
undivided ownership interests in the Pool Receivables and that each such
transaction shall constitute a purchase and sale and not a secured loan. If,
notwithstanding such intention, the conveyance of Receivables from any
Originator to the Seller pursuant to a Transfer Agreement shall ever be
characterized as a secured loan and not a sale, then the Seller shall be deemed
to have transferred to the Purchasers, in addition to the Receivable Interests,
all of the Seller's right, title and interest in, to and under the obligations
of such Originator deemed to be secured by a pledge of such Receivables, and, in
such event, this Agreement and the filings of the UCC statements referred to in
Section 3.01(b) shall be deemed to have granted (subject to the exceptions set
forth in Section 4.01 hereof), to the Purchasers a duly perfected security
interest prior to all other liens on and security interests in all of the
Seller's right, title, and interest in, to and under the obligations of such
Originator to the Seller deemed to be secured by such pledge. If the conveyance
of the Receivable Interests from the Seller to the Purchasers shall ever be
characterized as a secured loan and not a sale, it is the intention of this
Agreement that this Agreement shall constitute a security agreement under
applicable law, and that the Seller shall be deemed to have granted to the
Purchasers a duly perfected security interest in all of the Seller's right,
title and interest in, to and under the Pool Receivables, all payments on or
with respect to such Pool Receivables, all other rights relating to and payments
made in respect of the Pool Receivables, and all proceeds of any thereof prior
to all other liens on and security interests therein. Although such ownership or
security interests may be perfected in the name of the

                                       59



Purchasers, the Administrative Agent shall be deemed to be an independent
custodian for purposes of perfection of the ownership or security interest
granted to the Seller and such ownership or security interest may also be
perfected in the name of the Administrative Agent, for the benefit of the
Purchasers.

                                       60



          IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

               SELLER:                     G-P RECEIVABLES, INC.


                                           By: /s/ Phillip M. Johnson
                                              ---------------------------------
                                              Name: Phillip M. Johnson
                                              Title: Vice President
                                                     and Treasurer

                                           133 Peachtree Street, N.E.
                                           Atlanta, Georgia 30348-5605
                                           Attention: Treasurer
                                           Facsimile No.: (404) 827-7076


          COLLECTION AGENT:                GEORGIA-PACIFIC CORPORATION


                                           By: /s/ Phillip M. Johnson
                                              ---------------------------------
                                              Name: Phillip M. Johnson
                                              Title: Vice President
                                                     and Treasurer

                                           133 Peachtree Street, N.E.
                                           Atlanta, Georgia 30348-5605
                                           Attention: Treasurer
                                           Facsimile No.: (404) 827-7076


               PURCHASERS:                 BLUE RIDGE ASSET FUNDING CORPORATION


                                           By: /s/ W. Adrian Jordan
                                              ---------------------------------
                                              Name: W. Adrian Jordon
                                              Title: Senior Vice President

                                           191 Peachtree Street, N.E.
                                           Atlanta, GA 30303
                                           Attention: Elizabeth Wagner
                                           Facsimile No.: (404) 332-5152



                                           CORPORATE ASSET FUNDING COMPANY,
                                           INC.

                                           By: CITICORP NORTH AMERICA, INC.,
                                               AS ATTORNEY-IN-FACT


                                           By: /s/ David J. Donofrio
                                               ------------------------------
                                               Name: David J. Donofrio
                                               Title: Vice President

                                           Sears Towers
                                           233 South Wacker Drive
                                           86th Floor
                                           Chicago, IL 60606
                                           Attention: David Donofrio
                                           Facsimile No.:


                                           CORPORATE RECEIVABLES CORPORATION


                                           By: CITICORP NORTH AMERICA, INC.,
                                               AS ATTORNEY-IN-FACT


                                           By: /s/ David J. Donofrio
                                               ------------------------------
                                               Name: David J. Donofrio
                                               Title: Vice President

                                           Sears Tower
                                           233 South Wacker Drive
                                           86th Floor
                                           Chicago, IL 60606
                                           Attention: David Donofrio
                                           Facsimile No.:



                                           FOUR WINDS FUNDING CORPORATION


                                           By: COMMERZBANK AG (NEW YORK BRANCH),
                                               AS ATTORNEY-IN-FACT


                                           By: /s/ James F. Ahern
                                               ------------------------------
                                               Name: James F. Ahern
                                               Title: Senior Vice President


                                           By: /s/ Tom Ausfahl
                                               ------------------------------
                                               Name: Tom Ausfahl
                                               Title: Vice President

                                           1251 Avenue of the Americas
                                           New York, New York
                                           Attention: James Ahern
                                           Facsimile No.:


                                           VICTORY RECEIVABLES CORPORATION


                                           By: /s/ R. Douglas Donaldson
                                               ------------------------------
                                               Name: R. Douglas Donaldson
                                               Title: Treasurer

                                           J.H. Management Corporation
                                           C/O Ropes & Gray
                                           One International Place
                                           Room 569
                                           Boston, MA 02110
                                           Attention: Doug Donaldson
                                           Facsimile No.: (617) 951 7050



          ADMINISTRATIVE
          AGENT:                           CITICORP NORTH AMERICA, INC.,
                                            as Administrative Agent


                                           By: /s/ David J. Donofrio
                                               ------------------------------
                                               Name: David J. Donofrio
                                               Title: Vice President

                                           Sears Tower
                                           233 South Wacker Drive
                                           86th Floor
                                           Chicago, IL 60606
                                           Attention: David Donofrio
                                           Facsimile No.:

EX-10.33(II)

- --------------------------------------------------------------------------------
                                                               Exhibit 10.33(ii)



                               PURCHASE AGREEMENT

                                  by and among

                          GEORGIA-PACIFIC CORPORATION,

                             CERTAIN SUBSIDIARIES OF
                           GEORGIA-PACIFIC CORPORATION

                                       and

                                   DOMTAR INC.

                                   dated as of

                                  June 1, 2001

- --------------------------------------------------------------------------------



                                TABLE OF CONTENTS
                                                                                                     
ARTICLE I Purchase and Sale of Acquired Assets; Assumption of Assumed
                Liabilities; Purchase and Sale of Shares.................................................2

1.1      Transfer of Assets..............................................................................2
1.2      Excluded Assets.................................................................................5
1.3      Assumed Liabilities.............................................................................7
1.4      Purchase and Sale of Shares....................................................................10
1.5      Purchase Price; Allocation of Purchase Price...................................................10

ARTICLE II The Closing; Purchase Price Adjustments......................................................10

2.1      Closing Date...................................................................................10
2.2      Transactions to be Effected at the Closing.....................................................10
2.3      Purchase Price Adjustment......................................................................12
2.4      Accounts Receivable Reimbursement..............................................................14

ARTICLE III Representations and Warranties of Sellers...................................................14

3.1      Organization, Standing and Power...............................................................14
3.2      Authority......................................................................................14
3.3      No Conflicts...................................................................................15
3.4      Compliance with Applicable Laws................................................................15
3.5      Litigation; Decrees............................................................................16
3.6      Capitalization; Subsidiaries; Title to Shares; Title to Assets.................................16
3.7      Sufficiency of Acquired Assets.................................................................17
3.8      Financial Information..........................................................................18
3.9      Absence of Certain Changes.....................................................................18
3.10     No Undisclosed Liabilities.....................................................................20
3.11     Real Property..................................................................................20
3.12     Intellectual Property..........................................................................22
3.13     Insurance......................................................................................23
3.14     Contracts......................................................................................24
3.15     Employee Benefits and Related Matters..........................................................26
3.16     Environmental Matters..........................................................................28
3.17     Taxes..........................................................................................29
3.18     Labor Matters..................................................................................31
3.19     Brokers........................................................................................31
3.20     Affiliate Transactions.........................................................................32



                                        i



                                                                                                     
ARTICLE IV Representations and Warranties of Purchaser..................................................32

4.1      Organization, Standing and Power...............................................................32
4.2      Authority......................................................................................32
4.3      No Conflicts...................................................................................33
4.4      Financing Commitment...........................................................................33
4.5      Litigation      33
4.6      Investment Intent..............................................................................33
4.7      Accredited Investor; Investment Representations................................................34
4.8      Brokers........................................................................................34

ARTICLE V Covenants.....................................................................................34

5.1      Conduct of Carve Out Business..................................................................34
5.2      Access to Information..........................................................................36
5.3      Further Actions................................................................................36
5.4      Information Technology.........................................................................36
5.5      Pre-Closing Publicity and Related Matters......................................................42
5.6      Ancillary Documents............................................................................42
5.7      Proration of Certain Charges...................................................................43
5.8      Real Property..................................................................................43
5.9      Adverse Changes................................................................................44
5.10     Supplemental Disclosure........................................................................45
5.11     Tax Exempt Bond Financed Facilities............................................................45
5.12     Termination of Certain Arrangements............................................................46
5.13     Environmental Site Assessment..................................................................46
5.14     Audited and Interim Financial Statements.......................................................46
5.15     Monthly Financial Information..................................................................47
5.16     Transition Services............................................................................47
5.17     Information Regarding Financing................................................................47
5.18     FERC Assets....................................................................................47
5.19     Wisconsin Real Property Transfers..............................................................49
5.20     Return of Parent Information...................................................................49
5.21     Inventory......................................................................................50
5.22     Black Liquor...................................................................................50
5.23     Cluster Testing................................................................................50
5.24     Inventory Support..............................................................................50

ARTICLE VI Conditions Precedent.........................................................................50

6.1      Conditions to Each Party's Obligation..........................................................50
6.2      Conditions to Obligation of Purchaser..........................................................51
6.3      Conditions to Obligation of Sellers............................................................52



                                       ii



                                                                                                     
ARTICLE VII Termination, Amendment and Waiver...........................................................53

7.1      Termination....................................................................................53
7.2      Amendments and Waivers.........................................................................54

ARTICLE VIII Indemnification............................................................................55

8.1      Indemnification by Parent......................................................................55
8.2      Indemnification by Purchaser...................................................................56
8.3      Limitations on Indemnity Obligation............................................................57
8.4      Procedures Relating to Third Party Claims (other than Pre-Closing Environmental Liabilities)...60
8.5      Procedures Relating to Pre-Closing Environmental Liabilities...................................61
8.6      Acknowledgment; Exclusive Remedies.............................................................62

ARTICLE IX Additional Agreements........................................................................62

9.1      Survival of Representations and Warranties, etc................................................62
9.2      Confidentiality................................................................................63
9.3      Expenses.......................................................................................63
9.4      Certain Information............................................................................64
9.5      Tax Matters....................................................................................64
9.6      Name Changes...................................................................................72
9.7      Use of Certain Information.....................................................................72
9.8      Woodland Landfill..............................................................................73

ARTICLE X General Provisions............................................................................73

10.1     Notices........................................................................................73
10.2     Severability...................................................................................74
10.3     Counterparts...................................................................................74
10.4     Entire Agreement; No Third Party Beneficiaries.................................................74
10.5     Attachments....................................................................................75
10.6     Governing Law, etc.............................................................................75
10.7     Assignment.....................................................................................76
10.8     Headings.......................................................................................76

ARTICLE XI Definitions..................................................................................76

11.1     Definitions....................................................................................76
11.2     Construction and Interpretation of Certain Terms and Phrases...................................90



                                       iii



                 
EXHIBIT A-1         ASSUMED ENVIRONMENTAL LIABILITIES
EXHIBIT A-2         EXCLUDED ENVIRONMENTAL LIABILITIES
EXHIBIT B           WORKING CAPITAL PRINCIPLES
EXHIBIT C           TERM SHEET FOR ACCOUNTS RECEIVABLE COLLECTION AND
                    REMITTANCE OF FUNDS
EXHIBIT D           Form of IT SUPPORT SERVICES Agreement
EXHIBIT E           Form OF HUMAN RESOURCES Agreement
EXHIBIT F           FORMS OF TRADEMARK LICENSE AGREEMENTs
EXHIBIT G           Form of SUPPLY AND DISTRIBUTION Agreement
EXHIBIT H           Form of NON-COMPETITION Agreement
EXHIBIT I           Form of PULP SUPPLY Agreement
EXHIBIT J           FORMS OF FIBRE SUPPLY AGREEMENTS (ashdown and
                    woodland)
EXHIBIT K           Form of Opinion of Counsel to Parent
EXHIBIT L           FORM OF SHARED SERVICES AGREEMENT
EXHIBIT M           Form of OPERATING Agreement
EXHIBIT N           TERM SHEET FOR INTERIM SALES AGREEMENT



                                       iv



                               PURCHASE AGREEMENT

     This Purchase Agreement (this "Agreement") is made and entered into as of
                                    ---------
June 1, 2001, by and among Georgia-Pacific Corporation, a Georgia corporation
("Parent"), Nekoosa Papers Inc., a Wisconsin corporation ("NPI"),
  ------                                                   ---
Georgia-Pacific Resins, Inc. ("G-P Resins"), a Delaware corporation, and Domtar
                               ----------
Inc., a Canadian corporation ("Purchaser").
                               ---------

                              PRELIMINARY STATEMENT

     WHEREAS, Parent and G-P Resins own pulp and paper mill operations located
in and around Woodland, Maine and certain related assets that are used in the
conduct of the Carve Out Business (as such term and other capitalized terms used
herein without definition are defined in Article XI);

     WHEREAS, NPI owns pulp and paper mill operations located in and around
Nekoosa, Wisconsin; Port Edwards, Wisconsin; and Ashdown, Arkansas and certain
related assets that are used in the conduct of the Carve Out Business;

     WHEREAS, Parent owns all of the outstanding shares of St. Croix Water Power
Company, a Maine corporation, The Saint Croix Water Power Company, a New
Brunswick, Canada corporation, and The Sprague's Falls Manufacturing Company
(Limited), a New Brunswick, Canada corporation (collectively, the "Transferred
                                                                   -----------
Subsidiaries"), which own certain real property and water rights relating to
- ------------
dams used in the Woodland, Maine operation;

     WHEREAS, Parent and certain Subsidiaries of Parent make available to the
Mills certain services and assets that are used in the conduct of the Carve Out
Business;

     WHEREAS, Purchaser wishes (i) to acquire certain assets associated with the
Mills (subject to the assumption of certain obligations and liabilities
specified herein) and to acquire the Shares and (ii) to receive certain
                                                 --
services, licenses and rights pursuant to certain ancillary agreements under
which Parent and certain Subsidiaries of Parent will make available certain
services and assets used in the Carve Out Business for specified periods
following the Closing, all on the terms and conditions set forth herein; and

     WHEREAS, Sellers are agreeable to such a transaction, on the terms and
subject to the conditions set forth herein;

     NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements herein contained, the parties, intending to be legally
bound, agree as follows:

                                       1



                                   ARTICLE I

                      Purchase and Sale of Acquired Assets;
         Assumption of Assumed Liabilities; Purchase and Sale of Shares
         --------------------------------------------------------------

     1.1 Transfer of Assets.
         ------------------

     (a)  Upon the terms and subject to the conditions of this Agreement, at the
Closing, for the consideration specified in Section 1.5, Parent, NPI and G-P
Resins, as applicable, will sell, assign, transfer, convey and deliver to
Purchaser, and Purchaser will purchase and acquire from Parent, all right, title
and interest of Parent, NPI and G-P Resins, as applicable, in and to the
properties, assets and rights of every nature, kind and description, tangible
and intangible (including goodwill), whether real, personal or mixed, whether
accrued, contingent or otherwise primarily relating to or used or held for use
in the operation of the Carve Out Business as of the date hereof and at any time
following the date hereof to the Closing Date, including all such property
acquired by Parent, NPI and G-P Resins, as applicable, between the date hereof
and the Closing Date, but excluding the Excluded Assets (collectively, the
"Acquired Assets"). It is agreed that the Acquired Assets shall include, without
 ---------------
limitation, the following assets, in each case as they shall exist on the
Closing Date:

          (i)   the Real Property, including all buildings, improvements,
     fixtures and all other appurtenances thereto (including the Port Edwards
     chipping facility presently under construction, the Wisconsin Sand Pit, the
     Maine Non-FERC Assets, the FERC Assets, the Nepco Lake Dam, and the Weirgor
     Woodyard) and all other rights and benefits in and relating to real
     property (including the Wisconsin Landfill Extension Option) together with
     all right, title and interest therein (the "Premises");
                                                 --------

          (ii)  except for public utilities, all water treatment facilities,
     together with all pipes and canals that are used to bring water to and
     discharge water from the Premises and rights to water from the Wisconsin
     River and Nepco Lake;

          (iii) all Inventory of Parent and NPI (other than Excluded Inventory)
     located at any Mill and any Inventory of Parent and NPI (including the
     Inventory of the Weirgor Woodyard) that is not located at any Mill but is
     allocable to the Mills in a manner consistent with the practices utilized
     in the preparation of the Audited Financial Statements;

          (iv)  all rights in products sold or leased by or on behalf of any
     Mill to third parties (including, but not limited to, products hereafter
     returned or repossessed and unpaid rights or rescission, replevin,
     reclamation and rights to stoppage in transit), but in the case of returned
     products only to the extent that any

                                       2



     corresponding obligation to a third party in respect of such products
     constitutes an Assumed Liability hereunder;

          (v)    all production orders that are allocated to the Mills in
     accordance with past practice, including customer orders for at least 4,000
     tons of Woodland export pulp Inventory;

          (vi)   all machinery, equipment, furniture, vehicles, tools, dies,
     molds, rolling stock, intermill railroads and related equipment, office
     supplies and all other items of tangible personal property owned or leased
     by Parent or NPI that are located at any Mill (or are in transit to or on
     order on behalf of any Mill) or are used primarily by Other Employees (as
     defined in the Human Resources Agreement) (other than fixtures) who accept
     an offer of post-Closing employment that he or she receives from Purchaser
     prior to the Closing or during the 30-day period following the Closing or
     by Employees who work at any Mill (including, but not limited to, any of
     the foregoing items purchased subject to any conditional sales or title
     retention agreement in favor of any other Person);

          (vii)  any and all Computer Hardware and Computer Software which is
     physically located and operated at any Mill (or is in transit to or on
     order on behalf of any Mill) (collectively, the "Mill Technology"), and any
                                                      ---------------
     and all Computer Hardware (and all Computer Software loaded thereon) that
     (A) constitutes a personal computer (with peripherals) that is primarily
      -
     used by any Other Employee who accepts an offer of post-Closing employment
     that he or she receives from Purchaser prior to or during the 30 day period
     following the Closing or (B) is portable (e.g., laptop computers, PDA's)
                               -
     and is used primarily by an Employee who works at any Mill;

          (viii) the Purchaser IT Environment on the terms provided in Section
     5.4;

          (ix)   to the extent their transfer is permitted under Applicable
     Laws, all Governmental Approvals that are used primarily in the operation
     of any Mill, including any pending applications therefor (the "Permits");
                                                                    -------

          (x)    all Contracts relating primarily to the business activities of
     any Mill (including all Contracts specifically identified on Section
     3.14(a) of the Parent Disclosure Letter as being assigned to Purchaser
     hereunder), including, without limitation, any right to receive payment for
     products sold or services rendered pursuant to such Contracts (to the
     extent they constitute receivables under clause (xi) below), any right to
     receive goods and services pursuant to such Contracts, and any right to
     assert claims and take other rightful actions in respect

                                       3



     of post-closing breaches, defaults and other violations of such Contracts
     (such Contracts, the "Mill Contracts");
                           --------------

          (xi)   $120 million of trade accounts receivable (the "Transferred
                                                                 -----------
     Accounts Receivable") for products shipped or services provided prior to
     -------------------
     the Closing Date, which receivables shall be specifically identified on a
     schedule to be provided by Parent to Purchaser within 15 days after the
     Closing Date;

          (xii)  all prepaid expenses and other current assets that are
     attributable to any Mill and that will inure to the benefit of Purchaser
     after the Closing;

          (xiii) all books of account, financial and accounting records, files,
     manuals, invoices, customer and supplier lists and other business records
     related primarily to any Mill, including Transferring Employee records
     (other than medical records) except to the extent required by Applicable
     Law to be retained by Parent or its Affiliates (in which case copies (other
     than of medical records) will be provided to Purchaser), including all
     records and materials maintained at the headquarters of Parent or NPI,
     catalogues, price lists, correspondence, mailing lists, distribution lists,
     photographs, production data, sales and promotional materials and records,
     purchasing materials and records, manufacturing and quality control records
     and procedures, blueprints and research and development files;

          (xiv)  all patents, patent applications, trade secrets, confidential
     know-how, formulae, processes, procedures, trademarks, service marks,
     copyrights, trade names, service names, corporate signatures, logos and
     other like proprietary rights specifically listed in Section 1.1(a)(xiv) of
     the Parent Disclosure Letter, including rights to sue for and remedies
     against past, present and future infringements thereof, and rights of
     priority and protection of interests therein under the laws of any
     jurisdiction worldwide and all tangible embodiments thereof (the "Acquired
                                                                       --------
     Intellectual Property");
     ---------------------

          (xv)   Plan assets to the extent provided in the Human Resources
     Agreement; and

          (xvi)  all assets specifically listed in Section 1.1(a)(xvi) of the
     Purchaser Disclosure Letter.

     (b)  At the Closing, the Acquired Assets shall be transferred or otherwise
conveyed to Purchaser free and clear of all liabilities, obligations and Liens
excepting only Assumed Liabilities and Permitted Liens or, in the case of the
Real Property, free and clear of all Title Defects, excepting only the Permitted
Real Property Exceptions.

                                       4



     (c)  Notwithstanding anything to the contrary contained herein, but subject
to the provisions of Section 5.3(c) and the Ancillary Documents, to the extent
any Mill Contract, order, document, instrument or other asset that is intended
to be sold, assigned, transferred, conveyed or licensed to Purchaser hereunder
or any Ancillary Document requires the consent, approval, authorization, waiver,
permit, grant, franchise, concession or license of any Person (other than any
Seller) (any of the foregoing, a "Consent") in order to consummate the
                                  -------
transactions contemplated hereby and by the Ancillary Documents (any such Mill
Contract, order, document, instrument or other asset, a "Restricted Asset"),
                                                         ----------------
this Agreement will not constitute an agreement to sell, assign, transfer,
convey or license such Restricted Asset if such action would constitute a breach
of the terms of, or limit the post-Closing use and enjoyment of such Restricted
Asset. In accordance with Section 5.3(c), Section 5.4 and the expense provisions
of Section 9.3, Parent shall take all commercially reasonable actions to obtain
such Consent from such Person. Subject to Section 6.2(e), if the Closing occurs
without obtaining any such Consent regarding a Restricted Asset, Parent and its
Affiliates will, in accordance with the expense provisions of Section 9.3, take
all commercially reasonable action requested by Purchaser to obtain such Consent
after the Closing or to otherwise transfer to Purchaser the benefit of such
Restricted Asset. Without limiting the obligations of Parent under Section 5.4,
in connection with seeking any Consent, Parent and its Affiliates (i) will not
                                                                   -
agree to any modifications of rights in respect of the Restricted Asset that
would be adverse to Purchaser after the Closing, (ii) shall not be required to
                                                  --
agree to any restriction on the conduct of their respective businesses, and
(iii) shall not be required to make any payment that is unreasonable in relation
 ---
to the applicable Contract or asset. This Section 1.1(c) shall not limit or
otherwise affect Parent's obligation to seek Consents in respect of Mill
Technology and the Purchaser IT Environment, which will be governed by Section
5.4.

     1.2 Excluded Assets. Notwithstanding anything in this Agreement to the
         ---------------
contrary, the following assets of Parent, NPI and G-P Resins (collectively, the
"Excluded Assets") shall be excluded from and shall not constitute any part of
 ---------------
the Acquired Assets:

          (i)   all cash and cash equivalents on hand or in banks and all bank
     accounts, including trust funds with the Maine Environmental Protection
     Division;

          (ii)  (A) all rights of Parent or its Affiliates under this Agreement
                 -
     and the agreements, instruments and - certificates delivered in connection
     with this Agreement and the certificate of incorporation and bylaws of
     Sellers, qualifications to conduct business, taxpayer and other
     identification numbers, corporate seals, minute books, stock transfer
     records and any other document relating to the organization, maintenance
     and existence of each of Parent, NPI and G-P Resins as a corporation, (B)
                                                                            -
     such business - records as may be located at the Mills and are listed on
     Section 1.2(ii) of the Parent Disclosure Letter, (C) books,
                                                       -

                                       5



     records and other information relating primarily to production orders not
     allocated - to the Mills, (D) medical records of Employees and (E)
                                -
     personnel records of Employees who are not - Transferring Employees;

          (iii) all records prepared by Parent and its Affiliates in connection
     with the sale of the Mills to Purchaser, except as otherwise specified
     herein;

          (iv)   all rights, claims and causes of action and rights of
     reimbursement (A) relating to any of the Excluded Liabilities or the
                    -
     Excluded Assets, including rights, claims and causes of action under
     insurance policies relating thereto and to the Acquired Assets, (B)
                                                                      -
     specifically listed in Section 1.2(iv) of the Parent Disclosure Letter or
     (C) arising after the Closing relating to the pre-Closing operations of the
      -
     Mills;

          (v)    all deferred Tax assets and all rights to claims available to
     or being pursued by Parent, NPI and G-P Resins and their respective
     Affiliates for refunds of or credits against Taxes, investment Tax credits,
     research credits and credits for prepayments of Taxes attributable to
     Parent or any Affiliate of Parent (other than (A) any Tax refund accrued as
                                                    -
     a current asset shown on the Closing Working Capital Statement as finally
     determined in accordance with Section 2.3 and (B) any refund in respect of
                                                    -
     any Transfer Tax to the extent such Transfer Tax is the responsibility of
     Purchaser under Section 9.5(k) of this Agreement);

          (vi)   any consolidated, combined, unitary or separate company Tax
     Return relating to Income Taxes that includes Parent or any Affiliate of
     Parent and records and work papers used in preparation thereof;

          (vii)  except for the Acquired Intellectual Property, all patents,
     patent applications, trade secrets, confidential know-how, formulae,
     processes, procedures, trademarks, service marks, copyrights, trade names,
     service names, corporate signatures, logos and other like proprietary
     rights owned by Parent or any Affiliate of Parent, including, without
     limitation, the Georgia-Pacific logo and corporate signature, the trade
     names and trademarks "Georgia-Pacific", "G-P" and "Great Northern", the
     "gapac.com" and "gp.com" domain names and any variation, alteration,
     modification or derivative thereof;

          (viii) except as otherwise set forth in the Human Resources Agreement,
     any asset of any Plan, including, but not limited to, the right to receive
     assets of any such Plan upon termination thereof;

          (ix)   all properties, assets and rights of Parent relating primarily
     to (A) the sawmill operations located in the Town of Baileyville, Maine,
         -
     the oriented strand board operations located in the Town of Baileyville,
     Maine, the

                                       6



     procurement yard adjacent thereto and certain expansion lands adjacent
     thereto, the exact location of each of which shall be established prior to
     the Closing Date by a survey to be prepared by Plisga & Day and shall be
     subject to the reasonable approval of Purchaser and Sellers (together, the
     "Excluded Woodland Facilities"), and (B) the procurement operations located
      ----------------------------         -
     at or adjacent to the Woodland Mill or the Ashdown Mill that are identified
     in Section 1.2(ix) of the Parent Disclosure Letter;

          (x)    all rights of Parent or any of its Affiliates to any
     reimbursements from any Governmental Entity for payments made in respect of
     environmental remediation or condemnation prior to the Closing (except to
     the extent reflected as a current asset on the Closing Working Capital
     Statement);

          (xi)   any and all properties or assets not located at the Mills that
     are utilized by Parent or its Affiliates in providing the services that are
     the subject of the Ancillary Documents or the services listed in Section
     3.20(a) of the Parent Disclosure Letter, other than the Purchaser IT
     Environment on the terms provided in Section 5.4(b);

          (xii)  the real property located at or near the Woodland Mill known as
     the South Princeton Landfill, and the accompanying contiguous buffer zone,
     situated in the Town of Princeton, Maine, the exact location of which shall
     be established prior to the Closing Date by a survey to be prepared by
     Plisga & Day and shall be subject to the reasonable approval of Purchaser
     and Sellers;

          (xiii) the Excluded Inventory;

          (xiv) the Computer Hardware or Computer Software (and any associated
     Contract) that is specifically listed in Section 1.2(xiv) of the Parent
     Disclosure Letter; and

          (xv)   (A) all Contracts relating to benefit plans and arrangements
                  -
     except to the extent provided in the Human Resources Agreement and (B) all
                                                                         -
     Contracts specifically identified on Section 3.14(a) of the Parent
     Disclosure Letter as not being assigned to Purchaser hereunder.

     1.3 Assumed Liabilities.
         -------------------

     (a)  Subject to the terms and conditions set forth herein, at the Closing
Purchaser shall assume and undertake to pay, satisfy or discharge the following
liabilities, obligations and commitments (collectively, the "Assumed
Liabilities"):

          (i)    all liabilities, obligations and commitments that constitute
     trade accounts payable allocated to the Mills in a manner consistent with
     the practices

                                       7



     utilized in the preparation of the Audited Financial Statements, and other
     accrued liabilities recorded in the books and records of the Mills;

          (ii)   all liabilities, obligations and commitments that arise after
     the Closing under the Mill Contracts assigned to Purchaser at the Closing,
     excluding liabilities for pre-Closing breaches except as otherwise provided
     pursuant to Section 1.3(a)(iii) below;

          (iii)  all liabilities, obligations and commitments that it expressly
     agrees to assume under the Human Resources Agreement, including accrued
     vacation and related benefits to the extent assumed by Purchaser under the
     Human Resources Agreement (the "Assumed Employee Liabilities");
                                     ----------------------------

          (iv)   the litigation, proceedings and claims identified as items
     IV(a)(ii), (iii), (iv), (v) and (vii) under the heading for "Woodland" in
     Section 3.5 of the Parent Disclosure Letter (the "Assumed Litigation");
                                                       ------------------

          (v)    all Pre-Closing Environmental Liabilities relating to or
     arising out of the matters for which Purchaser is identified as the
     "Responsible Party" on Exhibit A-1 hereto (the "Assumed Purchaser
                                                     -----------------
     Environmental Liabilities");
     -------------------------

          (vi)   all Pre-Closing Environmental Liabilities relating to or
     arising out of the matters for which Parent is identified as the
     "Responsible Party" on Exhibit A-1 hereto and all other Pre-Closing
     Environmental Liabilities relating to or arising out of matters that are
     not identified on Exhibit A-1 hereto (excluding Excluded Environmental
     Liabilities and the Impaired Asset Liabilities) (the "Assumed Parent
                                                           --------------
     Environmental Liabilities");
     -------------------------

          (vii)  all liabilities, obligations or commitments (whether known or
     unknown, contingent or otherwise) relating to or arising out of the
     Impaired Assets (the "Impaired Asset Liabilities"); and
                           --------------------------

          (viii) any liabilities, obligations or commitments, excluding the
     Excluded Liabilities, whether known or unknown, contingent or otherwise, to
     the extent relating to or arising out of the operation of the Carve Out
     Business or the ownership of the Acquired Assets prior to the Closing
     (including any Transferred Subsidiary Pre-Closing Liability other than in
     respect of Taxes) (other than those liabilities, obligations and
     commitments included in clauses (i) - (vii) above)(collectively, the
     "Assumed Pre-Closing Liabilities").
      -------------------------------

     (b)  Except as expressly set forth in Section 1.3(a), Purchaser expressly
does not, and shall not, assume or be deemed to assume, under this Agreement or
otherwise by reason of the transactions contemplated hereby, any liabilities,
obligations or

                                       8



commitments of Parent or any of its Affiliates of any nature whatsoever, whether
known or unknown, contingent or otherwise (collectively, the "Excluded
                                                              --------
Liabilities"). Without limiting the generality of the foregoing, and
- -----------
notwithstanding Section 1.3(a)(viii), the following shall constitute Excluded
Liabilities:

          (i)    any obligation or liability (including, without limitation, any
     Pre-Closing Environmental Liability) in respect of the Excluded Assets;

          (ii)   any continuing liabilities of Parent or its Affiliates under
     this Agreement or the Ancillary Documents or other instruments to be
     delivered by Parent or its Affiliates at the Closing;

          (iii)  any legal, accounting, transactional, consultant, brokerage or
     other expense relating to the negotiation and consummation of the
     transactions contemplated hereby by or on behalf of Parent;

          (iv)   any deferred Tax Liability and any liability for (A) Taxes
                                                                 -
     imposed on, with respect to or relating to the Acquired Assets for any
     Pre-Closing Tax Period or (B) Taxes of Parent or any of its Affiliates
                                -
     (other than any liability in respect of any Transfer Tax to the extent such
     Transfer Tax is the responsibility of Purchaser under Section 9.5(k) of
     this Agreement);

          (v)    except as expressly provided otherwise in this Agreement or in
     any Ancillary Document, any obligation or liability to Parent or any of its
     Affiliates, including any post-Closing Date obligation or liability arising
     from an Affiliated Party Transaction, other than trade accounts payable
     arising in the ordinary course of business that are included in the Assumed
     Liabilities;

          (vi)   any litigation, proceeding or claim (excluding the Assumed
     Litigation and other claims and proceedings expressly assumed by Purchaser
     under the Human Resources Agreement) that is pending or has been made or
     asserted and of which Parent has received notice as of the Closing Date,
     including without limitation any such litigation, proceeding or claim that
     is set forth on Section 3.5, 3.11, 3.12, 3.15 or 3.18 of the Parent
     Disclosure Letter (all such litigation, proceedings and claims described in
     this clause (vi), the "Pending Litigation");
                            ------------------

          (vii)  all Pre-Closing Environmental Liabilities relating to or
     arising out of the matters for which Parent is identified as the
     "Responsible Party" on Exhibit A-2 hereto (the "Excluded Environmental
                                                     ----------------------
     Liabilities");
     -----------

                                       9



          (viii) all liabilities relating to or arising out of any breach prior
     to the Closing of any Mill Contract other than as provided in the Human
     Resources Agreement; and

          (ix)   all Pre-Closing Employee Liabilities other than Assumed
     Employee Liabilities.

     1.4 Purchase and Sale of Shares. Upon the terms and subject to the
         ---------------------------
conditions of this Agreement, at the Closing, for the consideration specified in
Section 1.5, Parent will sell, transfer and deliver to Purchaser free and clear
of all Liens, and Purchaser will purchase, acquire and accept from Parent, the
Shares.

     1.5 Purchase Price; Allocation of Purchase Price.
         --------------------------------------------

     (a)  The aggregate purchase price for the Acquired Assets and the Shares
shall be $1,650,000,000 (the "Purchase Price"), payable in the manner described
                              --------------
in Section 2.2(b)(i) and subject to adjustment as set forth in Section 2.3.

     (b)  Purchaser and Parent agree to allocate the Purchase Price between the
Shares and the Acquired Assets in accordance with Section 9.5(d)(i) of this
Agreement. Any adjustment to the Purchase Price pursuant to Section 2.3 or
otherwise shall be allocated to the Shares on the one hand or the Acquired
Assets on the other hand as determined in good faith by Purchaser.

                                   ARTICLE II

                     The Closing; Purchase Price Adjustments
                     ---------------------------------------

     2.1 Closing Date. The closing of the transactions contemplated by this
         ------------
Agreement (the "Closing") shall take place at the New York offices of Debevoise
                -------
& Plimpton, at 10:00 a.m., local time, on (i) the second Business Day following
                                           -
the last to be fulfilled or waived of the conditions set forth in Article VI
(other than those conditions which are only capable of being fulfilled as of
such date), or (ii) such other time, date or place as the parties hereto may
                --
agree in writing. The date on which the Closing shall occur is herein referred
to as the "Closing Date".
           ------------

     2.2 Transactions to be Effected at the Closing.
         ------------------------------------------

     (a)  Sellers shall deliver or cause to be delivered to Purchaser the
following:

          (i)    such appropriately executed special or limited warranty deeds
      in local customary form, bills of sale, assignments, affidavits of title
     and other instruments of transfer as shall be necessary or appropriate for
     the sale, assignment, transfer, conveyance and delivery as contemplated by
     this Agreement

                                       10



     of the Acquired Assets (it being understood that any such document shall
     not provide for any representations or warranties that are not otherwise
     expressly provided for in this Agreement), provided that the transfer
                                                --------
     documents for the FERC Assets and the Nepco Lake Dam, respectively, shall
     be held in escrow pursuant to an escrow arrangement reasonably satisfactory
     to Purchaser and Parent pending FERC's approval of the transfer of the FERC
     Licenses and any necessary compliance with Chapter 31 of the Wisconsin
     Statutes as contemplated by Section 5.18;

          (ii)   the stock certificate or certificates representing all of the
     Shares, duly endorsed in blank or accompanied by stock powers duly executed
     in blank;

          (iii)  a duly executed copy of each of the Ancillary Documents to
     which Parent or an affiliate of Parent is a party; and

          (iv)   such other instruments or documents, the delivery of which is a
     condition to Closing or which may be reasonably requested by Purchaser
     prior to the Closing Date or as may be necessary to effect the Closing in
     accordance with this Agreement (it being understood that any such other
     instrument or document shall not provide for any representations or
     warranties or any obligations or liabilities that are not otherwise
     expressly provided for in this Agreement).

