GEORGIA-PACIFIC CORPORATION 2005 LONG-TERM INCENTIVE PLAN

EXHIBIT 10.1

GEORGIA-PACIFIC CORPORATION

2005 LONG-TERM INCENTIVE PLAN

ADOPTED BY THE BOARD OF DIRECTORS, FEBRUARY 3, 2005

TABLE OF CONTENTS

PAGE

1.

ADOPTION AND PURPOSE

1

2.

DEFINITIONS

1

(a)

Award

1

(b)

Award Agreement

1

(c)

Board

1

(d)

Cause

1

(e)

Change of Control

2

(f)

Code

2

(g)

Committee

2

(h)

Common Stock

2

(i)

Company

2

(j)

Effective Date

2

(k)

Employee

2

(l)

Exchange Act

2

(m)

Fair Market Value

2

(n)

Incentive Stock Option

3

(o)

Non-Qualified Stock Option

3

(p)

Option

3

(q)

Participant

3

(r)

Performance Goals

3

(s)

Performance Award

3

(t)

Performance Period

3

(u)

Plan

3

(v)

Plan Year

3

(w)

Prior Plan

3

(x)

Restricted Shares

3

(y)

Restriction Period

4

(z)

Subsidiary

4

(aa)

SAR

4

(ab)

SAR Unit

4

3.

ELIGIBILITY

4

4.

STOCK SUBJECT TO THE PROVISIONS OF THIS
PLAN; LIMITATIONS

4

(a)

Applicable Stock

4

(b)

Plan Limitations

4

(c)

Individual Limitations

4

(d)

Calculation Procedures

5

i

5.

AWARDS UNDER THIS PLAN

5

(a)

Options

5

(b)

Performance Awards

5

(i)

Administration

5

(ii)

Payment of Award

6

(iii)

Further Restriction Period

6

(c)

Restricted Shares

6

(i)

Issuance of Stock Certificates

7

(ii)

Status of Restricted Shares

7

(iii)

Participant Rights With Respect to Issued Restricted Shares

7

(d)

SARs

7

6.

OTHER TERMS AND CONDITIONS

8

(a)

Assignability; Designation of Beneficiaries

8

(i)

Prohibition on Transfer

8

(ii)

Designation of Beneficiaries

9

(b)

Award Agreement

9

(c)

Rights as a Shareholder

9

(d)

No Obligation to Exercise

9

(e)

Payments by Participants

9

(f)

Tax Withholding

10

(g)

Restrictions on Exercise

10

(h)

Surrender of Options

10

(i)

Requirements of Law

10

(j)

Non-Exclusivity of the Plan

10

(k)

Unfunded Plan

10

(l)

Legends

11

(m)

Company's Retirement and Welfare Plans

11

(n)

Forfeitures

11

(i)

Violations of Company Policies

11

(ii)

For Cause Termination

11

(o)

Requirement of Employment

11

(p)

Code Section 162(m)

12

7.

PLAN ADMINISTRATION

12

(a)

Committee as Plan Administrator

12

(b)

Delegation

12

(c)

Determinations Final

12

8.

AMENDMENTS AND TERMINATION

13

(a)

Authority to Amend or Terminate

13

(b)

Awards Previously Granted

13

(c)

Limitations

13

ii

9.

CORPORATE RESTRUCTURING

13

(a)

No Bar to Corporate Restructuring

13

(b)

Capital Readjustments/Award Modifications

14

10.

NO RIGHT TO EMPLOYMENT

14

11.

CHANGE OF CONTROL

14

(a)

Special Rights Upon Change of Control

14

(i)

Lapse of Restrictions; Acceleration of Exercise
and/or Vesting

14

(ii)

Extended Exercise Period

14

(iii)

Awards Non-Cancellable

15

(b)

Definition of "Change of Control"

15

(i)

Acquisition of Stock

15

(ii)

Change in Board Membership

15

(iii)

Shareholder-Approved Reorganization, Merger
or Consolidation

15

(iv)

Liquidation or Dissolution

16

12.

GOVERNING LAW

16

13.

CAPTIONS

16

14.

RESERVATION OF SHARES

16

15.

SAVINGS CLAUSE

17

16.

EFFECTIVE DATE AND TERM

17

iii

GEORGIA-PACIFIC CORPORATION

2005 LONG-TERM INCENTIVE PLAN

1. ADOPTION AND PURPOSE

             Georgia-Pacific Corporation (the "Company") hereby adopts this Georgia- Pacific Corporation 2005 Long-Term Incentive Plan, which was approved by its Board of Directors on February 3,, 2005 subject to further approval by the Company's shareholders (the "Plan"). The purposes of the Plan are to promote the interests of the Company and its stockholders by (a) attracting and retaining exceptional executive personnel and other key employees for the Company and its Subsidiaries (as defined below), (b) motivating such employees by means of performance-related incentives to achieve long-range performance goals and (c) enabling such employees to participate in the long-term growth and financial success of the Company.

