Exhibit 1.1
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT (the "Agreement") is made as of
August 10, 2001, by and among Cascade Investment LLC, a Washington limited
liability company ("Buyer"), Gabelli Asset Management Inc., a New York
corporation ("Seller"), Xxxxx X. Xxxxxxx ("Gabelli"), Gabelli Group Capital
Partners, Inc., a New York corporation ("Gabelli Group"), Rye Holdings,
Inc., a New York corporation ("Rye Holdings"), and Rye Capital Partners,
Inc., a Delaware corporation (collectively with Gabelli, the Gabelli Group
and Rye Holdings, the "Gabelli Stockholders").
INTRODUCTION
1. Seller desires to sell to Buyer and Buyer desires to purchase
from Seller the convertible promissory note (the "Note") in the form
attached as Exhibit A;
2. The Note is convertible into shares of Class A Common Stock,
par value $0.001 per share (such shares and any other securities issued or
distributed with respect to, or in exchange for, such shares pursuant to
any reclassification, merger or other transaction, the "Class A Common
Stock"), of the Seller on the terms and conditions set forth in the Note;
3. The Gabelli Stockholders beneficially own, directly or
indirectly, 24,000,000 shares of Class B Common Stock, par value $0.001 per
share ("Class B Common Stock"), of the Seller, representing approximately
98% of the combined voting power of the outstanding Capital Stock (as
hereinafter defined) of the Seller; and
4. As a condition to its agreement to purchase the Note, Buyer has
required, and in consideration for the benefits to the Seller from such
purchase the Gabelli Stockholders have agreed to grant to Buyer, certain
rights with respect to Buyer's Class A Common Stock.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. Purchase and Sale.
1.1 Purchase and Sale. At the Closing, as defined in Section 1.3
below, Buyer shall purchase from Seller, and Seller shall issue and sell to
Buyer, the Note and Buyer and Seller shall enter into a Registration Rights
Agreement in the form of Exhibit B (the "Registration Rights Agreement").
The Note is convertible into shares of Class A Common Stock of the Seller
(the "Conversion Shares") on the terms provided therein.
1.2 Purchase Price. In consideration for the Note, Buyer shall pay
to Seller, by wire transfer in immediately available funds, One Hundred
Million U.S. Dollars (U.S. $100,000,000) (the "Consideration").
1.3 Closing. The closing of the purchase and sale of the Note
hereunder (the "Closing") shall be held at the offices of Xxxxxxxx &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M. on
August 13, 2001, or at such other time and place upon which the parties
shall agree (the "Closing Date"). The Closing shall be effective upon the
receipt by the parties of the agreements, documents, instruments and
consideration described in Section 3.
2. Representations and Warranties.
2.1 Seller's Representations and Warranties. Except as disclosed
in Exhibit C, Seller represents and warrants to Buyer as follows:
2.1.1 Organization; Standing and Power. The Seller is a
corporation duly organized and validly existing under the laws of the State
of New York, has all requisite power and authority to own, lease, and
operate its properties and to carry on its business as now being conducted,
and is duly qualified and in good standing to do business in each
jurisdiction in which it is required to be so qualified by applicable laws.
Each of the Seller's Subsidiaries is a corporation or other business entity
duly incorporated or organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, has all
requisite power and authority to own, lease and operate its properties and
to carry on its business as now conducted, and is duly qualified and in
good standing in each jurisdiction in which it is required to be so
qualified by applicable laws.
"Subsidiary" means (i) any corporation, association or other
business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by the
Seller or one or more of the other Subsidiaries (or a combination thereof)
and (ii) any partnership (A) the sole general partner or the managing
general partner of which is the Seller or a Subsidiary or (B) the only
general partners of which are the Seller or one or more Subsidiaries (or
any combination thereof).
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership,
partnership interests (whether general or limited) and (iv) any other
interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or agency or political
subdivision thereof (including any subdivision or ongoing business of any
such entity or substantially all of the assets of any such entity,
subdivision or business).