     (b)  Purchaser shall deliver or cause to be delivered to Sellers, as the
case may be, the following:

          (i)    by wire transfer to the accounts designated in writing by
     Parent at least five days prior to the Closing, immediately available U.S.
     funds in an aggregate amount equal to the Purchase Price;

          (ii)   such appropriately executed assumption agreements and other
     instruments of assumption providing for Purchaser's assumption of the
     Assumed Liabilities as contemplated by this Agreement (it being understood
     that any such document shall not provide for any representations or
     warranties that are not otherwise expressly provided for in this
     Agreement);

          (iii)  a duly executed copy of each of the Ancillary Documents to
     which Purchaser is a party; and

          (iv)   such other instruments or documents, the delivery of which is a
     condition to Closing or which may be reasonably requested prior to the
     Closing Date by Parent or as may be necessary to effect the Closing in
     accordance with this Agreement (it being understood that any such other
     instrument or document shall not provide for any representations or
     warranties or any obligations or liabilities that are not otherwise
     expressly provided for in this Agreement).

                                       11



     2.3 Purchase Price Adjustment.
         -------------------------

     (a)  Within 60 days following the Closing Date, Parent will prepare and
deliver or cause to be prepared and delivered to Purchaser, a working capital
statement for the Acquired Assets and the Assumed Liabilities as of the close of
business on the Closing Date (the "Closing Working Capital Statement"), audited
                                   ---------------------------------
by Arthur Andersen, independent accountants for Parent, setting forth an
itemized calculation of the current assets included in the Acquired Assets or
owned by the Transferred Subsidiaries as of the Closing Date and the current
liabilities included in the Assumed Liabilities (including for this purpose
liabilities of the Transferred Subsidiaries for Taxes (other than Combined
Income Taxes)). The excess of such current assets over such current liabilities,
as reflected on the Working Capital Statement, will be referred to herein as the
"Closing Working Capital". The Closing Working Capital Statement shall be
 -----------------------
prepared in accordance with U.S. GAAP and on a basis consistent with the U.S.
GAAP principles, procedures and elections used in the Financial Statements, as
modified by the principles, procedures and elections set forth in Exhibit B
hereto (the "Working Capital Principles"). Notwithstanding the foregoing, (i)
             --------------------------
the amount of the trade accounts receivable for the purposes of determining the
Closing Working Capital shall be $120,000,000 and (ii) the Closing Working
Capital Statement will not reflect any accrual for additional matching
contributions within the meaning of the applicable Parent 401(k) Plan.

     (b)  Following the receipt by Purchaser of the Closing Working Capital
Statement, Purchaser and its advisors and accountants shall have 45 days to
review the Closing Working Capital Statement. Purchaser shall have full access
to all information used by Parent in preparing the Closing Working Capital
Statement, including the books and records and the work papers of Parent's
accountants (subject to the reviewing party executing any customary access
letters required by Parent's accountants). The Closing Working Capital Statement
will become final and binding upon the parties on the 45th day following
delivery thereof, unless Purchaser delivers a written notice (the "Dispute
                                                                   -------
Notice") to Parent prior to such date which specifies in reasonable detail the
- ------
amount by which and the reasons why Purchaser thinks the current assets or
current liabilities reflected on the Closing Working Capital Statement either
contain mathematical errors or were not prepared in accordance with Section
2.3(a).

     (c)  If Purchaser delivers a Dispute Notice in accordance with Section
2.3(b), then the parties shall, during the 30-day period beginning on the
receipt by Parent of the Dispute Notice (the "Review Period"), seek in good
                                              -------------
faith to resolve in writing any differences which they may have with respect to
the matters specified in the Dispute Notice. If Purchaser and Parent are unable
to resolve all of the objections of Purchaser within such 30-day period, then
Purchaser and Parent shall submit such unresolved objections to the Washington,
D.C. office of Deloitte & Touche LLP (the "Third Party Accountants"). Purchaser
                                           -----------------------
and Parent shall use reasonable efforts to cause the Third Party Accountants to
render a final, binding decision resolving the matters in dispute within 60

                                       12



days following the submission of such matter to the Third Party Accountants. The
determination of the Third Party Accountants will be final and binding on Parent
and Purchaser and judgment may be entered upon the determination of the Third
Party Accountants in any court having jurisdiction over the party against which
such determination is to be enforced. The fees, costs and expenses of the Third
Party Accountants (i) shall be borne by Purchaser in the proportion that the
                   -
aggregate dollar amount of all such disputed items so submitted that are
unsuccessfully disputed by Purchaser (as finally determined by the Third Party
Accountants) bears to the aggregate dollar amount of such items so submitted and
(ii) shall be borne by Parent in the proportion that the aggregate dollar amount
 --
of such disputed items so submitted that are successfully disputed by Purchaser
(as finally determined by the Third Party Accountants) bears to the aggregate
dollar amount of all such items so submitted.

     (d)  Within 10 days after the first to occur of (i) the Closing Working
                                                     -
Capital Statement becoming final pursuant to Section 2.3(b) or (ii) the parties
                                                                --
reaching agreement pursuant to Section 2.3(c) or (iii) the Third Party
                                                  ---
Accountants rendering their decision pursuant to Section 2.3(c), a final
adjustment to the Purchase Price will be made as follows:

               (A) if it is determined that the Closing Working Capital is equal
          to $200,000,000, then no adjustment will be made to the Purchase
          Price;

               (B) if it is determined that the Closing Working Capital is less
          than $200,000,000, then the Purchase Price will be reduced by an
          amount equal to the difference between $200,000,000 and the Closing
          Working Capital, and Parent will pay to Purchaser, by wire transfer of
          immediately available funds, an amount equal to such difference, plus
          interest at LIBOR plus 150 basis points on such amount from the
          Closing Date through the date of payment; or

               (C) if it is determined that the Closing Working Capital is more
          than $200,000,000, then the Purchase Price will be increased by an
          amount equal to the excess of the Closing Working Capital over
          $200,000,000, and Purchaser will pay to Parent, by wire transfer of
          immediately available funds, an amount equal to such excess, plus
          interest at LIBOR plus 150 basis points on such amount from the
          Closing Date through the date of payment.

     (e)  Purchaser Indemnitees' rights to indemnification pursuant to Article
VIII (and any limitations on such rights) shall not be deemed to limit,
supersede or otherwise affect Purchaser's right to a full adjustment of the
Purchase Price pursuant to this Section 2.3, provided that Purchaser shall not
                                             --------
be entitled to be indemnified under Article VIII for

                                       13



a Loss if, and to the extent that, such Loss has been reflected in the final
calculation of Closing Working Capital.

     2.4 Accounts Receivable Reimbursement. The collection and reimbursement of
         ---------------------------------
the Transferred Accounts Receivable shall be performed in accordance with the
terms set forth in Exhibit C.
                   ---------

                                  ARTICLE III

                    Representations and Warranties of Sellers
                    -----------------------------------------

     As of the date hereof and as of the Closing Date, Sellers, jointly and
severally, represent and warrant to Purchaser as follows:

     3.1 Organization, Standing and Power.
         --------------------------------

     (a)  Each Seller and each Transferred Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has the requisite corporate power and authority to own, lease
and operate its properties and assets, to carry on its operations (including the
Carve Out Business) as now being conducted, to execute and deliver this
Agreement and each of the Ancillary Documents to which it is or will be a party,
to perform fully its obligations under this Agreement and the Ancillary
Documents, and to consummate the transactions contemplated hereby and thereby.

     (b)  Each Seller and each Transferred Subsidiary is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the operation of its portion of the Carve Out Business or the character of the
properties owned, leased or operated by it in connection with its portion of the
Carve Out Business makes such qualification or licensing necessary, except for
any such failure to be qualified or licensed that, individually and in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect.

     (c)  Each Seller and each Transferred Subsidiary has made available to
Purchaser complete and correct copies of its certificate of incorporation and
by-laws or other organizational documents, in each case, as amended and in
effect on the date hereof. No Seller or Transferred Subsidiary is in violation
of any of the provisions of its certificate of incorporation or by-laws or other
organizational documents.

     3.2 Authority. The execution and delivery of this Agreement and the
         ---------
Ancillary Documents and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of each Seller. This Agreement and the Human Resources Agreement have each
been duly executed and delivered by each Seller which is a party thereto and
each constitutes its legal, valid and binding obligation, enforceable against
each of them in accordance with their terms.

                                       14



Each Ancillary Document to be entered into by a Seller at the Closing will be
duly executed and delivered by such Seller, and when so executed and delivered
will constitute, the legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its terms.

     3.3 No Conflicts.
         ------------

     (a)  The execution, delivery and performance of this Agreement and the
Ancillary Documents by each Seller and the consummation by each Seller of the
transactions contemplated hereby and thereby do not and will not, conflict with,
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or result in
the creation of any Lien (other than a Permitted Lien) upon any asset
constituting a part of the Carve Out Business under (i) the certificate of
                                                     -
incorporation or bylaws (or comparable organizational documents) of such Seller,
(ii) subject to the filings and other matters referred to in the following
 --
paragraph (b), any law, judgment, order, decree, statute, ordinance, rule or
regulation applicable to Parent or any of its Affiliates, or (iii) other than as
                                                              ---
set forth in Section 3.3(a) of Parent Disclosure Letter, any Contract to which
Parent or any of its Affiliates is a party or by which any of the assets
constituting a part of the Carve Out Business are bound or affected, except in
the case of clause (ii) and clause (iii), for any such conflict, violation,
default, or other consequence that, individually or in the aggregate, has not
and would not reasonably be expected to have a Material Adverse Effect.

     (b)  No Governmental Approval is required to be obtained or made by Parent
or any of its Affiliates in connection with the execution and delivery of this
Agreement and the Ancillary Documents or the consummation of the transactions
contemplated hereby and thereby by Seller, except for (i) compliance with and
                                                       -
filings under the HSR Act and any other applicable pre-merger notification law,
whether U.S. or foreign, (ii) the Governmental Approvals set forth in Section
                          --
3.3(b) of the Parent Disclosure Letter, and (iii) those the failure of which to
                                             ---
obtain or make, individually or in the aggregate, would not materially impair
the ability of a Seller to perform its obligations under this Agreement or
materially impair Purchaser's use of the Acquired Assets or operation of the
Transferred Subsidiaries immediately following the Closing.

     3.4 Compliance with Applicable Laws.
         -------------------------------

     (a)  Except as set forth in Section 3.4(a) of the Parent Disclosure Letter,
Parent and its Affiliates have complied with all Applicable Laws with respect to
the Carve Out Business and the Acquired Assets, except where such failure to so
comply, individually or in the aggregate, has not had and would not reasonably
be expected to have a Material Adverse Effect. Except as set forth in Section
3.4(a) of the Parent Disclosure Letter, since January 1, 1996, neither Parent
nor any of its Affiliates has received any written

                                       15



notice from a Governmental Entity alleging any material non-compliance relating
to the Carve Out Business or the Acquired Assets under any such Applicable Law,
except for any alleged non-compliance that, if substantiated, individually and
in the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect. This Section 3.4(a) does not apply to employee benefits
matters for which Section 3.15 is applicable, Environmental Laws for which
Section 3.16 is applicable, Tax matters for which Section 3.17 is applicable or
labor matters for which Section 3.18 is applicable.

     (b) Section 3.4(b) of the Parent Disclosure Letter sets forth all consents,
approvals, authorizations, waivers, permits, grants, franchises, concessions,
agreements, licenses, exemptions or orders of, registrations, certificates,
declarations or filings with, or reports or notices to, any Governmental Entity
(collectively, "Governmental Approvals") necessary for, or otherwise material
                ----------------------
to, the use and operation of the Acquired Assets and the assets of the
Transferred Subsidiaries. Except as set forth in Section 3.4(b) of the Parent
Disclosure Letter, all such Governmental Approvals have been duly obtained and
are in full force and effect, and each of Parent and its Affiliates, as the case
may be, are in compliance with each of such Governmental Approvals held by it
with respect to the Acquired Assets and the assets of the Transferred
Subsidiaries, except for any failure to obtain or comply with a Governmental
Approval that, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect.

     3.5 Litigation; Decrees. Except as set forth in Section 3.5 of the Parent
         -------------------
Disclosure Letter (and except for any lawsuit, action or proceeding brought
after the date of this Agreement by any Person seeking to delay or prevent, or
otherwise challenging, the transactions contemplated hereby), there is no
lawsuit, action or proceeding pending, or, to the Knowledge of Parent,
threatened, against any of Parent or any of its Affiliates by any Person or
asserted by any of them against any Person that relates to the Carve Out
Business or the Acquired Assets, except for any such matter that, if resolved in
a manner adverse to Parent and its Affiliates, would not, individually or in the
aggregate reasonably be expected to have a Material Adverse Effect. None of
Parent or any of its Affiliates is in default under any material judgment,
order, injunction or decree of any Governmental Entity or arbitrator entered
against any such party that relates to the Carve Out Business or the Acquired
Assets. This Section 3.5 does not apply to Intellectual Property matters for
which Section 3.12 is applicable or labor matters for which Section 3.18 is
applicable.

     3.6 Capitalization; Subsidiaries; Title to Shares; Title to Assets.
         --------------------------------------------------------------

     (a) The authorized capital stock and the outstanding shares of capital
stock (collectively, the "Shares") of each of the Transferred Subsidiaries is
                          ------
set forth in Section 3.6(a) of the Parent Disclosure Letter, and there are no
other classes of stock authorized or issued. All of the Shares are duly and
validly authorized, issued and outstanding and are fully paid and
non-assessable, and owned beneficially and of record by Parent, as set

                                       16



forth in Section 3.6(a) of the Parent Disclosure Letter. There are no shares of
capital stock of any Transferred Subsidiary held as treasury shares. There are
no preemptive rights existing with respect to the capital stock of any
Transferred Subsidiary and none of the Shares were issued in violation of any
preemptive rights. There are no outstanding warrants, options, rights, calls or
other commitments of any nature relating to the capital stock of any Transferred
Subsidiary, and there are no outstanding securities or debt obligations of any
Transferred Subsidiary convertible into or exchangeable for shares of capital
stock of any Transferred Subsidiary. There are no agreements, commitments,
restrictions or arrangements relating to ownership (including, without
limitation, repurchase or redemption), voting or receipt of dividends or
distributions in respect of any shares of any Transferred Subsidiary's capital
stock.

     (b)  No Transferred Subsidiary has any Subsidiaries, or owns any shares of
capital stock or other securities of, or interest in, any other Person, or is
obligated to make any capital contribution to or other investment in any other
Person. From the time that Parent acquired the Transferred Subsidiaries, they
have not employed any employees and have not engaged in any material business
activities other than the ownership of the dams used in the operation of the
Woodland Mill, the production of electric power for supply to the Woodland Mill
and other operations of Parent and activities related thereto.

     (c)  Except as set forth in Section 3.6(c) of the Parent Disclosure Letter,
each of Parent, NPI and G-P Resins, as the case may be, has good and valid title
to, or has legally sufficient rights to use, the Acquired Assets, in each case
free and clear of all Liens, except for Permitted Liens. This Section 3.6(c)
does not apply to Real Property, for which Section 3.11 is applicable.

     3.7 Sufficiency of Acquired Assets.
         ------------------------------

     (a)  Other than the Excluded Assets, the assets owned by the Transferred
Subsidiaries and the Acquired Assets, together with the services, licenses and
rights to be provided pursuant to the Ancillary Documents and the services
referenced on Section 3.7(a) of the Parent Disclosure Letter, comprise all
assets and services used in and necessary for the conduct of the Carve Out
Business since January 1, 2000 and as of the Closing Date.

     (b)  The Acquired Assets and the assets of the Transferred Subsidiaries are
in all material respects adequate for the purposes for which such assets are
currently used or are held for use, and are in reasonably good repair and
operating condition (subject to normal wear and tear). To the Knowledge of
Parent, there are no facts or conditions affecting any material tangible
Acquired Assets which would, individually or in the aggregate, reasonably be
expected to materially interfere with the use, occupancy or operation thereof as
currently used, occupied or operated, or their adequacy for such use.

                                       17



     3.8 Financial Information. True and complete copies of (i) the unaudited
         ---------------------                               -
balance sheets of the Carve Out Business as of January 1, 2000 and December 30,
2000, and the related unaudited statements of income, Parent's investment and
cash flow for each of the three years in the three-year period ended December
30, 2000, together with all related notes thereto (the "Year-End Financial
                                                        ------------------
Statements"), and (ii) the unaudited balance sheet of the Carve Out Business as
- ----------         --
of March 31, 2001, and the related unaudited statements of income, Parent's
investment and cash flow for the three months ended March 31, 2001, together
with all related notes thereto (the "Interim Financial Statements" and together
                                     ----------------------------
with the Year-End Financial Statements, the "Financial Statements"), have been
                                             --------------------
delivered by Parent to Purchaser. The Year-End Financial Statements, the Interim
Financial Statements, and, when delivered in accordance with Section 5.14, the
Audited Financial Statements (x) were (and, in the case of the Audited Financial
                              -
Statements, shall have been) prepared in accordance with the books of account
and other financial records of Parent and its Affiliates, (y) present fairly, in
                                                           -
all material respects, the consolidated financial condition and results of
operations of the Carve Out Business, as of the dates thereof or for the periods
covered thereby, as the case may be, and (z) have been (and, in the case of the
                                          -
Audited Financial Statements, shall have been prepared) in accordance with U.S.
GAAP applied on a consistent basis from period to period, except as otherwise
stated in the Financial Statements (including the notes thereto) or in the
letter dated the date hereof delivered by Parent to Purchaser (the "Side
                                                                    ----
Letter"). Upon Purchaser's receipt of the Audited Financial Statements delivered
- ------
in accordance with Section 5.14(a), all references in this Article III to the
"Financial Statements" shall be deemed to refer to the Audited Financial
Statements and the Interim Financial Statements instead of the Year-End
Financial Statements and the Interim Financial Statements delivered prior to the
date hereof. Notwithstanding the foregoing provisions of this Section 3.8, the
Weirgor Woodyard and related Inventory and assets are not reflected in the
Year-End Financial Statements but such properties and assets will be reflected
in the Audited Financial Statements.

     3.9 Absence of Certain Changes. Except as set forth on Section 3.9 of the
         --------------------------
Parent Disclosure Letter, since December 30, 2000, (i) the Carve Out Business
                                                    -
has been conducted in the ordinary course and (ii) neither Parent nor any of its
                                               --
Affiliates (solely in connection with the Carve Out Business) has:

     (a)  suffered any Material Adverse Effect;

     (b)  made any change in method of accounting or accounting practice, other
than such changes required by U.S. GAAP;

     (c)  sold, transferred, leased, subleased, licensed or otherwise disposed
of any properties or assets, real, personal or mixed (including, without
limitation, leasehold interests and intangible property), other than the sale of
Inventory and other sales of non-material assets in each case in the ordinary
course consistent with past practice;

                                       18



     (d)  solely with respect to any Transferred Subsidiary, issued or sold any
capital stock, notes, bonds or other securities, or any option, warrant or other
right to acquire the same;

     (e)  solely with respect to any Transferred Subsidiary redeemed any of the
capital stock or declared, made or paid any dividends or distributions to the
holders of capital stock or otherwise;

     (f)  solely with respect to any Transferred Subsidiary amended or restated
its certificate of incorporation or bylaws;

     (g)  amended, terminated, cancelled or compromised any material claims of
or waived any other rights of substantial value to the Carve Out Business;

     (h)  made any express or deemed election or settled or compromised any
material liability with respect to Taxes other than in the ordinary course of
business consistent with past practice;

     (i)  failed to pay any creditor of the Carve Out Business any material
amount owed to such creditor when due (other than in connection with any good
faith commercial disputes relating to monies owed, services rendered or product
warranties or guarantees);

     (j)  mortgaged, pledged or subjected to Lien (other than Permitted Liens),
any Acquired Asset or asset of any Transferred Subsidiary;

     (k)  received any notice of termination of any Contract or suffered any
damage, destruction or loss (whether or not covered by insurance) which, in
either case, individually or in the aggregate, has had, or would reasonably be
expected to have or result in, a Material Adverse Effect;

     (l)  made any change in the rate of compensation, commission, bonus or

other direct or indirect remuneration payable, or paid or agreed or orally
promised to pay, conditionally or otherwise, any bonus, incentive, retention or
other compensation, retirement, welfare, fringe or severance benefit or vacation
pay, to or in respect of any, officer, Employee, salesman, distributor, broker
or agent of Parent or any of its Affiliates relating to the Carve Out Business,
or entered into or amended any employment, severance or similar Contract with
any such Person, except (A) in the ordinary course and consistent with past
                         -
practice, (B) as may be required to satisfy contractual obligations existing as
           -
of the date hereof (a full and complete description of which is provided in
Section 3.9(l) of the Parent Disclosure Letter), (C) as set forth in the Human
                                                  -
Resources Agreement, or (D) to satisfy the requirements of Applicable Law,
                         -
unless any such action has the effect of reducing the aggregate liabilities of
Parent and its Affiliates with respect

                                       19



to any such payments, benefits, agreements or arrangements, in each case to the
extent such Person is participating in the conduct of the Carve Out Business;

     (m)  had any actual or, to the Knowledge of Parent, threatened employee
strikes, work stoppages, slowdowns or lockouts, or had any materially adverse
change in its relations with its employees, agents, customers or suppliers
(taking each group as a whole);

     (n)  suffered any material or recurring power shortages at any of the
Mills;

     (o)  instituted, settled or agreed to settle any litigation, action or
proceeding before any Governmental Entity relating to the Carve Out Business or
the Acquired Assets, other than in the ordinary course of business but in no
event for an amount in excess of $250,000;

     (p)  failed to maintain Inventory levels in the ordinary course of business
consistent with past practice or made any purchase commitment other than in the
ordinary course of business consistent with past practice;

     (q) changed its methods and guidelines for allocating pulp or paper
production orders among any of its mills; or

     (r)  agreed, whether in writing or otherwise, to take any of the actions
specified in this Section 3.9, except as expressly contemplated by this
Agreement and the Ancillary Documents.

     3.10 No Undisclosed Liabilities. There are no liabilities arising out of or
          --------------------------
relating to the Carve Out Business or the Acquired Assets, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due, except (i) as set forth in Section 3.10 of the Parent Disclosure Letter,
             -
(ii) as and to the extent disclosed or reserved against in the audited balance
 --
sheet as of December 30, 2000 included in the Financial Statements (including
the notes thereto) and (iii) for liabilities and obligations that (A) were
                        ---                                        -
incurred after the date of such balance sheet in the ordinary course of business
consistent with past practice and (B) individually and in the aggregate have not
                                   -
had or resulted in, and would not reasonably be expected to have or result in, a
Material Adverse Effect.

     3.11 Real Property.
          -------------

     (a)  Fee Properties. One of the Sellers or the Transferred Subsidiaries is
          --------------
or prior to the Closing will be the owner of good, marketable and insurable fee
title to the land described in Section 3.11(a) of the Parent Disclosure Letter
and to all buildings, structures and other improvements (which term, as used in
this Agreement, shall include fixtures constituting real property) located
thereon (collectively, "Owned Real Property")
                        -------------------

                                       20



free and clear of all Title Defects except for the Permitted Real Property
Exceptions. The Owned Real Property constitutes all of the real property owned
by Parent or any of its Affiliates on the date hereof that primarily relates to
or is used in or held for use in connection with the Carve Out Business.

     (b) [Intentionally Omitted].
         -----------------------

     (c) Leased Properties. Section 3.11(c) of the Parent Disclosure Letter is a
         -----------------
true and complete (except with respect to easements) list of all Contracts under
which Parent or any of its Affiliates uses or occupies or has the right to use
or occupy, now or in the future, any real property that primarily relates to or
is used in or held for use in connection with the Carve Out Business (such
Contracts, the "Real Property Leases", the land, buildings, and other
                --------------------
improvements covered by the Real Property Leases being herein called the "Leased
                                                                          ------
Real Property"). Except for the Permitted Real Property Exceptions, Parent or
- -------------
one of its Affiliates, as the case may be, have good and valid title to the
leasehold estates under, and good and valid interest in, each Real Property
Lease free and clear of all Title Defects. Except for the Permitted Real
Property Exceptions, there is no underlying mortgage, deed of trust, lease,
grant of term or other estate or interest affecting any Leased Real Property
which is superior to the interest of Parent or of its Affiliates as tenant under
the applicable Real Property Lease and the Real Property Leases will not be
subordinate to any future mortgage, deed of trust, lease, grant of term or other
estate affecting the Leased Real Property.

     (d) Entire Premises. All of the land, buildings, structures and other
         ---------------
improvements which primarily relate to or are used in or are held for use
primarily in connection with the Carve Out Business are included in the Owned
Real Property and the Leased Real Property. The Owned Real Property and the
Leased Real Property are hereinafter collectively referred to as the "Real
                                                                      ----
Property".
- --------

     (e) No Options. Except as set forth in Section 3.11(e) of the Parent
         ----------
Disclosure Letter (all of which exceptions are Permitted Real Property
Exceptions), neither Parent nor any of its Affiliates owns, holds or is
obligated under or a party to, any option, right of first refusal or other
contractual right to purchase, acquire, sell or dispose of the Real Property or
any portion thereof or interest therein.

     (f) Real Property Permits. All material certificates of occupancy, permits,
         ---------------------
licenses, franchises, approvals and authorizations (collectively, the "Real
                                                                       ----
Property Permits") of all Governmental Entities having jurisdiction over the
- ----------------
Real Property (other than with respect to the environmental matters described in
Section 3.16 and other than any required State of Wisconsin or Federal permit
required for the pipeline running under the Wisconsin River from Nepco Lake to
the Port Edwards Mill) required to have been issued to Seller or Transferred
Subsidiaries to enable the Real Property to be lawfully occupied and used for
all of the purposes for which they are currently occupied and used

                                       21



have been lawfully issued and are, as of the date hereof, in full force and
effect. Neither Parent nor any of its Affiliates has received or been informed
by a third party of the receipt by it of any notice from any Governmental Entity
having jurisdiction over the Real Property threatening a suspension, revocation,
modification or cancellation of any Real Property Permit and, to Parent's
Knowledge, there is no basis for the issuance of any such notice or the taking
of any such action.

     (g) Condemnation. Except as set forth in Section 3.11(g) of the Parent
         ------------
Disclosure Letter, none of the Sellers or Transferred Subsidiaries has received
notice or has Knowledge of any pending, threatened or contemplated condemnation
proceeding affecting the Real Property or any part thereof or of any sale or
other disposition of the Real Property or any portion thereof in lieu of
condemnation.

     (h) Real Property Taxes. Except for Permitted Real Property Exceptions,
         -------------------
each of the parcels included in the Real Property is assessed for real estate
tax purposes as a wholly independent tax lot, separate from any adjoining land
or improvements not constituting a part of such parcel.

     (i) Survey. Except for Permitted Real Property Exceptions, there are
         ------
neither any encroachments upon any of the parcels comprising each of the
Woodland Mill and each NPI Mill nor any other facts or conditions affecting any
such parcel that an accurate survey or careful physical inspection thereof would
reveal. Except for Permitted Real Property Exceptions, no portion of any
improvement located on the Real Property encroaches upon any property not
included within the Real Property or upon the area of any easement affecting the
Real Property.

     3.12 Intellectual Property.
          ---------------------

     (a)  Owned Intellectual Property. All Intellectual Property owned by Parent
          ---------------------------
or any of its Affiliates and used or held for use in the conduct of the Carve
Out Business, including the Acquired Intellectual Property (collectively, the
"Owned Intellectual Property") is listed in Section 3.12(a) of the Parent
 ---------------------------
Disclosure Letter if it is (i) material to the conduct of the Carve Out Business
                            -
and (ii) constitutes an issued patent or pending patent application, a trademark
     --
registration, pending trademark application or common-law trademark, a
registered copyright or a registered domain name. With respect to any registered
or issued patents, copyrights or trademarks, or any pending applications
therefor that are listed on Section 3.12(a) of the Parent Disclosure Letter,
such list indicates the jurisdiction in which they were issued or registered or
await issuance or registration, registration or application, as the case may be,
and any registration or identification number assigned thereto. All due and owed
maintenance fees and renewal filings with respect to each such registration,
issuance and application have been paid or filed, as the case may be, except
where the failure to make the payment of such fees or such filings would not,
individually or in the aggregate, reasonably be expected to have a

                                       22



Material Adverse Effect. Except as disclosed in Section 3.12(a) of the Parent
Disclosure Letter or as set forth in a Listed Contract, neither Parent nor any
of its Affiliates has granted any license or assigned any rights to a third
party with respect to any Acquired Intellectual Property and has not granted any
license or assigned any rights with respect to any Owned Intellectual Property
that will be inconsistent with the rights granted under the License Agreement.
Except as listed in Section 3.12(a) of the Parent Disclosure Letter, there are
no present or future royalty or other payment obligations arising from the use
of the Acquired Intellectual Property.

     (b)  Licensed Intellectual Property. Section 3.12(b) of the Parent
          ------------------------------
Disclosure Letter sets forth a complete and correct list of all Contracts (other
than shrink-wrap licenses for off-the-shelf commercially available Computer
Software) pursuant to which a Person permits Parent or any of its Affiliates to
use any Intellectual Property that is material to the conduct of the Carve Out
Business (collectively, the "Intellectual Property Licenses"). To the Knowledge
                             -------------------------------
of Parent, none of the Intellectual Property Licenses is subject to any
outstanding order, ruling, decree, judgment or stipulation by or with any
Governmental Authority.

     (c)  Infringement. Except as disclosed in Section 3.12(c) of the Parent
          ------------
Disclosure Letter, the conduct of the Carve Out Business does not infringe or
otherwise conflict with any rights of any Person in respect of any Intellectual
Property, except for any infringement or conflict that, together with any other
such conflict or infringement, has not had and would not reasonably be expected
to have, a Material Adverse Effect. Except as disclosed in Section 3.12(c) of
the Parent Disclosure Letter, no claim or demand of any Person has been made nor
is there any proceeding that is pending, or to Parent's Knowledge, threatened,
nor, to Parent's Knowledge, is there a reasonable basis therefor, which (i)
                                                                         -
challenges the rights of Parent or any of its Affiliates in respect of any Owned
Intellectual Property or Intellectual Property License or (ii) asserts that
                                                           --
Parent or any of its Affiliates is infringing any Person's Intellectual Property
rights in the conduct of the Carve Out Business or is required to pay any
royalty, license fee, charge or other amount with regard to its use of any
Intellectual Property in the conduct of the Carve Out Business. There is no
material contractual restriction or limitation pursuant to any orders, decisions
or decrees of any Governmental Authority on the right of Parent and its
Affiliates to use the names and marks that constitute Acquired Intellectual
Property in the conduct of the Carve Out Business. To the Knowledge of Parent,
no Acquired Intellectual Property is being infringed by any other Person, other
than any infringement that, together with any other such infringement, has not
had and would not reasonably be expected to have, a Material Adverse Effect.

     3.13 Insurance. Section 3.13 of the Parent Disclosure Letter contains a
          ---------
complete and correct list and summary description of all insurance policies
maintained by or with respect to the Carve Out Business or the Acquired Assets.
Such policies are in full force and effect, and all premiums due thereon have
been paid. Parent, NPI, G-P Resins and

                                       23



the Transferred Subsidiaries have complied in all material respects with the
terms and provisions of such policies. Neither Parent nor any of its Affiliates
has received or been informed by a third party of the receipt by it of any
notice from any insurance company or fire rating and other similar board or
organization having jurisdiction over the Real Property threatening a
suspension, revocation, modification or cancellation of any insurance policies
maintained by or with respect to the Real Property and, to Parent's Knowledge,
there is no basis for the issuance of any such notice or the taking of any such
action in each case that would reasonably be expected to have a Material Adverse
Effect.

     3.14 Contracts.
          ---------

     (a)   Except for any Contract listed in Sections 3.11(c), 3.12(b), 3.14(a)
or 3.15 of the Parent Disclosure Letter or in a schedule to the Human Resources
Agreement (collectively, "Listed Contracts"), no Acquired Asset or asset of the
                          ----------------
Transferred Subsidiaries is bound or affected by, and none of any Transferred
Subsidiary, Parent or any of its other Affiliates (solely in connection with the
Carve Out Business) is a party to or bound by, any Contract that is:

           (i)   a Contract for the employment of any Person with an annual base
     salary in excess of $100,000 or any consulting agreement with any Person
     involving annual payments in excess of $100,000;

           (ii)  a collective bargaining agreement or any other material
     Contract with any labor union;

           (iii) a written agreement for the supply of power to any of the
     Mills;

           (iv)  other than letters of credit obtained in the ordinary course of
     business, an indenture, note, loan or credit agreement or other Contract
     relating to the borrowing of money or to the direct or indirect guarantee
     or assumption of the obligations of any other Person for borrowed money in
     excess of $100,000, including any arrangement which has the economic effect
     although not the legal form of such a guarantee;

           (v)   a mortgage, pledge, security agreement, deed of trust or other
     document granting any Liens (including Liens upon properties acquired under
     conditional sales, capital lease or other title retention or security
     devices) on any of the Acquired Assets or any assets of a Transferred
     Subsidiary, other than Permitted Liens;

           (vi)  a power of attorney (other than powers of attorney given in the
     ordinary course of business);

                                       24



           (vii)  a covenant not to compete or similar agreement prohibiting or
     materially restricting the ability of any Transferred Subsidiary or any
     Person operating the Carve Out Business from conducting or engaging in any
     business or operating in any geographical area, other than (A) any
                                                                 -
     distribution (including independent sales representative) agreement listed
     on Section 3.14(a) of the Parent Disclosure Letter or (B) any supplier or
                                                            -
     customer agreement relating to non-disclosure of confidential information
     of the supplier or customer party thereto;

           (viii) a Computer Hardware or Computer Software maintenance or
     outsourcing agreement relating to information technology systems used in
     the Carve Out Business;

           (ix)   a lease or similar agreement under which (A) Parent or any of
                                                            -
     its Affiliates is lessee of, or holds or uses, any machinery, equipment,
     vehicle or other tangible personal property owned by any third Person for
     an annual payment in excess of $200,000 or (B) Parent or any of its
                                                 -
     Affiliates is a lessor of, or makes available for use by any third Person,
     any tangible personal property owned (including ownership for Tax purposes)
     by Parent or such Affiliate having a fair market value in excess of
     $200,000;

           (x)    other than any of the following entered into in the ordinary
     course of business between the date of this Agreement and the Closing Date,
     a Contract (including purchase orders) involving an obligation to purchase
     products or services for payment by Parent or one of its Affiliates of more
     than $500,000 annually (unless terminable by Parent or such Affiliate, as
     the case may be, without payment or penalty of not more than $100,000 upon
     no more than 90 days' notice);

           (xi)   a joint venture, partnership or similar Contract involving a
     sharing of profits or expenses (including but not limited to a joint
     research and development or joint marketing Contract);

           (xii)  a stock purchase agreement, asset purchase agreement or other
     acquisition or divestiture agreement, including, but not limited to, any
     agreement relating to the acquisition, sale, lease or disposal of any
     material asset constituting part of the Carve Out Business or Acquired
     Assets or assets of any Transferred Subsidiary (other than sales of
     inventory in the ordinary course of business) or involving continuing
     indemnity or other obligations; or

           (xiii) a Contract not otherwise identified above that is material to
     the Carve Out Business, taken as a whole.

                                       25



     All Listed Contracts that constitute Mill Contracts are indicated as such
in the Parent Disclosure Letter.

     (b)   Except as disclosed in Section 3.14(b) of the Parent Disclosure
Letter or in a schedule to the Human Resources Agreement, (i) each material
                                                           -
Listed Contract is in full force and effect and enforceable against each party
thereto in accordance with its terms (except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting the enforcement of creditors'
rights generally, and except that the availability of the remedy of specific
performances or other equitable relief is subject to the discretion of the court
before which any proceeding therefor may be brought), (ii) neither Parent nor
                                                       --
any of its Affiliates is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect under any material
Listed Contract, (iii) to the Knowledge of Parent, as of the date of this
                  ---
Agreement, none of the other parties to any such material Listed Contract is
(with or without the lapse of time or the giving of notice, or both) in breach
or default in any material respect thereunder, and (iv) neither Parent nor any
                                                    --
to terminate any material Listed Contract.Complete and correct copies of all
Listed Contracts, including all amendmentsand supplements thereto (and a
complete and correct description of all oralListed Contracts), have been made
available by Parent to Purchaser at the Millsor at the data room maintained by
Parent at its Atlanta headquarters.

     3.15 Employee Benefits and Related Matters.
          -------------------------------------

     (a)   Employee Benefit Plans.
           ----------------------

           (i)   Section 3.15(a)(i) of the Parent Disclosure Letter sets forth a
     true and complete list of each Plan. Section 3.15(a)(i) of the Parent
     Disclosure Letter separately identifies each Plan that is sponsored or
     maintained by NPI (a "NPI Stand-Alone Plan").
                           --------------------

           (ii)  With respect to each such Plan, Parent has provided or made
     available to Purchaser complete and correct copies of: all Plans; all trust
     agreements, insurance contracts or other funding arrangements, if any; the
     most recent actuarial and trust reports, if applicable; the most recent
     Forms 5500 and all schedules thereto, if applicable; the most recent IRS
     determination letter, if applicable; current summary plan descriptions; all
     material communications received from or sent to the IRS, the Pension
     Benefit Guaranty Corporation or the Department of Labor (including a
     written description of any material oral communication to the extent
     relevant to the administration of Purchaser's employee benefit plans to be
     established as set forth in the Human Resources Agreement, such information
     to be provided from time to time prior to Closing); an actuarial study of
     any post-employment life or medical benefits provided under any such Plan,
     if any; statements or other communications regarding withdrawal

                                       26



     or other multiemployer plan liabilities, if any; and all amendments and
     modifications to any such document.

