CONVERTIBLE PROMISSORY NOTE

 

Exhibit 99.4                                                       Execution Copy

------------                                                       --------------

 

NEITHER THIS NOTE NOR THE SHARES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN

REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE

"ACT"), AND EXCEPT FOR ANY TRANSFERS SPECIFICALLY AUTHORIZED UNDER THE TERMS OF

THIS NOTE, NEITHER THIS NOTE NOR SUCH SHARES MAY BE OFFERED, SOLD, TRANSFERRED,

ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT REGISTRATION THEREOF UNDER THE ACT OR

COMPLIANCE WITH RULE 144 OR RULE 144A PROMULGATED UNDER THE ACT, OR UNLESS

GABELLI ASSET MANAGEMENT INC. HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY

SATISFACTORY TO GABELLI ASSET MANAGEMENT INC., THAT SUCH REGISTRATION IS NOT

REQUIRED. TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN IS ALSO SUBJECT TO

RESTRICTIONS UNDER THE TERMS HEREOF.

 

                           CONVERTIBLE PROMISSORY NOTE

                           ---------------------------

 

$50,000,000.00                                             Dated: August 14, 2001

                                                                 Rye, New York

 

 

                  FOR VALUE RECEIVED, the undersigned, GABELLI ASSET MANAGEMENT

INC., a New York corporation. ("Gabelli"), promises to pay to the order of

CASCADE INVESTMENT LLC, a Washington limited liability company ("Cascade"), or

its permitted registered assigns or at such other place or places as the Holder

(as defined below) may designate in writing, on August 14, 2011, the principal

sum of FIFTY MILLION and NO/100 DOLLARS ($50,000,000) minus the principal amount

converted or sold after April 1, 2005 pursuant to the Put Option (as defined

below) or the Change of Control Put Option (as defined below) (such amount, as

of any determination date, the "Unpaid Principal Amount") on or before August

14, 2011, and to pay interest thereon from and including August 14, 2001 (the

"Issue Date") or from the most recent Interest Payment Date (as defined below)

to which interest has been paid or duly provided for, semi-annually on February

14 and August 14 in each year, commencing February 14, 2002, and at Maturity

(each, an "Interest Payment Date") at the rate of (i) 6.5% per annum for the

period from and including the Issue Date to but excluding August 14, 2002, (ii)

6.0% per annum for the period from and including August 14, 2002 to but

excluding August 14, 2003, and (iii) 5.0% per annum for the period from and

including August 14, 2003 to but excluding August 14, 2011, until the principal

hereof is paid or made available for payment; provided, however, that (i) upon

the occurrence and during the continuance of an Event of Default (as defined

below) this Note and (ii) any principal and any such installment of interest

which is overdue, in each case shall bear interest at the rate of 15% per annum

(or, if less, the maximum interest rate permitted by the laws of the State of

Washington). The interest so payable, and punctually paid or duly provided for,

on any Interest Payment Date will be paid to the Person in whose name this Note

is registered at the close of business on the day immediately prior to such

Interest Payment Date (whether or not a Business Day). Payment of the principal

of and interest on this Note will be made in such coin or currency of the United

States of America as at the time of payment is legal tender for payment of

public and private debts.

 

<PAGE>

 

 

                  Any payments in respect of this Note shall first be applied to

Enforcement Costs (as defined below), then to interest and then to principal. If

it is ever determined that any rate of interest payable in respect of this Note

exceeds the maximum rate (if any) prescribed by applicable law, then any portion

of interest payments representing any amounts in excess of said maximum shall be

applied as provided in the preceding sentence.

 

                  As used herein, "Maturity" means the date on which the

principal of this Note becomes due and payable as provided herein, whether at

its stated maturity, by declaration of acceleration or otherwise and "Holder"

means, at any time, the person in whose name this Note is registered in the Note

Register (as defined below).

 

                  This Convertible Promissory Note ("Note") was issued by

Gabelli pursuant to that certain Note Purchase Agreement, dated as of August 10,

2001, which has been amended by the First Amendment thereto, dated as of July 1,

2003, the Second Amendment thereto, dated as of August 4, 2004, and the Third

Amendment thereto, dated as of February 28, 2005 (as so amended, the "Purchase

Agreement"), among Gabelli, Cascade and the Gabelli Stockholders. Capitalized

terms not otherwise defined in this Note shall have the meaning set forth in the

Purchase Agreement, which definitions are incorporated herein.