2.1.2 Capital Structure; Ownership of Shares. The
authorized Capital Stock of the Seller consists of one hundred million
(100,000,000) shares of Class A Common Stock, of which 5,762,100 shares are
issued and outstanding (the "Class A Shares"), one hundred million
(100,000,000) shares of Class B Common Stock, of which 24,000,000 shares
are issued and outstanding (together with the Class A Shares, the
"Shares"), and ten million (10,000,000) shares of Preferred Stock, par
value $.0001 per share, none of which are issued and outstanding. All of
the Shares have been duly authorized and validly issued, are fully paid and
nonassessable, and were issued in compliance with applicable federal and
state securities laws. The Conversion Shares have been duly authorized and
reserved for issuance out of the Seller's authorized and unissued shares of
Class A Common Stock and, when issued upon conversion of the Note, will be
validly issued, fully paid and nonassessable. Other than as disclosed in
Seller's SEC Reports (as defined below), there are not any options,
warrants, calls, convertible or exchangeable securities or rights,
commitments, agreements, contracts, understandings, restrictions,
arrangements, or rights of any character to which the Seller or any of its
Subsidiaries is a party or by which any of them or any of their assets may
be bound to issue, deliver, or sell, or cause to be issued, delivered, or
sold, additional shares of the Capital Stock of the Seller or any of its
Subsidiaries, or obligating the Seller or any of its Subsidiaries to grant,
extend, or enter into any such option, warrant, call, conversion right,
commitment, agreement, restriction, or right. There are no outstanding
obligations of the Seller or any of its Subsidiaries to repurchase, redeem
or otherwise acquire any shares of Capital Stock of the Seller or any of
its Subsidiaries. Other than as disclosed in the Seller's SEC Reports (as
defined below), there are no voting trusts or other agreements or
understandings to which the Seller, any of its Subsidiaries or any of the
Gabelli Stockholders is a party with respect to the holding, voting or
disposing of Capital Stock of the Seller or any of its Subsidiaries. Except
as described in Seller's SEC Reports or in a schedule hereto delivered to
Buyer on or prior to the date hereof, neither the Seller nor any of its
Subsidiaries has any outstanding bonds, debentures, notes or other
obligations or other securities (other than the Shares) that entitle the
holders thereof to vote with the stockholders of the Seller or any of its
Subsidiaries on any matter or which are convertible into or exercisable for
securities having such a right to vote that are not owned by the Seller or
another Subsidiary. Delivery of the Conversion Shares to Buyer upon
conversion of the Note will vest valid title thereto in Buyer, free and
clear of all liens, encumbrances, claims, and limitations of every kind
(collectively, "Liens") other than any attributable to actions or omissions
by Buyer or any of its Affiliates.
2.1.3 Subsidiaries. Seller's SEC Reports disclose each of
its Subsidiaries required to be described in such SEC Reports. Except as
otherwise disclosed in the SEC Reports, all of the issued and outstanding
shares of Capital Stock of each Subsidiary of the Seller have been duly
authorized, are validly issued, fully paid and (except for general partner
interests) nonassessable and are owned by the Seller, directly or through
Subsidiaries, free and clear of all Liens.
2.1.4 Authority. Seller has all requisite corporate power
and authority to enter into this Agreement, the Registration Rights
Agreement and the Note and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by Seller of this Agreement,
the Registration Rights Agreement and the Note and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate actions on the part of Seller. Each of this
Agreement, the Registration Rights Agreement and the Note has been duly
executed and delivered by Seller and constitutes a valid and binding
obligation of Seller enforceable in accordance with its terms, except that
such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, or other similar laws relating to enforcement of creditors'
rights generally, (ii) general equitable principles and (iii) to the extent
that indemnification provisions of the Registration Rights Agreement may be
limited by applicable federal or state securities law.
2.1.5 No Conflict. The execution and delivery of this
Agreement, the Registration Rights Agreement and the Note and the
consummation of the transactions contemplated hereunder and thereunder will
not violate, conflict with, constitute a default or breach under, (i) any
laws, rules or regulations of any governmental, administrative or
regulatory authority (including without limitation stock or commodity
exchanges, securities associations and other self-regulatory bodies
(collectively, "Self-Regulatory Organizations")) (collectively,
"Governmental Authorities") that are applicable to the Seller or any of its
Subsidiaries (collectively, "Applicable Laws"), (ii) any provisions of the
certificate of incorporation or bylaws (or comparable constituent or
governing documents) of the Seller or any of its Subsidiaries, or (iii) any
material agreement, contract, or instrument to which Seller or any of its
Subsidiaries or any of their assets may be bound or of any judgment, order
or decree of any Governmental Authority to which Seller may be bound, nor
will the execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Note by the Seller result in the
creation of any Lien upon the Shares or any material asset or right of the
Seller or any of its Subsidiaries, except, in the case of clause (iii), for
such violations, conflicts, defaults or breaches that would not,
individually or in the aggregate, have a material adverse effect on (i) the
business, operations, affairs, financial condition, assets, property,
results of operations or prospects of the Seller and its Subsidiaries,
taken as a whole, (ii) the ability of the Seller to perform any of its
material obligations under this Agreement, the Registration Rights
Agreement or the Note or (iii) the validity or enforceability of this
Agreement, the Registration Rights Agreement or the Note (each, a "Material
Adverse Effect"). No consent, approval, authorization or order of, or
filing or registration with, any Governmental Authority is required for the
execution, delivery and performance of this Agreement, the Registration
Rights Agreement and the Note by the Seller and the consummation by the
Seller of the transactions contemplated hereby and thereby.
