Preliminary Proxy Solicitation Material — Going-Private Transaction Statement — Schedule 13E-3
Filing Table of Contents
Document/Exhibit Description Pages Size
1: PRE13E3 Rule 13E-3 Transaction Statement [Schedule 13E-3 11 53K
Filed as Part of Proxy Materials]
2: EX-99.(C)(10) Amendment to Stock Purchase Agreement 13 43K
3: EX-99.(C)(11) Amendment to Stock Purchase Agreement 14 45K
4: EX-99.(D)(1) Description to Come 93 486K
EX-99.(C)(11) — Amendment to Stock Purchase Agreement
Exhibit Table of Contents
AMENDMENT TO
STOCK PURCHASE AGREEMENT
Amendment No. 1 (this "Amendment") to Stock Purchase
Agreement, dated as of January 29, 1997, by and among ANDREWS GROUP
INCORPORATED, a Delaware corporation ("Purchaser"), ISAAC PERLMUTTER, an
individual ("Perlmutter"), ISAAC PERLMUTTER T.A., a Florida Trust ("Trust"), and
ZIB INC., a Delaware corporation ("Zib" and together with Perlmutter and Trust,
the "Stockholders").
WHEREAS the parties to the Stock Purchase Agreement (the
"Stock Purchase Agreement"), dated as of November 20, 1996, by and among
Purchaser, Perlmutter, Trust, and Zib wish to amend such Agreement on the terms
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, intending to be legally bound
thereby, the parties hereto agree as follows:
1. Article I of the Stock Purchase Agreement is hereby amended as follows:
i) By amending the definition of "Cash Component" to read as
follows:
"Cash Component": the $119,161,914 cash portion
of the Purchase Price, as set forth in Section 2.2.
ii) By adding the following definition after the definition
of "Marvel":
"Operating Cash Flow": for any period, (i) earnings
before interest, taxes, depreciation and amortization, but
shall include depreciation and amortization expense
relating to product tooling, product molds, product design
and product packaging costs (collectively, "Product
Expense") to the extent Product Expense exceeds 6% of net
revenues for such period (with the result that Operating
Cash Flow shall be reduced by the amount by which Product
Expense exceeds 6% of the net revenues for such period);
minus (ii) minority interest in earnings before interest,
taxes, depreciation and amortization determined in
accordance with (i) above, all determined (including
Product Expense) in accordance with GAAP (in effect on the
date hereof) consistently
applied and on a basis consistent with the conduct of
business and assumptions underlying the financial
projections previously provided in writing to Marvel's bank
group on December 9, 1996, and reflected in part in Section
2.6 hereof.
iii) By amending the definitions of "Promissory Note" and
"Purchase Price" to read as follows:
"Promissory Note": the note from Purchaser in
the principal amount of $13,922,086, in the form
attached hereto as Exhibit A, with blanks
appropriately completed, representing partial
payment of the Purchase Price, as set forth in
Section 2.2.
"Purchase Price": the $133,084,000 payable for
the Shares, consisting of the Cash Component and the
Promissory Note, as set forth in Section 2.2.
iv) By adding the following definition after the
definition of "Stockholders' Agreement"
"Trigger Event": an event as set forth in
Section 5.6.
2. Article II of the Stock Purchase Agreement is hereby
amended by adding the following new Sections 2.6 and 2.7:
2.6 Three Year Additional Payments.
(a) Not later than March 31, 1998, or as soon after the
completion of the determination described in Section 2.6(e) as may be
practicable, Purchaser shall deliver to the Stockholders, in
immediately available funds by wire transfer to an account designated
by the Stockholders to Purchaser at least two business days prior to
such date, an amount equal to .6961 times the excess, if any, of (x)
the Company's Operating Cash Flow for the twelve month period ended
December 31, 1997, over (y) $74,300,000.
