Company Name: Georgia-Pacific Corporation
Public Availability Date: Sep. 24, 1976

[INQUIRY LETTER]
SHEARMAN & STERLING
53 WALL STREET
NEW YORK, NEW YORK 10005

August 17, 1976

1933 Act/4(1)/Rule 144

Securities and Exchange Commission
500 North Capitol Street, N.W.
Washington, D.C. 20549

Attention: William E. Toomey, Esq.

Division of Corporation Finance

Georgia-Pacific Corporation

Dear Sirs:

On February 4, 1976, our client, Georgia-Pacific Corporation (Georgia-Pacific), entered into a Plan and Agreement of Merger, which was subsequently amended as of July 30, 1976 (the Plan and Agreement of Merger, as so amended, being herein referred to as the Merger Agreement). The Merger Agreement provides for the merger of Plastic Container Corp. into Georgia-Pacific and the conversion of the Common Stock of Plastic Container into (a) 25,017 shares of Common Stock of Georgia-Pacific and (b) the contingent right to receive 24,957 additional shares of Georgia-Pacific Common Stock depending on the market performance of the shares initially issued. The transaction has been structured so as to be a transaction not involving a public offering and, therefore, exempt under Section 4(2) of the Securities Act of 1933.

At the Closing, which is scheduled for August 30, Georgia-Pacific will issue to the sole stockholder of Plastic Container the 25,017 shares of Georgia-Pacific Common Stock. Georgia-Pacific will also issue the 24,957 additional shares of Common Stock into escrow. If at any time prior to January 19, 1978, the shares issued on August 30, 1976 to the sole stockholder have not achieved an aggregate market value of $1,670,000, the sole stockholder is entitled to as many of the 24,957 escrowed shares as will equal in market value the difference between the then market value of the original, non-escrowed shares and $1,670,000. No matter how low the market value, however, the stockholder is entitled to receive no more than the 24,957 escrowed shares.

In the letter entitled Familian Corp. (4/1/76), the Staff determined that the "guarantee arrangement" there involved constituted a put or other option within the meaning of Rule 144(d)(3)(A) and that, therefore, the holding period for both the original and the additional shares involved in the acquisition did not begin to run until the expiration of the "guarantee." The Staff also said that three earlier letters dealing with contingent issues in acquisitions had failed to recognize that the effect of the arrangements described in those letters was to eliminate the investment risk of the stockholders of the acquired corporations. These letters were entitled Rollins, Inc. (10/17/72); Transitron Electronics Corporation (4/12/72); and Vernitron Corporation (4/5/73). Copies of all these letters are enclosed for your convenience.

As the Staff stated in Familian, the transaction described in each of these letters apparently was a guarantee arrangement; the stockholders of each of the companies being acquired were guaranteed a certain dollar amount.

Under the Georgia-Pacific formula, which has been used by Georgia-Pacific for many years, the stockholder of the acquired company may become entitled to receive up to a certain number of additional shares, but he is not guaranteed shares worth any specific dollar amount. If the market price of Georgia-Pacific Common Stock does not rise above $33.42 (the closing price yesterday was $31.00), he will receive all of the additional shares, but no more. Thus, the stockholder will be at the risk of the market throughout the valuation period, both as to the shares which he originally receives and as to the contingent escrowed shares, and the reasoning of the Familian letter would not apply.

Therefore, it is our opinion that the holding period for the shares originally issued to the stockholder and for the shares contingently issuable to him should be deemed to commence at the time of the closing of the merger since Georgia-Pacific will then be committed to issue such shares subject only to conditions other than the payment of further consideration. Further, it is our opinion that the valuation procedure described above does not constitute a put or other option to dispose of Common Stock of Georgia-Pacific and, therefore, there will be no tolling of the holding period for any of the shares. We believe that these conclusions are specifically covered by paragraphs (d)(3)(A) and (d)(4)(C) of Rule 144 and are also in accord with the philosophy and purposes thereof. We would appreciate your advising us whether you concur in our opinions.

As I discussed over the telephone with Mr. Toomey on Monday afternoon, Georgia-Pacific would like to close this merger on August 30 and, therefore, would appreciate your prompt attention to this request. It would be appreciated if Mr. Toomey could call the undersigned collect after he has had a chance to consider this letter.

Very truly yours,

Franklin H. Moore, Jr.

as

Enc.

[STAFF REPLY LETTER]

August [ Original Text Illegible ] 1974

Franklin H. Moore, Jr., Esq.

Shearman & Sterling

53 Wall Street

New York, New York 10005

Re: Georgia-Pacific Corporation

Dear Mr. Moore:

This is in response to your letter of August 17, 1976, concerning the applicability of paragraphs (d)(3)(A) and (d)(4)(C) of Rule 144 under the Securities Act of 1933, as they relate to a Plan and Agreement of Merger which provides for the merger of Plastic Container Corp. ("Plastic Container") into Georgia-Pacific Corporation ("Georgia-Pacific").

We understand the material facts to be as follows. At the closing, Georgia-Pacific will issue to the sole shareholder of Plastic Container 25,017 shares of Georgia-Pacific common stock. Georgia-Pacific will also issue 24,957 shares of common stock in escrow. If at any time prior to January 19, 1978, the shares issued at the closing have not achieved an aggregate market value of $1,670,000, the sole shareholder is entitled to as many of the 24,957 escrowed shares as will equal in market value the difference between the then market value of the original, non-escrowed shares and $1,670,000. No matter how low the market value, however, the stockholder is entitled to receive no more than the 24,957 escrowed shares.,

It is your opinion that the holding period for the shares originally issued to the stockholder, and for the shares contingently issuable to him should be deemed to commence at the time of the closing, in accordance with Rule 144(d)(4)(C). Furthermore, you express the view that the above-described valuation procedure does not constitute a put or other option to dispose of Georgia-Pacific common stock, and therefore the tolling provisions of Rule 144(d)(3)(A) are inapplicable.

Based on the facts presented, it is the Division's view that the contingently issuable shares will be deemed to have been issued on the closing date of the merger. The Division is also of the opinion that the valuation procedure does not constitute a put or other option to dispose of securities and, accordingly, the provisions of Rule 144(d)(3)(A) are inapplicable.

Sincerely,

William E. Toomey

Assistant Chief Counsel