EXHIBIT 4.2
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EXECUTION COPY
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NEITHER THIS NOTE NOR THE SHARES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND EXCEPT FOR ANY TRANSFERS SPECIFICALLY AUTHORIZED UNDER THE TERMS OF
THIS NOTE, NEITHER THIS NOTE NOR SUCH SHARES MAY BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT REGISTRATION THEREOF UNDER THE ACT OR
COMPLIANCE WITH RULE 144 OR RULE 144A PROMULGATED UNDER THE ACT, OR UNLESS
GABELLI ASSET MANAGEMENT INC. HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO GABELLI ASSET MANAGEMENT INC., THAT SUCH REGISTRATION IS NOT
REQUIRED. TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN IS ALSO SUBJECT TO
RESTRICTIONS UNDER THE TERMS HEREOF.
CONVERTIBLE PROMISSORY NOTE
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$100,000,000.00 Dated: August 14, 2001
Rye, New York
FOR VALUE RECEIVED, the undersigned, Gabelli Asset Management Inc., a New
York corporation. ("GABELLI"), promises to pay to the order of CASCADE
INVESTMENT LLC, a Washington limited liability company ("CASCADE"), or its
permitted registered assigns or at such other place or places as the Holder (as
defined below) may designate in writing, on August 14, 2011, the principal sum
of ONE HUNDRED MILLION and NO/100 DOLLARS ($100,000,000) minus the principal
amount converted or sold pursuant to the Put Option (as defined below) or the
Change of Control Put Option (as defined below) (such amount, as of any
determination date, the "UNPAID PRINCIPAL Amount") on or before August 14, 2011,
and to pay interest thereon from and including August 14, 2001 (the "ISSUE
DATE") or from the most recent Interest Payment Date (as defined below) to which
interest has been paid or duly provided for, semi-annually on February 14 and
August 14 in each year, commencing February 14, 2002, and at Maturity (each, an
"INTEREST PAYMENT DATE") at the rate of (i) 6.5% per annum for the period from
and including the Issue Date to but excluding August 14, 2002, (ii) 6.0% per
annum for the period from and including August 14, 2002 to but excluding August
14, 2003, and (iii) 5.0% per annum for the period from and including August 14,
2003 to but excluding August 14, 2011, until the principal hereof is paid or
made available for payment; PROVIDED, HOWEVER, that (i) upon the occurrence and
during the continuance of an Event of Default (as defined below) this Note and
(ii) any principal and any such installment of interest which is overdue, in
each case shall bear interest at the rate of 15% per annum (or, if less, the
maximum interest rate permitted by the laws of the State of Washington). The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will be paid to the Person in whose name this Note is registered at
the close of business on the day immediately prior to such Interest Payment Date
(whether or not a Business Day). Payment of the principal of and interest on
this Note will be made in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts.
Any payments in respect of this Note shall first be applied to Enforcement
Costs (as defined below), then to interest and then to principal. If it is ever
determined that any rate of interest payable in respect of this Note exceeds the
maximum rate (if any) prescribed by applicable law, then any portion of interest
payments representing any amounts in excess of said maximum shall be applied as
provided in the preceding sentence.
As used herein, "MATURITY" means the date on which the principal of this
Note becomes due and payable as provided herein, whether at its stated maturity,
by declaration of acceleration or otherwise and "HOLDER" means, at any time, the
person in whose name this Note is registered in the Note Register (as defined
below).
This Convertible Promissory Note ("NOTE") was issued by Gabelli pursuant to
that certain Note Purchase Agreement, dated as of August 10, 2001, which has
been amended by the First Amendment thereto, dated as of July 1, 2003, (as so
amended, the "PURCHASE AGREEMENT"), among Gabelli, Cascade and the Gabelli
Stockholders. Capitalized terms not otherwise defined in this Note shall have
the meaning set forth in the Purchase Agreement, which definitions are
incorporated herein.
NO REDEMPTION OR PREPAYMENT
Gabelli agrees and acknowledges that the conversion feature of this Note
during the term of the Note is a valuable right and that the Holder would not
have purchased this Note without assurances that the Note would not be called or
prepaid by Gabelli. Accordingly, Gabelli acknowledges and agrees that it shall
not be entitled to and will not, without the consent of the Holder, make any
prepayments of principal on this Note other than pursuant to an acceleration of
this Note or Forced Conversion (as hereinafter defined), in each case as
provided below.
EVENTS OF DEFAULT
"EVENT OF DEFAULT", wherever used with respect to this Note, means any one
of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgement, decree or order of any court or any order, rule or
regulation of any Governmental Authority):
(a) Payment Default. Gabelli shall fail to pay or cause to be paid
all or any portion of the principal of or interest on this Note
when it becomes due and payable, and, in the event of failure to
pay interest on the Note, such failure continues for 10 days and
time for payment has not been extended or deferred by the Holder;
or
(b) Letter of Credit Default. The Letter of Credit Issuer shall fail
to honor a conforming draw under the Letter of Credit or Gabelli
shall breach its obligations with respect to the Letter of Credit
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contained in Section 4.3 of the Purchase Agreement, and such
failure continues for 5 days and time for payment has not been
extended or deferred by the Holder; or
(c) Put Option Default. Gabelli shall fail to pay or cause to be paid
all or any portion of the Put Consideration when it becomes due
and payable, and such failure continues for 5 days and time for
payment has not been extended or deferred by the Holder; or
(d) Change of Control Put Option Default. Gabelli shall fail to pay
or cause to be paid all or any portion of the Change of Control
Put Consideration when it becomes due and payable; or
(e) Breach of Representation or Warranty. Any representation or
warranty made by Gabelli in the Purchase Agreement shall prove to
have been untrue or misleading when made in any respect that is
material and adverse to the value of the Holder's investment in
the Note or the Conversion Shares; PROVIDED, HOWEVER, that this
shall constitute an Event of Default only if Cascade or one of
its Affiliates (as defined below) is the Holder and if the Holder
accelerates this Note as provided below during the period in
which any such representation and warranty survives as provided
in the Purchase Agreement; or
(f) Breach of Other Covenants or Failure of any Condition. Gabelli
shall fail to perform, keep or observe any agreement or covenant
contained in this Note or the Purchase Agreement that is not
covered by clauses (a) through (e) above, and any such failure
shall remain unremedied for thirty (30) days after written notice
thereof shall have been given to Gabelli by the Holder; PROVIDED,
HOWEVER, that if any such failure is not susceptible to cure
within 30 days and Gabelli commences to cure such failure within
said 30-day period, then no Event of Default shall be deemed to
have occurred if Gabelli diligently prosecutes said cure
thereafter to completion and cures said failure by the sixtieth
(60th) day after the date of said notice; or
(g) Cross Defaults (Payment and Other). Gabelli or any of its
Subsidiaries that are at the time significant subsidiaries of
Gabelli within the meaning of Rule 1-02(w) of Regulation S-X
promulgated by the SEC as of the date of this Note (each, a