2. DEFINITIONS

             The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context:

(a)

Award. "Award" means, individually or collectively, a grant under this Plan of

Options, Restricted Shares, Performance Awards, and/or SARs. The issuance of Options, Restricted Shares, shares of unrestricted Common Stock, SARs and/or cash pursuant to an Award or the taking of any other action mandated under the terms and conditions of an Award, shall not be deemed to be a new Award for any purpose under this Plan (including, but not limited to, Section 16).

(b)

Award Agreement. "Award Agreement" means a written agreement entered into

between the Company and a Participant setting forth the terms and conditions of an Award made to such Participant under this Plan, in the form prescribed by the Committee.

(c)

Board. "Board" means the Board of Directors of the Company.

(d)

Cause. "Cause" shall mean any of the following: (i) the willful failure of a

Participant to perform satisfactorily the duties consistent with his title and position reasonably required of him by the Board or supervising management (other than by reason of incapacity due to physical or mental illness); (ii) the commission by a Participant of a felony, or the perpetration by a Participant of a dishonest act or common law fraud against the Company or any of its Subsidiaries; or (iii) any other willful act or omission (including without limitation the deliberate and willful violation of any corporate policy or regulation) which could reasonably be expected to expose the Company to civil liability under the law of the applicable jurisdiction or causes or may reasonably be expected to cause significant injury to the financial condition or business reputation of the Company or any of its Subsidiaries.

1

(e)

Change of Control. "Change of Control" shall have the meaning specified in

Section 11(b).

(f)

Code. "Code" means the Internal Revenue Code of 1986, as amended.

Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

(g)

Committee. "Committee" means the Management Development and

Compensation Committee of the Board of Directors of the Company, as constituted from time to time, or such subcommittee of that body as the Committee shall specify to act for the Committee with respect to this Plan. Each member of the Committee shall be a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act, shall be "independent" within the meaning of Section 303A (Corporate Governance Standards) in the NYSE listed Company Manual, and shall be an "outside director" within the meaning of Section 162(m) of the Code. The Committee shall be composed of at least two (2) such directors.

(h)

Common Stock. "Common Stock" means the Company's common stock, par

value $0.80 per share.

(i)

Company. "Company" means Georgia-Pacific Corporation, a Georgia

corporation headquartered in Atlanta, Georgia.

(j)

Effective Date. "Effective Date" means the effective date of this Plan as defined

in Section 16.

(k)

Employee. "Employee" means a common law employee of the Company or a

Subsidiary (including, without limitation, any Company or Subsidiary officer).

(l)

Exchange Act. "Exchange Act" means the Securities Exchange Act of 1934, as

amended. Reference to a specific section of the Exchange Act or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

(m)

Fair Market Value. "Fair Market Value" means, on any date, the mean between

the high and low sales prices of a share of Common Stock on that date as reported in The Wall Street Journal, New York Stock Exchange--Composite Transactions, or as reported in any successor quotation system adopted prospectively for this purpose by the Committee, in its discretion. If the date of determination is not a trading date on the New York Stock Exchange, Fair Market Value shall be determined using the high and low sales prices of a share of Common Stock on the next preceding trading date. The Fair Market Value of the Stock shall be rounded to the nearest whole cent (with 0.5 cent being rounded to the next higher whole cent).

2

(n)

Incentive Stock Option. "Incentive Stock Option" has the meaning specified in

Section 5(a).

(o)

Non-Qualified Stock Option. "Non-Qualified Stock Option" has the meaning

specified in Section 5(a).

(p)

Option. "Option" means an Incentive Stock Option or a Non-Qualified Stock

Option as defined in this Plan.

(q)

Participant. "Participant" means an Employee who has been designated as such

by the Committee pursuant to this Plan.

(r)

Performance Goals. "Performance Goals" means, with respect to any

Performance Period, one or more objective performance goals based on one of more of the following objective criteria established by the Committee prior to the beginning of such Performance Period or within such period after the beginning of the Performance Period as shall meet the requirements to be considered "pre-established performance goals" for purposes of Code Section 162(m): (i) increases in the price of the Common Stock; (ii) market share; (iii) sales; (iv) return on equity, assets or capital; (v) economic profit (economic value added); (vi) total shareholder return; (vii) costs; (viii) margins; (ix) earnings or earnings per share; (x) cash flow; (xi) customer satisfaction; (xii) operating profit; or (xiii) any combination of the foregoing. Such Performance Goals may be particular to an Employee or may be based, in whole or part, on the performance of the division, department, line of business, Subsidiary or other business unit, whether or not legally constituted, in which the Employee works or on the performance of the Company generally.

(s)

Performance Award. "Performance Award" shall have the meaning specified in

Section 5(b).

(t)

Performance Period. "Performance Period" means the period of service

designated by the Committee applicable to a Performance Award during which the Performance Goals will be measured.

(u)

Plan. "Plan" means the Georgia-Pacific Corporation 2005 Long-Term Incentive

Plan as described in this plan document.

(v)

Plan Year. "Plan Year" means the calendar year.

(w)

Prior Plan. "Prior Plan" means the Georgia-Pacific Corporation Long-Term

Incentive Plan (formerly known as the Georgia-Pacific Corporation/Georgia Pacific Group 1997 Long-Term Incentive Plan).