          (iii) Except as set forth in Section 3.15(a)(iii) of the Parent
     Disclosure Letter or as expressly provided for in the Human Resources
     Agreement, neither Parent nor any Affiliate of Parent has communicated to
     any Employee any intention or commitment to modify any Plan or to establish
     or implement any other employee or retiree benefit or compensation
     arrangement.

     (b)  Qualification. Each Plan intended to be qualified under section 401(a)
          -------------
of the Code, and the trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and to the Knowledge of the Parent nothing has
occurred since the date of such determination letter that could adversely affect
such qualification or tax-exempt status.

     (c)  Compliance; Liability.
          ---------------------

          (i)   Except as set forth in Section 3.15(c)(i) of the Parent
     Disclosure Letter, no Plan is subject to section 412 of the Code or section
      302 or 302 or Title IV of ERISA.

          (ii)  Except as set forth in Section 3.15(c)(ii) of the Parent
     Disclosure Letter, no material liability has been or is expected to be
     incurred by Parent or any Affiliate of Parent or the Carve Out Business
     (either directly or indirectly, including as a result of an indemnification
     obligation) under or pursuant to Title I or IV of ERISA or the penalty,
     excise tax or joint and several liability provisions of the Code relating
     to employee benefit plans that could, following the Closing, become or
     remain a liability of the Carve Out Business or become a liability of
     Purchaser or any of its Affiliates or of any employee benefit plan
     established or contributed to by Purchaser and, to the Knowledge of Parent,
     no event, transaction or condition has occurred or exists that could result
     in any such liability to the Carve Out Business or, following the Closing,
     Purchaser.

          (iii) Except as set forth in Section 3.15(c)(iii) of the Parent
     Disclosure Letter, each of the Plans has been operated and administered in
     all material respects in compliance with all Applicable Laws, except for
     any failure so to comply that, individually or together with all other such
     failures, (A) has not and - will not result in a material liability or
                -
     obligation on the part of the Carve Out Business, or, following the
     Closing, Purchaser or any of its Affiliates, and (B) has not had or
                                                       -
     resulted in, and will - not have or result in, a Material Adverse Effect.
     Except as set forth in Section 3.15(c)(iii) of the Parent Disclosure
     Letter, there are no material pending or, to the Knowledge of Parent,
     threatened claims by or on

                                       27



     behalf of any of the Plans, by any Employee or otherwise involving any such
     Plan or the assets of any Plan (other than routine claims for benefits).

          (iv)  Except as set forth in Section 3.15(c)(iv) of the Parent
     disclosure Letter, no condition exists and no event has occurred with
     respect to any Plan that is a "multiemployer plan" within the meaning of
     section 4001(a)(3) of ERISA (a "Multiemployer Plan") that presents a
                                     ------------------
     material risk of a complete or partial withdrawal under subtitle E of Title
     IV of ERISA. To the Knowledge of Parent, no Multiemployer Plan is in
     "reorganization" or "insolvent."

          (v)   All contributions required to have been made by Parent or any
     Affiliate of Parent to any Plan under the terms of any such Plan or
     pursuant to any applicable collective bargaining agreement or applicable
     law have been made within the time prescribed by any such Plan, agreement
     or Applicable Law.

          (vi)  No Employee is or may become entitled to post-employment

     benefits of any kind by reason of employment in the Carve Out Business,
     including, without limitation, death or medical benefits (whether or not
     insured), other than (A) coverage provided pursuant to the terms of any
                           -
     Plan specifically identified as providing such coverage in Section
     3.15(c)(vi) of the Parent Disclosure Letter or mandated by section 4980B of
     the Code, or (B) retirement benefits payable under any Plan qualified under
                   -
     section 401(a) of the Code.

          (vii) Except as otherwise expressly set forth in the Human Resources
     Agreement, the consummation of the transactions contemplated by this
     Agreement or the Ancillary Documents will not result in an increase in the
     amount of compensation or benefits or the acceleration of the vesting or
     timing of payment of any compensation or benefits payable to or in respect
     of any Employee.

     3.16 Environmental Matters. Except as disclosed in Section 3.16 of the
          ---------------------
Parent Disclosure Letter:

     (a)  Parent and its Affiliates are in material compliance with all
applicable Environmental Laws pertaining to the Real Property and the Carve Out
Business. No material violation by Parent or any of its Affiliates is being
alleged or, to the Knowledge of Parent, threatened, of any applicable
Environmental Law relating to the Real Property or the Carve Out Business or
with respect to any off-site disposal location.

     (b)  Parent and its Affiliates are in possession of, and in material
compliance with, all Governmental Authorizations relating to the Real Property
and the Carve Out Business that are required pursuant to applicable
Environmental Laws ("Environmental
                     -------------

                                       28



Permits"). A list of each Environmental Permit relating to the Carve Out
- -------
Business or to the Real Property is contained on Section 3.16(b) of the Parent
Disclosure Letter.

     (c) With respect to the Carve Out Business, except as has not had and would
not reasonably be expected to have a Material Adverse Effect, neither Parent nor
any of its Affiliates, nor to Parent's Knowledge, any other Person has caused or
taken any action that will result in any liability or obligation on the part of
Parent or any of its Affiliates relating to (i) the environmental conditions on,
                                             -
under, or about the Real Property or any off-site disposal location, including
without limitation, the air, soil and groundwater conditions, or (ii) the past
                                                                  --
or present use, management, handling, transport, treatment, generation, storage,
disposal, discharge, emission, Release or threatened Release of any Materials of
Environmental Concern at the Real Property or any off-site disposal location.

     (d) There are no material Environmental Claims pending, or to the Knowledge
of Parent, threatened, relating to the Real Property or the Carve Out Business,
and to the Knowledge of Parent, there are no facts, circumstances, conditions or
occurrences that could reasonably form the basis of any material Environmental
Claim, including with respect to any off-site disposal location used by the
Carve Out Business.

     (e) No material work, repair, construction or capital expenditure is
required or planned within the next two years in respect of the Real Property or
the Carve Out Business pursuant to, or to comply with, any Environmental Law,
nor has Parent or any of its Affiliates received notice of any such requirement.

     (f) The Parent and its Affiliates have made available to Purchaser all
material environmental site assessments, compliance audits, investigation or
remediation studies, notices of violation and allegations of noncompliance or
liability in its possession, custody or control relating to the Real Property or
the Carve Out Business or any off-site disposal location.

     3.17 Taxes. Except as set forth in Section 3.17 of the Parent Disclosure
          -----
Letter:

     (a) (i) None of the assets of the Transferred Subsidiaries or the Acquired
          -
Assets is "tax exempt use property" within the meaning of Section 168(h) of the
Code, (ii) no liens for material Taxes have been filed with respect to the
       --
assets of any of the Transferred Subsidiaries or the Acquired Assets, and (iii)
                                                                           ---
no material claims for Taxes payable by any of the Transferred Subsidiaries have
been asserted or raised and, to the Knowledge of Parent, no circumstances exist
to form the basis for asserting or raising such claims.

     (b) There have been properly completed and filed on a timely basis and in
correct form all material Tax Returns required to be filed by (or on behalf of)
the

                                       29



Transferred Subsidiaries or with respect to the Acquired Assets required to be
filed on or prior to the Closing Date, and the foregoing Tax Returns are true,
complete and correct in all material respects.

     (c) All material Taxes required to be paid by (or on behalf of) the
Transferred Subsidiaries or imposed with respect to the Acquired Assets which
were due and payable on or prior to the Closing Date have been duly and timely
paid or reserved for in accordance with GAAP, and all applicable material Tax
laws have been complied with on or prior to the Closing Date.

     (d) There is no audit, examination, investigation, appeal, litigation or
other proceeding currently pending with respect to Taxes payable by any of the
Transferred Subsidiaries or relating to the Acquired Assets which could
reasonably be expected to result in a material Tax liability.

     (e) All material Taxes required by law to be withheld or collected by (or
on behalf of) the Transferred Subsidiaries or with respect to the Acquired
Assets have been duly withheld or collected and have been timely paid over to
the proper Taxing authorities.

     (f) (i) None of the Transferred Subsidiaries is a party to or bound by or
          -
has an obligation under any Tax sharing, allocation, indemnification or similar
agreement and (ii) none of the Transferred Subsidiaries is or has been a member
               --
of any consolidated, combined or unitary group for purposes of filing Tax
Returns or paying Taxes and would be held liable for Taxes of any Person (other
than Parent and its Affiliates) under Treasury Regulation Section 1.1502-6 or
any similar provision of state, local or foreign law or as a transferee or
successor, by contract, or otherwise.

     (g) Neither Parent nor any of the Transferred Subsidiaries is a party to
any joint venture, partnership, or other arrangement which relates to the Carve
Out Business.

     (h) No written document or comparable consent extending or waiving, or
having the effect of extending or waiving, the application of the statute of
limitations with respect to any Taxes payable by any of the Transferred
Subsidiaries or relating to the Acquired Assets is currently outstanding,
pending or otherwise in effect with the IRS or any other taxing authority, and
no written power of attorney with respect to any such Taxes has been filed or
entered into with any taxing authority.

     (i) Section 3.17(i) of the Parent Disclosure Letter contains a list of
states, territories and jurisdictions in which material income, franchise,
sales, use, employment or payroll Tax Returns with respect to the Transferred
Subsidiaries or the Acquired Assets were filed for the past three years and
true, complete and correct copies of all such Tax Returns filed within the past
three years have been made available to Purchaser.

                                       30



     (j) There are no outstanding adjustments for Tax purposes applicable to any
of the Transferred Subsidiaries as a result of changes in methods of accounting.

     (k) Purchaser will not have a carryover basis in the Acquired Assets under
Section 1.338-8 of the Treasury Regulations.

     (l) Neither any of the Transferred Subsidiaries nor any Person on behalf of
any of the Transferred Subsidiaries has entered into or will enter into any
agreement or consent pursuant to Section 341(f) of the Code.

     (m) Each of the Transferred Canadian Subsidiaries (i) is classified as a
                                                        -
corporation for U.S. federal income - tax purposes and (ii) is not a corporation
                                                        --
for which an election described in Section 1504(d) of the Code has -- been made.

     3.18 Labor Matters. Except as set forth in Section 3.18 of the Parent
          -------------
Disclosure Letter:

     (a) Section 3.18(a) of the Parent Disclosure Letter sets forth a list of
each Other Employee (as defined in the Human Resources Agreement).

     (b) As of the date hereof, there are no strikes or lockouts or material
work stoppages or slowdowns pending or, to the Knowledge of Parent, threatened
against or involving employees of the Mills or the Acquired Assets.

     (c) As of the date hereof, there are no formal or informal complaints,
charges, claims or grievances against Parent or one of its Affiliates pending
or, to the Knowledge of Parent, threatened to be brought or filed with any
Governmental Entity, arbitrator or court based on or arising out of the
employment by Parent or one of its Affiliates of any employee of the Mills,
except for those which, individually or in the aggregate, has not had and would
not reasonably be expected to have a Material Adverse Effect.

     (d) Parent and each of its Affiliates is in compliance with all laws,
regulations, rules and orders of all Governmental Entities relating to the
employment of labor at the Mills or relating to the Transferring Employees,
including all such laws, regulations, rules and orders relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health, worker
notification requirements, immigration, workers' compensation, layoffs, and the
collection and payment of withholding Taxes and similar Taxes, except where the
failure to be in compliance, individually or in the aggregate, has not had and
would not reasonably be expected to have a Material Adverse Effect.

     3.19 Brokers. Except as disclosed in Section 3.19 of the Parent Disclosure
          -------
Letter, no finder, broker, agent or other intermediary is entitled to any fee or
commission or other payment from Parent or its Affiliates in connection with
this Agreement or the transactions contemplated hereby.

                                       31



     3.20 Affiliate Transactions.
          ----------------------

     (a) Section 3.20(a) of the Parent Disclosure Letter lists all material
services, and technology provided by or through Parent or any of its Affiliates
in the conduct of the Carve Out Business to NPI, G-P Resins or any Transferred
Subsidiary or to the operations conducted at the Mills.

     (b) Section 3.20(b) of the Parent Disclosure Letter sets forth a complete
and correct list of (i) any transfers of personnel between Parent or any of its
                     -
Affiliates, on the one hand, and any of the Mills, on the other hand from and
after January 1, 2000 and (ii) to the extent not described in Section 3.20(a),
                           --
all Contracts between Parent or any of its Affiliates, on the one hand, and any
of the Mills, on the other hand, in effect from and after January 1, 2000 (all
of the foregoing transactions described in Sections 3.20(a) and 3.20(b),
collectively, "Affiliated Party Transactions").
               -----------------------------

                                   ARTICLE IV
                   Representations and Warranties of Purchaser
                   -------------------------------------------

     As of the date hereof and as of the Closing Date, Purchaser hereby
represents and warrants to Parent as follows:

     4.1 Organization, Standing and Power.
         --------------------------------

     (a) Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the
requisite corporate power and authority to carry on its business as now being
conducted, to execute and deliver this Agreement and each of the Ancillary
Documents to which it is or will be a party, to perform fully its obligations
under this Agreement and the Ancillary Documents, and to consummate the
transactions contemplated hereby and thereby.

     (b) Purchaser is not in violation of any of the provisions of its
certificate of incorporation or by-laws.

     4.2 Authority. The execution and delivery of this Agreement and the
         ---------
Ancillary Documents and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Purchaser. This Agreement and the Human Resources Agreement have been
duly executed and delivered by Purchaser and each constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
Each Ancillary Document to be entered into by Purchaser will be duly executed
and delivered at the Closing and when so executed and delivered will constitute,
its legal, valid and binding obligation, enforceable against it in accordance
with its terms.

                                       32



     4.3 No Conflicts.
         ------------

     (a) The execution, delivery and performance of this Agreement and the
Ancillary Documents by Purchaser, and the consummation by Purchaser of the
transactions contemplated hereby and thereby do not and will not conflict with,
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or result in
the creation of any Lien (other than a Permitted Lien) upon any of Purchaser's
assets under, any provision of (i) the certificate of incorporation or bylaws of
                                -
Purchaser, (ii) subject to the filings and other matters referred to in the
            --
following paragraph (b), any law, judgment, order, decree, statute, ordinance,
rule or regulation applicable to Purchaser, or (iii) other than as set forth in
                                                ---
Section 4.3(a) of the Purchaser Disclosure Letter, any Contract to which
Purchaser is a party or by which any of Purchaser's assets are bound or
affected, except in the case of clause (ii) and clause (iii), for any such
conflict, violation, default or other consequence that would not, individually
or in the aggregate, reasonably be expected to materially impair the ability of
Purchaser to perform its obligations under this Agreement.

     (b) No Governmental Approval is required to be obtained or made by
Purchaser in connection with the execution and delivery of this Agreement and
the Ancillary Documents or the consummation of the transactions contemplated
hereby and thereby, except for (i) compliance with and filings under the HSR Act
                                -
and any other applicable pre-merger notification law, whether U.S. or foreign,
and (ii) those the failure of which to obtain or make, individually or in the
     --
aggregate, would not materially impair the ability of Purchaser to perform its
obligations under this Agreement.

     4.4 Financing Commitment. Purchaser has delivered to Parent a true and
         --------------------
correct copy of the commitment letter, dated June 1, 2001, obtained by Purchaser
in respect of the debt financing of the transactions contemplated by this
Agreement (the "Financing Commitment"). Assuming that the financing contemplated
                --------------------
by the Financing Commitment is consummated in accordance with the terms thereof,
the funds to be obtained thereunder by Purchaser, together with other funds of
Purchaser, will provide sufficient funds to pay the Purchase Price. As of the
date hereof, the Financing Commitment is in full force and effect to the extent
of the terms thereof.

     4.5 Litigation. As of the date hereof, there is no claim, action, suit
         ----------
proceeding or governmental investigation pending or, to the Knowledge of
Purchaser, threatened against Purchaser, by or before any Governmental Entity
which would materially impair the ability of Purchaser to perform, or prohibit
Purchaser from performing, its obligations under this Agreement.

     4.6 Investment Intent. Purchaser is acquiring the Shares solely for
         -----------------
investment for its own account and not with the view to, or for resale in
connection with, any

                                       33



distribution thereof. Purchaser understands that the Shares have not been
registered under the Securities Act or any state or foreign securities laws by
reason of specified exemptions therefrom that depend upon, among other things,
the bonafide nature of its investment intent as expressed herein and as
    --------
explicitly acknowledged hereby and that under such laws and applicable
regulations such securities may not be resold without registration under the
Securities Act or under applicable state or foreign law unless an applicable
exemption from registration is available.

     4.7 Accredited Investor; Investment Representations. Purchaser is an
         -----------------------------------------------
"accredited investor" within the meaning of Rule 501 of Regulation D under the
Securities Act. Purchaser, by reason of its business and financial experience in
business, has such knowledge, sophistication and experience in business and
financial matters as to be capable of evaluating the merits and risks of the
purchase of the Shares, is able to bear the economic risk of such investment in
the Transferred Subsidiaries, and is able to afford a complete loss of such
investment.

     4.8 Brokers. Except as disclosed in Section 4.8 of the Purchaser Disclosure
         -------
Letter, no finder, broker, agent or other intermediary is entitled to any fee or
commission or other payment from Purchaser or its Affiliates in connection with
this Agreement or the transactions contemplated hereby.

                                    ARTICLE V
                                    Covenants
                                    ---------

     5.1 Conduct of Carve Out Business. During the period from the date of this
         -----------------------------
Agreement to and including the Closing Date, except as otherwise required by
this Agreement or any Ancillary Document or as set forth on Section 5.1 of the
Parent Disclosure Letter:

     (a) Each of Sellers will, and will cause its Affiliates to (except with the
prior written consent of Purchaser, such consent not to be unreasonably withheld
or delayed):

          (i) inform Purchaser promptly of the occurrence of any event of which
     Parent obtains Knowledge which occurs prior to the Closing and which has
     had or would, based on the Knowledge of Parent at the time, reasonably be
     expected to have a Material Adverse Effect;

          (ii) maintain, preserve and insure the Acquired Assets in the ordinary
     course of business and consistent with past practice;

          (iii) pay accounts payable and other obligations of the Carve Out
     Business in the ordinary course of business consistent with prior practice
     and maintain current practices with respect to the collection of accounts
     receivable of the Carve Out Business;

                                       34



          (iv) perform in the ordinary cause of business and in all material
     respects all of its obligations under all Contracts and other orders,
     documents and instruments relating to or affecting the Carve Out Business,
     and comply in all material respects with all Applicable Laws with respect
     to the Carve Out Business or the Acquired Assets;

          (v) conduct all Tax affairs relating to the Transferred Subsidiaries
     and the Acquired Assets in good faith, in the ordinary course of business
     and in substantially the same manner as such affairs would have been
     conducted if this Agreement had not been entered into; and

          (vi) otherwise carry on the Carve Out Business in the ordinary course
     of business, in substantially the same manner as heretofore conducted,
     including preserving intact the present business organization, keeping
     available the services of the significant employees and sales agents, and
     preserving their respective relationships with material customers,
     suppliers, distributors and others having business dealings with Parent,
     NPI, G-P Resins or any of their Affiliates relating to the Carve Out
     Business.

     (b) Each of Sellers will not and will cause its Affiliates not to (without
the prior written consent of Purchaser, such consent not to be unreasonably
withheld or delayed):

          (i) make any capital expenditure on or lease any item of capital
     equipment for use in the Carve Out Business in excess of $500,000, in the
     case of any such capital expenditure or lease, or $5,000,000 in the case of
     all such capital expenditures and leases, in each case other than pursuant
     to the capital expenditure budget for the Mills for 2001 that has been
     provided to Purchaser;

          (ii) modify any Listed Contract or enter into or assume any Contract
     that would constitute a Listed Contract if it existed on the date hereof or
     that involves an expenditure of more than $1,000,000 per annum (or a series
     of related Contracts involving aggregate expenditures of more than $10
     million) or that is not cancelable without penalty on less than 90 days'
     notice or enter into or permit any material amendment, supplement, waiver
     or other modification in respect thereof, other than in the ordinary course
     of business and consistent with past practices;

          (iii) grant (or commit to grant) any options, stock appreciation
     rights, performance share awards or any other equity based awards to any
     Employee;

          (iv) sell, transfer or dispose of any of the Shares;

                                       35



          (v) make any material change in the selling, distribution, pricing,
     advertising or collection practices for the Carve Out Business, including,
     but not limited to, any special effort or program to sell or consign
     products to customers or to discount, factor or collect sooner than normal
     any accounts receivable;

          (vi) purchase, order or otherwise acquire Inventory for the Carve Out
     Business from any unit or Affiliate of Parent in excess of the reasonably
     forecast requirements of the Carve Out Business;

          (vii) make any bid for product to be shipped after the Closing that
     involves more than (i) 1,000 tons of copy paper, (ii) 200 tons of opaque
                         -                             --
     paper or (iii) 500 tons of offset paper, unless (in each case) the price
               ---
     quoted is at least 5% lower than the average transaction price in the two
     weeks preceding such bid;

          (viii) commit or agree to do any of the foregoing; or

          (ix) intentionally take or fail to take any action that would cause
     any of the representations and warranties set forth in Section 3.9 (other
     than clauses (a), (k), (m) or (n) thereof) to be untrue at any time prior
     to the Closing.

     5.2 Access to Information. Each of Sellers shall afford to Purchaser and
         ---------------------
its representatives reasonable access during normal business hours and upon
reasonable prior notice during the period prior to the Closing to all the
properties, books, Contracts, commitments and records relating to the Carve Out
Business and during such period shall furnish promptly to Purchaser any
information concerning the Carve Out Business as Purchaser may reasonably
request; provided, however, that no Seller is under any obligation to disclose
         --------  -------
to Purchaser (i) any information the disclosure of which is restricted by
              -
Contract or Applicable Law except in strict compliance with such Contract or
Applicable Law, (ii) any information as to which the attorney-client privilege
                 --
is available, until a mutually satisfactory agreement has been executed by
Purchaser and Parent or one of its Affiliates, as the case may be, (iii)
                                                                    ---
Employee medical records or (iv) personnel records of Employees who are not
                             --
Transferring Employees. Purchaser acknowledges that any information being
provided to it or its representatives by Sellers pursuant to or in connection
with this Agreement is subject to the terms of the Confidentiality Agreement,
which terms are incorporated herein by reference.

     5.3 Further Actions.
         ---------------

     (a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable (with a
target Closing of July 31, 2001) the transactions contemplated by this Agreement
and the Ancillary Documents and to

                                       36



cooperate with the other parties hereto in connection with the foregoing,
including using its reasonable efforts to (i) make all required regulatory
                                           -
filings and applications and obtain all Governmental Approvals, (ii) defend all
                                                                 --
lawsuits or other legal proceedings and contest and resist any action
challenging this Agreement or the consummation of the transactions contemplated
hereby (iii) cause to be lifted or rescinded any injunction or restraining order
        ---
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby. Without limiting the generality of the
foregoing, each of the parties hereto agrees to take any and all of the
following actions to the extent commercially reasonable and necessary to obtain
the approval of any Governmental Entity with jurisdiction over the enforcement
of any Applicable Laws regarding the transactions contemplated by this
Agreement: entering into negotiations; promptly providing information;
substantially complying with any second request for information pursuant to the
HSR Act; making proposals; or entering into and performing mutually satisfactory
agreements or submitting to judicial or administrative orders.

     (b) Parent and Purchaser will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or any other federal, state or
foreign antitrust or fair trade law. Notwithstanding anything to the contrary in
this Section 5.3, in connection with any such proceedings, neither Parent nor
Purchaser shall be required (i) to take any action that would reasonably be
                             -
expected to substantially impair the overall benefits expected, as of the date
hereof, to be realized from the consummation of the transactions contemplated by
this Agreement, or (ii) to agree to any restriction on the conduct of its
                    --
business, to make any material monetary expenditure, to commence or be a
plaintiff in any litigation or to offer or to grant any material accommodation
(financial or otherwise) to any third Person, including, without limitation, to
offer for sale of any part of the Acquired Assets or any of the other business
or assets of Parent, NPI, G-P Resins, Purchaser or their Affiliates to any
Person.

     (c) Parent, as promptly as practicable, will use all reasonable efforts to
obtain, or cause to be obtained, all Consents of any Persons in connection with
any Restricted Asset or otherwise that are needed in connection with the
execution and delivery of this Agreement and the Ancillary Documents and the
consummation of the transactions contemplated hereby and thereby.

     (d) Each of the parties hereto will, and will cause any of its Affiliates
to, coordinate and cooperate with the other parties in exchanging such
information and supplying such assistance as may be reasonably requested by such
party in connection with the filings and other actions contemplated by this
Section 5.3.

                                       37



     (e) The parties acknowledge that certain Listed Contracts do not constitute
Mill Contracts because they do not primarily relate to the business activities
at the Mills, yet the rights available under such Listed Contracts are important
to the post-Closing operations of Purchaser as well as Parent. Therefore, each
of the parties hereto will and will cause each of its Affiliates to use
commercially reasonable efforts to obtain prior to the Closing from the
counterparty to each Listed Contract set forth in Section 5.3(e) of the
Purchaser Disclosure Letter (each, a "Multi-Mill Contract" and collectively, the
                                      -------------------
"Multi-Mill Contracts") (i) a new separate Contract with Purchaser for the
 --------------------    -
portion of the goods or services purchased from or supplied to the Carve Out
Business under such Multi-Mill Contract and (ii) a new separate Contract with
                                             --
Parent or its Affiliate for the portion of the goods or services purchased from
or supplied to the continuing business of Parent and its Affiliates, in each
case upon terms and conditions (taking into account the apportionment of the
goods and services supplied or sold between Purchaser and Parent) substantially
similar to the existing Multi-Mill Contract or otherwise reasonably satisfactory
to Purchaser or Parent, as applicable.

     5.4 Information Technology.
         ----------------------

     (a) Creation and Establishment of the Purchaser IT Environment. Parent and
         ----------------------------------------------------------
its Affiliates will take all actions reasonably necessary to create and
establish for the benefit of Purchaser prior to the Closing Date an information
technology environment having the same functionality in all material respects as
the information technology environment used by Parent and its Affiliates in the
conduct of the Carve Out Business, including Computer Hardware (with the same
hardware platforms, adequately sized but not necessarily the same model number),
Computer Software (with databases and current and historical data (subject to
such redaction as (x) may be required by Applicable Law or (y) may be necessary
                   -                                        -
to remove information (i) that relates to operations of Parent, other than the
Carve Out Business, or (ii) that relates to the business activities of Parent
and its Affiliates that are the subject of the Supply and Distribution Agreement
or the Fiber Supply Agreement) and customer service call center (such
environment, excluding the Mill Technology, the "Purchaser IT Environment").
                                                 ------------------------
Parent shall support the Purchaser IT Environment to the extent set forth in the
IT Support Services Agreement. Except as provided in Sections 5.4(b) and 5.4(c)
below, the hardware platforms constituting part of the Purchaser IT Environment
shall be physically separate from, but connected to a common Direct Access
Storage Device frame with, the hardware platforms of Parent. It is anticipated
that the SAP (other than any HR Software), Manugistics, Indus and TOPS
components of the Purchaser IT Environment (each such software being described
in greater detail in the IT Support Services Agreement) will each be located on
separate hardware platforms. Purchaser shall become the owner of the hardware
platforms that are part of the Purchaser IT Environment (other than the hardware
platforms associated with the Support Services described in Category A and
Category D (except to the extent related to local area network hardware
purchased by

                                       38



Parent for Purchaser under the IT Support Services Agreement)) when the
platforms are no longer being maintained under IT Support Services Agreement.

     (b) Software Resident on Parent's Platform. Subject to the terms of this
         --------------------------------------
Section 5.4(b), Purchaser agrees that the Infinium Software (as defined in the
IT Support Services Agreement) and the HR Software, which constitute part of the
Purchaser IT Environment, will each be operated on a separate logical partition
on Parent's hardware platforms rather than on a physically separate platform. In
the case of the Infinium Software, such operation on Parent's hardware platform
will be subject to Purchaser's reasonable satisfaction prior to the Closing that
adequate security procedures will be implemented to protect the confidentiality
of all information relating to Purchaser's business and operations. The Infinium
Software and the HR Software will remain on Parent's platforms until (A) in the
                                                                      -
case of the Infinium Software, the 18 month anniversary of the Closing Date and
(B) in the case of the HR Software, until the end of the Initial Term and any
 -
Extended Term (as defined in the Human Resources Agreement). Parent will assist
Purchaser, at Purchaser's expense, in migrating data associated with the
Infinium Software to a platform to be designated by Parent no later than the 18
month anniversary of the Closing. Parent will transfer ownership of the human
resources portion of the Purchaser IT Environment (including the HR Software and
related data) to Purchaser no later than the end of the Initial Term and any
Extended Term under the Human Resources Agreement.

     (c) Mainframe Applications. The parties agree that the applications used in
         ----------------------
the Carve Out Business and currently operated on any mainframe maintained by IBM
Corporation will remain on such mainframe following the Closing Date, and Parent
agrees to operate such software (or have IBM operate such software) for
Purchaser to the extent set forth in the IT Support Services Agreement. Such
applications will constitute part of the Purchaser IT Environment; provided,
                                                                   --------
however, that Purchaser acknowledges that at no time will Parent be obligated to
- -------
create a separate mainframe environment for Purchaser. Subject to the foregoing,
the mainframe applications will be assigned to Parent as provided in Section
5.4(f), and, following expiration of the services period under the IT Support
Services Agreement relating to such applications, Purchaser will have the right
to require Parent to reasonably assist Purchaser in migrating the data relating
to such applications to another platform or mainframe, it being understood that
the costs of migrating such data and obtaining such other platform or mainframe
will be borne by Purchaser. At the request of Parent, Purchaser will license
back to Parent on a non-exclusive basis the right to continue using the assigned
mainframe applications.

     (d) Rights in Purchaser IT Environment and Mill Technology. As of the
         ------------------------------------------------------
Closing, Purchaser shall have a valid ownership, lease, license or use right
with respect to all elements of the Purchaser IT Environment, on terms
substantially similar to those applicable to Parent prior to the Closing. Prior
to the Closing, Parent will cause to be assigned (to the extent G-P can retain
its license and all of its rights thereunder for its

                                       39



business other than the Carve Out Business) or sublicensed to Purchaser, in
whole or in part, all Intellectual Property Licenses and other Contracts for
Computer Hardware or Computer Software (other than Contracts for maintenance and
service, which will remain entirely with Parent) that are part of the Purchaser
IT Environment or the Mill Technology that can be so assigned or sublicensed
without Consent by their terms.

          Any assignment or sublicense by Parent to Purchaser in accordance with
this Section 5.4 or Section 6.2(l) shall be for the full term of Parent's rights
in respect of the assigned or sublicensed technology, shall not be subject to
any unreasonable or material limitations that are not binding upon Parent under
its underlying Contract relating to such technology (other than Contracts for
maintenance and service, which will remain entirely with Parent), shall only
extend Purchaser the right to operate such technology in the operations acquired
under this Agreement, and shall not be affected by any termination or loss of
Parent's rights prior to the scheduled expiration of the underlying Contract.
Whether or not a Consent is required, if any underlying Contract provides that
any such assignment or sublicense is contingent on Purchaser's agreement in
writing to be bound by the existing terms applicable to Parent's usage of
technology to be sublicensed or assigned (to the extent they apply to
Purchaser's usage of such technology), and if Purchaser is provided with a
complete copy of the underlying Contract, then Purchaser's failure to agree in
writing to such existing terms shall relieve Parent of its obligation to assign
or sublicense such technology (or bear a portion of the cost of any Consent) to
the assignment or sublicense of such technology.

     (e) Consents. In the case of any Intellectual Property Licenses and other
         --------
Contracts for Computer Hardware or Computer Software (other than Contracts for
maintenance and service) that are part of the Purchaser IT Environment or the
Mill Technology and that cannot be assigned or sublicensed without Consent by
their terms, Parent will, prior to and after the Closing, reasonably cooperate
with and provide assistance to Purchaser in identifying and obtaining the
necessary Consents. It is understood that Parent is not obligated to assist in
obtaining (or to bear a portion of the cost of) any Consent to the extent that
such Consent would extend Purchaser the right to operate such technology in
operations other than those acquired through the transactions contemplated by
this Agreement.

     (f) Parent Developed IT. Parent hereby conveys, as of the Closing Date, a
         -------------------
limited, non-exclusive, non-transferable, non-assignable (except for an
assignment permitted under Section 10.7), royalty-free, perpetual right and
license to use and modify (other than during the applicable service period in
the IT Support Services Agreement), for the operations of the Carve Out Business
only, any G-P developed Computer Software that is in production and used in the
Carve Out Business as of the Closing Date, including TOPS and Forms Plus. Such
license shall not permit Purchaser to use such software other than in the Carve
Out Business or to sell, sublicense or otherwise assign any such software
(except for an assignment permitted under Section 10.7). The parties

                                       40



acknowledge and agree that e-TOPS is not currently in production at Parent, but
that if such Computer Software is fully implemented by Parent during the term of
the IT Support Services Agreement, it will be provided to Purchaser under the
terms of this subsection (f).

     (g) Cost Suite. The parties acknowledge and agree that the Cost Suite
         ----------
Computer Software that is part of the Purchaser IT Environment, as more
specifically described in Schedule 1 to the IT Support Services Agreement (the
"Cost Suite"), cannot be migrated to another platform without programming
 ----------
efforts, the results of which are uncertain. Accordingly, the parties agree to
work together in good faith to create a solution (whether by way of migrating
such software to another platform, or agreeing in good faith on an alternative
software solution) as soon as reasonably possible to provide Purchaser with
substantially similar functionality to the Cost Suite. The parties agree to work
together to attempt to implement a software solution prior to the Closing Date.
If such software solution is not obtained by the Closing Date, Parent agrees to
provide Purchaser at the Closing with a manual profitability reporting system to
generate information substantially similar to that which is obtainable through
Cost Suite.

     (h) Joint Efforts. The Purchaser IT Environment shall be created and
         -------------
established through the efforts of both parties and by each party's designation
of personnel who will have the authority to make decisions on behalf of such
party. Each party agrees to respond to information requests from the other in a
timely manner in order to ensure that the Purchaser IT Environment will be
operational and functional prior to the Closing Date. Each party will have the
right to review and discuss with the other from time to time the activities
undertaken (including testing activities) to ensure that the Purchaser IT
Environment will be operational and will have the functionality contemplated by
this Agreement as of the Closing Date and as of the date of delivery to
Purchaser of the human resources portion of the Purchaser IT Environment. Parent
will reasonably cooperate with Purchaser's chosen vendor for outsourced IT
Services for the migration of the Purchaser IT Environment following the
expiration of the support services provided by Parent, it being understood that
Parent will not be required to incur any out-of-pocket expenses in connection
therewith.

     (i) Expenses. Unless otherwise provided in this Section 5.4, the actual
         --------
out-of-pocket expenses of Parent or Purchaser paid in connection with the
actions contemplated by this Section 5.4 shall be allocated between Parent and
Purchaser as provided in this subsection.

          (A) Set-Up Costs. The costs of creating and establishing the Purchaser
              ------------
     IT Environment (including delivery of the hardware platforms as provided in
     the last sentence of Section 5.4(a)) shall be borne one-half by Parent and
     one-half by Purchaser, provided that Purchaser shall not be required to pay
                            --------
     an aggregate of more than $3,000,000 in respect of such costs (with the
     excess borne solely by

                                       41



     Parent). All payments to third parties in connection with creating and
     establishing the Purchaser IT Environment will be made by Parent, and
     Purchaser will reimburse Parent for its reasonably documented share of such
     costs in six equal monthly installments beginning as of the first calendar
     month following the Closing.

          (B) Consent Costs. The costs of obtaining any Consent referred to in
              -------------
     Section 5.4(e) shall be borne one-half by Parent and one-half by Purchaser,
     except that the costs of obtaining Consents in connection with the
     assignments and consents described in Section 6.2(l) shall be borne solely
     by Parent. All payments to third parties in connection with obtaining such
     Consents will be made by Parent to the extent payable prior to or as of the
     Closing Date and by Purchaser to the extent payable after the Closing Date,
     and, in each case, the party making such payment will promptly be
     reimbursed by the other party hereto for its reasonably documented share of
     such costs.

     5.5 Pre-Closing Publicity and Related Matters.
         -----------------------------------------

     (a) From the date of this Agreement through the Closing, no party hereto
shall issue or cause the publication of any press release or other public
disclosure with respect to the transactions contemplated by this Agreement
without the consent of the other parties hereto, which consent shall not be
unreasonably withheld, except as such release or disclosure may be required by
law or the rules or regulations of a national securities exchange in the United
States or Canada, in which case the party required to make the release or
announcement shall allow the other parties reasonable time to comment on such
release or announcement in advance of its issuance.

     (b) From the date hereof through the Closing, Sellers will not, directly or
indirectly, through any other party or otherwise: (i) engage in any negotiations
                                                   -
with or provide any information to any third party with respect to the Carve Out
Business in connection with a potential acquisition, sale or similar transaction
(including by way of any merger, joint venture or otherwise) involving the Carve
Out Business or any material assets used in the Carve Out Business; or (ii)
                                                                        --
solicit, facilitate or entertain any proposal relating to an acquisition, sale
or similar transaction (including by way of any merger, joint venture or
otherwise) involving the Carve Out Business or any material assets used in the
Carve Out Business.