2.1.6 Litigation. Except as disclosed in the Seller's SEC
Reports (as defined below), there is no pending or, to the best of Seller's
knowledge, threatened legal or governmental actions, proceedings, suits or
investigations or any arbitrations or labor disputes (collectively,
"Litigation") to which the Seller or any of its Subsidiaries is a party or
by which any material portion of any of their assets, taken as a whole, may
be bound, which Litigation, if adversely determined, would have a Material
Adverse Effect.
2.1.7 Accuracy of Reports; Financial Statements. All
registration statements, reports or other documents required to be filed
with the Securities and Exchange Commission (the "SEC") by the Seller
during the twelve month period preceding the date of this Agreement under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(collectively, the "SEC Reports"), have been duly and timely filed, were in
substantial compliance with the requirements of their respective forms when
filed, were complete and correct in all material respects as of the dates
at which the information was furnished, and contained (as of such dates) no
untrue statement of a material fact or omitted to state material fact
necessary in order to make the statements made therein in light of the
circumstances in which made not misleading. True and complete copies of the
SEC Reports have been delivered to Buyer by the Seller. The financial
statements of the Seller included in the SEC Reports (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto. The Financial Statements have been prepared in
accordance with generally accepted accounting principles ("GAAP")
consistently applied and fairly present the consolidated financial position
of the Seller and any its Subsidiaries at the dates thereof and the
consolidated results of operations and consolidated cash flows of the
Seller and its Subsidiaries for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments that are
not material in amount or effect). Except as set forth in the SEC Reports,
neither the Seller nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on a balance sheet of the
Seller or in the notes thereto, other than (i) liabilities and obligations
in the respective amounts reflected or reserved against in the most recent
consolidated balance sheet included in the Financial Statements or (ii)
other liabilities and obligations incurred in the ordinary course of
business since the date of the most recent consolidated balance sheet
included in the Financial Statements (the "Balance Sheet Date") which,
individually or in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect. Since the Balance Sheet Date
there have been no changes in the financial condition, results of
operations, business, properties or prospects of the Seller or its
Subsidiaries that, individually or in the aggregate, have had, or could be
reasonably expected to have, a Material Adverse Effect.
2.1.8 Solvency; No Default. The Seller has sufficient
funds, assets and cash flow to pay its debts and other liabilities as they
become due, and does not have unreasonably small capital for the conduct of
its business as currently conducted and proposed to be conducted in the
future. Neither the Seller nor any of its Subsidiaries is in violation of
its certificate of incorporation or bylaws (or comparable constituent or
governing documents) or is in default (or, with the giving of notice, lapse
of time or both, would be in default) under any material loan, agreement or
other obligation, except in the case of any material loan agreement or
other obligation, for such defaults which, individually or in the
aggregate, would not have a Material Adverse Effect. Each of the Seller and
each of its Subsidiaries has complied, and is in compliance, in all
material respects with all Applicable Laws and has all material licenses,
permits and other authorizations required to conduct its business as
currently conducted ("Permits"), except where the failure to have any such
Permits would not, individually or in the aggregate, have a Material
Adverse Effect. All such Permits are in full force and effect and no
proceeding is pending or, to the knowledge of the Seller and its
Subsidiaries, threatened to revoke, modify or rescind any such Permit.
2.1.9 Disclosure. No representation or warranty of the
Seller contained in this Agreement, the Registration Rights Agreement and
the Note or the exhibits attached hereto (when read together and taken as a
whole), contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein
or therein in light of the circumstances under which they were made not
misleading.
2.1.10 Accounting Controls. Each Subsidiary of the Seller
that is registered as a broker-dealer has adopted recordkeeping systems
that comply with the requirements of Section 17 of the Exchange Act, and
the rules thereunder and the rules of all Self-Regulatory Organizations
having jurisdiction over such Subsidiary, and maintains its records in
accordance therewith. Each of the Seller and its Subsidiaries has devised
and maintained systems of internal accounting controls sufficient to
provide reasonable assurances that (1) all transactions are executed in
accordance with management's general or specific authorization, (2) all
transactions are recorded as necessary to permit the preparation of
financial statements in conformity with generally accepted accounting
principles consistently applied with respect to broker-dealers, if
applicable, or any other criteria applicable to such statements, (3) access
to the property and assets of the Seller and its Subsidiaries is permitted
only in accordance with management's general or specific authorization and
(4) the recorded amounts for items is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to any
differences.