(x)

Restricted Shares. "Restricted Shares" shall have the meaning specified in

Section 5(c).

3

(y)

Restriction Period. "Restriction Period" means a Performance Period and/or any

other period during which full ownership of compensation contemplated in an Award remains subject to a substantial risk of forfeiture pursuant to the terms and conditions of that Award.

(z)

Subsidiary. "Subsidiary" means any corporation or other entity, whether

domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of more than 20% by reason of stock ownership or otherwise, unless the applicable Award Agreement specifies a higher ownership percentage.

(aa)

SAR. "SAR" has the meaning specified in Section 5(d).

(ab)

SAR Unit. "SAR Unit" means a bookkeeping entry maintained by the Company

on the Company's books and records for each share of Common Stock with respect to which a Participant has a SAR.

3. ELIGIBILITY

             Any Employee designated by the Committee (in its sole discretion) as a Participant under this Plan will be eligible to receive an Award specified by the Committee in accordance with this Plan. A non-Employee director of the Board will be eligible to receive an Award specified by the Board in accordance with this Plan.

4. STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN; LIMITATIONS

(a)

Applicable Stock. The stock subject to the provisions of this Plan shall either be

shares of authorized but unissued Common Stock, shares of Common Stock held as treasury stock or previously issued shares reacquired by the Company, including shares purchased on the open market.

(b)

Plan Limitations. Subject to adjustment in accordance with the provisions of

Sections 4(d) and 9, the total number of shares of Common Stock with respect to which Awards of Options, Restricted Shares, SARs, Performance Awards, and/or unrestricted Common Stock may be granted under this Plan may not exceed 8,000,000 shares, plus any of the following shares of Common Stock authorized under the Prior Plan: (A) shares of Common Stock that remain available for grant as of May 3, 2005, (B) shares of Common Stock represented by Awards which have been cancelled, forfeited, surrendered or terminated or which expire unexercised; or (C) the excess portion of variable Awards which become fixed at less than their maximum limitations. The maximum number of shares with respect to which Restricted Shares, Performance Awards (to the extent settled in shares of restricted or unrestricted Common Stock), and/or unrestricted Common Stock may be granted under this Plan may not exceed 35% of the total shares authorized under this Section 4(b).

(c)

Individual Limitations. Subject to adjustment in accordance with Section 9, and

subject to Section 4(b), (i) the total number of shares of Common Stock with respect to which Awards of Options may be granted in any Plan Year to any Employee shall not exceed 1,200,000 shares, (ii) the total number of Restricted Shares which may be granted in any Plan Year to any

4

Employee shall not exceed 150,000 shares, (iii) the total number of Performance Award shares which may be granted in any Plan Year to any Employee shall not exceed 300,000 shares, (iv) the value of any Performance Awards payable in cash that may be granted in any Plan Year to any Employee shall not exceed $2,500,000 (as determined on the date the Award is granted), and (v) the total number of shares of Common Stock with respect to which Awards of SARs may be granted in any Plan Year to any Employee shall not exceed 1,200,000 shares.

(d)

Calculation Procedures. For purposes of calculating the total number of shares of

Common Stock available under this Plan for grants of Awards, (i) the grant of an Award of Options, Restricted Shares, SARs or a Performance Award shall be deemed to be equal to the maximum number of shares of Common Stock which may be issued under the Award, (ii) subject to the provisions of Sections 4(b) and 4(c), there shall again be available for Awards under this Plan all of the following: (A) shares of Common Stock represented by Awards which have been cancelled, forfeited, surrendered or terminated or which expire unexercised; and (B) the excess portion of variable Awards which become fixed at less than their maximum limitations. and provided further that in no event shall the aggregate number of shares issued or delivered pursuant to the exercise of Incentive Stock Options exceed 8,000,000 shares.

5. AWARDS UNDER THIS PLAN

             Subject to the provisions of this Plan, the Committee shall have the sole and complete authority to determine the Employees to whom Awards shall be granted and the type, terms and conditions of such Awards. As the Committee may determine, the following types of Awards may be granted under this Plan to Employees:

(a)

Options. An Award consisting of a right to buy a specified number of shares of

Common Stock at a fixed exercise price during a specified time, not to exceed a maximum of ten (10) years, and subject to such other terms and conditions, all as the Committee may determine. Such Options may be Non-Qualified Stock Options or Incentive Stock Options. The exercise price for an Award of Options (whether or not they are Incentive Stock Options) may not be less than 100% of the Fair Market Value of the Common Stock on the grant date. The terms and conditions for an Award of Incentive Stock Options must otherwise comply with the requirements of Section 422 of the Code or any successor Section as it may be amended from time to time. Non-Qualified Stock Options are not intended to satisfy the Code requirements for Incentive Stock Options and need not meet such requirements. Each Stock Option granted as an Award under this Plan shall be subject to the provisions of this Plan and the applicable Award Agreement approved by the Committee pursuant to Section 6(b) governing that Option.

(b)

Performance Awards. An Award granted to an Employee consisting of the right

to receive cash, shares of Common Stock, Options or Restricted Shares that are not to be issued to the Employee until after the satisfaction of the related Performance Goals during the related Performance Period.