"SIGNIFICANT SUBSIDIARY") shall be in default under indebtedness
for borrowed money with an aggregate principal amount of twenty
five million dollars ($25,000,000) or more to any person or
persons and such default (i) shall constitute a failure to make
any payment of or with respect to such indebtedness or (ii)
permits the holder thereof to accelerate the payment of such
indebtedness or otherwise causes such indebtedness to become due
and payable prior to its stated maturity. Notwithstanding the
foregoing, there shall not be an Event of Default under this
section (g) until expiration of, without cure, any period for
cure contained in any other agreement regarding such
indebtedness; or
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(h) Judgments. A final judgment or final order (not covered by
insurance, treating deductibles, self-insurance and retentions as
not so covered) for the payment of money in excess of $25.0
million in the aggregate for all such judgments and orders is
entered by a court or courts of competent jurisdiction against
Gabelli or any of its Significant Subsidiaries and shall not be
paid or discharged, and there shall be a period of 60 consecutive
days after the final judgment or order that causes such aggregate
amount to exceed $25.0 million during which a stay of enforcement
of such final judgment or order is not in effect; or
(i) Involuntary Bankruptcy Events. The entry by a court having
jurisdiction in the premises of a decree or order (A) for relief
in respect of Gabelli, any of its Significant Subsidiaries or,
prior to the expiration or return to Gabelli of the Letter of
Credit, the Letter of Credit Issuer (if a substitute Letter of
Credit is not delivered by Gabelli to the Holder within 60 days
of such decree or order) (each, a "SUBJECT ENTITY") in an
involuntary case or proceeding under any applicable Federal or
state bankruptcy, insolvency, reorganization or other similar law
or (B) adjudging any Subject Entity bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of any
Subject Entity under any applicable Federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of any Subject Entity or
of any substantial part of any property of any Subject Entity, or
ordering the winding up or liquidation of the affairs of any
Subject Entity, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(j) Voluntary Bankruptcy Events. Any Subject Entity commences a
voluntary case or proceeding under any applicable Federal or
state bankruptcy, insolvency, reorganization or other similar law
or of any other case or proceeding to be adjudicated as bankrupt
or insolvent, or the consent by any Subject Entity to the entry
of a decree or order for relief in respect of it in an
involuntary case or proceeding under any applicable Federal or
state bankruptcy, insolvency, reorganization or other similar law
or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by any Subject Entity of a
petition or answer or consent seeking reorganization or relief
under any applicable Federal or state law, or the consent by any
Subject Entity to the filing of such a petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar
official of such Subject Entity or of any substantial part of
such Subject Entity's property, or the making by any Subject
Entity of an assignment for the benefit of creditors, or the
admission by any Subject Entity in writing of its inability to
pay its debts generally as they become due, or the taking of
corporate action by any Subject Entity in furtherance of any such
action.
If an Event of Default (other than an Event of Default specified in clause
(i) or (j) above with respect to Gabelli) occurs and is continuing, the Holder
may declare the principal
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amount of this Note and all accrued and unpaid interest hereon to be immediately
due and payable. If an Event of Default specified in clause (i) or (j) above
occurs with respect to Gabelli, the principal amount of the Note and all accrued
and unpaid interest hereon shall automatically become and be immediately due and
payable without any declaration or other act on the part of the Holder or any
other Person.
CONVERSION RIGHTS
The Holder shall have the right to convert this Note as provided in Exhibit
A hereto, which Exhibit shall be incorporated by reference herein.
If the Closing Price (as hereinafter defined) of the Common Stock is at
least 125%, 150%, 175% or 200%, as the case may be, of the Conversion Price (as
hereinafter defined) on each Trading Day (as hereinafter defined) during any
period of 20 consecutive Trading Days (each, a "QUALIFIED TRADING PERIOD")
occurring within any six month period beginning on the Exercise Date (as
hereinafter defined) or any six month anniversary thereof and ending on the next
six month anniversary of the Exercise Date (each, a "SIX MONTH PERIOD"), then on
any date on or after the tenth Business Day following the last trading day of
any such Qualified Trading Period during such Six Month Period (each a
"CONVERSION DATE") Gabelli may convert any portion of the Unpaid Principal
Amount which, together with the aggregate principal amount of this Note that has
been converted by the Holder on or prior to such Conversion Date or by Gabelli
pursuant to this provision with respect to such Six Month Period, does not
exceed the Maximum Conversion Amount (as defined below) with respect to such Six
Month Period, into fully paid and nonassessable shares of Common Stock
(calculated as to each conversion to the nearest full share of Common Stock) at
the Conversion Price in effect on the applicable Conversion Date by delivering
written notice to that effect to the Holder on or prior to such Conversion Date;
PROVIDED, HOWEVER, that notwithstanding the foregoing to the extent that any
prior conversions by the Holder prevented Gabelli from converting the full
Maximum Conversion Amount with respect to any Six Month Period and Gabelli
caused the conversion of all of the Unpaid Principal Amount that it was
permitted to convert with respect to such Six Month Period, then to such extent
such prior conversions by the Holder shall not be taken into account in
calculating the Unpaid Principal Amount that Gabelli is entitled to convert in
any subsequent Six Month Period pursuant to the foregoing provisions. After any
conversion pursuant to the foregoing, the Holder shall have the right and option
(the "SHARE PUT OPTION"), but not the obligation, exercisable by delivering a
written notice (the "SHARE PUT NOTICE") to Gabelli no later than the tenth day
after the Conversion Date, to cause Gabelli to purchase up to 50% of the
Conversion Shares issued in such conversion (the "FORCED CONVERSION SHARES") for
a purchase price per share in cash equal to the average of the Closing Prices
for the five Trading Days immediately following the date on which the Share Put
Notice is delivered to Gabelli (the "SHARE PUT CONSIDERATION"). The closing of
any Share Put Option will be held at 10:00 A.M. at the principal executive
offices of the Holder on the ninth Trading Day immediately following the date on
which the Share Put Notice is delivered to Gabelli, or at such other time and
place upon which the Holder and Gabelli shall agree. At such closing, Gabelli
shall pay the Share Put Consideration to the Holder in cash by wire transfer of
immediately available funds against the delivery to Gabelli of a certificate
representing the Forced Conversion Shares with respect to
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which the Share Put Option has been exercised, duly endorsed to Gabelli or in
blank, and concurrently with such delivery Gabelli shall, or shall cause the
applicable transfer agent for such shares to, duly execute and deliver to the
Holder a new share certificate representing the number of Forced Conversion
Shares with respect to which the Share Put Option has not been exercised.