 

No Redemption or Prepayment

---------------------------

 

                  Gabelli agrees and acknowledges that the conversion feature of

this Note during the term of the Note is a valuable right and that the Holder

would not have purchased this Note without assurances that the Note would not be

called or prepaid by Gabelli. Accordingly, Gabelli acknowledges and agrees that

it shall not be entitled to and will not, without the consent of the Holder,

make any prepayments of principal on this Note other than pursuant to an

acceleration of this Note or Forced Conversion (as hereinafter defined), in each

case as provided below.

 

Events of Default

-----------------

 

                   "Event of Default", wherever used with respect to this Note,

means any one of the following events (whatever the reason for such Event of

Default and whether it shall be voluntary or involuntary or be effected by

operation of law or pursuant to any judgement, decree or order of any court or

any order, rule or regulation of any Governmental Authority):

 

     (a)   Payment Default. Gabelli shall fail to pay or cause to be paid all or

          any portion of the principal of or interest on this Note when it

          becomes due and payable, and, in the event of failure to pay interest

          on the Note, such failure continues for 10 days and time for payment

          has not been extended or deferred by the Holder; or

 

     (b)   Letter of Credit Default. The Letter of Credit Issuer shall fail to

          honor a conforming draw under the Letter of Credit or Gabelli shall

          breach its obligations with respect to the Letter of Credit contained

          in Section 4.3 of the Purchase Agreement, and such failure continues

          for 5 days and time for payment has not been extended or deferred by

          the Holder; or

<PAGE>

 

 

     (c)   Put Option Default. Gabelli shall fail to pay or cause to be paid all

          or any portion of the Put Consideration when it becomes due and

          payable, and such failure continues for 5 days and time for payment

          has not been extended or deferred by the Holder; or

 

     (d)   Change of Control Put Option Default. Gabelli shall fail to pay or

          cause to be paid all or any portion of the Change of Control Put

          Consideration when it becomes due and payable; or

 

     (e)   Breach of Representation or Warranty. Any representation or warranty

          made by Gabelli in the Purchase Agreement shall prove to have been

          untrue or misleading when made in any respect that is material and

          adverse to the value of the Holder's investment in the Note or the

          Conversion Shares; provided, however, that this shall constitute an

          Event of Default only if Cascade or one of its Affiliates (as defined

          below) is the Holder and if the Holder accelerates this Note as

          provided below during the period in which any such representation and

          warranty survives as provided in the Purchase Agreement; or

 

      (f)   Breach of Other Covenants or Failure of any Condition. Gabelli shall

          fail to perform, keep or observe any agreement or covenant contained

          in this Note or the Purchase Agreement that is not covered by clauses

          (a) through (e) above, and any such failure shall remain unremedied

          for thirty (30) days after written notice thereof shall have been

          given to Gabelli by the Holder; provided, however, that if any such

          failure is not susceptible to cure within 30 days and Gabelli

          commences to cure such failure within said 30-day period, then no

          Event of Default shall be deemed to have occurred if Gabelli

          diligently prosecutes said cure thereafter to completion and cures

           said failure by the sixtieth (60th) day after the date of said notice;

          or

 

     (g)   Cross Defaults (Payment and Other). Gabelli or any of its Subsidiaries

          that are at the time significant subsidiaries of Gabelli within the

           meaning of Rule 1-02(w) of Regulation S-X promulgated by the SEC as of

          the date of this Note (each, a "Significant Subsidiary") shall be in

          default under indebtedness for borrowed money with an aggregate

          principal amount of twenty five million dollars ($25,000,000) or more

          to any person or persons and such default (i) shall constitute a

          failure to make any payment of or with respect to such indebtedness or

          (ii) permits the holder thereof to accelerate the payment of such

          indebtedness or otherwise causes such indebtedness to become due and

          payable prior to its stated maturity. Notwithstanding the foregoing,

          there shall not be an Event of Default under this section (g) until

          expiration of, without cure, any period for cure contained in any

          other agreement regarding such indebtedness; or

 

<PAGE>

 

 

