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mill was an intangible asset that GNN wanted KKO to bring into a
joint venture with GNN.
On December 31, 1981, GNN, LRC, KKO, Griffin, and LRFP
entered into the Stockholders' Agreement (the Stockholders'
Agreement) and the LRFP Stock Issuance Agreement (the Stock
Issuance Agreement), and KKO and LRFP entered into the Pulp Sales
Agreement. On the same day, Griffin transferred property to LRFP
valued at approximately $31.5 million in exchange for 5 percent
of LRFP's common stock and 32.8 percent of LRFP's preferred
stock, and LRFP assumed KKO's $10 million debt owed to Aetna.
GNN transferred $56.7 million to LRFP in exchange for 95 percent
of LRFP's common stock and a promise to pay $40 million in
exchange for 67.2 percent of LRFP's preferred stock.
The relevant parts of the Stockholders' Agreement provide as
follows:
1. At the Closing * * * [Griffin] shall sell,
assign and transfer to GNN all of its shares of common
stock of LRC for the amount of $200.
2. (a) Prior to the Closing KKO and [Griffin]
shall cause a recapitalization of LRFP to take effect
so that immediately prior to the Closing LRFP shall
have an authorized capital consisting of 7,700 shares
of preferred stock, without par value (the "Preferred
Stock") and 4,500 shares of common stock, par value
$1.00 per share (the "Common Stock"), of which 1,940
shares of the Preferred Stock and 208 shares of the
Common Stock shall be issued and outstanding and owned
of record and beneficially by [Griffin].
(b) At the Closing LRFP shall issue and
sell to LRC, 3,952 shares of the Common Stock
for the amount of $56,700,000 and
simultaneously therewith LRC shall subscribe
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