The "MAXIMUM CONVERSION AMOUNT" means, with respect to any Six Month
Period, (i) $25 million, if the Closing Price during each of the 20 consecutive
Trading Days during the first Qualified Trading Period in such Six Month Period
with respect to which Gabelli has effected a conversion pursuant to the
foregoing provisions (the "QUALIFIED TRADING PRICE") is at least 125% but less
than 150% of the Conversion Price, (ii) $50 million, if the Qualified Trading
Price is at least 150% but less than 175% of the Conversion Price, (iii) $75
million, if the Qualified Trading Price is at least 175% but less than 200% of
the Conversion Price, or (iv) $100 million, if the Qualified Trading Price is at
least 200% of the Conversion Price.
Except as otherwise provided above, any conversion pursuant to the
foregoing clauses (each, a "FORCED CONVERSION") shall be made in accordance with
the provisions of Exhibit A. If Gabelli effects a Forced Conversion, then on
such Conversion Date the Holder shall surrender the Note at the principal
executive offices of Gabelli (which, if Gabelli shall so require, shall be duly
endorsed to Gabelli or in blank, or be accompanied by proper instruments of
transfer to Gabelli or in blank), accompanied by irrevocable written notice to
Gabelli specifying the name or names (with address or addresses) in which a
certificate or certificates evidencing the full number of shares of Common Stock
issuable upon such conversion are to be issued and Gabelli shall deliver such
certificate or certificates registered in the name(s) and in the denominations
set forth in such instructions, together with a cash adjustment in respect of
any fraction of a share of Common Stock and, if less than all of the Unpaid
Principal Amount is being converted, a new Note of like tenor with an Unpaid
Principal Amount equal to the portion not being converted. Any such conversion
shall be deemed to have been made as of the applicable Conversion Date, and the
person or persons entitled to receive the Common Stock deliverable upon
conversion of this Note shall be treated for all purposes as the record holder
or holders of such Common Stock on such date.
PUT OPTION
The Holder shall have the right and option, but not the obligation, to
cause Gabelli to purchase all or any portion of the Unpaid Principal Amount of
this Note (the "PUT OPTION") on April 1, 2005 (the "EXERCISE DATE") for a
purchase price in cash equal to 100% of the principal amount of the Note to be
purchased plus accrued and unpaid interest thereon to but excluding the Exercise
Date (the "PUT CONSIDERATION"). The Put Consideration shall be payable to the
Holder by wire transfer of immediately available funds on the Exercise Date
against the delivery to Gabelli of this Note duly endorsed to it or in blank;
PROVIDED, HOWEVER, that if only a portion of the principal amount of this Note
is being purchased, then concurrently with such delivery Gabelli shall duly
execute and deliver to the Holder a new Note of the same tenor as this Note but
with a principal amount equal to the principal amount of this Note not being
purchased. In order to exercise the Put Option, the Holder must deliver a
written notice of its election to exercise to Gabelli at least 30 days prior to
the Exercise Date. The closing of any exercise of the
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Put Option will be held at 10:00 A.M. at the principal executive offices of the
Holder on the Exercise Date, or at such other time and place upon which the
Holder and Gabelli shall agree.
CHANGE OF CONTROL PUT OPTION
If a Change of Control or a Key Executive Change occurs at any time, the
Holder shall have the right and option, but not the obligation, to cause Gabelli
to purchase on the Change of Control Exercise Date (as defined below) all or any
portion of the Unpaid Principal Amount of this Note (the "CHANGE OF CONTROL PUT
OPTION") for a purchase price in cash equal to 101% of the principal amount of
the Note to be purchased plus accrued and unpaid interest thereon to but
excluding the Change of Control Exercise Date (the "CHANGE OF CONTROL PUT
CONSIDERATION"). The Put Consideration shall be payable to the Holder by wire
transfer of immediately available funds on the Change of Control Exercise Date
against the delivery to Gabelli of this Note duly endorsed to it or in blank;
PROVIDED, HOWEVER, that if only a portion of the principal amount of this Note
is being purchased, then concurrently with such delivery Gabelli shall duly
execute and deliver to the Holder a new Note of the same tenor as this Note but
with a principal amount equal to the principal amount of this Note not being
purchased. Gabelli shall give the Holder prompt written notice if a Change of
Control or a Key Executive Change occurs (a "NOTICE"). In order to exercise the
Change of Control Put Option with respect to any Change of Control or Key
Executive Change, the Holder must deliver a written notice of its election to
exercise to Gabelli within 30 days after it has received the Notice relating
thereto and the closing of any exercise of the Change of Control Put Option will
be held at 10:00 A.M. at the principal executive offices of the Holder on the
30th day after Gabelli receives such written notice, or at such other time and
place upon which the Holder and Gabelli shall agree (the "CHANGE OF CONTROL
EXERCISE DATE").
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or more related transactions, of all or
substantially all of the properties and assets of Gabelli and its Subsidiaries,
taken as a whole, to any Person or group (as such term is defined for purposes
of Rule 13d-5 under the 1934 Act or any successor rule), (ii) the adoption of a
plan relating to the liquidation or dissolution of Gabelli, (iii) the
consummation of any transaction or other event (including, without limitation,
any merger or consolidation) the result of which is that any "person" (as
defined above), other than Mario J. Gabelli and the Gabelli Entities (considered
as a single Person solely for this purpose), becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the 1934 Act), directly
or indirectly, of more than 40% of the total voting power of all the then
outstanding shares of Voting Stock of Gabelli or any Person with which Gabelli
consolidates or into which Gabelli merges, and more of the total voting power of
all such shares than is beneficially owned at such time by Mario J. Gabelli and
the Gabelli Entities (considered as a single Person solely for this purpose), or
(iv) the first day on which a majority of the members of the Board of Directors
of Gabelli are not Continuing Directors.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of Gabelli who (i) was a member of such Board of
Directors on the Issue Date or (ii) was nominated for election or elected to
such Board of Directors with the approval,
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recommendation or endorsement of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election.