     5.6 Ancillary Documents. At the Closing, Parent and Purchaser or their
         -------------------
respective affiliates shall enter into (a) an IT Support Services Agreement,
                                        -
substantially in the form of Exhibit D, (b) Trademark License Agreements,
                             ---------   -
substantially in the form of Exhibit F, (c) a Supply and Distribution Agreement,
                             ---------   -
substantially in the form of Exhibit G, (d) a Non-Competition Agreement,
                             ---------   -
substantially in the form of Exhibit H, (e) a Pulp Supply Agreement,
                             ---------   -
substantially in the form of Exhibit I, (f) a Fibre Supply
                             ---------   -

                                       42



Agreement, substantially in the form of Exhibit J, (g) a Shared Services
                                        ---------   -
Agreement, substantially in the form of Exhibit L (which is subject to further
                                        ---------
good faith negotiation), (h) an Operating Agreement, substantially in the form
of Exhibit M and (i) an Interim Sales Agreement, on substantially the terms set
   ---------      -
forth in Exhibit N.
         ---------

     5.7 Proration of Certain Charges. To the extent scheduled to be incurred
         ----------------------------
(in the ordinary course of business consistent with past practice) over a period
beginning before the Closing Date and ending after the Closing Date, the
following charges and payments shall be prorated on a per diem basis and
apportioned between Parent and its affiliates, on the one hand, and Purchaser,
on the other, as of the Closing Date: utility charges, prepaid items, license
and permit fees, and similar charges (but not including Taxes other than real
and personal property taxes (including all state, county, city, town, school,
fire district, garbage district and other special taxes, and also including any
special assessments or conditional levies)) imposed with respect to the Carve
Out Business. Parent and its Affiliates shall be liable for (and shall reimburse
Purchaser to the extent Purchaser shall have paid) that portion of such charges
relating to, or arising in respect of, periods on or prior to the Closing Date,
and Purchaser shall be liable for (and shall reimburse Parent and its Affiliates
to the extent Parent or its Affiliates shall have paid) that portion of such
charges relating to, or arising in respect of, periods after the Closing Date;
provided, however, that Parent and its Affiliates shall not be liable for any
- --------  -------
portion of such charges to the extent reflected as a Current Liability on the
Closing Working Capital Statement.

     5.8 Real Property.
         -------------

     (a) Parent and Purchaser, at Purchaser's sole cost and expense, have
ordered current surveys of certain portions of the Real Property that will be
prepared in accordance with the provisions of Section 6.2(e) (collectively, the
"Surveys"). Parent and Purchaser, at Parent's sole cost and expense, have
 -------
ordered title searches and commitments for extended coverage 1992 form of
American Land Title Association owner's policies of title insurance in each case
with liability in an amount designated by Purchaser and issued by First American
Title Insurance Company of New York (the "Title Company") for the Real Property
                                          -------------
(collectively, the "Title Commitments") together with true and complete copies
                    -----------------
of all instruments identified therein as giving rise to any defects or
exceptions to title to such Real Property. Within ten Business Days following
the delivery of the Surveys and the Title Commitments to Purchaser, Purchaser
shall advise Parent in writing of any Title Defects to such Real Property shown
in such Title Commitments and Surveys, other than Permitted Real Property
Exceptions shown in such Title Commitments and Surveys, and subject to which
Purchaser is unwilling to accept title (such Title Defects are hereinafter
collectively referred to as "Title Objections"). Failure of Purchaser to provide
                             ----------------
such written notice within such 10-day period shall be deemed an election by
Purchaser to waive any Title Defects shown in such Title Commitments and Surveys
and to accept such title to such Real Property indicated in the

                                       43



Title Commitments without any reduction in the Purchase Price or right to claim
under Article VIII with respect to such Title Defects. Parent shall remove or
discharge ("cure") each Title Objection that is a monetary lien created by
            ----
Parent or one of its Affiliates, regardless of cost. Parent may, in its sole
discretion, elect to cure one or more other Title Objections, in which case
Parent shall provide Purchaser with notice of such election within ten Business
Days after Parent's receipt of Purchaser's notice of Title Objections. Parent,
in its sole discretion, may extend the Closing Date one or more times for up to
90 days in the aggregate in order to cure Title Objections. If Parent does not
notify Purchaser that it has elected to cure any Title Objections within such
10-day period, then Parent shall be deemed to have elected not to cure any Title
Objections. If Parent is unwilling or unable to cure any Title Objection in
accordance with the terms of this Agreement then Purchaser may, at its option,
(i) accept title to the Real Property subject to any such Title Objections and
 -
proceed with the Closing of the transactions contemplated by this Agreement
without any reduction in the Purchase Price, preserving, however, all of
Purchaser's rights under Article VIII hereof for any breach of Parent's
representations or warranties relating to such Title Objections and to any other
Title Defect (other than Permitted Real Property Exceptions) not shown on such
Title Commitments or Surveys or (ii) terminate this Agreement by giving written
                                 --
notice to Parent by the Closing Date, in which event the parties hereto shall
have no further obligations or liabilities to each other except as otherwise
provided herein.

     (b) Parent shall use its commercially efforts to obtain prior to the
Closing a written waiver in form and substance satisfactory to Purchaser of that
certain right of first offer to purchase certain property (the "Option
                                                                ------
Property") presently leased to Bulls Eye Country Club, a Wisconsin corporation
- --------
("BECC"). Such written waiver shall be executed by BECC and shall waive BECC's
  ----
right to purchase the Option Property under paragraph 13 of that certain
Restated and Amended Lease Agreement, dated as of May 28, 1999, by and between
NPI and BECC, a Short Form of which is recorded in Volume 940, Page 339 in the
Office of the Register of Deeds, Wood County, Wisconsin.

     5.9 Adverse Changes. If prior to the Closing, any asset constituting a
         ---------------
material part of the Carve Out Business is impaired by reason of physical damage
caused by fire, earthquake, accident or other act of God and such impairment
would reasonably be expected to have a Material Adverse Effect, Purchaser may,
within five days after Purchaser is notified by Parent of such damage elect
either to (a) proceed with the Closing, at which time Parent shall have the
           -
option of (i) assigning to Purchaser at the Closing Parent's or its Affiliates'
           -
rights under insurance policies to receive any insurance proceeds due Parent or
its Affiliates as a result of such damage or (ii) retaining the right to receive
                                              --
such insurance proceeds and giving Purchaser a credit at Closing for any amount
Parent or its Affiliates is entitled to receive under its insurance policies by
reason of such damage (it being understood and agreed that Purchaser shall
assume responsibility for any required repairs, and Purchaser shall receive a
credit at Closing for any deductible, or coinsured amount under said insurance
policies), or (b) terminate this
               -

                                       44



Agreement by giving written notice to Parent within five Business Days of the
date on which Parent notifies Purchaser of the damage, in which event the
parties hereto shall have no further obligations or liabilities to each other
except as otherwise provided herein.

     5.10 Supplemental Disclosure. Parent or Purchaser may at any time, or from
          -----------------------
time to time after the date hereof, but not later than three Business Days prior
to the Closing Date (other than with respect to the disclosure of any event
referred to in Section 5.9), supplement or amend the Parent Disclosure Letter or
the Purchaser Disclosure Letter, as the case may be, with respect to any matter
arising after the date hereof which if existing or occurring at the date hereof
would have been required to be set forth or described in such a Disclosure
Letter, provided that Parent shall not be entitled under this Section 5.10 to
        --------
supplement or amend the Parent Disclosure Letter with information as to a matter
arising prior to the date hereof which was required to have been disclosed
herein. No supplement or amendment to such Disclosure Letter shall have any
effect for the purpose of determining the satisfaction of the conditions to the
obligation of the other parties under Article VI, but any matter arising after
the date hereof and disclosed in an amended or supplemented Disclosure Letter
pursuant to this Section 5.10 shall not form the basis for any claim for
indemnification pursuant to Section 8.1(i) or 8.2(i) if the transactions
contemplated hereby are consummated. Each of the representations and warranties
made herein shall be deemed repeated at the Closing, subject to such changes
thereto as shall have been made in accordance with this Section 5.10.

     5.11 Tax Exempt Bond Financed Facilities.
         ------------------------------------

     (a) Parent intends for certain tax exempt bonds issued by Parent and its
Affiliates that are related to the Acquired Assets to remain outstanding
following the Closing Date and has provided a complete list of such bonds (the
"IDBs") to the Purchaser in Section 5.11(a) of the Parent Disclosure Letter, and
 ----
has made available to Purchaser a complete copy of each agreement relating to
the IDBs. Purchaser is willing to take certain action as specified in this
Section with respect to Acquired Assets financed with the proceeds of the IDBs.

     (b) At least 10 days prior to the Closing Date Parent shall provide
Purchaser with a detailed list specifying the items of the Acquired Assets (the
"IDB Assets") financed with the proceeds of the IDBs, the use of which may
 ----------
affect the continued qualification of IDBs as tax exempt bonds under the Code.
Such list shall identify each specific material asset and its location.

     (c) Following the Closing Date, Purchaser shall use reasonable commercial
efforts to continue to use the IDB Assets in a manner substantially consistent
with their current use and shall use reasonable commercial efforts to provide
the Parent with written notice at least 30 days prior to terminating such use of
such IDB Asset. Purchaser's

                                       45



obligation hereunder shall continue with respect to an IDB Asset only so long as
the related IDBs are outstanding and otherwise qualify for tax exempt status
under the Code, and Parent shall give Purchaser immediate notice of the
redemption of any IDBs and of any other circumstance that would relieve the
Purchaser of its obligations hereunder.

     (d) Purchaser's only obligation under this Section 5.11 is to use and
provide notices with respect to the IDB Assets in accordance with its
undertaking in Section 5.11(c). Purchaser has no obligation with respect to the
IDBs, to any issuer, governmental authority, bond counsel or other obligor with
respect to any IDB or to any holder of an IDB, and Purchaser shall not be liable
to Parent or any other person with respect to the tax exempt status of the IDBs.

     5.12 Termination of Certain Arrangements. Prior to the Closing, Parent
          -----------------------------------
shall terminate all sale-leaseback arrangements between Parent and any of its
Affiliates as set forth in Section 5.12 of the Parent Disclosure Letter without
any obligation or liability to any Transferred Subsidiary or Purchaser and each
Transferred Subsidiary or Purchaser shall, as of the Closing, own all assets
that were the subject of such arrangements. All other Affiliate Transactions
(except as otherwise provided in Section 1.1) will be terminated prior to the
Closing without liability or obligation to Purchaser. Purchaser shall receive
documents evidencing the foregoing.

     5.13 Environmental Site Assessment. Prior to the Closing Date, Purchaser
          -----------------------------
shall have the right to prepare, or cause to be prepared, a Phase I
environmental site assessment and compliance evaluation of the Real Property or
the Carve Out Business (the "Environmental Site Assessment"), which shall
                             -----------------------------
include physical inspections, review of all relevant records and review of
relevant governmental agency records. Parent and NPI shall provide Purchaser and
its agents with reasonable access to the facility in order to prepare and
complete the Environmental Site Assessment.

     5.14 Audited and Interim Financial Statements.
          ----------------------------------------

     (a) As soon as practicable following the date hereof, but no later than
June 25, 2001, Parent shall deliver to Purchaser an unqualified audit report of
Arthur Andersen on the Year-End Financial Statements, together with financial
statements that incorporate any revisions made to the Year-End Financial
Statement in connection with the audit and any changes referred to in the Side
Letter (the financial statements on which Arthur Andersen renders such report,
incorporating any changes to the Year-End Financial Statements, the "Audited
                                                                     -------
Financial Statements"). As soon as such material is available, but no later than
- --------------------
the time of delivery of the Audited Financial Statements, Purchaser and its
accountants shall be given full access to all information used by Parent in
preparing the Audited Financial Statements, including the books and records and
the work papers of Arthur Andersen (subject to the reviewing party executing any
customary access letters required by Arthur Andersen).

                                       46



     (b) As soon as practicable following June 30, 2001, whether before or
following the Closing but no later than August 15, 2001, Parent shall deliver
the unaudited balance sheets of the Carve Out Business as of June 30, 2001 and
June 30, 2000, and the related unaudited statements of income, Parent's
investment and cash flow for the three months ended June 30, 2001 and June 30,
2000, together with all related notes and schedules thereto (the "June 2001
                                                                  ---------
Interim Financial Statements"), which will be prepared in accordance with U.S.
- ----------------------------
GAAP on a basis consistent with the Audited Financial Statements and will
include a review by Arthur Andersen.

     5.15 Monthly Financial Information. Within 15 days after the date hereof,
          -----------------------------
Parent will deliver a complete and correct copy of the monthly management
reports for each of the Mills prepared in the ordinary course of business
consistent with past practice (the "Monthly Management Reports") for the
                                    --------------------------
one-month period ending April 30, 2001. Within 15 days after the end of each
monthly period after the date hereof until the earlier of the Closing Date or
the termination of this Agreement, Parent shall deliver to Purchaser a complete
and correct copy of the Monthly Management Reports for each such monthly period.

     5.16 Transition Services. Promptly following the date hereof,
          -------------------
representatives of Parent and Purchaser will meet to discuss whether Purchaser
or Parent will require transitional services relating to the Carve Out Business
(in addition to those to be provided under the Ancillary Documents) or Parent's
other businesses for a certain period of time following the Closing. If such
services are required, Parent and Purchaser will negotiate in good faith whether
and under what terms such services will be provided by Parent to Purchaser
following the Closing. After the Closing, Parent will continue to provide at no
cost to Purchaser the engineering services for the Port Edwards chipping
facility currently under construction in accordance with prior practice and at
no charge to Purchaser other than reimbursement of out of pocket costs.

     5.17 Information Regarding Financing. From the date hereof until the
          -------------------------------
earlier of the Closing or the termination of this Agreement, Purchaser shall
promptly inform Parent of any developments of which it becomes aware that might
reasonably be expected to prevent Purchaser from satisfying the condition to
Closing set forth in Section 6.1(c) on or prior to July 31, 2001, or if the
Closing shall not have occurred by such date, on or prior to the then-applicable
date referred to in Section 7.1(a)(v). In addition, Purchaser shall provide
Parent with such information as Parent shall reasonably request regarding the
status of the financing for the transactions contemplated hereby.

     5.18 FERC Assets.
          -----------

     (a) The transfer to a U.S. subsidiary of Purchaser ("U.S. Sub") of the
                                                          --------
Maine FERC Assets and the Wisconsin FERC Assets (collectively, the "FERC
                                                                    ----
Assets") is conditioned upon the approval by the Federal Energy Regulatory
- ------
Commission ("FERC")
             ----

                                       47



of the transfer to the U.S. Sub of the FERC Licenses that govern certain of
those FERC Assets. In case of the Nepco Lake Dam, the transfer is conditioned
upon the approval of the Wisconsin Department of Natural Resources and the
assignment of permits issued thereby to one or more wholly-owned State of
Wisconsin Subsidiaries of Purchaser ("Wisconsin Sub"). Notwithstanding any other
                                      -------------
provision of this Agreement, the FERC Assets and the Nepco Lake Dam will not be
transferred on the Closing Date, but the related transfer documents will be
placed in escrow at Closing as contemplated by Section 2.2(a). Within three
Business Days following FERC approval of the transfer of the FERC Licenses to
U.S. Sub the transfer documents for the FERC Assets shall be released and
delivered to U. S. Sub for filing and recording in accordance with Applicable
Law. Within three Business Days following the requisite approval of the
Wisconsin Department of Natural Resources, the transfer documents for the Nepco
Lake Dam shall be released and delivered to Wisconsin Sub for filing and
recording in accordance with Applicable Law. Pending such transfer, the FERC
Assets and the Nepco Lake Dam shall be operated in accordance with the terms of
an Operating Agreement to be entered into on the Closing Date by Sellers and
Purchaser in the form of Exhibit M hereto. The FERC Assets and Nepco Lake Dam
will be deemed included in the Acquired Assets for all purposes under this
Agreement. The Parent Indemnitees will be entitled to indemnification in
accordance with Section 8.2 (iv) of this Agreement for any Losses incurred by
the Parent Indemnitees arising with respect to any breach of the Operating
Agreement by Purchaser prior to the transfer of the FERC Assets and the Nepco
Lake Dam or with respect to the use or operation of the FERC Assets and the
Nepco Lake Dam after the Closing.

     (b) Notwithstanding any other provision in this Agreement, Sellers and
Purchaser shall cooperate fully so that as promptly as practicable after the
execution and delivery of this Agreement, the parties will file with FERC a
joint application for transfer of the FERC Licenses to U.S. Sub. Thereafter,
Purchaser and Sellers shall each use their good faith, commercially reasonable
efforts to cause FERC to grant its approval of the transfer of the FERC Licenses
as soon as possible. Such application will provide for Purchaser to be
substituted for Parent in the litigation identified as item IV(a)(iv) and (v)
under the heading "Woodland" in Section 3.5 of the Parent Disclosure Letter.
                   --------
Sellers and Purchaser shall take similar action with respect to obtaining
approval from the Wisconsin Department of Natural Resources.

     (c) After the execution and delivery of this Agreement and until the
Closing, neither Sellers nor Purchaser, nor any of their Affiliates, shall (i)
file any application or other document of any kind relating to the FERC Assets,
the FERC Licenses, Nepco Lake Dam or the Maine Non-FERC Assets, with any
Governmental Entity; or (ii) initiate any communication (whether oral or
written) with any Governmental Entity regarding the proposed transfer of the
FERC Assets, Nepco Lake Dam, Maine Non-FERC Assets or the FERC Licenses without
the prior written approval of the other party which approval will not be
unreasonably withheld or delayed. In addition to the foregoing, each party will

                                       48



promptly forward to the other copies of any and all written or electronic
communications it receives, and accurate and complete written summaries of any
oral communications between any representative of such party and any
representative of a Governmental Entity in which a representative of the other
party did not participate, regarding or affecting the proposed transfer of FERC
Assets, the FERC Licenses, Nepco Lake Dam or the Maine Non-FERC Assets.

     (d) After the execution and delivery of this Agreement and until the
Closing, Sellers shall not (i) file any application, pleading or other document
                            -
of any kind relating to the FERC Assets, Nepco Lake Dam, or the Maine Non-FERC
Assets with any Governmental Entity, any Indian Tribe or Non-Governmental
Entity; or (ii) initiate any communication (whether oral or written) with any
            --
Governmental Entity, Indian Tribe or Non-Governmental Entity regarding the FERC
Assets, Nepco Lake Dam, or the Maine Non-FERC Assets without the prior written
approval of Purchaser. In addition to the foregoing, Sellers will promptly
forward to Purchaser copies of any and all written or electronic communications
Sellers receive, and accurate and complete written summaries of any oral
communications between any representative of Sellers and any representatives of
a Governmental Entity, Indian Tribe or Non-Governmental Entity in which a
representative of Purchaser did not participate regarding the FERC Assets, Nepco
Lake Dam, or the Maine Non-FERC Assets.

     5.19 Wisconsin Real Property Transfers. Prior to the Closing, Parent (a)
          ---------------------------------                                -
shall cause NPI to acquire good and marketable title to the Wisconsin Sand Pit,
(b) shall obtain a ten-year recordable, enforceable and irrevocable option (the
 -
"Wisconsin Landfill Extension Option"), in form and substance satisfactory to
 -----------------------------------
Purchaser, assignable to Purchaser and permitting Purchaser to purchase the
Wisconsin Landfill Extension (x) at a price of $1,000 per acre for the first
                              -
five years and (y) at a price equal to the then fair market value of such
                -
property for the second five years and (c) use all commercially reasonable
                                        -
efforts to obtain access rights (with reasonable indemnities in favor of North
American Timber Company, Inc.) to all properties adjacent to Nepco Lake that are
owned by North American Timber Company, Inc. and a covenant from North American
Timber Company, Inc. not to alter or affect in any way the inflow of water to
Nepco Lake from the stream that forms part of the real property owned by North
American Timber Company, Inc. adjacent to Nepco Lake.

     5.20 Return of Parent Information. After the Closing Date, Purchaser agrees
          ----------------------------
to promptly return to Parent, or upon Parent's reasonable request, to delete or
remove, at Parent's expense, any materials which are located at the Mills and
are described in Section 1.2(ii) of the Parent Disclosure Letter, it being
understood that such activities will be undertaken in a manner that will not
disrupt the operations of the Mills.

                                       49



     5.21 Inventory. Prior to the Closing, the parties will mutually agree on
          ---------
the segregation of the 20,000 tons of Woodland pulp Inventory and the 4,000 tons
of Woodland export pulp Inventory included in the Acquired Assets.

     5.22 Black Liquor. Prior to Closing, Parent and Purchaser shall enter into
          ------------
a six-month agreement providing for the Mill in Ashdown, Arkansas to sell its
black liquor soap to Parent on a basis consistent with past practice, and Parent
and Purchaser will discuss in good faith a potential long-term supply
arrangement for such black liquor soap and related products.

     5.23 Cluster Testing. Purchaser shall notify Parent and permit
          ---------------
representatives of Parent to observe the first round of MACT I cluster testing
that occurs at each of the Mills following the Closing. Parent shall also be
given the opportunity to review the testing procedures in advance of each test.

     5.24 Inventory Support. Parent will provide service support for
          -----------------
distribution from public warehouses (other than Mill overflow warehouses) to end
users for six months following the Closing, and Purchaser will reimburse Parent
for its actual cost in providing this service.

                                   ARTICLE VI
                              Conditions Precedent
                              --------------------

     6.1 Conditions to Each Party's Obligation. The obligation of the parties to
         -------------------------------------
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction prior to the Closing of the following conditions:

     (a) Certain Waiting Periods. (i) Any waiting period under the HSR Act and
         -----------------------
any other pre-merger notification law, whether U.S. or foreign, applicable to
any of the transactions contemplated hereby shall have expired or been earlier
terminated, and (ii) no antitrust authority shall have required Parent or any of
its Affiliates to continue to own any of the assets which constitute a part of
the Carve Out Business or to divest, separate or offer for sale any other assets
which do not constitute a part of the Carve Out Business or agree to any
restriction on the conduct of its business.

     (b) No Injunctions or Restraints. No temporary restraining order,
         ----------------------------
preliminary or permanent injunction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement
shall be in effect; provided, however, that subject to the second sentence of
                    --------  -------
Section 5.3(b), the party seeking to assert a failure of this condition to be
satisfied shall have used their reasonable best efforts to prevent the entry of
any such order, injunction or other restraint or

                                       50



prohibition and to appeal as promptly as possible any such order, injunction or
other restraint or prohibition that may be entered.

     (c) Financing. Purchaser shall have obtained, pursuant to the Financing
         ---------
Commitment, the funds necessary to consummate the transactions contemplated by
this Agreement and the Ancillary Documents.

     (d) Purchaser IT Environment. The Purchaser IT Environment shall have been
         ------------------------
established and shall be operational in accordance in all material respects with
the standards set forth in a testing protocol to be reasonably agreed upon by
Parent and Purchaser prior to the Closing.

     6.2 Conditions to Obligation of Purchaser. The obligation of Purchaser to
         -------------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction at and as of the Closing of each of the following conditions:

     (a) Representations and Warranties. The representations and warranties of
         ------------------------------
each Seller set forth in this Agreement and in any Ancillary Agreement shall be
true and correct in all respects as of the Closing as though such
representations and warranties were made on and as of the Closing, except for
(i) those representations and warranties which address matters only as of a
 -
particular date (which shall be true and correct only as of such date), and (ii)
                                                                             --
such inaccuracies as would not, individually or in the aggregate, have a
Material Adverse Effect (but disregarding for such purposes limitations on such
representations and warranties based on "materiality" or "Material Adverse
Effect") and Purchaser shall have received a certificate from each Seller and
NPI signed by an authorized officer to such effect.

     (b) Performance of Obligations. Sellers shall have performed or complied in
         --------------------------
all material respects with all obligations, conditions and covenants required to
be performed or complied with by it under this Agreement and under the Human
Resources Agreement at or prior to the Closing, and Purchaser shall have
received a certificate from each Seller signed by an authorized officer to such
effect.

     (c) Audited Financial Statements. Purchaser shall have received the Audited
         ----------------------------
Financial Statements at least 15 days prior to the Closing Date, and the
financial condition and results of operations of the Carve Out Business
reflected in the Audited Financial Statements and the notes thereto shall not
reflect any materially adverse deviations in the aggregate from the financial
condition and results of operations and notes reflected in the Year-End
Financial Statements.

     (d) Title. Purchaser shall have received extended coverage 1992 form of
         -----
American Land Title Association owner's policies of title insurance issued on
the Closing Date by the Title Company for the Real Property (collectively, the
"Title Policies").
 --------------

                                       51



Each Title Policy shall be in an amount designated by Purchaser and shall insure
Purchaser's ownership of fee title to the Real Property, subject to the terms of
Section 5.8, free and clear of all Title Defects other than Permitted Real
Property Exceptions.

     (e) Survey. Purchaser shall have received surveys for each parcel of Real
         ------
Property used or held for use in any material respect in the operations of any
of the Mills (other than surveys for the FERC Assets and lakes and rivers and
dams) in each case in form sufficient to delete the "standard survey exception"
with respect to the parcels surveyed in the Title Policies and to enable
Purchaser to obtain extended coverage Title Policies in accordance with the
further provisions of this Section. Each Survey shall be certified to Purchaser
and the Title Company and shall show the absence of any Title Defect other than
Permitted Real Property Exceptions.

     (f) Section 338(h)(10) Elections; FIRPTA Certification. Purchaser shall
         --------------------------------------------------
have received from Parent properly executed Forms 8023 as provided in Section
9.5(c) and the certifications provided for in Section 9.5(j).

     (g) Ancillary Documents. Parent (and/or its Affiliates, as the case may be)
         -------------------
shall have executed and delivered each of the Ancillary Documents to which they
are a party.

     (h) No Material Adverse Change. Since December 31, 2000, no events,
         --------------------------
occurrences, conditions, facts or change shall have occurred that, individually
or in the aggregate, have had or would reasonably be expected to have, a
Material Adverse Effect.

     (i) Opinion of Counsel. Purchaser shall have received an opinion, addressed
         ------------------
to it and dated the Closing Date, from counsel to Parent, in form and substance
satisfactory to Parent in its reasonable judgment, containing the opinions set
forth in Exhibit K.

     (j) Software. Parent shall have obtained for Purchaser the assignments or
         --------
sublicenses listed in Section 6.2(j) of the Purchaser Disclosure Letter, which
will provide Purchaser with the right to use as of the Closing the Computer
Software listed in such section of the Purchaser Disclosure Schedule.

     6.3 Conditions to Obligation of Sellers. The obligation of Sellers to
         -----------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction at and as of the Closing of each of the following conditions:

     (a) Representations and Warranties. The representations and warranties of
         ------------------------------
Purchaser set forth in this Agreement and in the Ancillary Documents shall be
true and correct in all respects as of the Closing as though such
representations and warranties were made on and as of the Closing, except for
(i) those representations and warranties which address matters only as of a
 -
particular date (which shall be true and correct only as

                                       52



of such date), (ii) such inaccuracies as would not, individually or in the
                --
aggregate, have a material adverse effect on the ability of Purchaser to perform
its obligations under the Agreement, and Parent shall have received a
certificate from Purchaser signed by an authorized officer of Purchaser to such
effect.

     (b) Performance of Obligations. Purchaser shall have performed or complied
         --------------------------
in all material respects with all obligations, conditions and covenants required
to be performed or complied with by it under this Agreement and under the Human
Resources Agreement at or prior to the Closing, and Parent shall have received a
certificate signed by an authorized officer of Purchaser to such effect.

     (c) Ancillary Documents. Purchaser shall have executed and delivered each
         -------------------
of the Ancillary Documents to which it is a party.

                                   ARTICLE VII
                        Termination, Amendment and Waiver
                        ---------------------------------

     7.1 Termination.
         -----------

     (a) Notwithstanding anything to the contrary in this Agreement, this
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing:

          (i) by mutual written consent of the parties hereto;

          (ii) by Parent if any of the conditions set forth in Section 6.1 or
     6.3 shall have become incapable of fulfillment, and shall not have been
     waived by Parent;

          (iii) by Purchaser if any of the conditions set forth in Section 6.1
     or 6.2 shall have become incapable of fulfillment, and shall not have been
     waived by Purchaser;

          (iv) by Purchaser, pursuant to Section 5.8 or 5.9; or

          (v) by Parent or Purchaser if the Closing does not occur on or prior
     to July 31, 2001, provided that either Parent or Purchaser shall be
                       --------
     entitled to extend such date to no later than August 15, 2001 (but only if
     it has complied with its obligations under Section 5.3(a)) if necessary to
     satisfy the Closing condition set forth in Section 6.1(d); further provided
                                                                ------- --------
     that either Parent or Purchaser shall be entitled to re-extend such date to
     no later than August 31, 2001 (but only if it has complied with its
     obligations under Section 5.3(a)) if further necessary to satisfy the
     Closing condition set forth in Section 6.1(d);

                                       53



provided, however, that the party seeking termination pursuant to clause (ii),
- --------  -------
(iii), (iv) or (v) is not in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this
Agreement.

     (b) In the event of termination of this Agreement pursuant to this Section
7.1, written notice thereof shall promptly be given to the parties hereto and
the transactions contemplated by this Agreement shall be terminated, without
further action by any party. If the transactions contemplated by this Agreement
are terminated as provided herein:

          (i) Purchaser shall return all documents and other material received
     from Parent or its Affiliates relating to the transactions contemplated
     hereby, whether so obtained before or after the execution hereof, to
     Parent; and

          (ii) all confidential information received by Purchaser with respect
     to the business of Parent or its Affiliates shall be treated in accordance
     with the Confidentiality Agreement which shall remain in full force and
     effect notwithstanding the termination of this Agreement.

     (c) If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Section 7.1, this Agreement shall
become null and void and of no further force and effect, except for the
provisions of (i) Section 5.2 and Section 5.5(a) (relating to the obligation of
               -
Purchaser to keep confidential certain information and data obtained by it from
Parent or its Affiliates), (ii) the provisions of this Agreement relating to
                            --
expenses (including Section 9.3), (iii) this Section 7.1 and (iv) Article X.
                                   ---                        --
Nothing in this Section 7.1 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or to impair the right of any party to compel specific performance by
any other party hereto of its obligations under this Agreement.

     7.2 Amendments and Waivers. No amendment, modification or discharge of this
         ----------------------
Agreement, and no waiver hereunder, shall be valid or binding unless set forth
in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy or breach of any
representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,

                                       54



occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.

                                  ARTICLE VIII
                                 Indemnification
                                 ---------------

     8.1 Indemnification by Parent. Parent covenants and agrees to defend,
         -------------------------
indemnify and hold harmless Purchaser, its Affiliates (including the Transferred
Subsidiaries from and after the Closing) and the officers, directors, employees,
agents, advisers and representatives of each such Person (collectively, the
"Purchaser Indemnitees") from and against, and pay or reimburse the Purchaser
 ---------------------
Indemnitees for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys',
accountants' and consultants' fees incurred in the investigation or defense of
any of the same or in asserting any of their respective rights hereunder
(collectively, "Losses"), resulting from or arising out of:
                ------

          (i) (A) any inaccuracy of any representation or warranty made by
     Sellers in Article III or in the Human Resources Agreement or the IT
     Support Services Agreement (in the case of any such representation or
     warranty, without taking into account any qualification as to materiality
     or Material Adverse Effect contained in such representation or warranty) or
     (B) subject to Section 8.2(vi), any Assumed Pre-Closing Liability;

          (ii) any failure of any Seller to perform any covenant or agreement
     hereunder or under the Human Resources Agreement or the IT Support Services
     Agreement;

          (iii) any Excluded Liability (including any Excluded Environmental
     Liability and any Pending Litigation) or Excluded Asset;

          (iv) any failure of any Seller to comply with applicable bulk sales
     laws (in consideration of which indemnification obligation Purchaser hereby
     waives compliance by Parent with any applicable bulk sales laws), except to
     the extent the Loss results from Purchaser's failure to discharge an
     Assumed Liability;

          (v) the Assumed Parent Environmental Liabilities until such time as
     the Losses incurred by Parent and its Affiliates resulting from or arising
     out of the Assumed Parent Environmental Liabilities, whether incurred
     directly or as a result

                                       55



     of Parent's indemnification of Purchaser Indemnitees under this clause (v),
     exceed $100,000,000 (the "Environmental Indemnity Cap"); or
                               ---------------------------

          (vi) the claims of any Person referred to in Section 3.19 with respect
     to a matter described in such section.

     8.2 Indemnification by Purchaser. Purchaser covenants and agrees to defend,
         ----------------------------
indemnify and hold harmless Parent, its respective Affiliates and the officers,
directors, employees, agents, advisers and representatives of each such Person
(collectively, the "Parent Indemnitees") from and against, and pay or reimburse
                    ------------------
the Parent Indemnitees for, any and all Losses resulting from or arising out of:

          (i) any inaccuracy in any representation or warranty by Purchaser in
     Article IV or in the Human Resources Agreement or the IT Support Services
     Agreement (in the case of any such representation or warranty, without
     taking into account any qualification as to materiality contained in such
     representation or warranty);

          (ii) any failure of Purchaser to perform any covenant or agreement
     hereunder or under the Human Resources Agreement or the IT Support Services
     Agreement;

          (iii) the Assumed Liabilities (other than the Assumed Parent
     Environmental Liabilities and the Assumed Pre-Closing Liabilities);

          (iv) the use, operation or ownership of the Acquired Assets after the
     Closing Date;

          (v) the Assumed Parent Environmental Liabilities from and after such
     time as the Losses incurred by Parent and its Affiliates resulting from or
     arising out of the Assumed Parent Environmental Liabilities, whether
     incurred directly or as a result of Parent's indemnification of the
     Purchaser Indemnitees, under Section 8.1(v), exceed the Environmental
     Indemnity Cap;

          (vi) the Assumed Pre-Closing Liabilities (A) until such time as the
                                                    -
     Losses incurred by the Purchaser Indemnitees resulting from or arising out
     of Assumed Pre-Closing Liabilities (whether directly or as a result of
     Purchaser's indemnification of the Parent Indemnitees under this clause
     (vi)) and the Losses referred to in Section 8.1(i)(A) exceed the Deductible
     (as defined in Section 8.3(a)(i)) and (B) from and after the earlier to
                                            -
     occur of (1) such time as the Losses incurred by Parent and its Affiliates
     resulting from or arising out of the Assumed Pre-Closing Liabilities,
     whether incurred directly or indirectly as a result of Parent's
     indemnification of the Purchaser Indemnitees under Section 8.1(i), and

                                       56



     any amounts paid by Parent to the Purchaser Indemnitees under clause (v) of
     Section 8.1 exceed the General Indemnity Cap (as defined in Section
     8.3(a)(i)) and (2) March 31, 2003;

          (vii) the claims of any Person referred to in Section 4.8 with respect
     to a matter described in such section; or

          (viii) any public or private offering of securities by Purchaser or
     any of its Affiliates based on a prospectus or similar document that
     incorporates all or any part of the financial statements and other
     information provided by Parent to Purchaser under Section 5.14; provided
     that this clause shall not limit Parent's indemnification obligations under
     Section 8.1(a)(i)(A).

except, in the case of clause (iv), to the extent such Losses result from or
arise out of the Excluded Liabilities or constitute Losses for which Parent is
required to indemnify Purchaser Indemnitees under Section 8.1.

     8.3 Limitations on Indemnity Obligation.
         -----------------------------------

     (a) Notwithstanding anything in Section 8.1 or 8.2 to the contrary, the
indemnification obligations set forth in Sections 8.1 and 8.2 shall be subject
to the following limitations:

          (i) If an indemnification claim is made under clause (i) of Section
     8.1 (other than claims made for breach of the representations and
     warranties in Sections 3.2, 3.6(a), 3.6(c) and 3.17) or clause (i) of
     Section 8.2 (other than claims made for breach of the representations and
     warranties in Section 4.2), Parent or Purchaser, as the case may be, (A)
                                                                           -
     shall not be required to indemnify the other party for any individual Loss
     or series of Losses arising out of the same or similar facts or
     circumstances totaling less than $250,000 ("De Minimis Losses") and (B)
                                                 -----------------        -
     shall be required to provide indemnification only at such time as the
     aggregate amount of Losses (other than De Minimis Losses) arising under
     clause (i) of Section 8.1 (other than claims made for breach of the
     representations and warranties in Sections 3.2, 3.6(a), 3.6(c) and 3.17) or
     clause (i) of Section 8.2 (other than claims made for breach of the
     representations and warranties in Section 4.2), as the case may be, exceeds
     on a cumulative basis an amount equal to $16,500,000 (the "Deductible") in
                                                                ----------
     which event the Indemnifying Party shall indemnify only to the extent of
     any excess over such Deductible up to a maximum total liability of
     $500,000,000 (not including any amounts excluded under the Deductible but
     including the amount of the Environmental Indemnity Cap, the "General
                                                                   -------
     Indemnity Cap");
     -------------

                                       57



          (ii) the indemnification obligations of Parent or Purchaser, as the
     case may be, under (A) clauses (ii), (iii), (iv) and (vi) of Section 8.1
                         -
     and under clauses (ii), (iii), (iv), (v), (vi), (vii) and (viii) of Section
     8.2, respectively, and (B) Section 9.5 shall not be subject to the
                             -
     Deductible, the General Indemnity Cap or the Environmental Indemnity Cap;

          (iii) any indemnification obligations of Parent under clause (i) of
     Section 8.1 arising as a result of a Title Objection or any Title Defect
     (other than Permitted Real Property Exceptions) that is not disclosed by
     the Surveys or the Title Commitments and that is not cured by Parent prior
     to Closing shall not be subject to the Deductible or considered a De
     Minimis Loss;

          (iv) none of the Purchaser Indemnitees shall be entitled to
     indemnification (A) under Section 8.1 with respect to the condition or
     current or past operation of, or any Loss arising with respect to, any of
     the Impaired Assets, (B) under Section 8.1(i) with respect to any
     Pre-Closing Environmental Liabilities or (C) under clause (A) of Section
     8.1(i) with respect to any Assumed Pre-Closing Liabilities;

          (v) subject to the other limitations set forth herein, the
     indemnification obligations of Parent with respect to any Pre-Closing
     Environmental Liabilities shall only include Losses incurred in response to
     any Environmental Claim and/or as necessary to comply with Applicable Law;
     and

          (vi) any indemnification obligations of Parent with respect to the New
     Source Review/Prevention of Significant Deterioration regulations as a
     result of the Section 114 investigations at the Mills relating to the
     period prior to the Closing which are identified as Assumed Parent
     Environmental Liabilities on Exhibit A-1 shall be limited to any fines
     imposed by any Governmental Entity and any attorney's and consultant's fees
     and expenses incurred in connection with such fines, and Purchaser shall be
     responsible for all other Losses arising from such matters.