2.1.11 Brokerage Fees. Neither the Seller nor any of its
Subsidiaries has paid, or is obligated to pay, to any Person any brokerage
or finder's fees in connection with the transactions contemplated by this
Agreement.
2.2 Gabelli Stockholders' Representations and Warranties. Each
Gabelli Stockholder, solely with respect to itself, represents and warrants
to the Buyer as follows:
2.2.1 Authority. Each Gabelli Stockholder (other than
Gabelli) is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization and has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery by each Gabelli Stockholder (other than Gabelli)
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate actions on the
part of such Gabelli Stockholder. This Agreement has been duly executed and
delivered by each Gabelli Stockholder and constitutes a valid and binding
obligation of such Gabelli Stockholder enforceable in accordance with its
terms, except that such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, or other similar laws relating to enforcement
of creditors' rights generally, and (ii) general equitable principles.
2.2.2 No Conflict. The execution and delivery of this
Agreement by each Gabelli Stockholder, and the consummation of the
transactions contemplated hereunder will not violate, conflict with,
constitute a default or breach under, (i) any laws, rules or regulations of
any Governmental Authority that are applicable to such Gabelli Stockholder,
(ii) except in the case of Gabelli, any provisions of the certificate of
incorporation or bylaws of such Gabelli Stockholder, or (iii) any material
agreement, contract, or instrument to which such Gabelli Stockholder may be
bound or of any judgment, order or decree of any Governmental Authority to
which such Gabelli Stockholder may be bound, nor will the execution,
delivery and performance of this Agreement result in the creation of any
Lien upon any of the Shares or Conversion Shares, except, in the case of
clause (iii), for such violations, conflicts, defaults or breaches that
would not, individually or in the aggregate, have a Material Adverse
Effect. No consent, approval, authorization or order of, or filing or
registration with, any Governmental Authority is required for the
execution, delivery and performance of this Agreement by any Gabelli
Stockholder and the consummation of the transactions contemplated hereby.
2.2.3 Ownership of Securities. Each Gabelli Stockholder
is the record and/or beneficial owner, directly or indirectly, of the
number of shares of Class B Common Stock and the number of shares of Class
A Common Stock set forth on the signature page to this Agreement. No
Gabelli Stockholder is the record or beneficial owner of any other
securities of the Seller.
"Beneficial Owner" and "beneficial ownership" shall have
the meaning assigned to such terms in Rules 13d-3 and 13d-5 promulgated
under the Exchange Act (or any successor rules).
2.3 Buyer's Representations and Warranties. Buyer makes the
following representations and warranties.
2.3.1 Investment Purpose. The Buyer is purchasing the
Note as principal for its own account for investment only and not with a
present view towards the public sale or distribution thereof, other than
sales or distributions registered or exempt from registration under the
Securities Act of 1933, as amended (the "1933 Act") .
2.3.2 Accredited Investor Status. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation
D and has such business and financial experience as is required to give it
the capacity to protect its own interests in connection with the purchase
of the Note.
2.3.3 Reliance on Exemptions. The Buyer understands that
the Note is being offered and sold to it in reliance upon specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Seller is relying upon the truth and
accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, covenants, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Note.
2.3.4 Information. The Buyer has been furnished with all
materials relating to the business, finances and operations of the Seller
and materials relating to the offer and sale of the Note which have been
requested by the Buyer. Buyer has been afforded the opportunity to ask
questions of the Seller and has received what the Buyer believes to be
satisfactory answers to any such inquiries. None of the foregoing or any
other due diligence investigation conducted by the Buyer or any of its
advisors or representatives shall modify, amend or affect in any respect
the Seller's representations and warranties contained in Section 2.1 above
or the Buyer's right to rely on them. The Buyer understands that its
investment in the Note involves a significant degree of risk.
2.3.5 Governmental Review. The Buyer understands that no
United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or
endorsement of the Note.
2.3.6 Transfer or Resale. The Buyer understands that (i)
no public market now exists for the Note and that the Seller has made no
assurances that a public market will ever exist for the Note, (ii) the Note
has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and may not be transferred unless (a) the
transfer is registered pursuant to an effective registration statement
under the 1933 Act, (b) the transfer qualifies for the exemption afforded
by Rule 144A or Rule 144 under the 1933 Act (or a successor rule), (c) the
Buyer shall have delivered to the Seller an opinion of counsel (which
opinion shall be reasonably satisfactory to the Seller) to the effect that
the Note to be sold or transferred may be sold or transferred pursuant to
another exemption from such registration or (d) the transfer is pursuant to
the Put Option or Change of Control Put Option (as such terms are defined
in the Note), and (iii) neither the Seller nor any other person is under
any obligation to register such Note under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder (in each case, other than pursuant to the Registration Rights
Agreement).