"KEY EXECUTIVE CHANGE" shall be deemed to have occurred at any time that
(for any reason) Mario J. Gabelli ceases to provide the predominant executive
leadership to Gabelli and its Subsidiaries, taken as a whole.
LIMITATION ON FUNDED INDEBTEDNESS
Prior to the Exercise Date, as such date may be extended, Gabelli shall
not, and shall not permit any of its consolidated Subsidiaries, to create,
issue, incur (by conversion, exchange or otherwise), assume, guarantee,
otherwise become liable for, or suffer to exist, any Funded Indebtedness (other
than Indebtedness to Gabelli or one of its wholly owned Subsidiaries and other
than the Note) in excess of $300,000,000 outstanding at any time.
"FUNDED INDEBTEDNESS" means, with respect to any Person at any date of
determination, any Indebtedness of such Person that by its terms matures more
than one year after the date in question or which is renewable or extendible at
the option of such Person for a period ending one year or more after the date in
question.
"INDEBTEDNESS" means, with respect to any Person at any date of
determination (without duplication):
(a) all indebtedness of such Person for borrowed money;
(b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(c) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations
with respect thereto), but excluding obligations with respect to
the Letter of Credit, other letters of credit securing any
Indebtedness and letters of credit entered into in the ordinary
course of business of such Person to the extent such letters of
credit are not drawn upon or, if drawn upon, to the extent such
drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement);
(d) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is
due more than one year after the date of placing such property in
service or taking delivery and title thereto or the completion of
such services, except trade payables;
(e) all guaranties, endorsements, assumptions and other contingent
obligations in respect of, or to purchase or otherwise acquire,
Indebtedness of other Persons;
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(f) all Indebtedness of other Persons secured by a Lien on the
property or assets of such Person; and
(g) all lease obligations that are required to be capitalized on the
balance sheet of such person in accordance with GAAP.
The amount of Indebtedness of any Person as of any determination date shall be
the outstanding balance on such date in the case of unconditional obligations
and, with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation; provided that:
(1) the amount outstanding at any time of any Indebtedness issued at
a price less than its principal or face amount at maturity shall
be the amount of the liability in respect thereof determined in
accordance with GAAP; and
(2) the amount of Indebtedness secured by a Lien on any asset of a
Person shall be the lesser of (i) the fair market value of such
asset as of the determination date and (ii) the amount of such
Indebtedness.
INFORMATION OBLIGATIONS
Gabelli will deliver to the Holder (without duplication):
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of Gabelli, a consolidated balance sheet
of Gabelli and its Subsidiaries as of the end of such fiscal year
and the related statements of operations and cash flow for such
fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, and accompanied by a report
thereon of an independent public accountant of nationally
recognized standing;
(b) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of
Gabelli, a consolidated balance sheet of Gabelli and its
Subsidiaries as of the end of such quarter and the related
statements of operations and cash flow for such quarter and for
the portion of Gabelli's fiscal year then ended, setting forth in
each case in comparative form the figures for the corresponding
quarter and the corresponding portion of Gabelli's previous
fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, consistency and,
except for the absence of footnotes, generally accepted
accounting principles by the chief financial officer or the chief
accounting officer of Gabelli;
(c) promptly upon the furnishing thereof to the security holders of
Gabelli or any of its Subsidiaries generally, copies of all
financial statements, reports, proxy statements and any other
information or reports so furnished;
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(d) as soon as available, all filings of Gabelli pursuant to the 1933
Act and the 1934 Act (other than Schedules 13D and 13G, Forms 13F
and Forms 3, 4 and 5), if any, with the Securities and Exchange
Commission; and
(e) within five days after any officer of Gabelli obtains knowledge
of any Event of Default or any event which, with notice or lapse
of time or both, would constitute an Event of Default (a
"DEFAULT"), if such Event of Default or Default is then
continuing, a certificate of the chief financial officer or the
chief accounting officer of Gabelli setting forth the details
thereof and the action which Gabelli is taking or proposes to
take with respect thereto.
Notwithstanding the foregoing, if Gabelli is then subject to the reporting
requirements under Section 13 or 15(d) of the 1934 Act or any successor statute,
(i) the delivery to the Holder of Gabelli's Annual Report on Form 10-K or any
successor form for the relevant fiscal year within the time periods provided for
in clause (a) shall satisfy the requirements of such clause and (ii) the
delivery to the Holder of Gabelli's Quarterly Report on Form 10-Q or any
successor form for the relevant fiscal quarter within the time periods provided
for in clause (b) shall satisfy the requirements of such clause.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Gabelli will not consolidate or merge with or into (whether or not Gabelli
is the surviving corporation), or directly and/or indirectly through its
Subsidiaries sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of the properties and assets of Gabelli and its
Subsidiaries taken as a whole in one or more related transactions, to any other
Person unless:
(a) the Person formed by or surviving any such consolidation or
merger (if other than Gabelli) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been
made (the "SUCCESSOR COMPANY") is a corporation, partnership,
limited liability company or other similar business entity
organized and validly existing under the laws of the United
States, any state thereof or the District of Columbia;
(b) the Successor Company assumes all the obligations of Gabelli
under the Notes and the Purchase Agreement pursuant an agreement
in form and substance reasonably satisfactory to the Holder; and
(c) immediately after such transaction no Event of Default or event
which, with notice or lapse of time or both, would constitute an
Event of Default exists.
Upon any consolidation of Gabelli with, or merger of Gabelli into, any other
Person or any transfer, conveyance, sale, lease or other disposition of all or
substantially all of the properties and assets of Gabelli and its Subsidiaries
taken as a whole in one or more related transactions in accordance with this
paragraph, the Successor Company shall succeed to, and be substituted for, and
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may exercise every right and power of, Gabelli under this Note and the Purchase
Agreement with the same effect as if such Successor Company had been named as
Gabelli herein, and thereafter, except in the case of a lease, Gabelli shall be
relieved of all obligations and covenants under this Note and the Purchase
Agreement.