(b) Not later than March 31, 1999, or as soon after the
completion of the determination described in Section 2.6(e) as may be
practicable, Purchaser shall deliver to the Stockholders, in
immediately available funds by wire transfer to an account designated
by the Stockholders to Purchaser at least two business days prior to
such date, an amount equal to .6961 times the excess, if any, of (x)
the Company's Operating Cash Flow for the twelve month period ended
December 31, 1998, over (y) $92,518,000; provided, such amount shall be
reduced by .6961 times the excess, if any, of (x) $74,300,000 over (y)
the Company's Operating
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Cash Flow for the twelve month period ended December 31, 1997.
(c) Not later than March 31, 2000, or as soon after the
completion of the determination described in Section 2.6(e) as may be
practicable, Purchaser shall deliver to the Stockholders, in
immediately available funds by wire transfer to an account designated
by the Stockholders to Purchaser at least two business days prior to
such date, an amount equal to .6961 times the excess, if any, of (x)
the Company's Operating Cash Flow for the twelve month period ended
December 31, 1999, over (y) $96,827,000; provided, that in the event
the Purchaser was not required to make a payment to the Stockholders
pursuant to Section 2.6(b) hereof, such amount shall be reduced by
.6961 times the sum of (i) the excess, if any, of (x) $74,300,000 over
(y) the Company's Operating Cash Flow for the twelve month period ended
December 31, 1997 plus (ii) (x) $92,518,000 minus (y) the Company's
Operating Cash Flow for the twelve month period ended December 31,
1998;
(d) Not withstanding the foregoing, in no event shall
Purchaser be required to deliver to the Stockholders an aggregate
amount in excess of $6,961,000, pursuant to this Section 2.6.
(e) Prior to March 1 of each year the Purchaser shall cause
the computation of Operating Cash Flow to be made. The determination by
the Purchaser shall be final and binding, provided, however, that the
Purchaser shall provide a certified public accountant selected by the
Stockholders with all the supporting documentation with respect to such
determination (and such certified public accountant shall audit such
determination); provided, further, that if the Stockholders' accountant
informs Purchaser within 30 days of receiving such supporting
documentation, that he disagrees with the Purchaser's determination of
the Operating Cash Flow then the Stockholders and the Purchaser shall
agree upon and engage a "Big Six" accounting firm to resolve any
disagreement and such firm's determination as to any such disagreement
shall be conclusive, final and binding and judgment may be entered
thereon in any court having jurisdiction. The Stockholders and the
Purchaser shall share equally all the costs and fees of such accounting
firm.
2.7 1998 Additional Payments. In the event that the
Company's Operating Cash Flow for the twelve month period ended
December 31, 1997 exceeds $70,000,000, then not later than March 31,
1998, or as soon after the completion of the determination described in
Section 2.6(e) as may be practicable, Purchaser shall deliver to the
Stockholders,
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in immediately available funds by wire transfer to an account
designated by the Stockholders to Purchaser at least two business days
prior to such date, $6,961,000. The Purchaser hereby covenants and
agrees that, at Closing, it will place, or it will cause its assignee
to place, $6,961,000 in a segregated account, and will grant to the
Stockholders a first priority perfected security interest in such
account on terms reasonably satisfactory to the Stockholders securing
the obligation to make the $6,961,000 payment contemplated by this
Section 2.7.