     (b) To the extent any Indemnified Party is seeking indemnification for
Losses in respect of the breach of any representation or warranty (i.e., a claim
under clause (i) of Section 8.1 or clause (i) of Section 8.2, as the case may
be), such Indemnified Party shall be entitled to indemnity only for those Losses
as to which such Indemnified Party has given written notice thereof to the
Indemnifying Party prior to the termination of any applicable survival period
for such representation or warranty applicable to such Loss pursuant to Section
9.1. Such Indemnified Party may at its option give notice under this

                                       58



Article VIII as soon as it has become aware of a potential claim in respect of
any breach of such representation or warranty, regardless of whether any Losses
have been suffered, so long as such Indemnified Party shall in good faith
determine that such potential claim is not frivolous or that such Indemnified
Party may be liable or otherwise incur Losses as a result of such claim or
otherwise and shall give written notice of such claim to the Indemnifying Party.
Any written notice delivered by such Indemnified Party pursuant to this Section
8.3 shall set forth with reasonable specificity the basis of the claim for
Losses and, if practicable, an estimate of the amount thereof.

     (c) If an Indemnified Party receives, prior to or subsequent to its receipt
of any indemnification from an Indemnifying Party, an amount in respect of the
Losses for which it has received indemnification under insurance coverage, then
such Indemnified Party shall promptly reimburse the Indemnifying Party for any
indemnification payment made by such Indemnifying Party with respect such Losses
up to the amount received under such insurance coverage, provided that the
                                                         --------
Indemnified Party shall have no obligation to seek reimbursement under any such
insurance coverage.

     (d) Purchaser acknowledges and agrees that to the extent any Losses are
specifically attributable to any change in any Applicable Law occurring after
the Closing Date (other than a change in law relating to Taxes), Parent shall
not be liable for indemnification pursuant to this Article VIII to the extent
such Losses are so attributable to such change in Applicable Law.

     (e) Notwithstanding anything to the contrary contained herein, no
indemnification shall be provided under this Article VIII in respect of any
consequential, punitive (other than as part of a loss resulting from a third
party claim), special, exemplary or similar damages or lost profits.

     (f) Parent shall be required to indemnify Purchaser Indemnitees under
clause (i) of Section 8.1 and under clause (ii) of Section 8.1 with respect to
breaches of the covenants in Section 5.1 only for those Losses as to which a
Purchaser Indemnitee has given Parent written notice on or prior to March 31,
2003.

     (g) Parent shall be required to indemnify Purchaser Indemnitees under
clause (v) of Section 8.1 with respect to Losses resulting from or arising out
of Assumed Parent Environmental Liabilities only for those Losses as to which a
Purchaser Indemnitee has given Parent written notice on or prior to the tenth
anniversary of the Closing Date (subject in all cases to the Environmental
Indemnity Cap).

     (h) The indemnification obligations of Parent and Purchaser under clauses
(ii) (subject to applicable statutes of limitation), (iii), (iv) and (vi) of
Section 8.1 and under clauses (ii), (iii), (iv), (v), (vi), (vii) and (viii) of
Section 8.2, respectively, and under Section 9.5 shall not expire.

                                       59



     8.4 Procedures Relating to Third Party Claims (other than Pre-Closing
         -----------------------------------------------------------------
Environmental Liabilities). In the case of any claim asserted by a third party
- -------------------------
(a "Third Party Claim") against a party entitled to indemnification under this
    -----------------
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
                -----------------
Party to the party required to provide indemnification (the "Indemnifying
                                                             ------------
Party") promptly after such Indemnified Party has actual knowledge of any claim
- -----
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom, provided that (i)
                                                            --------       -
the counsel for the Indemnifying Party who shall conduct the defense of such
claim or litigation shall be reasonably satisfactory to the Indemnified Party,
(ii) the Indemnified Party may participate in such defense at such Indemnified
 --
Party's expense, and (iii) the failure by any Indemnified Party to give notice
                      ---
as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except to the extent that such
Indemnifying Party is materially prejudiced as a result of such failure to give
notice (except that the Indemnifying Party shall not be liable for any expenses
incurred by the Indemnified Party during the period in which the Indemnified
Party failed to give such notice other than expenses reasonably incurred in
respect of any such claim or litigation). Such notice shall specify the
subsection of Section 8.1 or 8.2 (as applicable) under which indemnification is
being sought; provided that any failure to specify shall not relieve the
Indemnifying Party of its indemnification obligation except to the extent the
Indemnifying Party is materially prejudiced thereby. Except with the prior
written consent of the Indemnified Party, no Indemnifying Party, in the defense
of any such claim or litigation, shall consent to entry of any judgment or
order, interim or otherwise, or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the ability of
Purchaser to conduct its business, or that the Indemnified Party may have
available to it one or more defenses or counterclaims that are inconsistent with
one or more of those that may be available to the Indemnifying Party in respect
of such claim or any litigation relating thereto, the Indemnified Party shall
have the right at all times to participate with its own counsel in the defense,
settlement, negotiations or litigation relating to any such claim at the sole
cost of the Indemnifying Party. In the event that the Indemnifying Party does
not accept the defense of any matter as above provided, the Indemnified Party
shall have the full right to defend against any such claim or demand and shall
be entitled to settle or agree to pay in full such claim or demand. In any
event, the Indemnifying Party and the Indemnified Party shall cooperate in the
defense of any claim or litigation subject to this Section 8.4 and the records
of each shall be available to the other with respect to such defense.

                                       60



     8.5  Procedures Relating to Pre-Closing Environmental Liabilities.
          ------------------------------------------------------------

     (a) Control. For purposes of this Section 8.5, "exclusive control" over
         -------
Pre-Closing Environmental Liabilities shall mean the exclusive right to (i)
                                                                         -
obtain any tests and studies reasonably necessary to define and delineate the
extent of any contamination or noncompliance, (ii) contact Governmental
                                               --
Entities, make any reports to Governmental Entities, submit any remediation or
compliance plans to such entities, negotiate with such entities, and otherwise
deal with such entities, (iii) prepare the work plan for any remediation or
                          ---
correction of noncompliance to be submitted to a Governmental Entity, and (iv)
                                                                           --
conduct or direct any such remediation or correction of noncompliance.
Notwithstanding the foregoing, all Pre-Closing Environmental Liabilities shall
be managed in good faith and all activities conducted in connection therewith
shall be undertaken promptly and concluded expeditiously using all reasonable
efforts, subject to the schedules and approvals required by the Governmental
Entity asserting jurisdiction thereover. The parties shall consult in good faith
and provide such information as is reasonably requested in connection with the
management of all Pre-Closing Environmental Liabilities. The parties shall
comply with all Applicable Laws with respect to the resolution of any
Pre-Closing Environmental Liability. Purchaser shall provide Parent with
reasonable access to the Real Property in order for Parent to manage any
Pre-Closing Environmental Liability under its control. Parent shall manage such
liability so as not to unreasonably interfere with Purchaser's operations, the
Carve Out Business or the Real Property.

     (b) Control by Purchaser. After the Closing, Purchaser shall have Exclusive
         --------------------
Control over all Pre-Closing Environmental Liabilities that are (i) Assumed
                                                                 -
Purchaser Environmental Liabilities or (ii) Assumed Parent Environmental
                                        --
Liabilities but, in the case of clause (ii) of this Section 8.5(b), only (x) if
                                                                          -
Parent's indemnification obligations under clause (v) of Section 8.1 have
terminated pursuant to the terms of such clause or (y) if the survival period
                                                    -
specified in Section 8.3(g) has expired.

     (c) Control by Parent. After the Closing, Parent shall have exclusive
         -----------------
control over all Pre-Closing Environmental Liabilities that are (i) Excluded
                                                                 -
Environmental Liabilities or (ii) Assumed Parent Environmental Liabilities but,
                              --
in the case of this clause (ii) of this Section 8.5(c), only (x) if the
                                                              -
indemnification provided for in such clause has not terminated pursuant to the
terms of such clause and (y) if the survival period in Section 8.3(g) has not
                          -
expired.

     (d) Allocation Between Pre-Closing and Post-Closing Activities. If there is
         ----------------------------------------------------------
a dispute as to whether, and the extent to which an environmental condition or
instance of non-compliance constitutes a Pre-Closing Environmental Liability,
the parties shall meet and try to resolve the dispute, and then (if
unsuccessful) submit their positions, including

                                       61



all supporting factual and technical information, to a licensed professional
employed by a reputable environmental consulting firm having no existing
relationship with either Parent or Purchaser and mutually acceptable to both
parties (the "Arbitrator"). The Arbitrator shall allocate responsibility for
              ----------
such condition or non-compliance between Parent and Purchaser based on a
reasonable assessment of all the available evidence, provided, however, in the
                                                     --------  -------
event that the Arbitrator determines that post-closing activities have
contributed to the condition or non-compliance, that Purchaser's responsibility
shall be apportioned based on the period of time and the volume of Materials of
Environmental Concern that Purchaser contributed to the contamination or
non-compliance. As soon as practicable, but in no event later than twenty
Business Days after referral of the dispute to the Arbitrator (and in any event,
prior to any deadline set by a Governmental Entity with jurisdiction over such
matter), the Arbitrator shall issue a written report to the parties setting
forth in reasonable detail its determination of the disputed issues. Expenses of
the Arbitrator shall be borne equally by the parties. The decision of the
Arbitrator shall be final and binding.

     8.6 Acknowledgment; Exclusive Remedies. The parties acknowledge and agree
         ----------------------------------
that their sole and exclusive remedy with respect to any and all claims relating
to the subject matter of this Agreement (other than any claim of fraud or
intentional misrepresentation) shall be pursuant to the indemnification
provisions set forth in Section 9.5(a) and this Article VIII, provided that
                                                              --------
nothing herein shall limit the rights of either party to seek and obtain
injunctive relief to specifically enforce the other party's obligations. In
furtherance of the foregoing, the parties hereto hereby waive, to the fullest
extent permitted under Applicable Law, any and all rights, claims and causes of
action (other than any claim of fraud or intentional misrepresentation) with
respect to the subject matter of this Agreement that they may have against each
other, their respective affiliates and their respective officers, directors,
employees, stockholders, agents and representatives arising under or based upon
any Federal, state, local or foreign statute, law, ordinance, rule or regulation
or common law, except pursuant to the indemnification provisions set forth in
Section 9.5(a) and this Article VIII.

                                   ARTICLE IX
                              Additional Agreements
                              ---------------------

     9.1 Survival of Representations and Warranties, etc. Except as set forth in
         -----------------------------------------------
Section 8.3, the covenants and agreements of the parties shall continue in full
force and effect and shall survive the Closing. The representations and
warranties contained in this Agreement shall survive the execution and delivery
of this Agreement, any examination by or on behalf of the parties hereto and the
completion of the transactions contemplated herein, but only to the extent
specified below:

                                       62



     (a) except as set forth in clauses (b), (c) and (d) below, the
representations and warranties contained in Article III and Article IV shall
survive until March 31, 2003;

     (b) the representations and warranties contained in Sections 3.1, 3.2,
3.6(a), 3.6(c), 4.1 and 4.2 shall survive without limitation;

     (c) the representations and warranties of Parent contained in Section 3.17
shall survive as to any Tax covered by such representations and warranties for
so long as any statute of limitations for such Tax remains open, in whole or in
part, including without limitation by reason of waiver of such statute of
limitations; and

     (d) the representations and warranties in Section 3.16 shall terminate at
Closing.

     9.2 Confidentiality. The Confidentiality Agreement shall terminate as of
         ---------------
the Closing. Except as otherwise provided in this Agreement after the Closing,
(i) Parent will cause its Subsidiaries (and their respective accountants,
 -
counsel, consultants, employees and agents to whom they disclose such
information) to keep confidential all information in the possession of Parent,
or to which Parent is given access pursuant to Section 5.2 or 9.4, after the
Closing that constitutes a part of the Acquired Assets and (ii) Purchaser will,
                                                            --
and will cause its Subsidiaries (and their respective accountants, counsel,
consultants, employees and agents to whom they disclose such information) to,
keep confidential all information in the possession of Purchaser, or to which
Purchaser is given access pursuant to Section 5.2 or 9.4, that relates to Parent
and is not information related primarily to the Acquired Assets. The provisions
of this Section 9.2 shall not apply to the disclosure by either party hereto or
their respective Subsidiaries of any information, documents or materials (w)
                                                                          -
which are, or become, publicly available, other than by reason of a breach of
this Section 9.2 by the disclosing party or any Affiliate of the disclosing
party, (x) received from a third party not bound by any confidentiality
        -
agreement with the other party hereto, (y) required by Applicable Law to be
                                        -
disclosed by such party, or (z) necessary to establish such party's rights under
                             -
this Agreement or any Ancillary Document, provided that, in the case of clauses
(y) and (z), the Person intending to make disclosure of confidential information
will promptly notify the party to whom it is obliged to keep such information
confidential and, to the extent practicable, provide such party a reasonable
opportunity to prevent public disclosure of such information.

     9.3 Expenses. Whether or not the Closing takes place, and except as
         --------
otherwise specifically provided in this Agreement, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs or expenses provided that
                                                                   --------
Purchaser shall reimburse Parent for $280,000 for the fees of Arthur Andersen in
connection with the audit of the Audited Financial Statements.

                                       63



     9.4 Certain Information. After the Closing, upon reasonable written notice,
         -------------------
each of the parties hereto shall furnish or cause to be furnished to each other
and their respective accountants, counsel and other representatives access,
during normal business hours and upon reasonable prior notice, to such
information, including records pertinent to the Carve Out Business (other than
information or records which are the subject of attorney-client privilege or the
disclosure of which is prohibited by law or personnel or employee medical
files), and assistance relating to the Carve Out Business as is reasonably
necessary for financial reporting and accounting matters, the preparation and
filing of any returns, reports or forms or the defense of, or response required
under, or pursuant to, any lawsuit, action or proceeding (including any
proceeding involving Parent or its Affiliates and any environmental matters
related to the Carve Out Business). Each party shall make its personnel
available as reasonably requested by the other party to provide depositions,
testimony or other assistance with respect to any lawsuit, claims or
proceedings. After the Closing, each of Parent and its Affiliates, on the one
hand, and Purchaser, on the other, agrees to deliver promptly to each other all
mail and other documents (other than any mail or document which is the subject
of attorney-client privilege or the disclosure of which is prohibited by law or
personnel or employee medical files) received by such party which relate to any
business conducted by such other party or its Affiliates after the Closing. Each
such party shall also furnish or cause to be furnished to the other and their
respective accountants, counsel and other representatives access, during normal
business hours and upon reasonable prior notice, to such information for any
other reasonable business purpose. Each such party shall, and shall cause its
affiliates to, retain until five years after the Closing Date all such records
pertinent to the Carve Out Business which are owned by such Person immediately
after the Closing; after the end of such period, before disposing of any such
records, the applicable party shall give notice to such effect to the other, and
shall give the other, at the other's cost and expense, a reasonable opportunity
to remove and retain all or any part of such records as the other may select.
Cooperation with respect to Tax matters shall be governed by Section 9.5.

     9.5 Tax Matters.
         -----------

     (a) Tax Indemnification. Notwithstanding anything in this Agreement or the
         -------------------
Ancillary Documents to the contrary other than Section 9.5(k), Parent shall be
responsible for, shall indemnify and hold Purchaser and Purchaser Indemnitees
harmless from and against, and shall pay (i) all Taxes payable with respect to,
                                          -
incurred by, or asserted against any of the Transferred Subsidiaries for all
Pre-Closing Tax Periods, to the extent the liability for such Taxes exceeds the
accrual (if any) for such Taxes as a liability on the Closing Working Capital
Statement as finally determined in accordance with Section 2.3 and Exhibit B,
(ii) all Taxes for which any Transferred Subsidiary may be held liable because
 --
it was, prior to the Closing, a member of any combined, consolidated or unitary
group for purposes of filing Tax Returns or paying Taxes or a transferee or
successor of any other Person, (iii) all Taxes resulting from the making of
                                ---

                                       64



the Section 338(h)(10) Elections, (iv) all Taxes imposed on, with respect to or
                                   --
relating to the Acquired Assets for all Pre-Closing Tax Periods and (v) all
                                                                     -
Taxes imposed with respect to, relating to or as a result of the Ashdown #64
Lease or the termination of such lease, in each of the above cases together with
interest, additions and penalties and any out-of-pocket fees and expenses
(including reasonable attorneys' and accountants' fees) incurred by Purchaser or
any Purchaser Indemnitee.

     (b) Straddle Periods. For purposes of Section 9.5(a), any liability of a
         ----------------
Transferred Subsidiary or liability with respect to the Acquired Assets
attributable to a Straddle Period shall be apportioned between the portion of
such period ending on the Closing Date and the portion beginning on the day
after the Closing Date (i) in the case of real and personal property Taxes, by
apportioning such Taxes on a per diem basis and (ii) in all other cases, by a
closing of the books as of the close of the Closing Date as if the relevant
taxable period ended on the Closing Date.

     (c) Section 338(h)(10) Elections.
         ----------------------------

          (i) Election. Sellers and Purchaser shall join in an election pursuant
              --------
     to Section 338(h)(10) of the Code with respect to the purchase and sale of
     the U.S. Shares and all comparable elections under state and local Tax law
     (together with the elections under Section 338(h)(10) of the Code, the
     "Section 338(h)(10) Elections").
      ----------------------------

          (ii) Forms.
               -----

               (A) Purchaser shall be responsible for the preparation of all
          forms and schedules required to be filed in connection with the
          Section 338(h)(10) Elections (the "Section 338 Forms"), including
                                             -----------------
          without limitation IRS Form 8023 (or any successor form) and all
          attachments required to be filed therewith pursuant to applicable
          Treasury Regulations ("Form 8023"). Parent and Purchaser shall
                                 ---------
          cooperate in drafting and making final the Section 338 Forms.
          Purchaser shall be responsible for filing the Section 338 Forms with
          the proper taxing authorities, provided that Parent shall be
                                         --------
          responsible for filing any Section 338 Form that must be filed with a
          Tax Return described in Section 9.5(e)(i).

               (B) At least 10 days prior to the Closing Date, Purchaser shall
          furnish Parent with four copies of each Form 8023 prepared by
          Purchaser and executed by the proper party on behalf of Purchaser. On
          or prior to the Closing Date, Parent shall deliver to Purchaser three
          copies of each such Form 8023 executed by the proper party on behalf
          of Parent. Purchaser shall not file any Form 8023 with any Tax
          authority until the earlier of (x) the date the parties have agreed to
                                          -
          a Final Allocation

                                       65



          pursuant to Section 9.5(c)(iii) or (y) five business days prior to the
          last day for - filing the Section 338(h)(10) Elections. If Purchaser
          files any Form 8023 prior to an agreement between Purchaser and Parent
          regarding a Final Allocation pursuant to Section 9.5(c)(iii),
          Purchaser shall file such Form 8023 without completing Section E or F
          of such Form 8023 (unless failure to complete those sections would
          render the Section 338(h)(10) Election invalid).

               (C) Purchaser shall prepare (x) any corrections, amendments or
                                            -
          supplements to any Form 8023 as executed by Purchaser and Parent
          pursuant to Section 9.5(c)(ii)(B), (y) each IRS Form 8594 ("Form
                                              -                       ----
          8594") and (z) any state or local reports or forms that are each
          ----        -
          necessary or appropriate for purposes of complying with the
          requirements for making the Section 338(h)(10) Elections (each, an
          final each Additional Section 338 Form. At least 30 days prior to the
                     ---------------------------
          latest date for the filing of each Additional Section 338 Form,
          Purchaser shall furnish Parent with four copies of such Additional
          Section 338 Form prepared by Purchaser and executed by the proper
          party on behalf of Purchaser for Parent's review and approval. At
          least 15 days prior to the latest date for the filing of each
          Additional Section 338 Form, Purchaser and Parent shall agree upon the
          final form and content of such Additional Section 338 Form, and Parent
          shall deliver to Purchaser three copies of such Additional Section 338
          Form executed by the proper party on behalf of Parent. Parent and
          Purchaser shall cooperate in determining the final form and content of
          such Additional Section 338 Form, and any dispute with respect thereto
          shall be resolved in favor of Purchaser, provided that Purchaser's
          position is reasonable. Purchaser shall cause each Additional Section
          338 Form to be executed by the proper party on behalf of Purchaser,
          and shall be responsible for filing such Additional Section 338 Form
          with the proper taxing authorities, provided that Parent shall be
                                              --------
          responsible for filing any Additional Section 338 Form that must be
          filed with a Tax Return described in Section 9.5(e)(i).

          (iii) Allocation. On or before the date that is 90 days after the
                ----------
     Closing Date, Purchaser shall provide to Parent an allocation of the
     "aggregate deemed sales price" (the "ADSP") and the adjusted grossed-up
                                          ----
     basis ("AGUB") for the deemed sale and purchase of assets resulting from
             ----
     the making of the Section 338(h)(10) Elections, reflecting the portion of
     the Purchase Price allocated to the U.S. Shares pursuant to Section
     9.5(d)(i). The allocation shall indicate the fair market values of the
     assets of the Transferred U.S. Subsidiary as of the Closing Date by class
     of assets described in Section 1.338-6(b) of the Treasury Regulations and,
     with respect to Class V assets (as defined in such Treasury

                                       66



     Regulation), the fair market value of the groups of assets within such
     class with the same tax recovery period and subject to the same applicable
     depreciation method in the hands of Purchaser. Parent and Purchaser shall
     cooperate in determining a final allocation of such purchase price for the
     sale of assets resulting from the making of the Section 338(h)(10)
     Elections (the "Final Allocation"), and any dispute with respect thereto
                     ----------------
     shall be resolved in favor of Purchaser, provided that Purchaser's position
     is reasonable. Parent and Purchaser shall complete each executed Form 8023
     and Form 8594 in accordance with the Final Allocation.

          (iv) Modification; Revocation. Purchaser and Parent agree that neither
               ------------------------
     of them shall, or shall permit any of their Affiliates to, take any action
     to modify the Section 338 Forms following the execution thereof, or to
     modify or revoke the Section 338(h)(10) Elections following the filing of
     the Section 338 Forms, without the written consent of Parent and Purchaser,
     as the case may be, unless required to by any Tax authority (provided that
     any such requirement does not result from any act or omission of either
     party) after reasonable defense thereof, which shall not include seeking
     judicial review unless the other party shall have agreed to assume and pay
     all reasonable legal fees and expenses incurred in connection therewith.

          (v) Consistent Treatment. Purchaser and Parent shall, and shall cause
              -------------------
     their respective Affiliates to, file all Tax Returns in a manner consistent
     with the information contained in the Section 338 Forms and the Additional
     Section 338 Forms as filed, and neither shall take any position for Tax or
     financial purposes (including, without limitation, by agreeing to or
     accepting any proposed audit adjustment or assessment) that is inconsistent
     with such information without the express written consent of the other,
     which shall not be unreasonably withheld.

          (vi) Expenses. Notwithstanding any other provision of this Agreement
               --------
     or the Ancillary Documents, Purchaser and its Affiliates (including the
     Transferred U.S. Subsidiaries following the Closing), on the one side, and
     Parent and the Non-Transferred Subsidiary Affiliates, on the other side,
     shall bear their respective administrative, appraisal, legal, accounting
     and similar expenses resulting from the making of the Section 338(h)(10)
     Elections.

          (vii) Notices. All notices and other materials required to be provided
                --------
     pursuant to this Section 9.5(c) shall be provided as set forth in Section
     10.1, but if to Purchaser, additional copies shall be sent to Gary M.
     Friedman, Debevoise & Plimpton, 875 Third Avenue (until July 9, 2001), 919
     Third Avenue (after July 9, 2001), New York, New York 10022 (Fax: (212)
     909-6836).

                                       67



     (d) Allocation.
         ----------

          (i) Allocation Statement. On or before the date that is 90 days after
              --------------------
     the Closing Date, Purchaser shall provide to Parent for Parent's review and
     approval (i) an allocation of the consideration under the Agreement between
               -
     the Shares and the Acquired Assets, as contemplated under Section 1.5(b),
     and (ii) a schedule indicating the fair market value of the Acquired Assets
          --
     as of the Closing Date by class of assets described in Section 1.338-6(b)
     of the Treasury Regulations and, with respect to Class V assets (as defined
     in such Treasury Regulation), the fair market value of the groups of assets
     within such class with the same tax recovery period and subject to the same
     applicable depreciation method in the hands of Purchaser (the "Allocation
                                                                    ----------
     Statement"). Purchaser and Parent shall cooperate in connection with
     ---------
     finalizing the form and content of the Allocation Statement, and any
     dispute with respect thereto shall be resolved in favor of Purchaser,
     provided that Purchaser's position is reasonable.

          (ii) Reporting. Purchaser and Parent shall file and cause to be filed
               ---------
     all Tax Returns and execute such other documents as may be required by any
     taxing authority, in a manner consistent with the Allocation Statement, as
     it may be revised from time to time, and shall not take any position
     inconsistent therewith in any examination of any Tax Return, in any refund
     claim or in any litigation or investigation, except as required by
     applicable law, in which case the party taking such inconsistent position
     shall make reasonable efforts to notify such other party in advance of
     taking such inconsistent position. If any such allocation is audited by a
     taxing authority, the party receiving notice thereof shall promptly notify
     and consult with the other party and shall keep such other party informed
     of the status of such audit. Purchaser shall prepare Form 8594 pursuant to
     Section 1060 of the Code relating to the transactions contemplated by this
     Agreement based on the Allocation Statement, as it may be revised from time
     to time, and deliver such form to Parent. Purchaser and Parent shall file,
     or cause the filing of, such form with each relevant taxing authority.

     (e) Returns.
         -------

          (i) Parent's Responsibility. Parent shall cause to be prepared and
              -----------------------
     duly filed, and Parent and Purchaser shall cause the Transferred
     Subsidiaries to join, to the extent permitted by Applicable Law, for all
     taxable periods of the Transferred Subsidiaries ending on or prior to the
     Closing Date (i) the consolidated federal Income Tax Returns of the group
                   -
     of which Parent is the common parent and (ii) the combined, consolidated
                                               --
     or unitary Tax Returns for state, local and foreign Income Taxes which
     includes Parent or any Non-Transferred Subsidiary Affiliate and with
     respect to which any Transferred Subsidiary (x) filed such a Tax Return for
     the most recent taxable period for which a Tax Return has been filed prior
     to

                                       68



     the Closing Date and may file such a Tax Return for subsequent taxable
     periods or (y) is required to file such a Tax Return. Parent shall file, or
                 -
     shall cause to be filed, all other Tax Returns relating to the business or
     assets of the Transferred Subsidiaries or to the Acquired Assets for all
     taxable periods ending on or prior to the Closing Date. Parent shall cause
     all such Tax Returns to be filed on a basis consistent with the last
     previous such Tax Returns filed in respect of the Transferred Subsidiaries
     or the Acquired Assets, as the case may be.

          (ii) Purchaser's Responsibility. Purchaser shall prepare and file, or
               --------------------------
     cause to be prepared and filed, all Tax Returns relating to the business or
     assets of the Transferred Subsidiaries or to the Acquired Assets other than
     those Tax Returns described in clause (i) of this Section 9.5(e). Purchaser
     shall cause all such Tax Returns, insofar as they relate to items for
     periods including the Closing Date and to the extent permitted by
     applicable Tax law, to be filed on a basis consistent with the last
     previous such Tax Returns filed in respect of the Transferred Subsidiaries
     or the Acquired Assets, as the case may be.

     (f) Refunds. Parent shall be entitled to retain, or receive prompt payment
         ------
from the Transferred Subsidiaries or Purchaser of, any refund or credit with
respect to Taxes including interest received with respect thereto from the
applicable taxing authority (net of any cost or expenses to any Transferred
Subsidiary or Purchaser and excluding (i) any refund accrued as a current asset
on the Closing Working Capital Statement as finally determined in accordance
with Section 2.3, (ii) any refund attributable to or with respect to any item
                   --
described in Section 9.5(g) with respect to which the Transferred Subsidiaries
may not relinquish the right to carry back and (iii) any refund in respect of
                                                ---
any Transfer Tax to the extent such Transfer Tax is the responsibility of
Purchaser under Section 9.5(k) of this Agreement), relating to the Transferred
Subsidiaries or the Acquired Assets that are described as being the
responsibility of Parent in Section 9.5(a). Purchaser or the Transferred
Subsidiaries shall be entitled to retain, or receive prompt payment from Parent
of, any refund or credit with respect to Taxes (net of any cost or expenses to
Parent), plus any interest received with respect thereto from the applicable
taxing authority, relating to the Transferred Subsidiaries or the Acquired
Assets that Parent is not entitled to retain or receive pursuant to the
immediately preceding sentence. Purchaser and Parent shall cooperate with
respect to claiming any refund or credit with respect to Taxes referred to in
this Section 9.5(f), provided that such cooperation shall not unreasonably
                     --------
interfere with the conduct of the business of the parties.

     (g) Carryback of Tax Items. To the extent permitted by law, Purchaser shall
         ----------------------
cause the Transferred Subsidiaries not to carry back any item of income, loss,
credit or deduction from any period beginning after the Closing Date to any
period including or ending prior to the Closing Date.

                                       69



     (h) Cooperation; Returns. Parent and Purchaser shall each provide the other
         -------------------
with such assistance as may be reasonably requested (including making employees
reasonably available to provide information or testimony) in connection with the
preparation of any Tax Return, audit or other examination by any taxing
authority or judicial or administrative proceeding or the determination of
liability for Taxes with respect to the Transferred Subsidiaries and the
Acquired Assets, provided that the foregoing shall be done in a manner so as not
                 --------
to interfere unreasonably with the conduct of the business of the parties.
Parent and Purchaser each shall, and shall cause their Affiliates to, retain
until the longer of (x) seven years after the Closing Date or (y) the full
                     -                                         -
period of the applicable statute of limitations, including any extension
thereof, all Tax Returns, schedules, work papers and other records that are
owned by such Person immediately after the Closing Date and that relate to any
of the Transferred Subsidiaries and the Acquired Assets. After the end of such
period, before disposing of any such Tax Returns, schedules, work papers or
other records, each shall give notice to such effect to the other, and shall
give the other, at the other's cost and expense, a reasonable opportunity to
remove and retain all or any part of such Tax Returns, schedules, work papers or
other records as the other may select.

     (i) Audits.
         ------

          (i) If any Tax authority provides Parent or Purchaser with any written
     notice of a proposed or threatened audit, claim, assessment or other
     dispute concerning Taxes (x) of any of the Transferred Subsidiaries or with
                               -
     respect to the Acquired Assets, in each case for any taxable period ending
     on or prior to the Closing Date, or for any Straddle Period or (y) of
                                                                     -
     Parent or any Affiliate thereof that could reasonably be expected to affect
     the Tax liabilities of any of the Transferred Subsidiaries for taxable
     periods ending on or prior to the Closing Date, the party so informed shall
     in each case promptly notify the other party in writing within 10 days from
     such party's receipt of written notice of such matter. Such notice shall
     contain factual information (to the extent known) describing any asserted
     Tax liability in reasonable detail and shall be accompanied by copies of
     any notice or other documents received from any Tax authority with respect
     to such matter.

          (ii) The party responsible for filing the applicable Tax Return under
     this Section 9.5 shall control any audits, disputes, administrative,
     judicial or other proceedings related to such return. Subject to the
     preceding sentence, if an adverse determination may result in each party
     having responsibility for an amount of Taxes under this Section 9.5, each
     party shall be entitled to fully participate in that portion of the
     proceedings relating to the Taxes with respect to which it may incur
     liability hereunder, and neither party shall enter into a settlement in
     connection with any such proceedings without the consent of the other party
     (which consent shall not be unreasonably withheld). For purposes of

                                       70



     this Section 9.5 the term "participation" shall include (A) participation
                                                              -
     in conferences, meetings or - proceedings with any Tax authority, the
     subject matter of which includes an item for which such party may have
     liability hereunder, (B) participation in appearances before any court or
                           -
     tribunal, the subject matter of which includes an item for which a party
     may have liability hereunder, and (C) with respect to - the matters
                                        -
     described in the preceding clauses (A) and (B), participation in the
     submission and determination of the content of the documentation, protests,
     memorandum of fact and law, briefs, and the conduct of oral arguments and
     presentations.

          (iii) Between the date hereof and the Closing Date, Parent shall give
     prompt notice to Purchaser of any material Tax audit, the assessment of any
     material Tax, the receipt of any notice of material Tax due, or the
     commencement or scheduling of any administrative or judicial proceeding
     with respect to the determination, assessment, or collection of any
     material Tax with respect to any of the Transferred Subsidiaries and the
     Acquired Assets. Such notice shall provide reasonable detail of the
     asserted material Tax liability and shall include copies of any written
     notices or other documentation received from the applicable Tax authority.

     (j) FIRPTA. At the Closing, Sellers shall deliver to Purchaser duly
         ------
executed certificates certifying that the transactions contemplated hereby are
exempt from withholding under Section 1445 of the Code.

     (k) Transfer Taxes.
         --------------

          (i) Parent's Responsibility. Parent shall be responsible for, shall
              ----------------------
     indemnify and hold Purchaser and Purchaser Indemnitees harmless from and
     against, and shall pay, (A) 50% of the Joint Transfer Taxes and (B) all
`                             -                                       -
     Transfer Taxes in excess of the Joint Transfer Taxes.

          (ii) Purchaser's Responsibility. Purchaser shall be responsible for,
               --------------------------
     shall indemnify and hold Parent and Parent Indemnitees harmless from and
     against, and shall pay, 50% of the Joint Transfer Taxes.

          (iii) Returns; Cooperation. Parent shall prepare and file all Tax
                --------------------
     Returns required to be filed in respect of the Transfer Taxes. Parent and
     Purchaser shall cooperate in timely making and filing all Tax Returns as
     may be required to comply with the provisions of any Transfer Tax laws and
     in making arrangements that lawfully minimize Transfer Taxes without
     increasing other Taxes above the amount that would otherwise be payable in
     the absence of such arrangements and without materially interfering with
     the conduct of the business of the parties. To the extent legally able to
     do so, each party shall execute and deliver to the other

                                       71



     party exemption certificates satisfactory in form and substance to such
     other party with respect to Transfer Taxes as either the Purchaser or
     Parent may reasonably request. Such certificates shall be in the form, and
     shall be signed by the proper party, as provided under applicable Tax law.

     (l) Tax Treatment. Purchaser and Parent agree to treat any indemnity
         -------------
payment made pursuant to Article VIII or Section 9.5(a) as an adjustment to the
Purchase Price for all Tax purposes.

     (m) Tax Sharing Agreements. On the Closing Date, all Tax sharing agreements
         ----------------------
and other similar arrangements between any of the Transferred Subsidiaries, on
the one side, and Parent and its Affiliates, on the other side, shall be
terminated, and no additional payments shall be made thereunder.

     (n) Effect of Disclosure. No disclosure pursuant to Section 3.17 shall
         --------------------
affect the express obligations that Parent otherwise has under this Section 9.5,
provided that there shall not be any duplicative payments with respect to the
- --------
same item.

     (o) Coordination with Article VIII. In the case of any inconsistency
         ------------------------------
between Article VIII and this Section 9.5, this Section 9.5 shall control with
respect to Tax matters.

     9.6 Name Changes.
         ------------

     (a) No later than 30 days after the Closing Date, Purchaser shall cease
doing business under or utilizing as a trademark, trade name or service mark the
names "Georgia-Pacific" or "G-P", alone or in combination with any other words,
names or terms or variations of such words, names or terms, subject to
Purchaser's continuing right to sell or dispose in any manner of Inventory
bearing any trademark, tradename or tradenames or Parent or one of its
Affiliates that is completed or in process as of the Closing Date and to
continue for a period not exceeding 180 days from the Closing Date using any
stationary and any other physical assets that are held at the Mills as of the
Closing Date, in each case, to the extent bearing any such mark, name or term.