TRANSFER AND RELATED PROVISIONS
The Holder shall not offer, sell, contract to sell or otherwise dispose of
this Note without the prior written consent of Gabelli; PROVIDED, HOWEVER, that
the Holder shall be permitted to transfer the Note (i) to any of its Affiliates
and (ii) to any other Person (A) in connection with a transfer of substantially
all of the investments of the original Holder, (B) if the Holder is legally
precluded from holding this Note and (C) during the continuance of an Event of
Default, PROVIDED, that such transferee agrees to be bound by the terms
contained herein.
"AFFILIATE" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"CONTROL" (including, with correlative meanings, the terms "CONTROLLING,"
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect to any
specified Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
Gabelli shall keep at its principal office a register (the "REGISTER") in
which shall be entered the name and address of the registered holder of this
Note and particulars of this Note and of all permitted transfers of this Note.
Upon surrender for registration of a permitted transfer of this Note to Gabelli,
Gabelli shall execute and deliver, in the name of the designated transferee or
transferees, one or more new Notes, of any denominations of $1,000,000 and
multiples thereof and like aggregate principal amount. Notwithstanding the
foregoing, Gabelli shall not be required to register the transfer of or exchange
this Note unless it has been duly endorsed. All Notes issued upon any
registration of transfer or exchange of this Note shall be the valid obligations
of Gabelli, evidencing the same debt, and entitled to the same benefits, as this
Note.
No service charge shall be made for any registration of transfer or
exchange of this Note, but Gabelli may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
Prior to due presentment of this Note for registration of a permitted
transfer, Gabelli and its agents may treat the Person in whose name it is
registered as the owner of this Note for all purposes whatsoever, whether or not
it is overdue and neither Gabelli nor any of its agents shall be affected by
notice to the contrary.
REPLACEMENT OF NOTE
If this Note has been mutilated and is surrendered to Gabelli, Gabelli
shall execute and deliver in exchange a new Note of the same principal amount
and bearing a number not then outstanding. If the Holder shall deliver to
Gabelli (i) evidence reasonably satisfactory to Gabelli
11
that this Note has been destroyed, lost or stolen and (ii) such security or
indemnity as may be required by Gabelli to hold it and its agents harmless,
then, in the absence of notice that this Note has been acquired by a bona fide
purchaser, Gabelli shall execute and deliver, in lieu of this Note, a new Note
of a like principal amount and bearing a number not then outstanding. The
provisions of this paragraph are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes.
MISCELLANEOUS
Gabelli waives presentment for payment, demand, notice of nonpayment,
notice of protest and protest of this Note, and all notices in connection with
the delivery, acceptance, or dishonor of this Note.
Gabelli agrees that (a) if for any reason any amount due hereunder is paid
by cashier's, certified teller's check or other check, there shall be no
discharge of Gabelli's obligation until said check be finally paid by the issuer
thereof; and (b) the provisions of RCW 62A.3-311 shall not entitle Gabelli to
any accord and satisfaction of any now or hereafter existing claim in dispute
between the Holder and Gabelli (or any of their respective successors and
assigns), all of which provisions and rights are hereby waived.
The Holder shall not by any act or omission be deemed to waive any of its
rights or remedies under this Note or the Purchase Agreement unless such waiver
shall be in writing and signed by the Holder, and then only to the extent
specifically set forth therein.
No right or remedy herein conferred upon or reserved to the Holder is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
This Note may not be amended other than with the written consent of the
Holder and Gabelli.
Upon demand therefor, Gabelli agrees to pay to the Holder all costs and
fees arising out of enforcing this Note, whether incurred in any court action,
arbitration, or mediation, on appeal, in any bankruptcy (or state receivership
or other insolvency or similar proceedings or circumstances), in any forfeiture,
and for any post-judgment collection services (collectively, "ENFORCEMENT
COSTS").
GABELLI AND, BY ITS ACCEPTANCE OF THIS NOTE, THE HOLDER AGREE THAT, SUBJECT
TO THE SPECIFIC TERMS HEREOF AND TO THE EXTENT THAT WASHINGTON LAW APPLIES, THE
PROVISIONS OF ARTICLE 3 OF THE UNIFORM COMMERCIAL CODE OF WASHINGTON PERTAINING
TO INSTRUMENTS SHALL BE APPLIED TO THIS NOTE, EVEN IF THIS NOTE IS NOT DEEMED TO
BE AN "INSTRUMENT" OR A "NEGOTIABLE INSTRUMENT" THEREUNDER.
12
If this Note will at any time become subject to the Trust Indenture Act of
1939, Gabelli will make appropriate revisions hereto and will enter into an
indenture with an appropriate trustee so as to comply fully with such act.
Except as noted below, this Note shall be governed by and construed in
accordance with the laws of the State of Washington. In any court proceeding,
Gabelli agrees to submit to the jurisdiction of the federal court selected by
the Holder, and venue of any action concerning this Note shall be in King
County, Washington state. In the event that the federal court selected by the
Holder shall not have jurisdiction, Gabelli agrees to submit to the jurisdiction
of the Washington state court in King County selected by the Holder. Gabelli
hereby irrevocably waives to the fullest extent permitted by law any objection
which it may now or hereafter have to the laying of such venue and any claim
that any such forum is an inconvenient forum. Nothing in this Section shall
impair the right of the Holder to bring any action or proceeding against Gabelli
or its property in the courts of any other county or jurisdiction and Gabelli
irrevocably submits to the nonexclusive jurisdiction of the appropriate courts
(as selected by the Holder) of the jurisdiction in which Gabelli is organized or
any place where any property or any office of Gabelli is located. In the event
Holder transfers or assigns this Note to a person not one of its Affiliates,
then this Note shall be governed by and construed in accordance with the laws of
the State of New York and the consent to jurisdiction in the State of Washington
stated above is hereby revoked.
13
NOTICE: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has
duly executed and delivered this Note as of the date first written above.