3. Article V of the Stock Purchase Agreement is hereby amended
by replacing Section 5.6 with the following:
5.6 Trigger Event Additional Payments. (a) If, within one
year after the Closing, either (x) Purchaser and its affiliates shall
sell or otherwise transfer for value (including by way of merger) all
or substantially all of the shares of capital stock which are then
beneficially owned by Purchaser and its affiliates of the Company,
Marvel or any affiliate of Purchaser which has succeeded to the
business of the Company or (y) the Company or any such successor shall
dispose of all or substantially all of its assets (other than, in the
case of either (x) or (y), pursuant to an order of a court of competent
jurisdiction resulting from the exercise of creditors' remedies, other
than the cases in the United States Bankruptcy Court for the District
of Delaware, Numbers 96-2069 through 96-2077 and Numbers 96- 2066
through 96-2068, relating to Marvel and certain of its affiliates or
any cases into which such cases are converted) (any such event, a
"Trigger Event"), Purchaser shall thereupon pay to the Stockholders an
amount equal to the product of (i) the Shares and (ii) the excess, if
any, of (x) the price per share for Class A Common Stock paid by
Purchaser or any of its affiliates to the stockholders of the Company
other than the Stockholders and Avi Arad in connection with the
acquisition of the Company described in Section 6.2(c) over (y) (i) the
Purchase Price plus $13,922,000 divided by (ii) the number of Shares.
For the purposes of this Section 5.6, (a) a pledge of capital stock of
the Company, Marvel or any affiliate of Purchaser which has succeeded
to the business of the Company, or any direct or indirect parent of any
of the foregoing, to secure a bona fide obligation shall not be deemed
a sale or transfer for value of shares of capital stock and (b) the
creation of any lien, mortgage, pledge, charge or other security
interest or encumbrance with respect to any assets shall not be deemed
a disposal of such assets.
(b) Upon the occurrence of a Trigger Event within three
years after the Closing, Purchaser shall thereupon pay to the
Stockholders an amount equal to the excess of
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$13,922,000 over the aggregate amounts theretofore paid to the
Stockholders pursuant to Sections 2.6 and 2.7.
4. Article VIII of the Stock Purchase Agreement is hereby
amended by replacing Section 8.1 with the following:
8.1 Indemnification With Respect to Representations and
Warranties. The Stockholders shall indemnify, defend and hold harmless
Purchaser against any Damages relating to, arising out of or resulting
from any breach of any representation, warranty, covenant or agreement
made by the Stockholders in this Agreement or any document delivered
pursuant hereto, provided, however, that the maximum amount of Damages
the Stockholders shall be liable for relating to a breach of the
representations contained in Section 3.3 shall be equal to the Purchase
Price plus any amounts received pursuant to Sections 2.6 and 2.7.
5. Article IX of the Stock Purchase Agreement is hereby
amended by replacing Section 9.9 with the following:
9.9 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Notwithstanding the
foregoing, this Agreement shall not be assignable by any party hereto
(other than by operation of law) without the prior written consent of
the other parties hereto; provided, that Purchaser may assign its
rights and obligations hereunder to any of its subsidiaries. Any such
assignment by Purchaser shall not release it from its obligations
hereunder.
6. Exhibit A to the Stock Purchase Agreement is hereby amended
by replacing it in its entirety with Exhibit A hereto.
7. This Amendment shall be governed in all respects,
including validity, interpretation and effect, by the laws of the
State of New York.
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8. This Amendment may be executed by facsimile and in counterparts, all of
which for all purposes shall be deemed to be an original and all of
which shall, taken together, constitute the same Amendment.
IN WITNESS WHEREOF, the parties hereto have executed
or have caused this Amendment to be executed by their duly authorized officers
or representatives, all as of the date first written above.
ANDREWS GROUP INCORPORATED
By: /s/ Glenn Dickes
----------------------------
Name: Glenn P. Dickes
Title: Senior Vice President
/s/ Isaac Perlmutter
---------------------------
ISAAC PERLMUTTER
ISAAC PERLMUTTER T.A.
By: /s/ Isaac Perlmutter
-----------------------
Name: Isaac Perlmutter
Title:
ZIB INC.
By: /s/ Isaac Perlmutter
-----------------------
Name: Isaac Perlmutter
Title:
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Exhibit A - Form of Promissory Note
PROMISSORY NOTE
$13,922,086
____________, 1997
New York, New York
Andrews Group Incorporated, a Delaware corporation (the
"Company"), for value received, hereby promises to pay to the Holders, as
hereinafter defined, the principal sum of $13,922,086. This Note shall bear
interest on the unpaid principal balance outstanding at a rate per annum equal
to ___%(1). The principal amount of this Note shall be payable in full on
, 2002(2). Interest shall be payable on March 31, June 30, September 30
and December 31 of each year, commencing on the first such date after the second
anniversary of the date of this Note (the "First Interest Payment Date").
