Griffin Paper Corporation - Page 9

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                    to 4,000 shares of the Preferred Stock to be                      
                    purchased and paid for in ten equal quarterly                     
                    installments of $4,000,000 each commencing                        
                    March 1, 1983.                                                    
                         (c)  At the Closing LRFP shall deliver                       
                    the certificates evidencing LRC's shares of                       
                    the Common Stock against payment to LRFP of                       
                    cash in the amount of $56,700,00 so that at                       
                    the conclusion of the Closing LRC shall own                       
                    of record and beneficially ninety-five                            
                    percent of the Common Stock and [Griffin]                         
                    shall own of record and beneficially five                         
                    percent of the Common Stock.                                      
               *      *       *        *        *       *       *                     
                    4.  LRFP shall be responsible for constructing and                
               operating the Project.  Unless otherwise agreed in                     
               writing by KKO, the scope of LRFP's commercial                         
               activities shall be the production and marketing                       
               directly or indirectly of any and all products and by-                 
               products relating to or arising out of the forest                      
               products industry including the transportation thereof                 
               in any manner.                                                         
                    5.  All of the funds necessary to construct and                   
               operate the Project shall be provided to LRFP by LRC                   
               and nothing herein or in law shall be deemed to require                
               Griffin to provide a pro rata portion of such funds                    
               whether as loans or advances or equity to LRFP.  * * *                 
               *      *       *        *        *       *       *                     
                    6.  It is the intention of GNN and LRC to                         
               construct the Project in accordance with the Report but                
               nothing herein shall be construed to require LRC or GNN                
               to complete the Project in accordance with the Report                  
               or otherwise, to operate the pulp mill when constructed                
               and completed and/or the sawmill owned by LRFP or use                  
               its efforts to operate the same or, if either or both                  
               be in operation, to keep LRFP well or otherwise                        
               supplied with funds of any kind, and LRC and GNN may                   
               terminate the Project or cease construction of the pulp                
               mill or shutdown the pulp mill and/or the sawmill at                   
               any time or times without obligation or liability to                   
               any party hereto, all such decisions to be in the                      
               absolute discretion of LRC and GNN.  * * *                             





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