GABELLI ASSET MANAGEMENT INC.,
a New York Corporation
By: /s/
-------------------------
Its: Vice President
------------------------
14
EXHIBIT A
CONVERSION RIGHTS
1. RIGHT OF CONVERSION. At the option of the Holder, this Note or any
portion of the principal amount hereof which is $1,000,000 or an integral
multiple thereof, may be converted at the principal amount hereof, or such
portion hereof, into fully paid and nonassessable shares of the Common Stock
(calculated as to each conversion to the nearest 1/100 of a share of Common
Stock) at the Conversion Price (as hereinafter defined) in effect at the time of
conversion, or into such additional or other securities, cash or property and at
such other rates as required in accordance with the provisions set forth herein.
Such conversion right shall expire at the close of business on August 14, 2011.
2. CONVERSION PROCEDURES. In order to exercise the conversion right, the
Holder shall surrender this Note at the principal executive offices of Gabelli
(which, if Gabelli shall so require, shall be duly endorsed to Gabelli or in
blank, or be accompanied by proper instruments of transfer to Gabelli or in
blank), accompanied by irrevocable written notice to Gabelli to the effect that
the Holder elects so to convert this Note or, if less than the entire principal
amount hereof is to be converted, the portion hereof to be converted (which
notice shall specify the name or names (with address or addresses) in which a
certificate or certificates evidencing the shares of Common Stock to be issued
upon such conversion are to be issued). Except as otherwise expressly set forth
herein, no payment or adjustment shall be made upon any conversion of the Note
on account of any interest accrued on this Note or on account of any dividends
accrued on the shares of Common Stock issued upon such conversion.
Gabelli shall, as soon as practicable after the surrender of this Note at
the office referred to above and compliance with the other conditions herein
contained, deliver at such office, to the person or persons entitled thereto (as
specified in the applicable written notice of conversion), a certificate or
certificates evidencing the number of full shares of Common Stock to which such
person or persons shall be entitled as aforesaid, together with a cash
adjustment in respect of any fraction of a share of Common Stock as hereinafter
provided. Such conversion shall be deemed to have been made as of the date of
such surrender of this Note (or, if later, the date of compliance with such
other conditions), and the person or persons entitled to receive the Common
Stock deliverable upon conversion of this Note shall be treated for all purposes
as the record holder or holders of such Common Stock on such date.
If this Note is to be converted in part only, upon such conversion Gabelli
shall execute deliver to the Holder, at the expense of Gabelli, a new Note or
Notes of like tenor in denominations of $1,000,000 and any integral multiple
thereof and with an aggregate principal amount equal to the unconverted portion
of the principal amount of this Note.
3. NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of this Note. Instead of any fractional share of Common
Stock that would otherwise be issuable to the Holder upon conversion of this
Note (or any specified portion
15
hereof), Gabelli shall pay a cash adjustment in respect of such fractional share
in an amount equal to the same fraction of the Closing Price (as hereinafter
defined) on the day of conversion.
4. RESERVATION OF SHARES; ETC. Gabelli shall at all times reserve and keep
available, free from preemptive rights out of its authorized but unissued Common
Stock, solely for the purpose of effecting the conversion of this Note, the full
number of shares of Common Stock that would then be deliverable upon the
conversion of all of the principal amount of this Note and any other outstanding
Notes.
If any shares of Common Stock required to be reserved for purposes of
conversion of this Note require registration with or approval of any
governmental authority under any Federal or State law before such shares may be
issued or freely transferred upon conversion, Gabelli will in good faith and as
expeditiously as possible endeavor to cause such shares to be duly registered or
approved as the case may be. If the Common Stock is quoted on the New York Stock
Exchange or any other U.S. national securities exchange, Gabelli will, if
permitted by the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable upon
conversion of this Note and any other outstanding Notes. Notwithstanding the
foregoing, the reference to free transferability in the first sentence of this
paragraph and the reference to listing in the second sentence of this paragraph
shall apply only when this Note shall have become freely transferable under the
federal securities laws.
5. PRIOR NOTICE OF CERTAIN EVENTS. If Gabelli shall authorize any
transaction that would require an adjustment to the Conversion Price (other than
a transaction referred to in clauses (a) or (c) of Section 6 below) or there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
Gabelli, then Gabelli shall notify the Holder, at least 20 days (or, in the case
of a transaction referred to in clauses (b), (d) or (e) of Section 6 below, 10
days) prior to the applicable record, expiration or consummation date
hereinafter specified, a notice stating (i) the record date fixed for the
determination of holders of Common Stock entitled to the applicable issuance,
dividend or distribution or (ii) the date of expiration of the applicable tender
or exchange offer, as the case may be.
6. ADJUSTMENT OF CONVERSION PRICE.
(a) In case Gabelli shall pay or make a dividend or other distribution on
any class of Capital Stock of Gabelli payable in Common Stock, the Conversion
Price in effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination. (For the purposes of determining
adjustments to the Conversion Price as set forth herein, shares of Common Stock
held in the treasury of Gabelli, and distributions or issuances in respect
thereof, shall be disregarded.)
16
(b) In case Gabelli shall issue rights or warrants to all or substantially
all holders of its Common Stock entitling them, for a period of not more than 45
days, to subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price (as hereinafter defined) on the date fixed
for the determination of stockholders entitled to receive such rights or
warrants, the Conversion Price in effect at the opening of business on the day
following the date fixed for termination of such subscription or purchase period
shall be reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock actually purchased upon exercise of such rights or
warrants would have purchased at such Current Market Price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock actually purchased upon exercise of such rights or warrants, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such termination.
(c) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(d) In case Gabelli shall, by dividend or otherwise, distribute to all or
substantially all holders of its Common Stock evidences of indebtedness, shares
of capital stock of any class or series, other securities, cash or assets (other
than Stapled Securities (as hereinafter defined), Common Stock, rights or
warrants referred to in clause (b) of this Section 6 or a dividend or
distribution payable exclusively in cash), the Conversion Price in effect
immediately prior to the close of business on the date fixed for the payment of
such distribution shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the Current Market Price on the date
fixed for such payment less the then fair market value (as determined in good
faith by the Board of Directors of Gabelli (the "BOARD OF DIRECTORS"), whose
good faith determination shall be conclusive and described in a resolution of
the Board of Directors) of the portion of such evidences of indebtedness, shares
of capital stock, other securities, cash and assets distributed per share of
Common Stock and the denominator shall be such Current Market Price, such
reduction to become effective immediately prior to the opening of business on
the day following the date fixed for such payment. If the Board of Directors
determines the fair market value of any distribution for purposes of this
paragraph by reference to the actual or when-issued trading market for any
securities comprising such distribution, in doing so it must consider the prices
in such market over the same period used in computing the Current Market Price
for such purposes.