Interest on the Note that shall have accrued prior to the First Interest Payment
Date shall be paid on the First Interest Payment Date. Payment of the principal
of and interest on this Note will be made to the Holders by wire transfer in
same day or next day funds to the account set forth on Annex I hereto, or to
such other account as may be designated in writing by the Holders not less than
30 days prior to payment, in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts. This Note may be pre-paid by the Company at any time without
penalty or premium at an amount equal to the unpaid principal thereof plus
accrued interest to the date of pre-payment.
-------------------------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE REOFFERED,
SOLD ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
This Note is subject to the following additional terms and
conditions:
--------
1 To be equal to five-year treasury bill rate at the time of
issuance.
2 To be the first business day after the fifth anniversary of
the date of this Note.
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ARTICLE 1
DEFINITIONS
As used in this Note, the following terms, where used with an
initial capital letter, have the following meanings:
1.1 Company. The "Company" means Andrews Group Incorporated, a
Delaware corporation, and will also include its successors
and assigns.
1.2 Control. "Control" shall have the meaning set forth in
Rule 12b-2 of the Securities Exchange Act of 1934, as amended,
and any successor regulation thereto.
1.3 Event of Default. "Event of Default" shall have the
meaning set forth in Section 2.1.
1.4 Holders. "Holders" means Isaac Perlmutter, Isaac
Perlmutter T.A. and Zib Inc., a Delaware corporation.
1.5 Person. "Person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or
any agency or political subdivision thereof or any other
entity.
1.6 Stock Purchase Agreement. "Stock Purchase Agreement" means
the Stock Purchase Agreement, dated as of November 20,
1996, as amended from time to time, by and among the Company and
the Holders.
1.7 Trigger Event. "Trigger Event" shall have the meaning
ascribed to such term in the Stock Purchase Agreement.
1.8 Toy Biz. "Toy Biz" means Toy Biz, Inc., a Delaware
corporation, and shall also include its successors and
assigns.
ARTICLE 2
DEFAULT AND ACCELERATION
2.1 Events of Default. Any one or more of the following
events, if they occur and are continuing, will be deemed to be Events of Default
under this Note, without notice, except as expressly provided below:
(a) default in the payment in full of any installment of interest on
this Note as and when the same becomes due and payable;
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(b) default in the payment in full of the principal of this Note as and
when the same becomes due and payable at
maturity, by declaration or otherwise;
(c) the Company or its affiliates no longer Controls, directly or
indirectly, Toy Biz, Inc. or the Company disposes of all or
substantially all of its common stock of Toy Biz, Inc. other than to an
affiliate;
(d) the net worth of the Company, computed in accordance with generally
accepted accounting principles, shall be less than $100,000,000,
without taking into account (a) this Note and a similar note issued to
Avi Arad, and (b) any indebtedness attributable to (i) the Senior
Secured Discount Notes due 1998 and Series B Senior Secured Discount
Notes due 1998 of Marvel Holdings Inc., (ii) the Senior Secured
Discount Notes due 1998 of Marvel (Parent) Holdings Inc., and (iii) the
9-1/8& Senior Secured Notes due 1998 of Marvel III Holdings Inc.;
(e) the Company, within 50 days after the end of each of its first
three fiscal quarters, shall fail to deliver to the Holders its
Quarterly Report on Form 10-Q, or, in the event that the Company is no
longer required to file periodic reports with the Securities and
Exchange Commission ("SEC"), shall fail within such 50-day period to
deliver to the Holders unaudited consolidated financial statements
prepared in accordance with Regulation S-X;
(f) the Company, within 105 days after the end of its fiscal year,
shall fail to deliver to the Holders its Annual Report on Form 10-K,
or, in the event that the Company is no longer required to file
periodic reports with the SEC, shall fail within such 105-day period to
