Griffin Paper Corporation - Page 20

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          shares, and certain methods of financing.  If GNN desired to sell           
          more than 50 percent of its stock to a third party, Griffin could           
          compel GNN to compel the third party to purchase Griffin's shares           
          on the same terms.  The Stockholders' Agreement also did not list           
          a due date for payment of the ultimate purchase price, an exact             
          purchase price, or the right for GNN to sell Griffin's stock                
          interest or receive profits attributable to Griffin's stock                 
          interest.  In addition, the Stockholders' Agreement did not refer           
          to the 1981 transaction as a sale, and we know, from reading the            
          agreement repeatedly, that the parties thereto knew how to use              
          the various forms of the verb "to sell" when they wanted to.                
               Nor do we find much of the traditional indicia surrounding a           
          debtor/creditor relationship to support GNN's position that it              
          was a debtor of Griffin to the tune of at least $31.5 million.              
          We find no promissory note evidencing the purported debt, no                
          security, no fixed price, and no stated interest.  Indeed, if we            
          were to accept GNN's position that Griffin sold GNN net assets of           
          $21.5 million in 1981 for a deferred payment of $31.75 million              
          that was payable at the earliest on July 1, 1989, we would be               
          finding that the interest rate on GNN's debt was a mere 5.2                 
          percent compounded daily.4  We decline to find such a low                   

               4 We use the following formula to compute this rate of                 
          interest:  F = P(1 + i/n)ny, where "F" is the future payment                
          ($31.75 million), "P" is the principal of the loan ($21 million),           
          "i" is the annual interest rate (5.2%), "n" is number of times in           
          a year that interest is compounded (365), and "y" is the number             
                                                             (continued...)           




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