17
(e) In case Gabelli shall, by dividend or otherwise, make a distribution to
all or substantially all holders of its Common Stock payable exclusively in cash
in an aggregate amount that, when combined with the aggregate amount paid in
respect of all other distributions to all or substantially all holders of its
Common Stock paid exclusively in cash within the 12 months preceding the date
fixed for the payment of such distribution to the extent such amount has not
already been applied in a prior adjustment pursuant to this paragraph, exceeds
10% of the product of the Current Market Price on the date fixed for such
payment times the number of shares of Common Stock on which such distribution is
paid, the Conversion Price in effect immediately prior to the close of business
on the date fixed for such payment shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the Current
Market Price on the date fixed for such payment less the Per Share Distribution
Amount (as hereinafter defined) paid in such distribution and the denominator
shall be such Current Market Price, such reduction to become effective
immediately prior to the opening of business on the day following the date fixed
for such payment.
(f) In case Gabelli or any of its Subsidiaries shall consummate a tender or
exchange offer for all or any portion of the Common Stock, the Conversion Price
in effect immediately prior to the close of business on the date of expiration
of such tender or exchange offer shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be the Current Market Price on
such date of expiration less the Per Share Premium Amount (as hereinafter
defined) paid in such tender or exchange offer and the denominator shall be such
Current Market Price, such reduction to become effective immediately prior to
the opening of business on the day following such date of expiration.
(g) In case Gabelli shall, by dividend or otherwise, make a distribution
referred to in paragraph (d) or (e) above, the Holder converting this Note (or
any portion of the principal amount hereof) subsequent to the close of business
on the date fixed for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the Conversion Price adjustment
in respect of such distribution shall also be entitled to receive, for each
share of Common Stock into which this Note (or portion of the principal amount
being converted), the portion of the evidences of indebtedness, shares of
capital stock, other securities, cash and assets so distributed applicable to
one share of Common Stock; PROVIDED, HOWEVER, that, at the election of Gabelli
(whose election shall be evidenced by a resolution of the Board of Directors)
with respect to all holders so converting, Gabelli may, in lieu of distributing
to such holder any portion or all of such evidences of indebtedness, shares of
capital stock, other securities, cash and assets to which such holder is
entitled as set forth above, (i) pay such holder an amount in cash equal to the
fair market value thereof (as determined in good faith by the Board of
Directors, whose good faith determination shall be conclusive and described in a
resolution of the Board of Directors) or (ii) distribute to such holder a due
bill therefor, provided that such due bill (A) meets any applicable requirements
of the principal national securities exchange or other market on which the
Common Stock is then traded and (B) requires payment or delivery of such
evidences of indebtedness, shares of capital stock, other securities, cash or
assets no later than the date of payment thereof to holders of shares of Common
Stock receiving such distribution.
18
(h) Gabelli may make such reductions in the Conversion Price, in addition
to those required by the foregoing paragraphs, as it considers to be advisable
to avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes. In addition, Gabelli from time to time may reduce the Conversion Price
by any amount for any period of time if the period is at least twenty days, the
reduction is irrevocable during the period, and the Board of Directors of
Gabelli shall have made a determination that such reduction would be in the best
interest of Gabelli, which determination shall be conclusive. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, Gabelli shall
provide written notice to the Holder of this Note and the holders of any other
outstanding Notes of the reduction at least fifteen days prior to the date the
reduced Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect.
(i) Gabelli may not engage in any transaction if, as a result thereof, the
Conversion Price would be reduced to below the par value per share of the Common
Stock.
(j) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Conversion Price; PROVIDED, HOWEVER, that any adjustments which by reason of
this paragraph are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(k) Whenever the Conversion Price is adjusted as herein provided, Gabelli
shall compute the adjusted Conversion Price and shall prepare a certificate
signed by the Treasurer of Gabelli setting forth the adjusted Conversion Price
and showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall be given by Gabelli to the Holder of this Note and
the holders of any other outstanding Notes.
7. STAPLED SECURITIES.
(a) Prior to a Separation Event (as hereinafter defined) with respect to
any Stapled Securities, such Stapled Securities will be deemed, for purposes of
the adjustments contemplated hereby, to comprise part of the shares of Common
Stock to which such Stapled Securities appertain, and as a result, distributions
in respect of such Stapled Securities will be deemed, for such purposes, to be
distributions in respect of such shares.
(b) If the Holder converts this Note (or any portion of the principal
amount hereof) after a Separation Event with respect to any Stapled Securities,
it shall be entitled to receive upon such conversion, in addition to the shares
of Common Stock issuable upon such conversion, the same rights to which the
Holder would have been entitled under the Stapled Securities that would have
appertained to such shares of Common Stock if the Holder had effected such
conversion before such Separation Event.
19
8. CONSOLIDATIONS, MERGERS OR SALES OF ASSETS. In the event of any
consolidation of Gabelli with, or merger of Gabelli into, any other Person, any
merger of another Person into Gabelli (other than a merger which does not result
in any reclassification, conversion, exchange or cancellation of outstanding
shares of the Common Stock) or any sale or transfer of all or substantially all
of the assets Gabelli, the Person formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall enter into
a written agreement with the Holder, in form and substance reasonably acceptable
to the Holder, providing that the Holder shall have the right thereafter, during
the period in which this Note shall be convertible, to convert this Note (or
portion of the principal amount hereof) only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock into which
this Note (or portion thereof) might have been converted immediately prior to
such consolidation, merger, sale or transfer, assuming the Holder (i) is not a
Person with which Gabelli consolidated or into which Gabelli merged or which
merged into Gabelli or to which such sale or transfer was made, as the case may
be, (a "CONSTITUENT Person") or an Affiliate of a Constituent Person and (ii)
failed to exercise his or her rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer; PROVIDED, HOWEVER, that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of Common
Stock held immediately prior to such consolidation, merger, sale or transfer by
Persons other than a Constituent Person or an Affiliate thereof and in respect
of which such rights of election shall not have been exercised (each, a
"NON-ELECTING SHARE"), then for purposes of this Section 8 the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or transfer by each Non-Electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-Electing
Shares. Such written agreement shall provide for adjustments which, for events
subsequent to the effective date of such agreement, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Exhibit
A. The provisions of this Section 8 shall similarly apply to successive
consolidations, mergers, sales or transfers. If the conversion rights of the
Holder of this Note shall be adjusted pursuant to this Section 8, then Gabelli
shall cause to be given to the Holder and any other holders of outstanding
Notes, within 5 days after consummation of the transaction triggering such
adjustment, a notice describing such adjustment in appropriate detail.