     (h)   Judgments. A final judgment or final order (not covered by insurance,

          treating deductibles, self-insurance and retentions as not so covered)

          for the payment of money in excess of $25.0 million in the aggregate

          for all such judgments and orders is entered by a court or courts of

          competent jurisdiction against Gabelli or any of its Significant

          Subsidiaries and shall not be paid or discharged, and there shall be a

          period of 60 consecutive days after the final judgment or order that

          causes such aggregate amount to exceed $25.0 million during which a

          stay of enforcement of such final judgment or order is not in effect;

          or

 

     (i)   Involuntary Bankruptcy Events. The entry by a court having

          jurisdiction in the premises of a decree or order (A) for relief in

          respect of Gabelli, any of its Significant Subsidiaries or, prior to

          the expiration or return to Gabelli of the Letter of Credit, the

          Letter of Credit Issuer (if a substitute Letter of Credit is not

          delivered by Gabelli to the Holder within 60 days of such decree or

          order) (each, a "Subject Entity") in an involuntary case or proceeding

          under any applicable Federal or state bankruptcy, insolvency,

          reorganization or other similar law or (B) adjudging any Subject

          Entity bankrupt or insolvent, or approving as properly filed a

          petition seeking reorganization, arrangement, adjustment or

          composition of or in respect of any Subject Entity under any

          applicable Federal or state law, or appointing a custodian, receiver,

          liquidator, assignee, trustee, sequestrator or other similar official

          of any Subject Entity or of any substantial part of any property of

          any Subject Entity, or ordering the winding up or liquidation of the

          affairs of any Subject Entity, and the continuance of any such decree

          or order unstayed and in effect for a period of 60 consecutive days;

          or

 

     (j)   Voluntary Bankruptcy Events. Any Subject Entity commences a voluntary

          case or proceeding under any applicable Federal or state bankruptcy,

          insolvency, reorganization or other similar law or of any other case

          or proceeding to be adjudicated as bankrupt or insolvent, or the

          consent by any Subject Entity to the entry of a decree or order for

          relief in respect of it in an involuntary case or proceeding under any

          applicable Federal or state bankruptcy, insolvency, reorganization or

          other similar law or to the commencement of any bankruptcy or

          insolvency case or proceeding against it, or the filing by any Subject

          Entity of a petition or answer or consent seeking reorganization or

          relief under any applicable Federal or state law, or the consent by

          any Subject Entity to the filing of such a petition or to the

          appointment of or taking possession by a custodian, receiver,

          liquidator, assignee, trustee, sequestrator or other similar official

          of such Subject Entity or of any substantial part of such Subject

          Entity's property, or the making by any Subject Entity of an

          assignment for the benefit of creditors, or the admission by any

          Subject Entity in writing of its inability to pay its debts generally

          as they become due, or the taking of corporate action by any Subject

          Entity in furtherance of any such action.

 

                  If an Event of Default (other than an Event of Default

specified in clause (i) or (j) above with respect to Gabelli) occurs and is

continuing, the Holder may declare the principal amount of this Note and all

accrued and unpaid interest hereon to be immediately due and payable. If an

Event of Default specified in clause (i) or (j) above occurs with respect to

Gabelli, the principal amount of the Note and all accrued and unpaid interest

hereon shall automatically become and be immediately due and payable without any

declaration or other act on the part of the Holder or any other Person.

 

<PAGE>

 

Conversion Rights

-----------------

 

                  The Holder shall have the right to convert this Note as

provided in Exhibit A hereto, which Exhibit shall be incorporated by reference

herein.

 

                   If the Closing Price (as hereinafter defined) of the Common

Stock is at least 125%, 150%, 175% or 200%, as the case may be, of the

Conversion Price (as hereinafter defined) on each Trading Day (as hereinafter

defined) during any period of 20 consecutive Trading Days (each, a "Qualified

Trading Period") occurring within any six month period beginning on the Exercise

Date (as hereinafter defined) or any six month anniversary thereof and ending on

the next six month anniversary of the Exercise Date (each, a "Six Month

Period"), then on any date on or after the tenth Business Day following the last

trading day of any such Qualified Trading Period during such Six Month Period

(each a "Conversion Date") Gabelli may convert any portion of the Unpaid

Principal Amount which, together with the aggregate principal amount of this

Note that has been converted by the Holder on or prior to such Conversion Date

or by Gabelli pursuant to this provision with respect to such Six Month Period,

does not exceed the Maximum Conversion Amount (as defined below) with respect to

such Six Month Period, into fully paid and nonassessable shares of Common Stock

(calculated as to each conversion to the nearest full share of Common Stock) at

the Conversion Price in effect on the applicable Conversion Date by delivering

written notice to that effect to the Holder on or prior to such Conversion Date;

