NOTE PURCHASE AGREEMENT
EXECUTION
VERSION
This NOTE
PURCHASE AGREEMENT (the "Agreement") is made as of
October 2, 2008, by and among Cascade Investment, L.L.C., a Washington limited
liability company ("Buyer"),
GAMCO Investors, Inc., a New York corporation ("Seller"), Xxxxx X. Xxxxxxx
("Gabelli") and GGCP,
Inc., a New York corporation ("Gabelli Group" and
collectively with Gabelli, 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
hereto;
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, approximately 20
million shares of Class B Common Stock, par value $0.001 per share ("Class B Common Stock"), of the
Seller, representing approximately 95% 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 the
Conversion Shares (as hereinafter defined).
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,
Buyer and Seller shall enter into the amendment to the Registration Rights
Agreement, dated as of August 14, 2001 (the "Registration Rights
Agreement"), in the form of Exhibit B hereto (the
"First Amendment to
Registration Rights
Agreement"), and Buyer, Seller and JPMorgan Chase Bank, National
Association shall enter into the Escrow Agreement in the form of Exhibit C hereto (the
"Escrow Agreement"). The
Registration Rights Agreement as amended by the First Amendment to the
Registration Rights Agreement is referred to herein as the "Amended 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, Sixty Million U.S.
Dollars (U.S. $60,000,000) (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 October 2, 2008, 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 D hereto,
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 100,000,000 shares of Class A Common Stock, of which approximately 7,395,483
shares are issued and outstanding (the "Class A Shares"), 100,000,000 shares of
Class B Common Stock, of which approximately 20,550,006 shares are issued
and outstanding (together with the Class A Shares, the "Shares"), and 10,000,000
shares of Preferred Stock, par value $.001 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 the SEC Reports (as defined
below), there are no 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 SEC Reports, 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 the SEC Reports, 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 First Amendment to Registration Rights Agreement, the Escrow Agreement and
the Note and to consummate the transactions contemplated by this Agreement, the
Amended Registration Rights Agreement, the Escrow Agreement and the Note. The
execution and delivery by Seller of this Agreement, the First Amendment to
Registration Rights Agreement, the Escrow Agreement and the Note and the
consummation of the transactions contemplated by hereby and thereby have been
duly authorized by all necessary corporate actions on the part of
Seller. Each of this Agreement, the First Amendment to Registration
Rights Agreement, the Escrow Agreement and the Note has been duly executed and
delivered by Seller and each of them and the Amended Registration Rights
Agreement 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 and (ii) general equitable principles
and (iii) to the extent that indemnification provisions of the Amended
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
First Amendment to Registration Rights Agreement, the Escrow Agreement and the
Note and the consummation of the transactions contemplated by this Agreement,
the Amended Registration Rights Agreement, the Escrow Agreement and the Note
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 First Amendment
to Registration Rights Agreement, the Escrow Agreement or the Note nor the
performance of the Amended Registration Rights Agreement by the Seller result in
the creation of any Lien upon the Note or the Conversion 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 Amended Registration Rights Agreement, the Escrow Agreement
or the Note or (iii) the validity or enforceability of this Agreement, the
Amended Registration Rights Agreement, the Escrow 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 First Amendment to Registration
Rights Agreement, the Escrow Agreement and the Note or the performance of the
Amended Registration Rights Agreement or Escrow Agreement 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 SEC Reports, 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, or furnished to, 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 "1934 Act") (to the extent so
filed or furnished, 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 First
Amendment to 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 1934 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 GAAP, 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
Schedule I 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 1934 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 Amended 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 Amended
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 CONVERTIBLE PROMISSORY 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 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 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, the First Amendment to Registration Rights
Agreement and the Escrow Agreement, to purchase the Note to be purchased by it
and to carry out and perform all of its obligations under this Agreement, the
Amended Registration Rights Agreement and the Escrow Agreement, and (ii) each of
this Agreement, the First Amendment to Registration Rights Agreement and the
Escrow 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 Amended 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;
3.1.3 An
executed copy of the First Amendment to Registration Rights Agreement;
and
3.1.4 A copy of
the Escrow Agreement duly executed by Buyer.