2.3.7 Legends. The Buyer understands that the Note and,
until such time as the Conversion Shares have been registered under the
1933 Act as contemplated by the Registration Rights Agreement, the
Conversion Shares may bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of
the certificates for such Note) and any other legends required by the laws
of any State in which such securities will be issued:
(i) Legend for the Note:
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 "1933 ACT"), AND EXCEPT FOR ANY TRANSFERS SPECIFICALLY AUTHORIZED UNER
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 1933 ACT OR COMPLIANCE WITH RULE 144 OR RULE 144A
PROMULGATED UNDER THE 1933 ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED. TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN
IS ALSO SUBJECT TO RESTRICTIONS UNDER THE TERMS HEREOF.
(ii) Legend for the Conversion Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
ABSENT REGISTRATION THEREOF UNDER THE 1933 ACT OR COMPLIANCE WITH RULE 144
OR RULE 144A PROMULGATED UNDER THE 1933 ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED.
The legends set forth above (other than the last sentence of the legend in
clause (i)) shall be removed and the Seller shall issue a certificate
without such legend to the holder of any certificate upon which it is
stamped if, unless otherwise required by applicable state securities laws,
(a) such security is sold pursuant to an effective registration statement
filed under the 1933 Act, (b) such holder provides the Seller with an
opinion of counsel, satisfactory to the Seller, to the effect that a public
sale or transfer of such security may be made without registration under
the 1933 Act and such sale or transfer is effected or (c) such holder
provides the Seller with reasonable assurances that all of the securities
represented by such certificate can then be sold pursuant to Rule 144 under
the 1933 Act (or successor rule thereto). The Buyer agrees to sell all
Conversion Shares, including those represented by a certificate(s) from
which the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any.
2.3.8 Authorization; Enforcement. The Buyer represents
and warrants to the Seller that (i) the Buyer has all requisite limited
liability company power and authority and has taken all requisite limited
liability company action to execute and deliver this Agreement and the
Registration Rights Agreement, to purchase the Note to be purchased by it
and to carry out and perform all of its obligations under this Agreement,
and (ii) each of this Agreement and the Registration Rights Agreement
constitutes the legal, valid and binding obligation of the Buyer,
enforceable in accordance with its terms, except (1) as limited by
applicable bankruptcy, insolvency, reorganization, or similar laws relating
to or affecting the enforcement of creditors' rights generally and by
equitable principles generally and (2) to the extent that indemnification
provisions in the Registration Rights Agreement may be limited by
applicable federal or state securities laws.
2.3.9 Brokerage Fees. The Buyer has not paid, nor is
obligated to pay, to any Person any brokerage or finder's fees in connection
with the transactions contemplated by this Agreement.
3. Deliveries at Closing.
3.1 Deliveries by Buyer at the Closing. At the Closing, Buyer
shall deliver the following items to Seller (and in the case of Section
3.1.2, to the Gabelli Stockholders):
3.1.1 The Consideration, by wire transfer in immediately
available funds;
3.1.2 An executed copy of this Agreement; and
3.1.3 An executed copy of the Registration Rights
Agreement.
3.2 Deliveries by Seller at the Closing. At the Closing, Seller
shall deliver the following items to Buyer (and in the case of Section
3.2.2, to the Gabelli Stockholders):
3.2.1 The executed Note;
3.2.2 An executed copy of this Agreement;
3.2.3 An executed copy of the Registration Rights
Agreement;
3.2.4 An opinion of Seller's legal counsel, dated as of
the Closing Date, in substantially the form of Exhibit D attached
hereto; and
3.2.5 An executed copy of the Letter of Credit (as
defined below).
3.3 Deliveries by the Gabelli Stockholders at the Closing. At the
Closing, the Gabelli Stockholders shall deliver the following items to
Buyer (and, in the case of Section 3.3.1, to the Seller):
3.3.1 An executed copy of the Agreement; and
3.3.2 An opinion of counsel to the Gabelli Stockholders,
dated as of the Closing Date, in substantially the form of Exhibit
E attached hereto.