9. TAXES. Gabelli shall pay any and all stock transfer, documentary stamp
and other taxes that may be payable in respect of any issuance or delivery of
shares of Common Stock or other securities issued or delivered on conversion of
this Note. Gabelli shall not, however, be required to pay any such tax which may
be payable in respect of any transfer involved in the issuance or delivery of
shares of Common Stock or other securities in a name other than to the Holder,
and shall not be required to make any such issuance or delivery unless and until
the person otherwise entitled to such issuance or delivery has paid to Gabelli
the amount of any such tax or has established, to the satisfaction of Gabelli,
that such tax has been paid or is not payable.
10. CERTAIN DEFINITIONS. The following definitions shall apply to terms
used in this Exhibit A:
20
"CLOSING PRICE" of any common stock on any day means the last reported per
share sale price, regular way, of the common stock on such day, or, in case no
such sale takes place on such day, the average of the reported closing per share
bid and asked prices, regular way, of the common stock on such day, in each case
on the New York Stock Exchange or, if the common stock is not listed or admitted
to trading on the New York Stock Exchange, on the principal national securities
exchange or quotation system on which the common stock is listed or admitted to
trading or quoted, or, if the common stock is not listed or admitted to trading
or quoted on any national securities exchange or quotation system, the average
of the closing per share bid and asked prices of the common stock on such day in
the over-the-counter market as reported by a generally accepted national
quotation service or, if not so available in such manner, as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors of Gabelli for that purpose or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors (whose good faith
determination shall be conclusive and described in a resolution of the Board of
Directors).
"COMMON STOCK" shall mean the Class A Common Stock, par value $0.001 per
share, of Gabelli or, subject to Section 8, any shares of any class or classes
resulting from any reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of Gabelli and which are not
subject to redemption by Gabelli; PROVIDED, HOWEVER, that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from such reclassification bears to the total
number of shares of all such classes resulting from all such reclassifications.
"CONVERSION PRICE" initially means $53.00, subject to adjustment from time
to time as set forth herein; PROVIDED, HOWEVER, that without limiting the
foregoing the Conversion Price shall decrease by $1.00 as of August 14, 2003.
"CURRENT MARKET PRICE" on any date in question means, with respect to any
adjustment in conversion rights as set forth herein, the average of the daily
Closing Prices for the Common Stock for the five consecutive Trading Days
selected by the Board of Directors commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the date in question and the
day before the Ex Date with respect to the transaction requiring such
adjustment; provided, however, that (i) if any other transaction occurs
requiring a prior adjustment to the Conversion Price and the Ex Date for such
other transaction falls after the first of the five consecutive Trading Days so
selected by the Board of Directors, the Closing Price for each such Trading Day
falling prior to the Ex Date for such other transaction shall be adjusted by
multiplying such Closing Price by the same fraction by which the Conversion
Price is so required to be adjusted as a result of such other transaction and
(ii) if any other transaction occurs requiring a subsequent adjustment to the
Conversion Price and the Ex Date for such other transaction falls on or before
the last of the five consecutive Trading Days so selected by the Board of
Directors, the Closing Price for each such Trading Day falling on or after the
Ex Date for such other transaction shall be adjusted by dividing such Closing
Price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other transaction.
21
"EX DATE" means (i) when used with respect to any dividend, distribution or
issuance, the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the Closing Price is
obtained without the right to receive such dividend, distribution or issuance,
(ii) when used with respect to any subdivision or combination of shares of
Common Stock, the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such subdivision or
combination becomes effective, (iii) when used with respect to any tender or
exchange offer, the first date on which the Common Stock trades regular way on
such exchange or in such market after such tender or exchange offer expires and
(iv) when used with respect to any other transaction, the date of consummation
of such transaction.
"PER SHARE DISTRIBUTION AMOUNT" means, with respect to any distribution,
(i) the cash paid in such distribution divided by (ii) the number of shares of
Common Stock on which such distribution is paid.
"PER SHARE PREMIUM AMOUNT" means, with respect to any tender or exchange
offer, (i) the Premium Amount paid as part of such tender or exchange offer
divided by (ii) the Post-Tender Offer Number of Common Shares.
"POST-TENDER OFFER NUMBER OF COMMON SHARES" means, with respect to any
tender or exchange offer, the number of shares of Common Stock outstanding at
the close of business on the date of expiration of such tender or exchange offer
(before giving effect to the acquisition of shares of Common Stock pursuant
thereto) minus the number of shares of Common Stock acquired pursuant thereto.
"PREMIUM AMOUNT" means, with respect to any tender or exchange offer, (i)
the Tender Consideration paid in such tender or exchange offer minus (ii) the
product of the Current Market Price on the date of expiration of such tender or
exchange offer and the number of shares of Common Stock acquired pursuant to
such tender or exchange offer.
"SEPARATION EVENT" has the meaning set forth in the definition of the term
"Stapled Securities" below.
"STAPLED SECURITIES" means securities issued under any plan or agreement
providing in substance that, until such securities are redeemed or the rights
thereunder are otherwise terminated or a specified event occurs (a "SEPARATION
EVENT"), (i) a specified number of such securities will appertain to each share
of Common Stock then issued or to be issued in the future (including shares
issued upon conversion of this Note) and (ii) each such security will be
evidenced or represented by the certificate representing the share of Common
Stock to which it appertains and will automatically trade with such share.
22
"TENDER CONSIDERATION" means, with respect to any tender or exchange offer,
the aggregate of the cash plus the fair market value (as determined in good
faith by the Board of Directors, whose good faith determination shall be
conclusive and described in a resolution of the Board of Directors) of all
non-cash consideration paid in respect of such tender or exchange offer.
"TRADING DAY" means a day on which securities are traded on the national
securities exchange or quotation system or in the over-the-counter market used
to determine Closing Prices for the Common Stock.
23