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 First Amendment to Registration Rights
Agreement;
3.2.4 An
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, as special counsel to
the Seller, dated as of the Closing Date, in substantially the form of Exhibit E hereto, and
an opinion of Xxxxxx & Whitney LLP, as Washington special counsel to the
Seller, in substantially the form of Exhibit F
hereto;
3.2.5 A copy of
the Escrow Agreement duly executed by Seller and the Escrow Agent.
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 Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, as special counsel to
GGCP, Inc., dated as of the Closing Date, in substantially the form of Exhibit E hereto, and
an opinion of Xxxxxx & Whitney LLP, as Washington special counsel to GGCP,
Inc., in substantially the form of Exhibit F
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 Escrow.
4.3.1 If, on or
prior to the Exercise Date, (i) the Buyer elects to exercise any of the Put
Option, the Change of Control Put Option and/or the Fundamental Change Put
Option (collectively, the "Note
Put Options") or an Event of Default occurs and (ii) Seller fails to
deliver all or any portion of the consideration due and payable in respect of
such exercise or Event of Default (in each case, the "Unpaid Amount") when it
becomes due under the Note (in each case, the "Due Date"), then Seller may,
in its sole discretion, elect to make a claim under the Escrow Agreement for
cash in an amount equal to the Unpaid Amount and upon receipt of such cash by
the Buyer under the Escrow Agreement the Unpaid Amount shall be deemed to have
been paid in full by the Seller. Cascade and Seller shall instruct the Escrow
Agent to release all of the Escrowed Funds in excess of the Floor Amount
(defined below) promptly after (i) each partial conversion of the Note into
Common Stock or partial exercise of any Note Put Option (each a
"Partial Release Event")
and (ii) receipt of each Monthly Statement (defined below). The
Escrow Agreement shall terminate (other than the provisions of Sections 7 and 8
which will survive termination) upon the earlier to occur of (i) the full
conversion of the entire aggregate principal amount of the Note, (ii) the first
Business Day after the entire aggregate principal amount of the Note has been
paid in full, and (iii) the first Business Day after the Exercise Date on which
all outstanding Payment Notices (as defined in the Escrow Agreement) have be
fully discharged and paid in full.
4.3.2 "Monthly Statement" means the
monthly account statement provided by the Escrow Agent to the Buyer and Seller
pursuant to Section 3 of the Escrow Agreement. "Floor Amount" means the sum of the Unpaid
Principal Amount and six months of interest on the Unpaid Amount at the rate of
6.5% per annum. Capitalized terms used but not defined in this Agreement that
are defined in the Note shall have the meanings assigned to such terms in the
Note. Without limiting Section 4.3.1 , 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.
4.3.3 The Buyer
agrees to engage in good faith discussions with the Seller regarding the
possible subordination of the Note in September 2009, and regarding the release
of earnings on the Escrow Deposit from time to time after September
2010.
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 promptly
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 without regard to the conflict
of laws rules thereof. 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 waives 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 without regard to the conflicts of laws rules thereof 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 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:
GAMCO
Investors, Inc.
Xxx
Xxxxxxxxx Xxxxxx
Xxx, Xxx
Xxxx 00000
Attn: General
Counsel
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, L.L.C.
0000
Xxxxxxxx Xxxxx
Xxxxxxxx,
XX 00000
Attn: General
Counsel
Facsimile:
(000) 000-0000
With copy
to:
Xxxxxxxx
& Xxxxxxxx LLP
000 Xxxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx X. XxXxxxxxx
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
|
|
GAMCO
INVESTORS, INC.
|
CASCADE
INVESTMENT, L.L.C.
|
|
By: /s/ Xxxxxxx X.
Xxxxxxxx
|
By: /s/ Xxxxxxx
Xxxxxx
|
|
Xxxxxxx
X. Xxxxxxxx
President
and Chief Operating Officer
|
Xxxxxxx
Xxxxxx
Business
Manager
|
|
GABELLI
STOCKHOLDERS
|
|
|
By: /s/ Xxxxx X.
Xxxxxxx
|
|
|
XXXXX
X. XXXXXXX
(Shares
of Class A Common Stock)
(Shares
of Class B Common Stock)
|
|
|
GGCP,
INC.
(Shares
of Class A Common Stock)
(Shares
of Class B Common Stock)
|
|
|
By: /s/ Xxxxxxx
Xxxxxx
|
|
|
Xxxxxxx
Xxxxxx
Secretary
|