4. Covenants.
4.1 Reservation of Shares. Seller shall at all times have
authorized and reserved for the purpose of issuance pursuant to the
conversion of the Note the total number of shares of Class A Common Stock
into which the Note may be converted (as such number may be adjusted from
time to time pursuant to the terms of the Note) (the "Maximum Number"). If
at any time the number of shares of Class A Common Stock authorized and
reserved for issuance pursuant to the conversion of the Note is for any
reason below the Maximum Number, the Seller and the Gabelli Stockholders
will promptly take or cause to be taken all corporate action necessary to
authorize and so reserve a number of such shares equal to the Maximum
Number, including without limitation calling a special meeting of
shareholders to authorize additional shares to meet the Seller's and the
Gabelli Stockholders' obligations hereunder, and using their reasonable
best efforts to obtain shareholder approval of such an increase in the
authorized number of shares.
4.2 NYSE Listing. Seller shall promptly secure the listing of all
the Conversion Shares issued upon conversion of the Note upon the New York
Stock Exchange, Inc. or such other national securities exchange, automated
inter-dealer quotation system or over-the-counter market upon which shares
of Class A Common Stock are then listed, and shall maintain, so long as any
other shares of Class A Common Stock shall be so listed, such listing of
such shares of Class A Common Stock.
4.3 Security. At Closing, the Seller shall deliver to the Buyer an
irrevocable letter of credit (the "Letter of Credit") in the form of
Exhibit F hereto. The Letter of Credit shall be issued by The Chase
Manhattan Bank (the "Letter of Credit Issuer"). If at any time prior to the
exercise of the Put Option on the Exercise Date and the payment of the Put
Consideration payable on the Exercise Date by the Seller or pursuant to the
Letter of Credit the long-term rating of the senior unsecured debt of the
Letter of Credit Issuer falls below AA-by Standard & Poor's Ratings Group
or Aa3 by Xxxxx'x Investor Service, Inc., the Seller shall promptly, but in
no event later than thirty (30) days after such event, deliver to the Buyer
in exchange for the Letter of Credit a substitute letter of credit of the
same tenor as the Letter of Credit issued by a financial institution
reasonably satisfactory to the Buyer and whose senior unsecured debt has a
long-term rating of at least AA-by Standard & Poor's Ratings Group and Aa3
by Xxxxx'x Investor Service, Inc., and after such delivery such substitute
letter of credit and such financial institution shall be deemed to be the
Letter of Credit and Letter of Credit Issuer, respectively, for all
purposes of this Section 4.3. The Letter of Credit shall serve as security
for the full and faithful performance by the Seller of its obligations
under the Put Option and the repayment of the Note and accrued and unpaid
interest thereon as a result of an Event of Default on or prior to the
Exercise Date. If the Buyer elects to exercise the Put Option with respect
to any Exercise Date and the Seller fails to deliver all or any portion of
the Put Consideration on such Exercise Date, Buyer, in its sole discretion,
may draw upon the Letter of Credit the portion (which may be all) of the
Put Consideration not paid by the Seller on such Exercise Date (the "Unpaid
Portion") and upon receipt of the Unpaid Portion by the Buyer under the
Letter of Credit, the Put Consideration shall be deemed to have been paid
in full by the Seller. If the Buyer does not exercise the Put Option on or
prior to the Exercise Date or if it converts the Note in full into the
Conversion Shares, it will return the Letter of Credit to the Seller within
five days after the Exercise Date or the date of such conversion.
Capitalized terms used but not defined in this Section that are defined in
the Note shall have the meanings assigned to such terms in the Note and,
without limitation, if the Exercise Date is extended as provided in the
Note all references herein to the Exercise Date shall be to the Exercise
Date as so extended.