deliver to the Holders audited consolidated financial statements
prepared in accordance with Regulation S-X;
(g) entry by a court having jurisdiction of a decree or order for
relief concerning the Company in an involuntary case under any
applicable bankruptcy, insolvency, reorganization, or other similar
law, or appointment of a receiver, liquidator, trustee, assignee,
custodian, sequestrator (or other similar official) of the Company or
of its property, or ordering of the winding up or liquidation of its
affairs; or
(h) institution by the Company of a voluntary case under any applicable
bankruptcy, insolvency, reorganization, or other similar law, or
consent by the Company to the entry of an order for relief in an
involuntary case under such law, or consent of the Company to the
appointment of or taking possession by a receiver, liquidator, trustee,
assignee,
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custodian, sequestrator (or other similar official) of the Company or
of its property, or making by the Company of an assignment for the
benefit of creditors, or admission in writing by the Company of its
inability to pay its debts generally as they become due, or taking by
the Company or any corporate action furthering any of the above
purposes.
A default under clause (a), (c), (d), (e) or (f) shall not be an Event
of Default until the Holders notify the Company in writing of such default and
the Company does not cure such default within, in the case of clause (a), 15
days, or in the case of clauses (c), (d), (e) or (f), 30 days, after such
notice.
2.2 Rights on Default. If a default described in clause (a),
(c), (d), (e) or (f) of Section 2.1 above occurs and has continued for 15 days,
in the case of clause (a), or 30 days, in the case of clauses (c), (d), (e) and
(f), in each case following written notice by the Holders of such default to the
Company, the Holders may declare the principal of this Note, together with any
accrued and unpaid interest, to be due and payable immediately. Upon any such
declaration, such principal and interest will become due and payable
immediately, anything contained in this Note notwithstanding. If an Event of
Default described in paragraph (e) or (f) occurs, the principal of this Note,
together with any accrued and unpaid interest, if not already due, shall
automatically become immediately due and payable, without any declaration,
presentment, demand, protest or other requirement of any kind, all of which are
hereby expressly waived by the Company. The Holders may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of such
acceleration. No such rescission shall affect any subsequent default or impair
any right consequent thereto. Any delay or omission by the Holders in exercising
any right or remedy arising upon an Event of Default shall not impair such right
or remedy or constitute a waiver of or an acquiescence in the Event of Default.
All remedies are cumulative to the extent permitted by law. Upon and following
any acceleration of the principal and interest of this Note pursuant to this
Section 2.2, any unpaid principal and accrued interest on this Note shall bear
interest at a rate equal to the rate stated in the second sentence of this Note
plus 3%.
2.3 Waiver of Past Defaults. The Holders may waive
an existing default and its consequences by notice to the Company.
When a default is waived, it is deemed cured, but no such waiver shall extend
to any subsequent or other default or impair any consequent rights.
2.4 Enforcement. If the Holders declare the principal of this
Note, together with all accrued and unpaid interest on
4
this Note, due and payable immediately, the Holders may proceed to protect and
enforce their rights by an action at law, suit in equity, or other appropriate
proceeding.
2.5 Trigger Event. If a Trigger Event occurs, the principal of
this Note, together with any accrued and unpaid interest, if not already due,
shall automatically become immediately due and payable, without any declaration,
presentment, demand, protest or other requirement of any kind, all of which are
hereby expressly waived by the Company.
ARTICLE 3
MISCELLANEOUS
3.1 Restriction on Transfer. This Note is transferrable,
in whole but not in part, subject to compliance with applicable securities laws.