     (b) Following the Closing Date, Parent shall cease doing business under any
of the trademarks or trade names included in the Acquired Assets.

     9.7 Use of Certain Information. Parent agrees that Purchaser shall have the
         --------------------------
right to use in the operation of the Mills any know-how, formula, process and
other proprietary information that is (i) owned by Parent or any of its
Affiliates, (ii) utilized in any material respect in the conduct of the Carve
Out Business, and (iii) is not an Acquired Asset. The preceding sentence does
not apply to any Computer Software, Computer Hardware or any computer services
or the business records listed on Section 1.2(ii) of the Parent Disclosure
Letter. Purchaser shall take reasonable steps to protect the

                                       72



confidentiality of such information and will not disclose such information to
any third party or use such information for any purpose other than the operation
of the Mills in each case to the extent that it is protected by Parent and
Parent otherwise retains a proprietary interest therein.

     9.8 Woodland Landfill. Following the Closing, Purchaser will continue to
         -----------------
process the runoff from the Woodland landfill through the Woodland Mill's
wastewater treatment facility on a basis consistent with past practice.

                                   ARTICLE X
                               General Provisions
                               ------------------

     10.1 Notices. All notices and other communications hereunder shall be in
          -------
writing (including facsimile or similar writing) and shall be sent, delivered or
mailed, addressed or faxed:

                  if to Purchaser,to:   Domtar Inc.
                                        395 de Maisonneuve Blvd.
                                        Montreal, Quebec
                                        H3A 1L6
                                        Attn:  Corporate Secretary
                                        Facsimile No.:  514-848-6850

                  with a copy to:       Debevoise & Plimpton
                                        875 Third Avenue (until July 9, 2001)
                                        919 Third Avenue (after July 9, 2001)
                                        New York, New York  10022
                                        Attn:  Alan H. Paley and Paul S. Bird
                                        Facsimile No.:  (212) 909-6836

                  if to any Seller,to:  Georgia-Pacific Corporation
                                        133 Peachtree Street, N.E.
                                        Atlanta, Georgia 30303
                                        Attn:  Office of General Counsel
                                        Facsimile No.:  (404) 230-7543

                   with a copy to:      King & Spalding
                                        191 Peachtree Street
                                        Atlanta, Georgia 30303
                                        Attn:  Michael J. Egan
                                        Facsimile No.:  (404) 572-5146

                                       73



     Each such notice or other communication shall be given (i) by hand
                                                             -
delivery, (ii) by nationally recognized courier service, or (iii) by facsimile,
           --                                                ---
receipt confirmed. Each such notice or communication shall be effective (x) if
                                                                         -
delivered by hand or by nationally recognized courier service, when delivered at
the address specified in this Section 10.1 (or in accordance with the latest
unrevoked direction from such party), and (y) if given by facsimile, when such
                                           -
facsimile is transmitted to the facsimile number specified in this Section 10.1
(or in accordance with the latest unrevoked direction from such party), and
confirmation is received.

     10.2 Severability. If any provision of this Agreement (or any portion
         -------------
thereof) or the application of any such provision (or any portion thereof) to
any Person or circumstance is inoperative or unenforceable for any reason, the
remainder of this Agreement will continue in full force and effect and shall not
have the effect of rendering the provision (or portion thereof) in question
inoperative or unenforceable in any other case or circumstance, or of rendering
any other provision of this Agreement (or any portion thereof) invalid,
inoperative or unenforceable to any extent whatsoever. The parties further agree
to replace such invalid, illegal or unenforceable provision with a valid, legal
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid, illegal or unenforceable
provision.

     10.3 Counterparts. This Agreement may be executed in two or more
          ------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered (including by facsimile) to the other parties.

     10.4 Entire Agreement; No Third Party Beneficiaries. Except as set forth in
          ----------------------------------------------
this Section 10.4, this Agreement (including the Disclosure Letters and exhibits
referred to herein), the Ancillary Documents and the Confidentiality Agreement
(i) constitute the entire agreement and supersede all prior agreements and
 -
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) except as provided in Section 9.5 and Article
                           --
VIII with respect to indemnification of Indemnified Parties hereunder, are not
intended to confer upon any Person other than the parties identified herein and
their successors and permitted assigns any rights or remedies hereunder. Except
as expressly set forth in Article III, none of Parent, Parent's representatives,
Parent's Affiliates or any other person has made any representation or warranty,
expressed or implied, with respect to the Carve Out Business, the Acquired
Assets or the Assumed Liabilities or with respect to any information related
thereto furnished or made available to Purchaser and its representatives,
including any information prepared or provided by Morgan Stanley & Co.
Incorporated and any information, documents or material made available in any
"data rooms" or management presentations or in any other form in expectation of
the transactions contemplated hereby.

                                       74



     10.5 Attachments. Every Disclosure Letter, Schedule and Exhibit referred to
          ----------
in this Agreement is incorporated into this Agreement by reference. The parties
hereto acknowledge and agree that (i) the Disclosure Letters are qualified in
                                   -
their entirety by reference to specific provisions of the Agreement, and are not
intended to constitute, and shall not be construed as constituting,
representations or warranties of the parties hereto, except as and to the extent
specifically provided in the Agreement; (ii) inclusion of information in the
                                         --
Schedules shall not be construed as an admission that such information is
material to the operation and use of the Carve Out Business or the business,
results of operations or financial condition of Parent, or NPI or their
respective Affiliates; (iii) matters reflected in the Disclosure Letters are not
                        ---
necessarily limited to matters required by the Agreement to be reflected in the
Disclosure Letters and such additional matters are set forth for informational
purposes and do not necessarily include other matters of a similar nature; and
(iv) Disclosure Letter numbers and titles inserted on the Disclosure Letters are
 --
for convenience of reference only and shall to no extent have the effect of
amending or changing the express description of such Disclosure Letter as set
forth in the Agreement.

     10.6 Governing Law, etc. This Agreement shall be governed in all respects,
          ------------------
including as to validity, interpretation and effect, by the laws of the State of
New York, without giving effect to its principles or rules of conflicts of laws
to the extent that such principles or rules would require the application of the
law of another jurisdiction. Except as otherwise provided in this Agreement or
the Ancillary Documents, this Section 10.6 shall govern all disputes among the
parties hereto. Each of the parties hereto agrees to attempt in good faith to
resolve any controversy or claim arising out of or relating to this Agreement or
the Ancillary Documents promptly by negotiations between representatives of the
parties who have authority to settle the controversy. In the event that a
dispute arises between the parties with respect to a controversy or claim
arising out of or relating to this Agreement or the Ancillary Documents, the
disputing party shall give the other party written notice of the dispute. Within
ten days after receipt of the disputing party's notice, the other party hereto
shall submit to the disputing party a written response. The notice and response
shall include (i) a statement of each party's position and a summary of the
               -
evidence and arguments supporting its position and (ii) the name and title of
the person who will represent that party. The representatives shall meet for
negotiations at a mutually agreed time and place within fifteen days of the date
of the disputing party's notice and thereafter as often as they reasonably deem
necessary to exchange relevant information and to attempt to resolve the
dispute. If the dispute between the parties has not been resolved within sixty
days of the disputing party's notice, then either party may initiate litigation.
Each of the parties hereto hereby irrevocably submits to the jurisdiction of the
courts of the State of New York and the Federal courts of the United States of
America located in the State, City and County of New York solely in respect of
the interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and hereby waives, and agrees not
to assert, as a defense in any action, suit or proceeding for the interpretation
or

                                       75



enforcement hereof or of any such document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement or any of such document may not be enforced in or by said courts, and
the parties hereto irrevocably agree that all claims with respect to such action
or proceeding shall be heard and determined in such a New York State or Federal
court. Each of the parties hereto hereby consents to and grants any such court
jurisdiction over the person of such party and over the subject matter of any
such dispute and agrees that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in Section 10.1, or in
such other manner as may be permitted by law, shall be valid and sufficient
service thereof.

     10.7 Assignment. Neither this Agreement nor any of the rights, interests or
          ----------
obligations hereunder (including any rights, interests or obligations under
Article VIII) shall be assigned by any party hereto without the prior written
consent of the other parties and any purported assignment or transfer shall be
void and unenforceable, except that Purchaser may make such an assignment (i) to
                                                                           -
any Subsidiary of Purchaser, (ii) to any lender to Purchaser or any Subsidiary
                              --
or Affiliate thereof as security for obligations to such lender in respect of
the financing arrangements entered into in connection with the transactions
contemplated hereby and any refinancings, extensions, refundings or renewals
thereof, or (iii) subsequent to the Closing, to any transferee of all or
             ---
substantially all of the Acquired Assets and the Assumed Liabilities that
executes a written assumption of the obligations of Purchaser under this
Agreement, the Ancillary Documents and the Confidentiality Agreement.
Notwithstanding anything to the contrary in the foregoing, Purchaser shall
remain responsible as guarantor for the obligations of any Subsidiary assignee
under clause (i) and no assignment to a lender pursuant to clause (ii) of the
preceding sentence shall in any way affect Purchaser's obligations or
liabilities under this Agreement. Subject to the foregoing, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.

     10.8 Headings. The headings contained in this Agreement are for purposes of
         --------
convenience only and shall not affect the meaning or interpretation of this
Agreement.

                                   ARTICLE XI
                                   Definitions
                                   -----------

     11.1 Definitions. The following terms shall have the respective meanings
          -----------
set forth below throughout this Agreement:

     "Acquired Assets" has the meaning set forth in Section 1.1(a).
      ---------------

     "Acquired Intellectual Property" has the meaning set forth in Section
      ------------------------------
1.1(a)(xiii).

                                       76



     "Additional Section 338 Forms" has the meaning set forth in Section
      ----------------------------
9.5(c)(ii)(C).

     "ADSP" has the meaning set forth in Section 9.5(c)(iii).
      ----

     "Affiliate" of a Person means a Person that directly or indirectly through
      ---------
one or more intermediaries, controls, is controlled by, or is under common
control with, the first person or entity. The Transferred Subsidiaries will be
deemed Affiliates of Parent hereunder unless provided otherwise (or unless such
provision relates to actions to be taken following the Closing). "Control"
(including the terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person or entity, whether through the
ownership of voting securities, by contract, as trustee or executor, or
otherwise.

     "Affiliated Party Transactions" has the meaning set forth in Section
      -----------------------------
3.20(b).

     "Agreement" has the meaning set forth in the preamble hereto.
      ---------

     "AGUB" has the meaning set forth in Section 9.5(c)(iii).
      ----

     "Allocation Statement" has the meaning set forth in Section 9.5(d)(i).
      --------------------

     "Ancillary Documents" means the Human Resources Agreement and each of the
      -------------------
Agreements listed in Section 5.6.

     "Applicable Law" means all applicable provisions of all (i) constitutions,
      --------------                                          -
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Entity, (ii) Governmental
                                                         --
Approvals and (iii) orders, decisions, injunctions, judgments, awards and
               ---
decrees of or agreements with any Governmental Entity.

     "Arbitrator" has the meaning set forth in Section 8.5(e).
      ----------

     "Arthur Andersen" means Arthur Andersen LLP.
      ---------------

     "Ashdown Mill" means the pulp and paper mill in Ashdown, Arkansas that is
      ------------
included in the definition of NPI Mills.

     "Ashdown #64 Lease" means the lease agreement dated September 29, 1995
      -----------------
between Georgia-Pacific Britain, LLC and NPI, of the #64 paper machine
equipment, and related converting equipment, pulp mill equipment, recovery
equipment, and power equipment located at the Ashdown Mill.

     "Assumed Employee Liabilities" has the meaning set forth in Section 1.3(a).
      ----------------------------

                                       77



     "Assumed Liabilities" has the meaning set forth in Section 1.3(a).
      -------------------

     "Assumed Litigation" has the meaning set forth in Section 1.3(a).
      ------------------

     "Assumed Parent Environmental Liabilities" has the meaning set forth in
      ----------------------------------------
Section 1.3(a).

     "Assumed Pre-Closing Liabilities" has the meaning set forth in Section
      -------------------------------
1.3(a).

     "Assumed Purchaser Environmental Liabilities" has the meaning set forth in
      -------------------------------------------
Section 1.3(a).

     "Audited Financial Statements" has the meaning set forth in Section 5.13.
      ----------------------------

     "Business Day" means any day other than a Saturday, a Sunday or a day on
      ------------
which banks in New York City, Atlanta, Georgia and Montreal, Canada are
authorized or obligated by law or executive order to close.

     "Carve Out Business" means all assets and activities (including the assets
      ------------------
of the Transferred Subsidiaries) involved in the manufacture and sale of
products of the Mills prior to the Closing, including procurement,
manufacturing, sales, marketing, customer service and support and distribution
functions conducted at or for the Mills prior to the Closing or made available
to the Mills by Parent and its Subsidiaries, it being understood that certain
employees employed at the headquarters and divisional levels of Parent have
performed services for the Mills but that none of such employees is dedicated
exclusively to servicing the operations of the Mills.

     "Closing" has the meaning set forth in Section 2.1.
      -------

     "Closing Date" has the meaning set forth in Section 2.1.
      ------------

     "Closing Working Capital" has the meaning set forth in Section 2.3(a).
      -----------------------

     "Closing Working Capital Statement" has the meaning set forth in Section
      ---------------------------------
2.3(a)

     "Code" means the Internal Revenue Code of 1986, as amended.
      ----

     "Collective Bargaining Agreement" means any collective bargaining agreement
      -------------------------------
identified on Section 3.14(a) of the Parent Disclosure Letter.

     "Combined Income Taxes" means (i) all federal Income Taxes in respect of
      ---------------------         -
which any Transferred Subsidiary has filed or is required to file pursuant to
Section 9.5(e)(i) a consolidated federal Income Tax Return of which Parent is
the common parent, payable with respect to such Transferred Subsidiary for any
taxable period (or a portion thereof)

                                       78



ending on or prior to the Closing Date and (ii) all state and local Income Taxes
                                            --
in respect of which any Transferred Subsidiary has filed or is required to file
pursuant to Section 9.5(e)(i) a combined, consolidated or unitary state or local
Income Tax Return with Parent or any Non-Transferred Subsidiary Affiliate,
payable with respect to such Transferred Subsidiary for any taxable period (or a
portion thereof) ending on or prior to the Closing Date.

     "Computer Hardware" means any computer hardware, equipment and peripheral
      -----------------
of any kind and of any platform, including desktop and laptop personal
computers, handheld computerized devices, mid-range and mainframe computers,
process control and distributed control systems, network and telecommunications
equipment.

     "Computer Software" means any and all computer programs, including
      -----------------
operating system and applications software, associated databases and data,
implementations of algorithms, models and methodologies, printing utilities,
configurations and program interfaces, whether in source code or object code,
including all modifications and enhancements thereto through the Closing Date
and all documentation, including user manuals relating to the foregoing.

     "Confidentiality Agreement" means that certain confidentiality letter
      -------------------------
agreement between Purchaser and Parent, dated February 12, 2001, as amended.

     "Consent" has the meaning set forth in Section 1.1(c).
      -------

     "Contract" means any contract, lease, indenture, joint venture and other
      --------
agreement, commitment or other legally binding arrangement, whether oral or
written.

     "cure" has the meaning set forth in Section 5.8.
      ----

     "Deductible" has the meaning set forth in Section 8.3(a).
      ----------

     "De Minimis Losses" has the meaning set forth in Section 8.3(a).
      -----------------

     "Dispute Notice" has the meaning set forth in Section 2.3(b).
      --------------

     "Employee" means each employee or former employee employed or formerly
      --------
employed (i) by NPI or (ii) by Parent or any of its Affiliates in the operation
          -             --
of the Carve Out Business or the beneficiaries or dependents of any such
employee or former employee (collectively, the "Employees").
                                                ---------

     "Employee-related Obligations" has the meaning set forth in the Human
      ----------------------------
Resources Agreement.

                                       79



     "Environmental Claims" means any complaint, notice, directive, order,
      --------------------
claim, litigation, investigation, judicial or administrative proceeding or
judgment from any Person, involving violations of Environmental Laws or Releases
or threatened Releases of Materials of Environmental Concerns.

     "Environmental Indemnity Cap" has the meaning set forth in Section 8.3(a).
      ---------------------------

     "Environmental Laws" means any applicable foreign, Federal, state,
      ------------------
interstate or local statute, law or regulation, or any order, injunction,
judgment, decree, common law or other enforceable requirement of law as in
effect at any time on or prior to the Closing Date, and relating to the
protection of the human health or environment, including any of the foregoing
related to: (i) Remedial Actions, (ii) the reporting, licensing, permitting, or
             -                     --
investigating of the emission, discharge, Release or threatened Release of
Materials of Environmental Concern into the air, surface water, ground water or
land, or (iii) the manufacture, Release, distribution, use, generation,
          ---
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.

     "Environmental Permits" has the meaning set forth in Section 3.16(b).
      ---------------------

     "Environmental Site Assessment" has the meaning set forth in Section 5.12.
      -----------------------------

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
      -----
amended.

     "Excluded Assets" has the meaning set forth in Section 1.2.
      ---------------

     "Excluded Environmental Liabilities" has the meaning set forth in Section
      ----------------------------------
1.3(b).

     "Excluded Inventory" means (i) Inventory of finished goods paper products
      ------------------         -
allocated to the Georgia-Pacific Office Products division of Parent and held in
public warehouses as of the Closing Date (other than Mill overflow warehouses),
(ii) Inventory of finished goods paper products allocated to the Xerox Paper
 --
Group division of Parent and held in public warehouses (other than Mill overflow
warehouses) as of the Closing Date, (iii) Inventories of Woodland pulp products
                                     ---
(other than export) in excess of 20,000 tons located in the U.S. and Canada and
(v) Inventories of Woodland export pulp products in excess of 4,000 tons.
 -

     "Excluded Liabilities" has the meaning set forth in Section 1.3(b).
      --------------------

     "Excluded Woodland Facilities" has the meaning set forth in Section
      ----------------------------
1.2(ix).

     "Exhibits" means the exhibits listed in the table of contents of this
      --------
Agreement as attached hereto.

                                       80



     "FERC" has the meaning set forth in Section 5.18.
      ----

     "FERC Assets" has the meaning set forth in Section 5.18.
      ----

     "FERC Licenses" means, collectively, the following licenses issued to
      -------------
Parent and NPI: (i) FERC License No. 2292 (covering the Nekoosa Project), FERC
License No. 2291 (covering the Port Edwards Project), FERC License No. 2255
(covering the Centralia Project), FERC License No. 2492 (covering the Vanceboro
Project), FERC License No. 2618 (covering the West Branch Project) and FERC
License No. 2660 (covering the Forest City Project).

     "Final Allocation" has the meaning set forth in Section 9.5(c)(iii).
      ----------------
     "Financial Statements" has the meaning set forth in Section 3.8.
      --------------------

     "Financing Commitment" has the meaning set forth in Section 4.4.
      --------------------

     "Form 8023" has the meaning set forth in Section 9.5(c)(ii)(A).
      ---------

     "Form 8594" has the meaning set forth in Section 9.5(c)(ii)(C).
      ---------
     "General Indemnity Cap" has the meaning set forth in Section 8.3(a).
      ---------------------

     "Governmental Entity" means any court, administrative agency or commission
      -------------------
or other governmental authority or instrumentality, domestic or foreign.

     "Governmental Approvals" has the meaning set forth in Section 3.4(b).
      ----------------------

     "G-P Resins" is defined in the preamble to this Agreement.
      ----------

     "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
      -------
as amended.

     "Human Resources Agreement" means the Human Resources Agreement, dated as
      -------------------------
of the date hereof, by and among Parent, NPI and Purchaser.

     "IDBs" has the meaning set forth in Section 5.11(a).
      ----

     "IDB Assets" has the meaning set forth in Section 5.11(b).
      ----------

     "Impaired Assets" means (i) the No. 9 power boiler at the Woodland Mill,
      ---------------
(ii) the Centralia Dam in Wisconsin, (iii) the sulfite recovery furnace at Port
Edwards, Wisconsin, (iv) the primary clarifier at the Woodland Mill, (v) the
wastewater pipelines at the Woodland Mill and (vi) the two obsolete recovery
boilers at the Woodland Mill.

                                       81



     "Impaired Asset Liabilities" has the meaning set forth in Section
      --------------------------
1.3(a)(vii).

     "Income Tax" means any Tax on or determined by reference to net or gross
      ----------
income or profit, or that are franchise, doing business or similar Taxes.

     "Indemnified Party" has the meaning set forth in Section 8.4.
      -----------------

     "Indemnifying Party" has the meaning set forth in Section 8.4.
      ------------------

     "Intellectual Property" means the United States (state and federal) and
      ---------------------
foreign trademarks, service marks, trade names, trade dress, copyrights, and
similar rights, whether common-law or registered, including registrations and
applications to register or renew the registration of any of the foregoing,
United States and foreign patents (including design patents, industrial designs
and utility models) and patent applications (including docketed patent
disclosures awaiting filing, reissues, divisions, continuations and extensions),
and inventions, processes, designs, manufacturing, engineering and technical
drawings, technical specifications, business and marketing plans, formulae,
business logos, product names, trade secrets, know-how, confidential
information, Computer Software, data and documentation, and all similar
intellectual property rights, tangible embodiments of any of the foregoing (in
any medium including electronic media), and licenses of any of the foregoing.

     "Intellectual Property Licenses" has the meaning set forth in Section
      ------------------------------
3.12(b).

     "Interim Financial Statements" has the meaning set forth in Section 3.8.
      ----------------------------

     "Inventory" means all raw materials, work-in-process, finished goods,
      ---------
supplies, parts and other inventories, in each case, of pulp and paper products.

     "IRS" means the Internal Revenue Service.
      ---

     "IT Support Services Agreement" means the IT Support Services Agreement
      -----------------------------
referred to in Section 5.6 to be executed at the Closing.

     "Joint Transfer Taxes" means Transfer Taxes up to an aggregate maximum
      --------------------
amount of $600,000.

     "June 2001 Interim Financial Statements" has the meaning set forth in
      --------------------------------------
Section 5.14(b).

     "Knowledge" means, with respect to Parent, the actual knowledge of the
      ---------
Persons listed in Section 11.1(b) of the Parent Disclosure Letter, and with
respect to Purchaser, the actual knowledge of the persons listed in Section
11.1(c) of the Purchaser Disclosure Letter.

                                       82



     "Leased Real Property" has the meaning set forth in Section 3.11(c).
      --------------------

     "LIBOR", as of any date, means the London Interbank Offered Rates (3-month)
      -----
on the Business Day immediately following such date (as set forth in the "Money
                                                                          -----
Rates" section of The Wall Street Journal).
- -----

     "Lien" means mortgages, liens, security interests, easements, adverse
      ----
claims, rights of way, pledges, restrictions or encumbrances of any nature
whatsoever.

     "Listed Contracts" has the meaning set forth in Section 3.14(a).
      ----------------

     "Losses" has the meaning set forth in Section 8.1.
      ------

     "Maine FERC Assets" means, collectively, the Vanceboro Project, the West
      -----------------
Branch Project and the Forest City Project that are currently subject to FERC
License Nos. 2492, 2618 and 2660, respectively.

     "Maine Non-FERC Assets" means, collectively, the Grand Falls, the Woodland,
      ---------------------
the Clifford and the Canoose Dams and their associated property, facilities and
rights.

     "Material Adverse Effect" means (a) any event, occurrence, condition, fact
      -----------------------         -
or change that has or would reasonably be expected to have or result in a
material and adverse effect on the business, assets, properties, operations,
financial condition or results of operations of the Carve Out Business; provided
                                                                        --------
however, that (i) any adverse change resulting from conditions affecting the
- -------        -
United States or any foreign economy generally, (ii) any adverse change that is
                                                 --
primarily caused by conditions affecting the pulp and paper industry, (iii) any
                                                                       ---
failure to meet revenue or earnings projections for the Carve-Out Business
provided to Purchaser, (iv) any adverse change in the laws, regulations, rules
                        --
or orders of any Governmental Entity, and (v) any adverse change arising
                                           -
primarily from actions required to be taken by any party under this Agreement or
any Ancillary Document, or which is primarily attributable to the announcement
of this Agreement and the transactions contemplated hereby, shall not be taken
into account in determining whether there has been or would be a "Material
Adverse Effect", or (b) a material impairment of the ability of Parent and its
                     -
Affiliates to perform their respective obligations under this Agreement.

     "Materials of Environmental Concern" means any substance or material that
      ----------------------------------
(i) is defined as a "hazardous waste", "hazardous substance", "toxic substance"
 -
or words of similar import under any Environmental Law, including petroleum,
petroleum products, asbestos, radon gas and polychlorinated biphenyls, (ii)
                                                                        --
requires Remedial Action under any Environmental Law or (iii) is regulated by
                                                         ---
Environmental Law.

     "Mill Contracts" has the meaning set forth in Section 1.1(a)(ix).
      --------------

                                       83



     "Mill Technology" has the meaning set forth in Section 1.1(a)(vii).
      ---------------

     "Mills" means, collectively, the Woodland Mill and the NPI Mills.
      -----

     "Monthly Management Reports" has the meaning set forth in Section 5.15.
      --------------------------

     "Multiemployer Plan" has the meaning set forth in Section 3.15(c)(iv).
      ------------------

     "Nepco Lake Dam" means the dam across Four Mile Creek creating Nepco Lake
      --------------
situated in Wood County, Wisconsin, governed by the permit granted by the Public
Service Commission of Wisconsin No. WP-243, dated May 24, 1932, including the
real estate on which such dam is located.

     "Non-Transferred Subsidiary Affiliate" means any Affiliate of Parent other
      ------------------------------------
than the Transferred Subsidiaries.

     "NPI" means Nekoosa Papers Inc., a Wisconsin corporation.
      ---

     "NPI Mills" means NPI's pulp and paper mills located in Nekoosa, Wisconsin;
      ---------
Port Edwards, Wisconsin; and Ashdown, Arkansas, each of which is described with
greater specificity in Sections 3.11(a) of the Parent Disclosure Letter.

     "NPI Stand-Alone Plan" has the meaning set forth in Section 3.15(a)(i).
      --------------------

     "Other Employees" has the meaning set forth in the Human Resources
      ---------------
Agreement.

     "Owned Intellectual Property" has the meaning set forth in Section 3.12(a).
      ---------------------------

     "Owned Real Property" has the meaning set forth in Section 3.11(a).
      -------------------

     "Parent" means Georgia-Pacific Corporation, a Georgia corporation.
      ------

     "Parent Disclosure Letter" means the letter delivered by Parent to
      ------------------------
Purchaser contemporaneously with the execution and delivery of this Agreement.

     "Parent Indemnitees" has the meaning set forth in Section 8.2.
      ------------------

     "Pending Litigation" has the meaning set forth in Section 1.3(b).
      ------------------

     "Pension Plan" has the meaning set forth in Section 3.15(c)(i).
      ------------

     "Permitted Liens" means (i) statutory liens for Taxes not yet due, (ii)
      ---------------         -                                          --
statutory liens of warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due, (iii) liens incurred in the
                                                   ---
ordinary course of business in

                                       84



connection with workers' compensation, unemployment insurance and other types of
social security or to secure the performance of statutory obligations; and (iv)
                                                                            --
liens that do not materially affect the value or use of any underlying asset.

     "Permitted Real Property Exceptions" means Title Defects, as they affect
      ----------------------------------
each of the Woodland Mill and each NPI Mill, that do not, individually or in the
aggregate, (i) interfere in any material respect with the use, occupancy or
            -
operation of such Mill as currently used, occupied and operated (taking into
account reasonable requirements for expansion) or (ii) materially reduce the
                                                   --
fair market value of such Mill below the fair market value of such Mill but for
such Permitted Real Property Exceptions applicable thereto.

     "Permits" has the meaning set forth in Section 1.1(a)(viii).
      -------

     "Person" means any individual, corporation, partnership, limited liability
      ------
company, joint venture, trust, business association or other entity, including
any Governmental Entity.

     "Plan" means any "employee benefit plan", as such term is defined in
      ----
section 3(3) of ERISA, whether or not subject to ERISA, and each bonus,
incentive or deferred compensation, severance, termination, retention, change of
control, stock option, stock appreciation, stock purchase, phantom stock or
other equity-based, performance or other employee or retiree benefit or
compensation plan, program, arrangement, agreement, policy or understanding,
whether written or unwritten, that provides or may provide benefits or
compensation in respect of any Employee or under which any Employee is or may
become eligible to participate or derive a benefit and that is or has been
maintained or established by Parent or any of its Affiliates (including NPI), or
to which NPI contributes or is or has been obligated or required to contribute
or with respect to which NPI or the Carve Out Business may have any liability or
obligation following the Closing.

     "Pre-Closing Employee Liabilities" means all Employment-related
      --------------------------------
Obligations, whether direct or indirect, known or unknown, actual, current or
potential, past, present or future, relating to any Employee in respect of the
period ending on or prior to the Closing Date other than Assumed Employee
Liabilities.

     "Pre-Closing Environmental Liabilities" shall mean all Losses, whether
      -------------------------------------
direct or indirect, known or unknown, actual, current or potential, past,
present or future, imposed by, under or pursuant to any Environmental Law,
including, without limitation, all Losses related to Remedial Actions and Toxic
Tort Claims, to the extent arising out of or otherwise in respect of: (i) the
                                                                       -
ownership or operation of the Carve Out Business, the Acquired Assets, the
Shares or the Real Property prior to the Closing Date; (ii) the environmental
                                                        --
conditions existing on the Closing Date on, under, above, about or

                                       85



emanating from the Real Property or any currently or formerly owned, leased or
used real property (including any off-site disposal facility); (iii) the
                                                                ---
activities or omissions of the Parent or any of its Affiliates prior to the
Closing Date; or (iv) actions necessary to cause the Real Property or any
                  --
currently or formerly owned, leased or used real property or any aspect of the
Carve Out Business that is not in compliance with all applicable Environmental
Laws as of the Closing Date to come into compliance with Environmental Laws as
in effect on the Closing Date, including, without limitation, all Environmental
Permits required for the operation of the Carve Out Business as conducted prior
to the Closing.

     "Pre-Closing Tax Periods" means taxable periods ending on or before the
      -----------------------
Closing Date and the portion of any Straddle Period ending on the Closing Date
(as determined in accordance with Section 9.5(b)).

     "Premises" has the meaning set forth in Section 1.1(a)(i).
      --------

     "Purchase Price" has the meaning set forth in Section 1.5.
      --------------

     "Purchaser" means Domtar Inc., a Canadian corporation.
      ---------

     "Purchaser Disclosure Letter" means the letter delivered by Purchaser to
      ---------------------------

Parent contemporaneously with the execution and delivery of this Agreement.

     "Purchaser Indemnitees" has the meaning set forth in Section 8.1.
      ---------------------

     "Purchaser IT Environment" has the meaning set forth in Section 5.4(a).
      ------------------------

     "Real Property" has the meaning set forth in Section 3.11(d).
      -------------

     "Real Property Leases" has the meaning set forth in Section 3.11(c).
      --------------------

     "Real Property Permits" has the meaning set forth in Section 3.11(f).
      ---------------------

     "Release" means any releasing, disposing, discharging, injecting, spilling,
      -------

leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping,
dispersal, migration, transporting, placing and the like, including without
limitation, the moving of any materials through, into or upon, any land, soil,
surface water, groundwater or air, or otherwise entering into the environment.

     "Remedial Action" means any response action, removal action, remedial
      ---------------
action, corrective action, monitoring program, sampling program, investigation
or other cleanup activity required by any Environmental Law to clean up, remove,
remediate or treat any Materials of Environmental Concern.

                                       86



     "Restricted Asset" has the meaning set forth in Section 1.1(c).
      ----------------

     "Review Period" has the meaning set forth in Section 2.3(c).
      -------------

     "Section 338(h)(10) Elections" has the meaning set forth in Section
      ----------------------------
9.5(c)(i).

     "Section 338 Forms" has the meaning set forth in Section 9.5(c)(ii)(A).
      -----------------

     "Securities Act" means the Securities Act of 1933, as amended.
      --------------

     "Sellers" means Parent, NPI and G-P Resins.
      -------

     "Shares" has the meaning set forth in Section 3.6.
      ------

     "Side Letter" has the meaning set forth in Section 3.8.
      -----------

     "Straddle Period" means any Tax period that begins before and ends after
      ---------------
the Closing Date.

     "Subsidiary" means, with respect to a given Person, any corporation,
      ----------
partnership, limited liability company or other entity of which such Person
owns, directly or indirectly, at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other individuals performing similar
functions of such corporation, partnership, limited liability company or other
entity.

     "Superfund Claims" shall mean all claims associated with the release,
      ----------------
transport, handling, treatment, storage or disposal of Materials of
Environmental Concern at any off-site treatment, storage or disposal facility,
including claims brought under CERCLA and analogous state laws.

     "Surveys" has the meaning set forth in Section 5.8.
      -------

     "Tax" means all federal, state, foreign or other governmental Taxes,
      ---
assessments, duties, fees, levies or similar charges of any kind, including all
income, alternative minimum, accumulated earnings, capital stock, gross
receipts, license, value added, transfer, registration, stamp, severance,
environmental (including Taxes imposed under Section 59 of the Code), ad
valorem, premium, occupancy, social security, disability, unemployment, workers'
compensation, estimated, profit, windfall profits, custom, duty, real property,
personal property, franchise, excise, property, use, intangibles, sales,
payroll, employment, withholding and other Taxes, and including all interest and
penalties imposed with respect to such amounts and additions thereto.

                                       87



     "Tax Return" means any return, report, form, declaration, statement,
      ----------
schedule or information return or any amendment to any of the foregoing or other
information filed with any taxing authority with respect to Taxes (including any
claim for a Tax refund).

     "Third Party Accountants" has the meaning set forth in Section 2.3(c).
      -----------------------

     "Third Party Claim" has the meaning set forth in Section 8.4.
      -----------------

     "Title Commitments" has the meaning set forth in Section 5.8.
      -----------------

     "Title Company" has the meaning set forth in Section 5.8.
      -------------

     "Title Defects" means any mortgage, lien, pledge, security interest, claim,
      -------------
lease, charge, option, right of first refusal, easement, restrictive covenant,
encroachment or other survey defect, encumbrance, lack of title or any other
restriction or limitation whatsoever.

     "Title Objections" has the meaning set forth in Section 5.8.
      ----------------

     "Toxic Tort Claims" shall mean all claims by private parties for personal
      -----------------
injury and/or property damage with respect to allegations of exposure to
Materials of Environmental Concern.

     "Transferring Employees" has the meaning set forth in the Human Resources
      ----------------------
Agreement.

     "Transfer Taxes" means all transfer, documentary, sales, use, registration,
      --------------
stamp, value-added and other similar Taxes (including all applicable real estate
transfer Taxes), including any penalties, interest and additions to Tax,
incurred in connection with, or arising out of, the transactions contemplated
hereby, but excluding any real property gains Tax or other similar Income Tax.

     "Transferred Accounts Receivable" has the meaning set forth in Section
      -------------------------------
1.1(a)(xi).

     "Transferred Canadian Subsidiaries" means the Saint Croix Water Power
      ---------------------------------
Company and Sprague's Falls Manufacturing Company (Limited).

     "Transferred Subsidiaries" has the meaning set forth in the recitals to
      ------------------------
this Agreement.

     "Transferred Subsidiary Pre-Closing Liability" means any liabilities,
      --------------------------------------------
obligations or commitments of any Transferred Subsidiary of any nature
whatsoever, whether known or unknown, contingent or otherwise that relate to or
arise out of (i) the operation of the
              -

                                       88



Carve Out Business or the ownership of any assets used in the Carve Out Business
prior to the Closing Date or any other business activity of any Transferred
Subsidiary (including any activity of Parent or any of its Affiliates that are
attributed to any Transferred Subsidiary) prior to the Closing, including,
without limitation, any litigation, proceeding or claim by any Person with
respect to the Carve Out Business prior to or on the Closing Date, whether
asserted before, on or after the Closing Date, or (ii) any Affiliated Party
                                                   --
Transaction, excluding only any liability of a Transferred Subsidiary in respect
of a liability, obligation or commitment that constitutes an Assumed Liability
hereunder.

     "Transferred Technology" has the meaning set forth in Section 5.4(b).

     "Transferred U.S. Subsidiary" means St. Croix Water Power Company.
      ---------------------------

     "Transferring Employees" has the meaning set forth in the Human Resources
Agreement.

     "Treasury Regulations" means the regulations prescribed under the Code.

     "U.S. Shares" means the Shares of the Transferred U.S. Subsidiary.
      -----------

     "Weirgor Woodyard" means the woodyard situated in the Town of Weirgor,
      ----------------
Sawyer County, Wisconsin, the exact location of which shall be established by a
survey to be prepared by either Lampert-Lee & Associates or Basler Land
Surveying, Inc. and shall be subject to the approval of Purchaser.

     "Wisconsin FERC Assets" means, collectively, the Nekoosa Project, the Port
      ---------------------
Edwards Project and the Centralia Project that are currently subject to FERC
License Nos. 2292, 2291 and 2255, respectively.

     "Wisconsin Landfill Extension" means the landfill situated in the Town of
      ----------------------------
Saratoga, Wood County, Wisconsin, the exact location of which shall be
established by a survey to be prepared by either Lampert-Lee & Associates or
Basler Land Surveying, Inc. and shall be subject to the approval of Purchaser.