4.4 Tag-Along Right. If any Gabelli Entity (as defined below),
acting individually or together in any combination with any other Gabelli
Entity (collectively, the "Transferor"), proposes to sell, contract to
sell, or otherwise transfer or dispose of, directly or indirectly, in one
transaction or a series of related transactions, (each, a "Transfer")
Voting Stock (as defined below) of the Seller, which represents 20% or more
of the total voting power of all the then outstanding shares of Voting
Stock of Seller to a Person other than a Gabelli Entity (the "Purchaser"),
the Transferor shall provide written notice (a "Transfer Notice") to the
Buyer no later than 30 days prior to the consummation of the Transfer
specifying all the material terms and conditions of the Transfer, including
but not limited to the type and number of shares of Voting Stock to be
transferred, the nature and amount of the consideration to be paid by the
Purchaser, the identity of the Purchaser and any conditions to the
Transfer. If a change occurs in the nature or amount of consideration to be
paid by the Purchaser or in any other material terms or conditions of the
Transfer, the Transferor shall immediately deliver to the Buyer a new
Transfer Notice. If the Buyer elects to sell Conversion Shares in
connection with the Transfer by delivering written notice to the Transferor
in writing within 10 days after the date on which the Buyer received the
Transfer Notice, then the Transferor will not consummate the Transfer
unless (i) it does so at a price at least as high and on other terms and
conditions at least as favorable as those specified in the Transfer Notice
and (ii) simultaneously with the consummation of the Transfer the Purchaser
also purchases from the Buyer, at the same price and on the other terms and
conditions specified in the Transfer Notice, a percentage of the number of
Conversion Shares then beneficially owned by it equal to the percentage
obtained by dividing (i) the number of shares of Voting Stock being sold by
the Transferor in the Transfer by (ii) the total number of shares of Voting
Stock then beneficially owned by all of the Gabelli Entities and
multiplying that quotient by 100. Gabelli shall cause any Gabelli Entity
that is not a party to this Agreement who becomes the record or beneficial
owner of any Voting Stock of the Seller after the date of this Agreement (a
"New Gabelli Stockholder") to comply with the requirements of this Section
and to execute and delivery, on or prior to the date on which it acquires
such record or beneficial ownership, a written undertaking to Buyer, in
form and substance reasonably satisfactory to the Buyer, that such New
Gabelli Stockholder will comply with the requirements of this Section 4.4
as if it was a Gabelli Stockholder, and thereafter such New Gabelli
Stockholder shall be deemed to be a Gabelli Stockholder for all purposes of
this Section.
A "Gabelli Entity" shall mean Gabelli, the spouse or any child or
grandchild of Gabelli, or any Person in which Gabelli and/or one or more of
such other individuals has a controlling interest or beneficially owns,
directly or indirectly, (i) a majority of the number of outstanding shares
of Capital Stock of such Person and/or (ii) Voting Stock of such Person
which represents 50% or more of the total voting power of all the then
outstanding shares of Voting Stock of such Person, and shall also mean any
testamentary, charitable or similar trust or foundation of which Gabelli
and/or one or more of such other individuals is a grantor, beneficiary,
trustee or person having similar management authority.
"Voting Stock" means, with respect to any Person, Capital Stock of
such Person that is entitled to vote generally in the election of directors
(or, in the case of Persons that are not corporations, persons performing
similar functions) of such Person.
5. Survival of Representations and Warranties. All representations,
warranties, agreements and covenants contained in this Agreement shall
survive the Closing; provided, however, that a claim for a breach of a
representation or warranty (but not for a breach of a covenant or
agreement) must be brought within one (1) year of the execution of this
Agreement. In the event Buyer brings a claim within such one (1) year
period, such representations and warranties shall continue to survive
solely with regard to such claim until such claim has been finally resolved
and satisfied. Buyer's rights under this Agreement shall not be affected by
any knowledge it may have with respect to the Seller, its Subsidiaries or
their businesses.
6. Miscellaneous.
6.1 Entire Agreement. This Agreement and the documents listed in
Section 3.2 (other than the opinion of Seller's legal counsel) represents
the entire agreement among the parties with respect to the transactions
contemplated herein and supersede all prior agreements, written or oral,
with respect thereto. This Agreement may be amended only by an instrument
that is executed and authorized by all parties hereto.
6.2 Expenses. Without limiting Section 6.6, Buyer and Seller will
pay their own respective expenses, including attorneys' fees, in connection
with the negotiation of this Agreement, the performance of its obligations
hereunder, and the consummation of the transactions contemplated by this
Agreement.
6.3 Successors and Assigns. This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns;
provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by either party without
the prior written consent of the other party.
6.4 Governing Law; Consent to Jurisdiction. Except as stated
below, this Agreement shall be governed by the laws of the State of
Washington. The parties hereby irrevocably and unconditionally submit in
any legal action or proceeding relating to this Agreement to the
non-exclusive general jurisdiction of the courts of the United States
located in the Western District of Washington and, in any such action or
proceeding, consent to jurisdiction in such courts and waive any objection
to the venue in any such court. In the event that the federal court
selected by Buyer shall not have jurisdiction, Seller agrees to submit to
the jurisdiction of the courts of the State of Washington located in King
County. In the event Buyer transfers or assigns the Note to a person not an
affiliate (as defined in Rule 405 under the 1933 Act), then this Agreement
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.
6.5 Nonwaiver. The failure of either party to insist upon strict
adherence to any one or more of the covenants and restrictions in this
Agreement, on one or more occasion, shall not be construed as a waiver, nor
deprive either party of the right to require strict compliance thereafter
with the same. All waivers must be in writing and signed by the waiving
party.