3.2 Immunity. This Note is solely a corporate obligation of
the Company, and no personal liability whatever shall attach to, or is or will
be incurred by, the shareholders, officers or directors, as such, of the Company
or any of its successors, because of the creation of the indebtedness under this
Note, or under or by reason of the obligations, covenants or agreements
contained in or implied from this Note. This Section 3.2 is not intended to
modify or otherwise affect the common law and statutory rights and obligations
of shareholders, directors and officers of the Company as of the date hereof.
3.3 Notices. All notices, request, demands and payments of
principal and interest given to or made under this Note will, except as
otherwise specified in this Note, be in writing and will be effective upon the
earlier of (a) receipt or (b) the fifth day following the date such notice was
mailed properly addressed, first class, registered or certified mail, return
receipt requested, postage prepaid, to the other party at the following
addresses (which may be changed at any time by notice under this Section 3.3):
The Company: Andrews Group Incorporated
3200 Windy Hill Road
Atlanta, Georgia 30339
Attention: General Counsel
Telecopy: 770-563-9610
with a copy to: MacAndrews & Forbes Holdings Inc.
35 East 62nd Street
New York, New York 10021
Attention: Barry F. Schwartz, Esq.
Telecopy: 212-572-5056
with an additional
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copy to: Skadden, Arps, Slate, Meagher &
Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Alan C. Myers, Esq.
Telecopy: 212-735-2000
The Holders: P.O. Box 1028
Lake Worth, FL 33460-1028
with a copy to: Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: John Turitzin, Esq.
Telecopy: 212-856-7813
3.4 Headings. The headings in this Note are inserted for
convenience only and will not affect the meaning or
interpretation of all or any part of this Note.
3.5 Representations and Warranties of the Holders. The
Holders, by accepting this Note, represent and warrant that:
(a) The Holders understand that this Note has not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and that there is no existing public market for this
Note and that there can be no assurance that the Holders will be able
to sell or dispose of this Note.
(b) The Holders are "accredited investors" (as defined in Rule
501 of Regulation D under the Securities Act) purchasing for their own
accounts and are acquiring this Note for investment purposes and not
with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act and they have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of their investment in this
Note, including a complete loss of their investment, or the Holders
have been advised by a representative possessing such knowledge and
experience.
(c) The Holders have had the opportunity to ask questions of
and receive answers from the Company concerning the terms and
conditions of this Note and other related matters. The Holders further
acknowledge that the Company has made available to the Holders or their
representatives all documents and information relating to an
investment in this Note requested by or on behalf of the Holders.
3.6 Payment Date. In any case where the date specified in this
Note for the occurrence of any event (including
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the giving of notice and the making of a payment) is not a business day, then
such event shall occur on the next succeeding date that is a business day with
the same force and effect as if such event had occurred on the date originally
specified, and, if such event is a payment in respect of this Note, no interest,
if any, shall accrue for the intervening period.
3.7 Costs of Collection. The Company shall reimburse the
Holders upon their written request for all reasonable expenses incurred by them
in connection with the collection of payment of principal of or interest on the
Note, following a default with respect thereto.
3.8 Construction. Wherever possible, each provision of this
Note will be interpreted in such a manner as to be effective and valid under
applicable law but if any provision of this Note is prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Note.
3.9 Amendments. This Note may not be modified, amended,
rescinded, canceled or waived, in whole or in part, except by written
instruments signed by the Company and the Holders. Upon any modification,
amendment or supplement of or to the terms hereof, the Holders shall surrender
this Note to the Company within 10 days of written notice by the Company, and
the Company shall immediately thereafter issue a new Note to the Holders as
modified, amended or supplemented in accordance with the terms hereof.
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3.10 Governing Law. This Note is made subject to and
shall be construed under the laws of the State of New York,
without giving effect to the principles of conflicts of law
thereof.
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed as of the day and year first set forth above.
Andrews Group Incorporated,
a Delaware corporation
By:________________________
Name:
Title:
8
Dates Referenced Herein and Documents Incorporated by Reference
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