     "Wisconsin Landfill Extension Option" has the meaning set forth in Section
      -----------------------------------
5.19.

     "Wisconsin Sand Pit" means the sand burrow situated in the Town of
      ------------------
Saratoga, Wood County, Wisconsin, the exact location of which shall be
established by a survey to be prepared by either Lampert-Lee & Associates or
Basler Land Surveying, Inc. and shall be subject to the approval of Purchaser.

                                       89



     "Woodland Mill" means the pulp and paper mill of Parent and G-P Resins
      -------------
located in Woodland, Maine, which is described with greater specificity in
Section 3.11(a) of the Parent Disclosure Letter.

     "Working Capital Principles" has the meaning set forth in Section 2.3.
      --------------------------

     "Year-End Financial Statements" has the meaning set forth in Section 3.8.
      -----------------------------

     11.2 Construction and Interpretation of Certain Terms and Phrases. Unless
          ------------------------------------------------------------
the context of this Agreement otherwise requires, (i) words of any gender
                                                   -
include each other gender; (ii) words using the singular or plural number also
                            --
include the plural or singular number, respectively; (iii) the terms "hereof,"
                                                      ---
"herein," "hereby" and derivative or similar words refer to this entire
Agreement; (iv) the terms "Article" or "Section" refer to the specified Article
            --
or Section of this Agreement; and (v) the phrases "ordinary course of business"
                                   -
and "ordinary course of business consistent with past practice" refer to the
business and practice of Parent, NPI, G-P Resins and their Affiliates in
connection with the Carve Out Business. Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless Carve Out
Business Days are specified. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. For purposes of any
indemnification provision in this Agreement, the word "expenses" shall mean
out-of-pocket expenses, and shall not include any allocations of internal
salaries and other expenses. Whenever the words "included," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." All references to "$" or "dollars" in this
Agreement are to U.S. dollars.

                                       90



     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.

GEORGIA-PACIFIC CORPORATION


By: /s/ A.D. Correll
    ----------------
Name: A.D. Correll
Title: President, Chairman and Chief Executive Officer


NEKOOSA PAPERS INC.


By: /s/ A.D. Correll
    ----------------
Name: A.D. Correll
Title: Chairman


GEORGIA-PACIFIC RESINS, INC.


By: /s/ A.D. Correll
    ----------------
Name: A.D. Correll
Title: Chairman


DOMTAR INC.


By: /s/ Raymond Royer
    -----------------
Name: Raymond Royer
Title: President and Chief Executive Officer

                                       1

EX-10.33(III)

                                                              Exhibit 10.33(iii)


                      AMENDMENT NO. 1 TO PURCHASE AGREEMENT

     AMENDMENT NO. 1, dated as of August 3, 2001 (this "Amendment"), by and
among Domtar Inc., a Canadian corporation ("Purchaser"), Georgia-Pacific
                                            ---------
Corporation, a Georgia corporation ("Parent"), Nekoosa Papers Inc., a Wisconsin
                                     ------
corporation ("NPI"), and Georgia-Pacific Resins, Inc., a Delaware corporation
              ---
("G-P Resins"), to the Purchase Agreement, dated as of June 1, 2001 (as amended
  ----------
by the Amendment, the "Agreement"), by and among Purchaser, Parent, NPI and G-P
Resins. Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Agreement, and all references to Articles and
Sections herein are references to Articles and Sections of the Agreement.

     In consideration of the premises and the mutual promises herein made, and
in consideration of the agreements herein contained, the parties, intending to
be legally bound hereby, agree as follows:

     1. Amendment to Section 1.1(a)(v). Section 1.1(a)(v) is hereby amended by
        ------------------------------
deleting the reference to "4,000" and replacing it with "500".

     2. Amendment to Section 1.5(a). Paragraph (a) of Section 1.5 is hereby
        ---------------------------
amended to read in its entirety as follows:

     "(a) The aggregate purchase price for the Acquired Assets and the Shares
(the "Purchase Price") shall be the sum of (x) $1,650,000,000, plus (y) $240,625
      --------------                        -                  ----
for each day, if any, between the date of the Measuring Time (as defined in
Section 2.3(a)) through the Closing Date (excluding the Measuring Time date and
the Closing Date). By way of illustration, if the Closing Date is August 7,
2001, the Purchase Price will be $1,650,721,875. The Purchase Price shall be
payable in the manner described in Section 2.2(b)(i) and shall be subject to
adjustment as set forth in Section 2.3."

     3. Amendment to Section 2.1. Section 2.1 is hereby amended to read in its
        ------------------------
entirety as follows:

     "2.1 Closing Date. Subject to the fulfillment or waiver of the conditions
          ------------
set forth in Article VI, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the New York offices of Debevoise
                -------
& Plimpton, at 10:00 a.m., New York City time, on Tuesday, August 7, 2001 (the
"Target Closing Date"). If such conditions have not been fulfilled or waived as
 -------------------
of the Target Closing Date, then, without limiting the rights of Parent and
Purchaser under Section 7.1(a)(v), the parties will discuss in good faith the
scheduling of a new date for the Closing on or before August 15, 2001, such date
to represent the first Business Day when it will be reasonably practicable to
hold the Closing following the last to be fulfilled or waived of the



conditions set forth in Article VI. The date on which the Closing shall occur is
herein referred to as the "Closing Date."
                           ------------

     4. Amendment to Section 2.3(a). Section 2.3(a) is hereby amended to read in
        ---------------------------
its entirety as follows:

     "Within 60 days following the Closing Date, Parent will prepare and
deliver, or cause to be prepared and delivered to Purchaser, a working capital
statement for the Acquired Assets and the Assumed Liabilities as of the
Measuring Time (as defined in the next sentence) (the "Closing Working Capital
                                                       -----------------------
Statement"), audited by Arthur Andersen, independent accountants for Parent,
- ---------
setting forth an itemized calculation of the current assets included in the
Acquired Assets or owned by the Transferred Subsidiaries as of the Measuring
Time and the current liabilities included in the Assumed Liabilities as of the
Measuring Time (including for this purpose liabilities of the Transferred
Subsidiaries for Taxes (other than Combined Income Taxes)). The "Measuring Time"
                                                                 --------------
will be 11:59 p.m. Eastern Daylight Time on August 3, 2001, provided that if the
                                                            --------
Closing Date does not occur on the Target Closing Date, the Measuring Time will
be a date and time on or prior to the Closing Date, as shall be reasonably
agreed upon by Parent and Purchaser. The excess of such current assets over such
current liabilities, as reflected on the Working Capital Statement, will be
referred to herein as the "Closing Working Capital". The Closing Working Capital
                           -----------------------
Statement shall be prepared in accordance with U.S. GAAP and on a basis
consistent with the U.S. GAAP principles, procedures and elections used in the
Financial Statements, as modified by the principles, procedures and elections
set forth in Exhibit B hereto (the "Working Capital Principles").
                                    --------------------------
Notwithstanding the foregoing, (i) the amount of the trade accounts receivable
                                -
for the purposes of determining the Closing Working Capital shall be deemed to
be $120,000,000 and (ii) the Closing Working Capital Statement will not reflect
                     --
any accrual for additional matching contributions within the meaning of the
applicable Parent 401(k) Plan."

     5. Addition of Section 2.5. A new Section 2.5 is hereby added to read in
        -----------------------
its entirety as follows:

     "2.5 Reimbursement of Certain Amounts. If, during the period between the
          --------------------------------
Measuring Time and the Closing Date, a Seller (i) discharges any liability,
obligation or commitment that would constitute an Assumed Liability hereunder if
it were not discharged as of the Closing Date or (ii) pays any amount for or
with respect to any asset that constitutes an Acquired Asset, Purchaser will
reimburse such Seller for the amount of the liability, obligation or commitment
discharged or the amount of the payment made. Similarly, if, during the period
between the Measuring Time and the Closing Date, a Seller sells, transfers or
disposes of any asset (including, without limitation, Inventory) that would
constitute an Acquired Asset hereunder if held by a Seller as of the Closing
Date or receives payment in respect of any service (other than for transition
services under the Human Resources Agreement) provided by the Carve Out Business
during the



period between the Measuring Time and the Closing Date, such Seller
will deliver to Purchaser all proceeds received by such Seller from such sale,
transfer or disposition or the provision of a service. This Section 2.5 will not
relieve Sellers and their Affiliates from any of their obligations under Section
5.1 (Conduct of the Carve Out Business). Any amounts owed by Purchaser to
Sellers or by Sellers to Purchaser under this Section 2.5 will be made on the
date for adjustment of the Purchase Price under Section 2.3(d) (together with
interest on such amounts in accordance with Section 2.3(d)), even if no
adjustment is required to be made to the Purchase Price under Section 2.3(d) on
such date. Each of the Sellers and Purchaser agrees that, notwithstanding
anything to contrary in this Section 2.5, no party shall be entitled to any
benefit or suffer any detriment under this Section 2.5 to the extent that such
benefit or detriment is fully accounted for in the Closing Working Capital
Statement or is the subject of a payment made pursuant to the Human Resources
Agreement."

     6. Amendment to Section 5.4. Sections 5.4(a) and 5.4(b) are hereby amended
        ------------------------
to read in their entirety as follows:

        (a) Creation and Establishment of the Purchaser IT Environment. Parent
            ----------------------------------------------------------
and its Affiliates will take all actions reasonably necessary to create and
establish for the benefit of Purchaser prior to the Closing Date an information
technology environment having the same functionality in all material respects as
the information technology environment used by Parent and its Affiliates in the
conduct of the Carve Out Business, including Computer Hardware (with the same
hardware platforms, adequately sized but not necessarily the same model number),
Computer Software (with databases and current and historical data (subject to
such redaction as (x) may be required by Applicable Law or (y) may be necessary
                   -                                        -
to remove information (i) that relates to operations of Parent, other than the
                       -
Carve Out Business, or (ii) that relates to the business activities of Parent
                        --
and its Affiliates that are the subject of the Supply and Distribution Agreement
or the Wood Fiber Supply Agreements)), and customer service call center (such
environment, excluding the Mill Technology, the "Purchaser IT Environment").
                                                 ------------------------
Parent shall support the Purchaser IT Environment to the extent set forth in the
IT Support Services Agreement. Except as provided in Sections 5.4(b) and 5.4(c)
below, the hardware platforms constituting part of the Purchaser IT Environment
shall be physically separate from, but connected to a common Direct Access
Storage Device frame with, the hardware platforms of Parent. It is anticipated
that the SAP, Manugistics, Indus and TOPS components of the Purchaser IT
Environment (each such software being described in greater detail in the IT
Support Services Agreement) will each be located on separate hardware platforms.
Purchaser shall become the owner of the hardware platforms that are part of the
Purchaser IT Environment (other than the hardware platforms associated with the
Support Services described in Category A and Category D (except to the extent
related to local area network hardware purchased by Parent for Purchaser under
the IT Support Services Agreement)) when the platforms are no longer being
maintained under the IT Support Services Agreement.



          (b) Software Resident on Parent's Platform. Subject to the terms of
              --------------------------------------
this Section 5.4(b), Purchaser agrees that the Infinium Software (as defined in
the IT Support Services Agreement), which constitutes part of the Purchaser IT
Environment, will be operated on a separate logical partition on Parent's
hardware platforms rather than on a physically separate platform. In the case of
the Infinium Software, such operation on Parent's hardware platform will be
subject to Purchaser's reasonable satisfaction prior to the Closing that
adequate security procedures will be implemented to protect the confidentiality
of all information relating to Purchaser's business and operations. The Infinium
Software will remain on Parent's platforms until the 18 month anniversary of the
Closing Date. Parent will assist Purchaser, at Purchaser's expense, in migrating
data associated with the Infinium Software to a platform to be designated by
Purchaser no later than the 18 month anniversary of the Closing.

     7.   Addition of Section 5.4 (j). A new Section 5.4(j) is hereby added to
          ---------------------------
read in its entirety as follows:

          (j) Post-Closing Activities. It is understood and agreed that
              -----------------------
Purchaser's acknowledgement of the satisfaction of the closing condition in
Section 6.1(d) shall not limit Purchaser's post-Closing right to verify Parent's
compliance with this Section 5.4 or any of Purchaser's rights and remedies
related thereto. Following the Closing, Parent agrees to cooperate with any
reasonable requests of Purchaser, consistent with Section 5.25, related to the
verification of Parent's obligations under this Section 5.4.

     8.   Amendment to Section 5.6. Section 5.6 is hereby amended to read in its
          ------------------------
entirety as follows:

     "5.6 Ancillary Documents. At the Closing, Parent and Purchaser or their
          -------------------
respective Affiliates shall enter into (a) an IT Support Services Agreement,
                                        -
substantially in the form of Exhibit D, (b) Trademark License Agreements,
                             ---------   -
substantially in the forms of Exhibits F-1, F-2, F-3 and F-4, (c) a Supply and
                              ------------  ---  ---     ---   -
Distribution Agreement, substantially in the form of Exhibit G, (d) a
                                                     ---------   -
Non-Competition Agreement, substantially in the form of Exhibit H, (e) a Pulp
                                                        ---------   -
Supply Agreement, substantially in the form of Exhibit I, (f) Wood Fiber Supply
                                               ---------   -
Agreements, substantially in the forms of Exhibits J-1 and J-2, (g) a Shared
                                          ------------     ---   -
Services Agreement, substantially in the form of Exhibit L, (h) Operating
                                                 ---------   -
Agreements, substantially in the forms of Exhibit M-1 and M-2, (i) Escrow
                                          -----------     ---
Agreements, substantially in the forms of Exhibit N-1 and N-2, (j) a Transition
                                          -----------     ---
Services Agreement, substantially in the form of Exhibit O, (k) a Railroad
                                                 ---------
Services Agreement, substantially in the form of Exhibit P, and (l) a Crude Tall
                                                 ---------
Oil Purchase Agreement, substantially in the form of Exhibit Q."
                                                     ---------

     9.   Amendment to Section 5.7. Section 5.7 is hereby amended by deleting
          ------------------------
the references to "Closing Date" and replacing them with the words "Measuring
Time".




     10.   Amendment of Section 5.21. Section 5.21 is hereby amended to read in
           ---------------------------------------
its entirety as follows:

     "5.21 Inventory. As of the Closing Date, (i) Parent will deliver no less
           ---------                           -
than 5,000 tons and no more than 20,000 tons of Woodland pulp Inventory (other
than export pulp) in such locations as the pulp may exist on the Closing Date,
it being understood that (A) at least 2,500 tons will be located at the Woodland
                          -
Mill and the remainder will be located in warehouses in the U.S. and (B) the
                                                                      -
minimum Inventory requirement will be decreased in the event that between the
Measuring Time and the Closing Date, Domtar requires the Woodland Mill to
operate other than at historical production levels and (ii) Parent will deliver
                                                        --
500 tons of Woodland export pulp Inventory in Flushing, Netherlands."

     11.   Addition of Section 5.25. A new Section 5.25 is hereby added to read
           ------------------------
in its entirety as follows:

     "5.25 Further Assurances. Following the Closing, each of Purchaser and
           ------------------
Sellers shall, and shall cause each of their Affiliates to, from time to time,
execute and deliver such additional instruments, documents, conveyances or
assurances and take such other actions (it being understood that any such
instrument, document, conveyance, assurance or action shall not provide for any
representations or warranties or any obligations or liabilities that are not
otherwise expressly provided for in this Agreement) as shall be reasonably
necessary, or otherwise reasonably requested by the other party, to confirm and
assure the rights and obligations provided for in this Agreement and in the
Ancillary Documents and render effective the consummation of the transactions
contemplated hereby and thereby."

     12. Amendment to Section 6.1(d). Section 6.1(d) is hereby amended by adding
         ---------------------------
the following sentences at the end of such section: "In the event the Purchaser
IT Environment "goes live" at the times specified in final sentence of this
Section 6.1(d), Purchaser will notify Parent no later than 8:00 a.m. Eastern
Daylight Time on August 6, 2001 (the "Notification Deadline") as to whether the
                                      ---------------------
closing condition in this Section 6.1(d) has been satisfied, it being understood
that if any "go live" time is delayed, up to a maximum delay of 24 hours,
Purchaser shall nonetheless provide such notice to Parent, but the
aforementioned Notification Deadline shall be extended by an amount of time
equal to the duration of the delay and, in the event that more than one "go
live" time is delayed, by an amount of time equal to the duration of the longest
such delay. If any or all of the "go live" times are delayed by more than 24
hours, Parent and Purchaser will reasonably agree on a new Notification
Deadline. The "go live" times are as follows: (i) Indus, 6:00 a.m. Eastern
Daylight Time on August 5, 2001, (ii) SAP, 12:00 p.m. Eastern Daylight Time,
August 4, 2001, (iii) Manugistics, 12:00 p.m. Eastern Daylight Time, August 4,
2001, (iv) TOPS, 12:00 p.m. Eastern Daylight Time, August 4, 2001, (v) EDI, 7:00
a.m. Eastern Daylight Time, August 4, 2001, (vi) HR, 12:00 p.m. Eastern



Daylight Time, August 4, 2001, (vii) Infinium AP and AR, 5:00 p.m. Eastern
Daylight Time, August 4, 2001, (viii) BW, 12:00 p.m. Eastern Daylight Time,
August 5, 2001, (ix) Cost Suite PSR, 4:00 p.m. Eastern Daylight Time, August 4,
2001, and (x) and all other systems other than those agreed by the parties
following the date hereof as permitted contingencies, 12:00 p.m. Eastern
Daylight Time, August 5, 2001.

     13. Amendment to Section 7.1(a)(v). Clause (v) of Section 7.1(a) is hereby
         ------------------------------
amended to read in its entirety as follows:

     "(v) by Parent or Purchaser if the Closing does not occur on or prior to
August 7, 2001, provided that either Parent or Purchaser shall be entitled to
                --------
extend such date to no later than August 15, 2001 (but only if it has complied
with its obligations under Section 5.3(a)) if necessary to satisfy the Closing
condition set forth in Section 6.1(d); further provided that either Parent or
                                       ------- --------
Purchaser shall be entitled to re-extend such date to no later than August 31,
2001 (but only if it has complied with its obligations under Section 5.3(a)) if
necessary to satisfy the Closing condition set forth in Section 6.1(d)."

     14. Deletion of Section 9.8. Section 9.8 is hereby deleted in its entirety.
         -----------------------

     15. Amendment to Section 11.1. Section 11.1 is hereby amended by adding the
         -------------------------
following definitions:

     "Measuring Time" has the meaning set forth in Section 2.3(a).
      --------------

     "Target Closing Date" has the meaning set forth in Section 2.1.
      -------------------

     Section 11.1 is hereby further amended by replacing the following
definition in its entirety:

     "Excluded Inventory" means (i) Inventory of finished goods paper products
      ------------------         -
allocated to the Georgia-Pacific Office Products division of Parent and held in
public warehouses as of the Closing Date (other than Mill overflow warehouses),
(ii) Inventory of finished goods paper products allocated to the Xerox Paper
 --
Group division of Parent that is listed on Exhibit A-2 to the Supply and
Distribution Agreement and held in public warehouses (other than Mill overflow
warehouses) as of the Closing Date and (iii) Inventories of Woodland pulp
                                        ---
products (other than export) and Inventories of Woodland export pulp products in
excess of the amounts to be conveyed to Purchaser in accordance with Section
5.21.

     16. Financial Statements.
         --------------------

     (a) The unaudited balance sheet of the Carve Out Business as of March 31,
2001, and the related unaudited statements of income, Parent's investment and
cash flow for the three months ended March 31, 2001, together with all related
notes thereto,



delivered to Purchaser on July 26, 2001 and attached to this Amendment as Annex
B, (i) shall for all purposes under the Agreement be deemed to be the "Interim
    -
Financial Statements" and (ii) shall replace in their entirety the Interim
                           --
Financial Statements and the Side Letter delivered to Purchaser on June 1, 2001.

     (b) The balance sheets of the Carve Out Business as of January 1, 2000 and
December 30, 2000, and the related statements of income, Parent's investment and
cash flow for each of the three years in the three-year period ended December
30, 2000, together with all related notes thereto and the unqualified audit
report of Arthur Andersen on such financial statements, that incorporate any
revisions made to the Year-End Financial Statements in connection with the
audit, delivered to Purchaser on July 26, 2001 and attached to this Amendment as
Annex C, (i) shall for all purposes under the Agreement be deemed to be the
          -
"Audited Financial Statements" and (ii) shall replace in their entirety the
                                    --
Year-End Financial Statements and the Side Letter delivered to Purchaser on June
1, 2001. The Audited Financial Statements shall be deemed timely delivered by
Parent pursuant to Section 5.14(a) of the Purchase Agreement.

     17. Exhibits. The forms of the Ancillary Documents attached to this
         --------
Amendment as Exhibits A through Q shall replace Exhibits A through N to the
Purchase Agreement in their entirety. References to "Closing" will be changed to
"Measuring Time" in Item II of Exhibit C.

     18. Confirmation of Agreement. Other than as expressly modified pursuant to
         -------------------------
this Amendment, all provisions of the Agreement remain unmodified and in full
force and effect. This Amendment will be governed by all of the General
Provisions in Article X of the Agreement.



     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the first date above written.

GEORGIA-PACIFIC CORPORATION


By  /s/ James F. Kelley
  -------------------------------
Name:   James F. Kelley
Title:  Executive Vice President
          and General Counsel


NEKOOSA PAPERS INC.


By  /s/ James F. Kelley
  -------------------------------
Name:   James F. Kelley
Title:  Executive Vice President
          and General Counsel


GEORGIA-PACIFIC RESINS, INC.


By  /s/ James F. Kelley
  -------------------------------
Name:   James F. Kelley
Title:  Executive Vice President
          and General Counsel


DOMTAR INC.


By  /s/ Christian Dube
  -------------------------------
Name:   Christian Dube
Title:  SVP-Chief Financial Officer


By  /s/ Gilles Pharand
  -------------------------------
Name:   Gilles Pharand
Title:  SVP-GC and Secretary

EX-12

                                                                      EXHIBIT 12

GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES
STATEMENTS OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                                                  For the year ended
                                       -----------------------------------------
(Unaudited)                            December 29,  December 30,  January 1,
In millions                                    2001          2000        2000
================================================================================
Fixed charges:
  Total interest expense                   $ 1,133        $   607     $   432
  One-third of rent expense                     68             54          37
- --------------------------------------------------------------------------------
Total fixed charges                          1,201            661         469
- --------------------------------------------------------------------------------
Add:
  (Loss) income before income taxes
    and extraordinary item                    (295)           553       1,164
  Interest capitalized                           3              4          10
- --------------------------------------------------------------------------------
                                              (292)           557       1,174
- --------------------------------------------------------------------------------
Earnings for fixed charges                 $   909        $ 1,218     $ 1,643
================================================================================
Ratio of earnings to fixed charges            0.76x          1.84x       3.50x
================================================================================

EX-21

                                                                      EXHIBIT 21
                    GEORGIA-PACIFIC CORPORATION SUBSIDIARIES
                               AS OF March 1, 2002

         The following table lists each subsidiary of Georgia-Pacific
Corporation indented under the name of its immediate parent, the percentage of
each subsidiary's voting securities beneficially owned by its immediate parent
and the jurisdiction under the laws of which each subsidiary was organized:



                                                                                   % of Voting
Name                                                                               Securities    Jurisdiction
- ----                                                                               -----------   ------------
                                                                                           
Georgia-Pacific Corporation                                                              -       Georgia
A)    175 Peachtree, LLC                                                               100       Georgia
B)    Arbor Property and Casualty Limited                                              100       Bermuda
C)    Arkansas Louisiana & Mississippi Railroad Company                                100       Delaware
D)    Ashley, Drew & Northern Railway Company                                          100       Arkansas
E)    Blue Rapids Railway Company                                                      100       Kansas
F)    Brown Board Holding, Inc.                                                        100       Delaware
G)    Brunswick Pulp & Paper Company                                                   100       Delaware
H)    Brunswick Pulp Land Company, Inc.                                                100       Delaware
I)    CeCorr, Inc.                                                                     100       Indiana
J)    Color-Box, LLC                                                                   58/1/     Georgia
K)    Fordyce and Princeton R. R. Co.                                                  100       Arkansas
L)    ForestExpress, LLC                                                             33.33/2/    Delaware
M)    Fort James Corporation                                                           100       Virginia
      1)   Fort James International Holdings, Ltd.                                    88.8/3/    Virginia
           a)  Brusara Participacoes Ltda.                                            99.99/4/   Brazil
           b)  China Tissue Co. Ltd.                                                   50        British Virgin Islands
               i) Shanghai Cimic Fort James Tissue Co. Limited                        98.2/5/    People's Republic of China
           c)  Crown Zellerbach AG Zug                                                 95        Switzerland
           d)  Crown Zellerbach Interamerica, Inc.                                     100       Panama
           e)  Fort James Alberta Ltd.                                                 100       Alberta
           f)  Fort James Canada, Inc.                                                 100       Canada
               i) Canada Cup (1994) Inc.                                               100       Canada
               ii)Dixie Canada Corp.                                                   100       Canada
           g)  Fort James de Mexico S.A. de C.V.                                    99.95238     Mexico
           h)  Fort James Healthcare Management Corporation                            100       Delaware
           i)  Fort James Holding de Mexico, S.A. de C.V.                           99.98/6/     Mexico
               i) Manufacturas Fort James de Mexico, S.A. de C.V.                  99.998/7/     Mexico

- --------------------

1   58% of Color-Box, LLC is owned by Georgia-Pacific Corporation and 42% is
    owned by Chesapeake Display & Packaging Company.
2   Georgia-Pacific Corporation, International Paper Company and Weyerhaeuser
    Company are all members of ForestExpress, LLC with each holding a 33.33%
    interest.
3   Fort James Corporation owns 88.8% of Fort James International Holdings, Ltd.
    And Fort James Operating Company owns 11.2%.
4   Fort James International Holdings, Ltd. owns 99.99% of Brusara Participacoes
    Ltda and Fort James Corporation owns .001%.
5   China Tissue Co., Ltd. owns 98.2% of Shanghai CIMIC Fort James Tissue Co.,
    Limited and Shanghai Min. Ying Industrial Co. owns 1.8%.
6   Fort James International Holdings, Ltd. owns 99.98% of Fort James Holding
    de Mexico, S.A. de C.V. and Fort James Operating Company owns .002%.







                                                                                  % of Voting
Name                                                                               Securities    Jurisdiction
- ----                                                                               -----------   ------------
                                                                                           
               ii) Fort James S.A. de C.V.                                      99.998/8/    Mexico
           j)  Fort James Investment S.a.r.l.                                      100       US/Luxembourg
           k)  Fort James S.a.r.l.                                                 100       Luxembourg
               i) Fort James B.V.                                                  100       The Netherlands
                  I)  Fort  James Europe Limited                                   100       United Kingdom
                 II)  Fort James France S.A.S.                                     100       France
                III)  Fort James France s.c.a.                                    97.7/9/    France
                      1)  Fort James Belux S.P.R.L.                                100       Belgium
                      2)  Fort James Brionne S.A.S.                              99.99/10/   France
                      3)  Laboratoires Polive S.N.C.                                50       France
                      4)  Sodipan S.C.A.                                           100       France
                          a) Sodipan Transformation S.A.R.L.                       100       France
                      5)  Sodipan S.N.C.                                           100       France
                      6)  Vania Expansion S.N.C.                                    50       France
                          a) Etablissements Ruby S.A.                               90       France
                      7)  Wear Safe (Malaysia) SDN, BHD                             60       Malaysia
                 IV)  Fort James Hellas S.A.                                       100       Greece
                  V)  Fort James Ireland Limited                                   100       Ireland
                      1) Handi-Pak Distributors Limited                            100       Ireland
                 VI)  Fort James Italia S.r.l.                                     100       Italy
                VII)  Fort James Nederland                                         100       The Netherlands
                      1)  Fort James Belgium B.V.B.A.                              100       Belgium
                      2)  Fort James Deutsch-Land GmbH                             100       Germany
               VIII)  Fort James S.P.R.L.                                          100       Belgium
                 IX)  Fort James S.P.R.L. S. Comp.A.                               100       Spain
                  X)  Fort James Services S.N.C.                                 99.9/11/    Belgium
                 XI)  Fort James Suomi OY                                          100       Finland
                      1)  Fort James Danmark A/S                                   100       Denmark
                      2)  Fort James Norge AS                                      100       Norway
                      3)  Fort James Sverige AB                                    100       Sweden
                      4)  Ikaalisten Teollisuuspal-Velu oy                         100       Finland
                      5)  James River EESTI AS                                     100       Estonia
                      6)  Nokian Palkallispal-Velutoy                              100       Finland
                      7)  Zao Fort James                                           100       Russia
             XII)  Fort James UK Limited                                           100       United Kingdom
                      1)  British Tissues Limited                                  100       England
                      2)  Fort James Group Services Limited                        100       United Kingdom
                      3)  Fort Sterling Limited                                    100       England
                          a)   Stuart Edgar                                        100       England
                      4)  Troy Fibers Limited                                      100       United Kingdom
            XIII)     Ipek Kagit A.S.                                               50       Turkey
           l)  Jarapar Participacoes Ltda.                                       99.99/12/   Brazil
           m)  St. Francis Insurance Co. Ltd.                                      100       Bermuda


- --------------------
7   Fort James Holding de Mexico, S.A. de C.V. owns 99.998% of Manufacturas Fort
    James de Mexico, S.A. de C.V. and Fort James International Holdings, Ltd.
    owns .002%.
8   Fort James Holding de Mexico, S.A. de C.V. owns 99.998% of Fort James S.A.
    de C.V. and Fort James International Holdings, Ltd. owns .002%.
9   Fort James B.V. owns 97.7% of Fort James France s.c.a. and Fort James
    S.P.R.L. owns 2.3%.
10  Fort James France s.c.a owns 99.99% of Fort James Brionne SAS and Fort James
    S.P.R.L. owns .01%.
11  Fort James B.V. owns 99.9% of Fort James Services S.N.C. and Fort James
    S.P.R.L. owns 1%.
12  Fort James International Holdings, Ltd. owns 99.99% of Jarapar Participacoes
    Ltda and Fort James Corporation owns .001%.






                                                                                   % of Voting
Name                                                                               Securities    Jurisdiction
- ----                                                                               -----------   ------------
                                                                                           

     2)   Fort James Maine, Inc.                                                       100          Maine
     3)   Fort James Operating Company                                                 100          Virginia
          a)  Ecosource Corp.                                                          100          Delaware
          b)  Fort James Camas L.L.C.                                                  100          Washington
          c)  Fort James Fiber Canada Corporation                                      100          Ontario
          d)  Fort James Green Bay L.L.C.                                              100          Wisconsin
          e)  Fort James Northwest L.L.C.                                              100          Oregon
                 I)Harmon Associates Ltd.                                              100          Ontario
              Ii) Harmon International Limited                                         100          United Kingdom
          f)  Prim Company L.L.C.                                                      100          Wisconsin
          g)  West Mason, Inc.                                                         100          Delaware
          h)  Swanson Wiper Corporation                                                100/13/      Wisconsin
     4)       Naheola Cogeneration Limited Partnership                                  99/14/      Delaware
N)   G-P Gypsum Corporation                                                            100          Delaware
     1) KMHC, Incorporated                                                             100          California
          a)  Compania Occidental Mexicana, S.A. de C.V.                                49          Mexico
0)   G-P Maine, Inc.                                                                   100          Delaware
P)   G-P Receivables, Inc.                                                             100          Delaware
Q)   Georgia-Pacific (Bermuda) Finance Ltd.                                           1000          Bermuda
R)   Georgia-Pacific Childcare Center, LLC                                             100          Georgia
S)   Georgia-Pacific Development Company                                               100          Delaware
     1)  Dunes West Joint Venture, A Partnership                                       100/15/      South Carolina
         a)  Dunes West Recreation Association, Inc.                                   100          Delaware
T)   Georgia-Pacific Foreign Holdings, Inc.                                            100          Delaware
U)   Georgia-Pacific Holdings, Inc.                                                    100          Delaware
V)   Georgia-Pacific Investment Company                                                100          Oregon
W)   Georgia-Pacific Resins, Inc.                                                      100          Delaware
X)   Georgia-Pacific Shared Services Corp.                                             100          Delaware
Y)   Georgia-Pacific Tissue, LLC                                                        95/16/      Delaware
     1)  Wisconsin Tissue Management, LLC                                              100          Delaware
Z)   Georgia-Pacific Tissue Real Estate Company, LLC                                   100          Delaware
AA)  Georgia-Pacific West, Inc.                                                        100          Oregon
     1)  Aztec Trading Company, S.A.                                                   100          Panama
     2)  Flakeboard, Inc.                                                              100          Oregon
         a) G-P Flakeboard Company                                                      67/17/      Ontario
     3)  GPMF, Inc.                                                                    100          Delaware
     4)  G-P Canada Finance Company                                                    100          Nova Scotia
     5)  G-P Canada Holdings, Limited                                                  100          Nova Scotia
         a) Beaverwood Finance Company                                                 100          Nova Scotia
         b) Georgia-Pacific Canada, Inc.                                               100          Ontario
            i) Flakeboard Canada Incorporated                                          100          Nova Scotia
           ii) Georgia-Pacific (Barbados), Limited                                     100          Barbados
     6)  G-P Latin America, Incorporated                                               100          Barbados
         a) Inversiones Georgia-Pacific                                                 99/18/      Barbados


- ----------------------
13 Fort James Operating Company owns 100% of the preferred stock of Swanson
   Wiper Corporation and 50% of the common stock.
14 Fort James Pennington, Inc. owns 99% of Naheola Cogeneration, Limited
   Partnership and Naheola Cogeneration, Inc. owns 1%.
15 50% of the partnership of Dunes West Joint Venture is owned by Georgia-
   Pacific Development Company and 50% is owned by Georgia-Pacific Investment
   Company.
16 95% of Georgia-Pacific Tissue, LLC is owned by Georgia-Pacific Corporation
   and 5% is owned by Wisconsin Tissue Mills, Inc.
17 67% of G-P Flakeboard Company is owned by Flakeboard, Inc. and 33% is owned
   by F.B.F. Corporation.






                                                                                   % of Voting
Name                                                                               Securities    Jurisdiction
- ----                                                                               -----------   ------------
                                                                                           


       7)     Georgia-Pacific Asia, Inc.                                               100       Delaware
              a) Georgia-Pacific-Asia (H. K.) Limited                                  100/19/   Hong Kong
       8)     Georgia-Pacific Building Materials Sales, Ltd.                           100       New Brunswick
       9)     Georgia-Pacific de Mexico, S. de R. L. de C. V.                          100/20/   Mexico
      10)     Georgia-Pacific Finance, LLC                                             100       Delaware
      11)     Georgia-Pacific Foreign Sales Corporation                                100       Barbados
      12)     Georgia-Pacific NZ Holdings, LLC                                         100       Delaware
              a)  G-P Securities Company                                               100       New Zealand
              b)  Georgia-Pacific Global Corporation                                   100       Oregon
                  i) GPSP, Inc.                                                        100       Delaware
              c)  Georgia-Pacific NZ Company                                           100       New Zealand
      13)     Georgia-Pacific U.K. Limited                                             100       England
      14)     Georgia Steamship Company, Inc.                                          100       Delaware
      15)     Pulpsource GmbH                                                           90/21/   Switzerland
      16)     St. Croix Pulpwood, Limited                                              100       New Brunswick
AB)   Georgia Temp, Inc.                                                               100       Delaware
AC)   Gloster Southern Railroad Company                                                100       Delaware
AD)   Great Northern Nekoosa Corporation                                               100       Maine
      1)      Chattahoochee Industrial Railroad                                        100       Georgia
      2)      Envases Industriales de Costa Rica, S.A.                               33.33/22/   Costa Rica
      3)      Fipasa-Fibras Panama, S.A.                                                50       Panama
      4)      Great Southern Paper Company                                             100       Georgia
      5)      Industria Panamena de Papel, S.A.                                         50       Panama
      6)      Leaf River Forest Products, Inc.                                         100       Delaware
              a)    LRC Timber, Inc.                                                   100       Delaware
              b)    LRFP Timber, Inc.                                                  100       Delaware
              c)    Old Augusta Railroad Company                                       100       Mississippi
      7)      Nekoosa Packaging Corporation                                            100       Delaware
              a)    G-P Total Packaging Solutions, Inc.                                100       Delaware
      8)      Nekoosa Papers Inc.                                                      100       Wisconsin
              a)    Georgia-Pacific Britain, L.L.C.                                    100/23/   Delaware
AE)   Millennium Packaging Solutions, LLC                                               50/24/   Delaware
      1)      NATC California Holdings, LLC                                            100       Delaware
              a)    NATC California, LLC                                               100       Delaware
AF)   Phoenix Athletic Club, Inc.                                                      100       Georgia
AG)   Saint Croix Water Power Company, The                                             100       New Brunswick
AH)   Southwest Millwork and Specialties, Inc.                                         100       Delaware
      1)      Maderas Howrey S. A. de C. V.                                            100/25/   Mexico

- --------------------
18  99% of Inversiones Georgia-Pacific (Group 1 841) is issued to G-P Latin
    America. Incorporated and 1% is issued to Georgia-Pacific (Barbados)
    Limited.
19  90% of Georgia-Pacific Asia (H.K.) Limited is owned by Georgia-Pacific Asia,
    Inc. and 10% is owned by Unisource International, Inc.
20  Georgia-Pacific de Mexico, S. de R.L. de C.V. is owned by both Georgia-
    Pacific West, Inc. and Georgia-Pacific Investment Company.
21  90% of Pulpsource GmbH is owned by Georgia-Pacific West, Inc. and 10% is
    owned by Unisource International, Inc.
22  33.33% of Envases Industriales de Costa Rica, S.A. is owned by Great
    Northern Nekoosa Corporation and 66.67% is owned by Del Monte Fresh Produce
    International, Inc.
23  90% of Georgia-Pacific Britain, L.L.C. is owned by Nekoosa Papers Inc. and
    10% is owned by Great Northern Nekoosa Corporation.
24  50% of Millennium Packaging Solutions, LLC is owned by Georgia-Pacific
    Corporation and 50% is owned by National Packaging Solutions Group.