6.6 Attorneys' Fees and Expenses. In any suit or action brought to
enforce this Agreement, or to obtain an adjudication, declaratory or
otherwise, of rights hereunder, the losing party shall pay to the
prevailing party reasonable attorneys' fees and all other costs and
expenses that may be incurred by the prevailing party in such action. The
foregoing shall be in addition to, and shall not limit, any other rights
that the non-breaching party may have against the breaching party at law or
in equity.
6.7 Publicity. Seller shall not issue any public statement (such
as press releases, letters to shareholders, speeches and similar
statements) concerning the beneficial owner of Buyer without the prior
written consent of the Buyer; provided, however, that such disclosure may
be made if such approval has been requested and not received and the Seller
concludes (after consulting with counsel) that it is required by law or
stock exchange regulation to make such disclosure in a press release or
other public statement. With respect to any press release issued by Seller,
Seller shall use reasonable efforts to provide copies to Buyer prior to
public dissemination thereof and shall incorporate Buyer's comments to such
press release, if any, in good faith.
6.8 Notices. Any notice required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including
a recognized overnight delivery service) or by facsimile and shall be
effective for five days after being placed in the mail, if mailed by
regular U.S. mail, or upon receipt, if delivered personally or by courier
(including a recognized overnight delivery service) or by facsimile, in
each case addressed to a party. The addresses for such communications shall
be:
If to the Seller or any Gabelli Stockholder:
Gabelli Asset Management Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxx, Xxx Xxxx 00000
Attn: Xxxxx X. XxXxx, Esq.
Facsimile: (000) 000-0000
With copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
If to Buyer:
Cascade Investment LLC
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
With copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. XxXxxxxxx, Esq.
Facsimile: (000) 000-0000
Each party shall provide notice to the other of any changes in
address.
6.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart. Each counterpart may consist of
a number of copies hereof, each signed by less than all, but together
signed by all, of the parties hereto.
6.10 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions
hereof. If any provision of this Agreement, or the application thereof to
any person or entity or any circumstance, is invalid or unenforceable, (a)
a suitable and equitable provision shall be substituted therefor in order
to carry out, so far as may be valid and enforceable, the intent and
purpose of such invalid or unenforceable provision and (b) the remainder of
this Agreement and the application of such provision to other persons,
entities or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof,
in any other jurisdiction.
6.11 Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent
of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein
refers to action to be taken by any person, or which such person is
prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such person, whether or not
expressly specified in such provision. The construction of this Agreement
shall not be affected by which party drafted this Agreement.
6.12 Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
(the remainder of this page has been intentionally left blank)
SIGNATURE PAGE - NOTE PURCHASE AGREEMENT
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, the parties hereto have executed this
Agreement as of the date first mentioned above.
SELLER BUYER
GABELLI ASSET MANAGEMENT INC. CASCADE INVESTMENT LLC
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------- By: /s/ Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxxxx ------------------------
Vice President and CFO Xxxxxxx Xxxxxx
GABELLI STOCKHOLDERS
/s/ Xxxxx X. Xxxxxxx
--------------------------------
XXXXX X. XXXXXXX
(113,265 Shares of Class A Common Stock)
(24,000,000 Shares of Class B Common Stock)
GABELLI GROUP CAPITAL PARTNERS, INC.
(0 Shares of Class A Common Stock)
(24,00,000 Shares of Class B Common Stock)
By: /s/ Xxxxx X. XxXxx
------------------------------
Xxxxx X. XxXxx
Secretary
RYE HOLDINGS, INC.
(0 Shares of Class A Common Stock)
(8,400,000 Shares of Class B Common Stock)
Xxxxx X. XxXxx
Secretary
By: /s/ Xxxxx X. XxXxx
---------------------
Xxxxx X. XxXxx
Secretary By:
RYE CAPITAL PARTNERS, INC.
(0 Shares of Class A Common Stock)
(240,000 Shares of Class B Common Stock)
By: /s/ Xxxxx X. XxXxx
----------------------
Xxxxx X. XxXxx
Secretary
EXHIBIT A
FORM OF CONVERTIBLE PROMISSORY NOTE
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT C
SELLER'S DISCLOSURE SCHEDULE
Schedule 2.1.2
Gabelli Asset Management Inc. ("Gabelli") has an outstanding
exchange offer to the shareholders of Gabelli Securities, Inc. ("GSI"), a
majority-owned subsidiary of Gabelli, pursuant to which the shareholders of
GSI may exchange each of their shares of Common Stock of GSI for four
shares of Class A Common Stock of Gabelli.
EXHIBIT D
FORM OF OPINION OF COUNSEL TO SELLER
EXHIBIT E
FORM OF OPINION OF COUNSEL TO GABELLI STOCKHOLDERS
EXHIBIT F
FORM OF LETTER OF CREDIT