                                                                                   % of Voting
Name                                                                               Securities    Jurisdiction
- ----                                                                               -----------   ------------
                                                                                           
AI)   Sprague's Falls Manufacturing Company (Limited), The                             100       New Brunswick
AJ)   St. Croix Water Power Company                                                    100       Maine
AK)   Tomahawk Land Company                                                            100       Delaware
AL)   Unisource Worldwide, Inc.                                                        100       Delaware
      1)   Alco Realty, Inc.                                                           100       Delaware
           a)  Alco Canada Realty Ltd.                                                 100       Alberta
               i)   Braces Properties Corporation                                       50       Canada
      2)   BRT, Inc.                                                                   100       Delaware
      3)   Packaging Concepts International Corp.                                      100       New Jersey
      4)   Paper Corporation of North America                                          100       Delaware
           a)  Unisource Canada, Inc.                                                  100       Ontario
           b)  Unisource Distribudora, S.A. de C.V.                                    100       Mexico
               i)   Servicios Corporativos, Unisource, S.A. de C.V.                   99.9/26/   Mexico
               ii)  Unisource del Centro, S.A. de C.V.                                99.9/27/   Mexico
               iii) Unisource Empaque, S.A. de C.V.                                   99.9/28/   Mexico
      5)   Portfolio Receivables, Inc.                                                 100       Delaware
           a)  Portfolio Receivables, LLC                                              100       Delaware
      6)   UniMadison, Inc.                                                            100       Wisconsin
      7)   Unisource Capital Corporation                                               100       Delaware
      8)   The Unisource Corporation                                                   100       Texas
      9)   Unisource Holdings, Inc.                                                    100       Delaware
      10)  Unisource International, Inc.                                               100       Delaware
           a)  Unisource International Handelgesellschaft m.b.H.                        99       Austria
           b)  Unisource International Hong Kong Limited                                99       Hong Kong
           c)  Unisource International Limited                                          99       Jamaica
           d)  Unisource International (South East Asia) PTE Limited                    99       Singapore
           e)  Unisource Planeacion, S.A. de C.V.                                       99       Mexico
           f)  Unisource Servicios, S.A. de C.V.                                       100       Mexico
      11)  Unisource Realty, Inc.                                                      100       Delaware
      12)  Unisource Sales Corporation                                                 100       Delaware
AM)   XRS, Inc.                                                                        100       Delaware

- --------------------
25  99.6% of Maderas Howrey S.A. de C.V. is issued to Southwest Millwork and
    Specialties, Inc. and the remaining .4% is issued to Georgia-Pacific Shared
    Services Corp., Georgia-Pacific Holdings, Inc, Georgia-Pacific Pulpwood
    Company and Georgia-Pacific West, Inc. in equal parts. 100% of Series B
    stock and 100% of Series C stock are issued to Southwest Millwork and
    Specialties, Inc.
26  99.9% is owned by Unisource Distribudora, S.A. de C.V. and .01% is owned by
    Unisource Servicios S.A. de C.V.
27  99.9% is owned by Unisource Distribudora, S.A. de C.V. and .01% is owned by
    Unisource Servicios S.A. de C.V.
28  99.9% is owned by Unisource Distribudora, S.A. de C.V. and .01% is owned by
    Unisource Servicios S.A. de C.V.

EX-23

                                                                      Exhibit 23

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation
of our report dated January 23, 2002 included in this Annual Report on Form 10-K
into Georgia-Pacific Corporation's previously filed Registration Statement Nos.
333-80757, 333-48388, 333-35813, 333-44112, 2-53427, 2-61238, 2-68688, 2-76072,
2-93184, 33-11341, 33-26985, 33-39693, 33-62498, 33-60933, 333-35793, 2-99380,
33-58664, 33-52823, 33-37930, 33-38561, 33-48328, 33-52815, 33-48329,
33-38561, 33-48330, 33-48331, 33-59057, 333-42597, 333-93793, 333-96007,
333-33816, 333-36196, 333-36198, 333-50978, 333-50980, 333-51442, and 333-58040.

                                          /s/ Arthur Andersen

Atlanta, Georgia
March 21, 2002

EX-99.1

                                                                    EXHIBIT 99.1

                           Georgia-Pacific Corporation
                       Building Products Plants and Mills
                  Capacities are stated as of December 29, 2001




     Structural Panel Plants:  23
     ----------------------------                                      Oriented Strand Board Plants:  7
     Softwood Plywood Plants:  16                                      2,335,000,000 sq. ft. annual capacity, 3/8" basis
     5,521,000,000 sq. ft. annual capacity, 3/8" basis                 2,180,000,000 sq. ft. 2001 shipments        Capacity:  sq.ft.
     4,866,000,000 sq. ft. 2001 shipments     capacity sq. ft.         -------------------------------------------------------------
     ---------------------------------------------------------
                                                                                                               
     Alabama                                                           Arkansas

     Peterman .................................... 315,000,000         Fordyce ........................................ 450,000,000

     Talladega ................................... 322,000,000         Woodland ....................................... 200,000,000

     Arkansas                                                          Mississippi

     Crossett .................................... 680,000,000         Grenada ........................................ 375,000,000

     Fordyce ..................................... 310,000,000         North Carolina

     Florida                                                           Dudley ......................................... 170,000,000

     Hawthorne ................................... 370,000,000         Virginia

     Georgia                                                           Brookneal ...................................... 400,000,000

     Madison ..................................... 367,000,000         Skippers ....................................... 365,000,000

     Monticello .................................. 347,000,000         West Virginia

     Warm Springs ................................ 340,000,000         Mt. Hope ....................................... 375,000,000

     Mississippi

     Gloster ..................................... 285,000,000
                                                                       Industrial Panel Plants: 17
     Louisville .................................. 290,000,000         ---------------------------
                                                                       Hardboard Plants:  3
     Taylorsville ................................ 355,000,000         660,000,000 sq. ft. annual capacity, 1/8" basis
                                                                       699,000,000 sq. ft. 2001 shipments        Capacity:  sq. ft.
     North Carolina                                                    ------------------------------------------------------------

     Dudley ...................................... 366,000,000         Minnesota

     Whiteville .................................. 328,000,000         Duluth ......................................... 280,000,000

     South Carolina                                                    South Carolina

     Prosperity .................................. 250,000,000         Catawba ........................................ 290,000,000

     Russellville ................................ 260,000,000         Wisconsin

     Virginia                                                          Phillips .......................................  90,000,000

     Emporia ..................................... 336,000,000






                                       -1-



                           Georgia-Pacific Corporation
                 Building Products Plants and Mills (continued)




Particleboard Plants:  8                                             Medium density Fiberboard Plants:  3
1,362,000,000 sq. ft. annual capacity, 3/4"  basis                   296,000,000 sq. ft. annual capacity,3/4" basis
977,000,000 sq. ft. 2001 shipments          Capacity:  sq. ft.       269,000,000 sq. ft. 2001 shipments             Capacity: sq.ft.
- --------------------------------------------------------------       ---------------------------------------------------------------
                                                                                                                
Georgia                                                              Georgia

Monticello .......................................  62,000,000       Monticello ........................................  36,000,000

Vienna ........................................... 150,000,000       South Carolina

Michigan                                                             Holly Hill ........................................ 100,000,000

Gaylord .......................................... 270,000,000       Canada

Mississippi                                                          Sault Sainte Marie, Ontario ....................... 160,000,000

Louisville ....................................... 160,000,000

Oxford ........................................... 200,000,000

Taylorsville ..................................... 185,000,000       Hardwood Plywood Plants:  2
                                                                     395,000,000 bd. ft. annual capacity, surface measure basis
South Carolina                                                       310,000,000 bd. ft. 2001 shipments            Capacity:  sq.ft.
                                                                     ---------------------------------------------------------------
Russellville ..................................... 185,000,000       Georgia

Canada                                                               Savannah .......................................... 155,000,000

Bancroft, Ontario ................................ 150,000,000       Oregon

                                                                     Eugene ............................................ 240,000,000

Softboard Plant:  1
250,000,000 sq. ft. annual capacity, 1/2" basis                      Other Wood Panel Plants:  2
227,000,000 sq. ft. 2001 shipments          Capacity:  sq. ft.       Panel Processing Operations:  2
- --------------------------------------------------------------       228,000,000 sq. ft. annual capacity
                                                                     41,000,000 sq. ft. 2001 shipments            Capacity:  sq. ft.
Virginia                                                             ---------------------------------------------------------------

Jarratt .......................................... 250,000,000       Mississippi

                                                                     Eupora (cut-to-size) ............................... 28,000,000

                                                                     Oxford (thermally fused melamine)                   200,000,000


                                       -2-



                           Georgia-Pacific Corporation
                 Building Products Plants and Mills (continued)



Lumber Mills: 33
- ----------------

Southern Pine Sawmills: 18                                           Southern Pine Stud Mills: 4
- ---------------------------
1,606,000,000 bd. ft. annual capacity                                283,000,000 bd. ft. annual capacity
1,322,000,000 bd. ft. 2001 shipments         Capacity: bd. ft.       219,000,000 bd. ft. 2001 shipments            Capacity: bd. ft.
- --------------------------------------------------------------       ---------------------------------------------------------------
                                                                                                                
Alabama                                                              Arkansas

Fayette .........................................  122,000,000       Crossett..........................................   70,000,000

Arkansas                                                             Georgia

El Dorado .......................................  110,000,000       Monticello........................................   74,000,000

Florida                                                              Mississippi

Cross City ......................................   84,500,000       Taylorsville......................................   67,000,000

Palatka .........................................   76,000,000       South Carolina

Georgia                                                              Russellville......................................   72,000,000

Claxton .........................................   85,000,000       Western Softwood Sawmills: 3
                                                                     437,000,000 bd. ft. annual capacity
Sterling ........................................  106,000,000       375,000,000 bd. ft. 2001 shipments            Capacity:  bd ft.
                                                                     ---------------------------------------------------------------
Warrenton .......................................   85,000,000       California

Mississippi                                                          Ft. Bragg.........................................  144,000,000

Bay Springs .....................................  123,500,000       Oregon

Columbia ........................................  115,000,000       Coos Bay..........................................  173,000,000

New Augusta .....................................  100,000,000       Philomath.........................................  120,000,000

Roxie ...........................................  104,500,000

North Carolina                                                       Southern Hardwood Sawmills: 2
                                                                     39,000,000 bd. ft. annual capacity
Ahoskie .........................................   78,000,000       34,000,000 bd. ft. 2001 shipments             Capacity:  bd ft.
                                                                     ---------------------------------------------------------------
Creedmoor .......................................   71,000,000       North Carolina

Dudley ..........................................   83,500,000       Bowdens...........................................   19,000,000

Whiteville ......................................   72,000,000       Enfield...........................................   20,000,000

South Carolina

McCormick .......................................   70,000,000       Appalachian Hardwood Sawmills: 5
                                                                     87,000,000 bd. ft. annual capacity
Prosperity ......................................   85,000,000       99,588,000 bd. ft. 2001 shipments             Capacity:  bd.ft.
                                                                     ---------------------------------------------------------------
Virginia                                                             Pennsylvania

Wakefield .......................................   35,000,000       Marble............................................   18,000,000

                                                                     Virginia

Eastern Softwood Sawmill: 1                                          Buena Vista.......................................   14,000,000
66,000,000 bd. ft. annual capacity
384,000 bd. ft. 2001 shipments              Capacity:  bd. ft.       West Virginia
- --------------------------------------------------------------
Maine                                                                Green Valley......................................   20,000,000

Woodland.........................................   66,000,000       Rainelle..........................................   18,000,000

                                                                     Richwood..........................................   17,000,000


                                       -3-



                           Georgia-Pacific Corporation
                 Building Products Plants and Mills (continued)


Other Lumber Facilities 10
- --------------------------
Laminated Veneer Lumber Mill: 1
5,200,000 cu. ft. annual capacity
5,200,000 cu. ft. 2001 shipments              Capacity: cu. ft.
- ---------------------------------------------------------------

North Carolina

Roxboro............................................   5,200,000

Lumber Planing Operations: 2
50,000,000 sq. ft. annual capacity
34,000,000 sq. ft. 2001 shipments             Capacity: sq. ft.
- ---------------------------------------------------------------


Mississippi

Tylertown..........................................  27,000,000

Virginia

Suffolk............................................  23,000,000

I Beam Manufacturing Operations: 2

48,000,000 l. ft. annual capacity
48,000,000 l. ft. 2001 shipments               Capacity: l. ft.
- ---------------------------------------------------------------

Florida

Ocala..............................................  24,000,000

North Carolina

Roxboro............................................  24,000,000

Pressure Treating Facilities: 5
269,000,000 bd. ft. annual capacity
253,000,000 bd. ft. 2001 shipments*           Capacity: bd. ft.
- ---------------------------------------------------------------


Alabama

Athens.............................................  46,500,000

Georgia

Sterling...........................................  30,000,000

North Carolina

Henderson..........................................  90,300,000

Roanoke Rapids.....................................  43,700,000

South Carolina

Rock Hill..........................................  58,500,000


* 2001 shipments do not include contract treating facilities


                                       -4-


                           Georgia-Pacific Corporation

                 Building Products Plants and Mills (continued)


Gypsum
- ------

Gypsum Board Plants:  18                                            Gypsum Plaster Mills (at gypsum board plants)
- ------------------------
6,546,000,000 sq. ft. annual capacity                               483,000 tons annual capacity
4,152,000,000 sq. ft. 2001 shipments        Capacity:  sq. ft.      453,000 tons 2001 shipments                Capacity:   tons
- --------------------------------------------------------------      -----------------------------------------------------------
                                                                                                      
California                                                          California

Antioch........................................... 340,000,000      Antioch............................................  30,000

Long Beach*....................................... 330,000,000      Long Beach.........................................  70,000

Georgia                                                             Georgia

Brunswick......................................... 570,000,000      Brunswick..........................................  30,000

Savannah*......................................... 300,000,000      Kansas

Indiana                                                             Blue Rapids........................................ 248,000

Wheatfield........................................ 500,000,000      New Jersey

Iowa                                                                Camden.............................................  40,000

Fort Dodge........................................ 390,000,000      Utah

Kansas                                                              Sigurd.............................................  65,000

Blue Rapids*...................................... 160,000,000

Nevada

Las Vegas......................................... 270,000,000      Other Gypsum Plants: 6
                                                                    ----------------------
New Hampshire                                                       Fire Door Core Plants:  2
                                                                    650,000 cores annual capacity
Newington ........................................ 600,000,000      306,000 cores 2001 shipments              Capacity:   cores
                                                                    -----------------------------------------------------------
New Jersey
                                                                    Missouri
Camden ........................................... 316,000,000
                                                                    Cuba .............................................. 335,000
Texas
                                                                    Oregon
Acme* ............................................ 645,000,000
                                                                    Canby ............................................. 315,000
Sweetwater ....................................... 320,000,000

Utah

Sigurd* .......................................... 160,000,000
                                                                    Gypsum Joint System Plants:  4
Washington
                                                                    131,000 tons annual capacity
Tacoma ........................................... 400,000,000      66,000 tons 2001 shipments                 Capacity:   tons
                                                                    -----------------------------------------------------------
Wyoming
                                                                    Florida
Lovell ........................................... 300,000,000
                                                                    Ft. Lauderdale .................................... 14,000
Canada
                                                                    Georgia
Caledonia, Ontario (East) ........................ 475,000,000
                                                                    Marietta .......................................... 39,000
Edmonton, Alberta ................................ 250,000,000
                                                                    Texas
Surrey, British Columbia ......................... 220,000,000
                                                                    Acme (at gypsum board plant) ...................... 30,000

                                                                    Virginia

                                                                    Milford ........................................... 28,000

                                                                    Canada

* Plant indefinitely idled in 2001.                                 Longueuil, Quebec ................................. 20,000



                                       -5-



                           Georgia-Pacific Corporation
                 Building Products Plants and Mills (continued)



Chemicals
- ---------
Formaldehyde Plants: 16                                              Thermosetting Resin Plants: 17
2,785,000,000 lbs. annual capacity                                   3,874,000,000 lbs. annual capacity
2,283,000,000 lbs. 2001 shipments               Capacity: lbs.       3,465,000,000 lbs. 2001 shipments            Capacity: lbs.
- --------------------------------------------------------------       -----------------------------------------------------------
                                                                                                         
Arkansas                                                             Arkansas

Crossett .....................................     180,000,000       Crossett ..................................   258,000,000

Georgia                                                              California

Vienna .......................................     120,000,000       Elk Grove .................................    55,000,000

Michigan                                                             Ukiah .....................................   160,000,000

Beaver Creek .................................     145,000,000       Georgia

Mississippi                                                          Savannah (Port Wentworth) .................   180,000,000

Louisville ...................................     150,000,000       Vienna ....................................   250,000,000

Taylorsville .................................     290,000,000       Michigan

North Carolina                                                       Beaver Creek ..............................   251,000,000

Conway .......................................     159,000,000       Mississippi

Healing Springs ..............................     175,000,000       Louisville ................................   295,000,000

Ohio                                                                 Taylorsville ..............................   225,000,000

Columbus .....................................     235,000,000       North Carolina

Oregon                                                               Conway ....................................   375,000,000

Albany .......................................     178,000,000       Ohio

White City ...................................     288,000,000       Columbus ..................................   110,000,000

South Carolina                                                       Oregon

Rock Hill ....................................     104,000,000       Albany ....................................   235,000,000

Russellville .................................     278,000,000       Eugene ....................................   160,000,000

Texas                                                                White City ................................   235,000,000

Houston ......................................     110,000,000       South Carolina

Lufkin .......................................     145,000,000       Russellville ..............................   325,000,000

South Africa                                                         Texas

Umbogintwini, Natal* .........................     108,000,000       Lufkin ....................................   330,000,000

South America                                                        South Africa

Concordia, Argentina .........................      77,000,000       Umbogintwini, Natal* ......................   168,000,000

Concepcion, Chile ............................     151,000,000       South America

                                                                     Concordia, Argentina ......................   143,000,000

                                                                     Concepcion, Chile .........................   287,000,000

*Unconsolidated Joint Venture capacity and shipments not included in totals.



                                       -6-



                           Georgia-Pacific Corporation
                 Building Products Plants and Mills (continued)



Other Building Products Facilities
Roofing Plant - Felt: 1                                         Other Paperboard Mills - Gypsum Paperboard (G): 4
30,000 tons annual capacity                                     311,000 tons annual capacity
24,000 tons 2001 shipments                 Capacity:  tons      264,000 tons 2001 shipments                Capacity: tons
- ----------------------------------------------------------      ---------------------------------------------------------
                                                                                                  
Oklahoma:  Pryor                                                California

Dry roofing felt ................................   30,000      San Leandro (G) ................................   72,000

                                                                New Jersey

                                                                Delair (G)* ....................................   60,000

                                                                Oklahoma

Tall Oil and Specialty Chemical Plants:  3                      Pryor (G) ......................................   69,000

408,000,000 lbs. annual capacity                                Canada
325,000,000 lbs. 2001 shipments            Capacity:  lbs.
- ----------------------------------------------------------      Thorold (G) ....................................  110,000

Arkansas:  Crossett (2 plants)
                                                                * Sold March 1, 2002
Tall oil ...................................    34,000,000

Tall oil distillation ......................   220,000,000

Rosin derivatives ..........................    18,000,000

Rosin size .................................   107,000,000

Illinois: Chicago

Tall oil ...................................    29,000,000









                                       -7-



                           Georgia-Pacific Corporation
                     Building Products Distribution Centers


Domestic:  64
Alabama                       Louisiana                       North Dakota

Birmingham                    Baton Rouge                     Fargo

Arkansas                      New Orleans                     Ohio

Little Rock                   Shreveport                      Akron

California                    Maine                           Oklahoma

Fremont                       Portland                        Tulsa

Los Angeles                   Maryland                        Oregon

Riverside                     Baltimore                       Portland

Sacramento                    Massachusetts                   Pennsylvania

San Diego                     Bellingham                      Allentown

Colorado                      Michigan                        Pittsburgh

Denver                        Detroit                         South Carolina

Connecticut                   Grand Rapids                    Charleston

Newtown                       Minnesota                       South Dakota

Florida                       Minneapolis                     Sioux Falls

Jacksonville                  St. Paul                        Tennessee

Lake City                     Mississippi                     Erwin

Miami                         Jackson                         Memphis

Pensacola                     Missouri                        Nashville

Tampa                         Kansas City                     Texas

Georgia                       Springfield                     El Paso

Atlanta                       St. Louis                       Fort Worth

Idaho                         New Jersey                      Harlingen

Boise                         Denville                        Houston

Illinois                      New Mexico                      Lubbock

Chicago                       Albuquerque                     San Antonio

Indiana                       New York                        Vermont

Elkhart                       Buffalo                         Burlington

Iowa                          Long Island                     Virginia

Des Moines                    North Carolina                  Norfolk

Kentucky                      Asheville                       Richmond

Florence                      Charlotte                       Washington

                              Raleigh                         Seattle

                              Whiteville                      Wisconsin

International: 1                                              Wausau

Vancouver, Canada



                                       -8-



                           Georgia-Pacific Corporation
                           Packaging Plants and Mills
                  Capacities are stated as of December 29, 2001
                                                                                                       
Linerboard (L) and Medium (M) Mills: 4                               Corrugated Packaging Plants: 46
3,763,600 tons annual capacity                                       3,493,600 tons annual capacity
3,414,400 tons 2001 shipments               Capacity: tons           2,742,100 tons 2001 shipments
- ----------------------------------------------------------
                                                                     Capacity: tons
                                                                     --------------
Georgia                                                              Alabama                                New Jersey

Cedar Springs (L)..............................    896,600           Huntsville                             Milford

Cedar Springs (M)..............................    268,700           Tarrant City                           New Mexico

Mississippi                                                          California                             Santa Teresa

Monticello (L).................................  1,091,000           Anaheim                                New York

Oregon                                                               Buena Park                             Batavia

Toledo (L).....................................    539,100           Madera                                 Schenectady

Toledo (M).....................................    358,000           Modesto                                North Carolina

Virginia                                                             San Francisco                          Asheboro

Big Island (L).................................    271,400           Florida                                Ohio

Big Island (M).................................    338,800           Lake Placid                            Akron

South Carolina                                                       Georgia                                Cincinnati

Sonoco *(M)....................................    187,500           Albany                                 Circleville

                                                                     Augusta                                Cleveland
* Unconsolidated joint venture not included in capacity or
shipment totals                                                      Doraville                              West Chester

                                                                     Illinois                               Pennsylvania

Other Pulp and Paper Facilities: 7                                   Chicago                                Bradford
- ----------------------------------
Other Converting Plants: 7                                           Mount Olive                            Mt. Wolf
187,000 tons annual capacity
83,600 tons 2001 shipments                  Capacity: tons           Indiana                                Philadelphia
- ----------------------------------------------------------
                                                                     Indianapolis                           South Carolina
California
Fresno Specialty Coatings                           17,000           Iowa                                   Spartanburg
Madera Graphics Coralure**                          18,000
Visalia Litho Laminating**                          18,000           Dubuque**                              Tennessee

Georgia                                                              Monticello**                           Chattanooga***
Valdosta Preprinted linerboard.................     27,000
                                                                     Louisiana                              Cleveland
Indiana
                                                                     West Monroe                            Lebanon
Richmond Litho Laminating**....................     55,000
                                                                     Massachusetts                          Memphis
Mississippi
                                                                     Franklin                               Texas
Pelahatchie Litho Laminating**.................     18,000
                                                                     Michigan                               Denton
Ohio
                                                                     Albion                                 Waxahachie
West Chester Specialty Coatings................     34,000
                                                                     Milan                                  Virginia

                                                                     Owosso                                 Martinsville

                                                                     Missouri                               Washington

                                                                     Kansas City                            Olympia

                                                                                                            Wisconsin

                                                                                                            Oshkosh

                                                                                                            Sheboygan



 ** Acquisition of the remainder of joint venture, Color Box LLC, November 2001

*** Unconsolidated joint venture not included in capacity or shipment totals




                                     - 9 -



                           Georgia-Pacific Corporation

                    Bleached Pulp and Paper Plants and Mills

                  Capacities are stated as of December 29, 2001


Communication Papers Mills:  4                                  Market Pulp  Mills Fluff (F), Hardwood (HW), Softwood (SW):  3
1,212,000 tons annual capacity                                  1,651,900 tons annual capacity
1,257,000 tons 2001 shipments               Capacity: tons      1,534,600 tons 2001 shipments                 Capacity:  tons
- ----------------------------------------------------------      -------------------------------------------------------------
                                                                                                     
Arkansas                                                        Georgia

Crossett ........................................  202,000      Brunswick (F) .....................................  843,650

Louisiana                                                       Maine

Port Hudson .....................................  592,000      Old Town (HW) .....................................  180,000

Oregon                                                          Mississippi

Wauna ...........................................  113,000      New Augusta (SW) ..................................  628,200

Washington

Camas ...........................................  305,000
                                                                Poly Coating Plants:  2
                                                                240,000 tons annual capacity
                                                                189,000 tons 2001 shipments                     Capacity: tons
                                                                --------------------------------------------------------------

Other Paperboard Mills - Bleached Board (B), Kraft (K),         Arkansas
Linerboard (L):  3
829,000 tons annual capacity                                    Crossett ..........................................  140,000
805,500 tons 2001 shipments                Capacity:  tons
- ----------------------------------------------------------      Georgia

Alabama                                                         St. Marys .........................................  100,000

Naheola (B) .....................................  305,000

Arkansas

Crossett (B) ....................................  207,000

Crossett (L) ....................................   22,000

Florida:

Palatka (K) .....................................  277,000

Palatka (L) .....................................   18,000



                                      -10-



                           Georgia-Pacific Corporation

                   Bleached Pulp & Paper Distribution Centers

 Total Locations:  255
 ---------------------
Domestic:  210
- --------------
                                                                                                   
Alabama                          Connecticut              Iowa                           Sparks (2)            Rhode Island
   Birmingham (2)                   Milford                  Des Moines              New Jersey                   East Providence
   Mobile                           Windsor (2)           Kansas                         Camden                South Carolina
Alaska                           Delaware                    Lenexa                      Little Ferry             Columbia (2)
   Anchorage                        New Castle               Olathe                      North Bergen          South Dakota
   Fairbanks                     Florida                     Wichita                 New Mexico                   Sioux Falls (2)
Arizona                             Clearwater            Kentucky                      Albuquerque            Tennessee
   Glendale                         Ft. Lauderdale           Louisville                 Farmington                Chattanooga
   Mesa                             Jacksonville (6)      Louisiana                  New York                     Knoxville
   Phoenix                          Longwood                 Baton Rouge                Albany                    Memphis
   Tucson                           Medley                   Shreveport                  Binghamton               Nashville (2)
Arkansas                            Miami                 Maine                          Farmington            Texas
   Little Rock                      Miramar                  Bangor                     New York City             Austin (3)
California                          Orlando (2)           Maryland                      Rochester                 Carrollton (2)
   Bakersfield (2)                  Sarasota                 Capitol Heights                                      Dallas
   Chico                            St. Petersburg           Jessup                  North Carolina               Ft. Worth
   City of Commerce (2)             Tallahassee              Rockville                  Charlotte                 Houston
   El Cajon                         Tampa (4)             Massachusetts                 Garner                    Lubbock
   El Centro                        West Palm Beach          Mansfield                  Raleigh                   McAllen
   Emeryville                    Georgia                     Southborough               Rocky Mount               San Antonio
   Escondido                        Atlanta (2)              Waltham                    Winston-Salem             Tyler
   Fresno (3)                       College Park          Michigan                   North Dakota              Utah
   Grover Beach                     Doraville                Kalamazoo                  Fargo                     Ogden
   Hayward                          Macon                    Lansing                 Ohio                         Provo
   La Palma (2)                     Marietta                 Livonia                    Cincinnati                Salt Lake City (2)
   Los Angeles (3)                  Norcross (2)             Rochester Hills            Cleveland                 St. George
   Mira Loma                        Roswell                  Southfield                 Columbus (2)           Virginia
   Pleasanton                    Idaho                       Sterling Heights         Independence                Norfolk
   Rancho Cucamonga                 Boise (2)             Minnesota                  Oklahoma                     Richmond (2)
   Sacramento                       Idaho Falls              Brooklyn Park              Oklahoma City (2)      Washington
   Salinas                       Illinois                 Missouri                      Tulsa (2)                 Kent (2)
   San Bernadino                    Addison                  Independence            Oregon                       Renton
   San Diego (2)                    Des Plaines              Joplin                     Eugene                    Spokane (2)
   San Jose                         Itasca                   St. Louis (2)              Medford                   Tacoma
   Santa Ana                        Joliet                Montana                       Milwaukie (2)          West Virginia
   Santa Barbara                    Morton                   Billings                   Portland (2)              Huntington
   Santa Rosa (2)                   Quincy                   Great Falls                Tigard                 Wisconsin
   Sherman Oaks                  Indiana                     Missoula                Pennsylvania                 Appleton
   South San Francisco              Indianapolis          Nebraska                      Exton                     Brookfield
   West Sacramento                  South Bend               Omaha                      Fort Washington           Janesville
Colorado                                                  Nevada                        Philadelphia (2)          La Crosse
   Denver (3)                                                Las Vegas (3)              Pittsburgh (2)            New Berlin
                                                                                        Reading                   Wisconsin Rapids


                                      -11-


                           Georgia-Pacific Corporation
             Bleached Pulp & Paper Distribution Centers (continued)

Canada:   24                                       Mexico:     21
- ------------                                       --------------
Alberta                                            Acapulco
   Calgary  (2)                                    Cabo San Lucas
   Edmonton                                        Cancun
                                                   Chihuahua
British Columbia                                   Guadalajara
   Vancouver                                       Hermosillo
   Victoria                                        CD. Juarez
   Prince George                                   Leon
   Richmond                                        Mazatlan
                                                   Mexico City (2)
Manitoba                                           Monterrey
   Winnipeg (2)                                    Morelia
                                                   Nogales
New Brunswick                                      C.D. Obregon
   Moncton                                         Puerto Vallarta
   Saint John                                      Queretaro
                                                   Reynosa
Nova Scotia                                        San Luis Potosi
   Dartmouth                                       Tijuana
                                                   Tlalnepantla
Ontario
   London
   Mississauga
   Ottawa
   Windsor
   Toronto (3)

Quebec
   Quebec
   St. Laurent

Saskatchewan
   Saskatoon
   Regina

Newfoundland
   St. John's

                                      -12-



                           Georgia-Pacific Corporation

                 Consumer Products Plants and Mills (continued)
                  Capacities are stated as of December 29, 2001


Tissue Mills:  27                                                    Tissue Product Mills:  36
3,800,600 tons annual capacity                                       4,222,800 tons annual capacity
3,613,300 tons 2001 shipments                  Capacity:  tons       3,345,900 tons 2001 shipments                  Capacity:  tons
- --------------------------------------------------------------       --------------------------------------------------------------
                                                                                                           
Alabama                                                              Alabama
Naheola .............................................  277,000       Naheola .............................................  278,000
Arkansas                                                             Arkansas
Crossett ............................................  256,500       Crossett ............................................  227,500
Florida                                                              Florida
Palatka .............................................  218,700       Palatka .............................................  165,300
Georgia                                                              Georgia
Rincon ..............................................  400,000       Rincon ..............................................  408,000
Louisiana                                                            Louisiana
Port Hudson .........................................   94,700       Port Hudson .........................................   44,500
Maine                                                                Maine
Old Town ............................................   90,000       Old Town ............................................  103,000
New York                                                             New York
Plattsburgh .........................................  133,000       Plattsburgh .........................................  127,300
Oklahoma                                                             Oklahoma
Muskogee ............................................  337,000       Muskogee ............................................  364,600
Oregon                                                               Oregon
Halsey ..............................................  107,000       Halsey ..............................................  144,000
Wauna ...............................................  200,000       Wauna ...............................................  182,500
Washington                                                           Washington
Bellingham ..........................................   89,000       Bellingham ..........................................   81,000
Camas ...............................................  141,000       Camas ...............................................  198,100
Wisconsin                                                            Wisconsin
Green Bay (East) ....................................  180,000       Green Bay (East) ....................................  189,500
Green Bay (West) ....................................  426,000       Green Bay (West) ....................................  549,500
Finland                                                              China
Nokia ...............................................  102,000       Shanghai ............................................   16,000
France                                                               Finland
Gien ................................................   88,500       Ikaalin .............................................    6,800
Hondouville .........................................   88,000       Nokia ...............................................   83,600
Kunheim .............................................   78,500       France
Greece                                                               Gien ................................................   87,800
Patras ..............................................   20,000       Hondouville .........................................  110,100
Italy                                                                Kunheim .............................................  111,100
Avigliano ...........................................   14,000       Sotteville ..........................................  111,000
Castelnuovo .........................................   50,500       Greece
Netherlands                                                          Athens ..............................................   24,600
Cujik ...............................................   64,000       Ireland
Spain                                                                Dublin ..............................................   31,000
Allo ................................................  104,500       Italy
United Kingdom                                                       Avigliano ...........................................    8,000
Brigend .............................................   85,200       Castelnuovo .........................................   66,500
Oughtibridge ........................................   41,600       Mexico
Stubbins ............................................  113,900       Toluca ..............................................   27,000
Turkey                                                               Netherlands
Karamursel* .........................................   95,900       Cujik ...............................................   97,000
                                                                     Russia
* Unconsolidated Joint Venture not included in total capacity or     Ivanteevka ..........................................    7,900
shipment numbers.                                                    Spain
                                                                     Allo ................................................   96,900
                                                                     Canary Islands ......................................    3,300
                                                                     Turkey
                                                                     Karamursel* .........................................   62,800



                                      -13-



                           Georgia-Pacific Corporation
                 Consumer Products Plants and Mills (continued)
                  Capacities are stated as of December 29, 2001



Dixie Plants:  12
- -----------------
58,000,000 cases annual capacity
41,000,000 cases 2001 shipments               Capacity:  cases
- --------------------------------------------------------------
                                                                                                                  
Bowling Green, KY ................................   2,900,000          United Kingdom
Bentworth, Ontario ...............................   2,500,000
Bramton, Ontario .................................   2,000,000          Brigend .........................................  83,700
Darlington, SC ...................................   6,500,000          Horwich .........................................  91,700
Edmonton, Alberta ................................     700,000          Newcastle .......................................  12,700
Epic, MI .........................................   4,500,000          Oughtibridge ....................................  66,900
Fort Smith, AR ...................................   4,100,000          Wrexham .........................................  16,400
Lehigh Valley, PA ................................  11,100,000
Leominster, MA ...................................   4,500,000
Lexington, KY ....................................  12,300,000
Los Angeles, CA ..................................   5,300,000
Sandusky, OH .....................................   1,800,000          Polyethlene Film Plant:  1
                                                                        21,000,000 lbs. annual capacity
                                                                        20,900,000 lbs. 2001 shipments             Capacity:  lbs.
                                                                        ----------------------------------------------------------
                                                                        North Carolina
Other Operations:  7                                                    Hamlet .......................................  21,000,000
- --------------------

                                                                        Polyethlene Wrapping Plant:  1
Non-woven Plant:  1                                                     7,000 tons annual capacity
2,500 tons annual capacity                                              7,000 tons 2001 shipments                  Capacity:  tons
2,000 tons 2001 shipments                      Capacity:  tons          ----------------------------------------------------------
- --------------------------------------------------------------          New York
Wisconsin
                                                                        Warwick ...........................................  7,000
Green Bay (West) ...................................     2,500


                                                                        Cotton Converting Plant:  1

                                                                        3,500 tons annual capacity
Airlaid Plants: 3                                                       2,700 tons 2001 shipments                  Capacity:  tons
50,500 tons annual capacity                                             ----------------------------------------------------------
42,500 tons 2001 shipments                     Capacity:  tons          France
- --------------------------------------------------------------
Wisconsin                                                               Brionne ...........................................  3,500

Green Bay (East) ...................................    15,000

Green Bay (West) ...................................    25,000

France                                                                  Closed Chemical Operations: 3
                                                                        -----------------------------
Gien ...............................................    10,500
                                                                        Lignin Plants:  2

                                                                        35,400 tons 2001 shipments                 Capacity:  tons
                                                                        ----------------------------------------------------------
                                                                        Houston, TX
                                                                        Bellingham, WA

                                                                        Alcohol Plant:  1

                                                                        136,000 gals. 2001 shipments                Capacity: gals
                                                                        ----------------------------------------------------------
                                                                        Bellingham, WA


                                      -14-