provided, however, that notwithstanding the foregoing to the extent that any

prior conversions by the Holder prevented Gabelli from converting the full

Maximum Conversion Amount with respect to any Six Month Period and Gabelli

caused the conversion of all of the Unpaid Principal Amount that it was

permitted to convert with respect to such Six Month Period, then to such extent

such prior conversions by the Holder shall not be taken into account in

calculating the Unpaid Principal Amount that Gabelli is entitled to convert in

any subsequent Six Month Period pursuant to the foregoing provisions. After any

conversion pursuant to the foregoing, the Holder shall have the right and option

(the "Share Put Option"), but not the obligation, exercisable by delivering a

written notice (the "Share Put Notice") to Gabelli no later than the tenth day

after the Conversion Date, to cause Gabelli to purchase up to 50% of the

Conversion Shares issued in such conversion (the "Forced Conversion Shares") for

a purchase price per share in cash equal to the average of the Closing Prices

for the five Trading Days immediately following the date on which the Share Put

Notice is delivered to Gabelli (the "Share Put Consideration"). The closing of

any Share Put Option will be held at 10:00 A.M. at the principal executive

offices of the Holder on the ninth Trading Day immediately following the date on

which the Share Put Notice is delivered to Gabelli, or at such other time and

place upon which the Holder and Gabelli shall agree. At such closing, Gabelli

shall pay the Share Put Consideration to the Holder in cash by wire transfer of

immediately available funds against the delivery to Gabelli of a certificate

representing the Forced Conversion Shares with respect to which the Share Put

Option has been exercised, duly endorsed to Gabelli or in blank, and

concurrently with such delivery Gabelli shall, or shall cause the applicable

transfer agent for such shares to, duly execute and deliver to the Holder a new

share certificate representing the number of Forced Conversion Shares with

respect to which the Share Put Option has not been exercised.

 

<PAGE>

 

                  The "Maximum Conversion Amount" means, with respect to any Six

Month Period, (i) $25 million, if the Closing Price during each of the 20

consecutive Trading Days during the first Qualified Trading Period in such Six

Month Period with respect to which Gabelli has effected a conversion pursuant to

the foregoing provisions (the "Qualified Trading Price") is at least 125% but

less than 150% of the Conversion Price, (ii) $50 million, if the Qualified

Trading Price is at least 150% but less than 175% of the Conversion Price, (iii)

$75 million, if the Qualified Trading Price is at least 175% but less than 200%

of the Conversion Price, or (iv) $100 million, if the Qualified Trading Price is

at least 200% of the Conversion Price.

 

                  Except as otherwise provided above, any conversion pursuant to

the foregoing clauses (each, a "Forced Conversion") shall be made in accordance

with the provisions of Exhibit A. If Gabelli effects a Forced Conversion, then

on such Conversion Date the Holder shall surrender the Note at the principal

executive offices of Gabelli (which, if Gabelli shall so require, shall be duly

endorsed to Gabelli or in blank, or be accompanied by proper instruments of

transfer to Gabelli or in blank), accompanied by irrevocable written notice to

Gabelli specifying the name or names (with address or addresses) in which a

certificate or certificates evidencing the full number of shares of Common Stock

issuable upon such conversion are to be issued and Gabelli shall deliver such

certificate or certificates registered in the name(s) and in the denominations

set forth in such instructions, together with a cash adjustment in respect of

any fraction of a share of Common Stock and, if less than all of the Unpaid

Principal Amount is being converted, a new Note of like tenor with an Unpaid

Principal Amount equal to the portion not being converted. Any such conversion

shall be deemed to have been made as of the applicable Conversion Date, and the

person or persons entitled to receive the Common Stock deliverable upon

conversion of this Note shall be treated for all purposes as the record holder

or holders of such Common Stock on such date.

 

Put Option

----------

 

                  The Holder shall have the right and option, but not the

obligation, to cause Gabelli to purchase all or any portion of the Unpaid

Principal Amount of this Note (the "Put Option") on September 15, 2006 (the

"Exercise Date") for a purchase price in cash equal to 100% of the principal

amount of the Note to be purchased plus accrued and unpaid interest thereon to

but excluding the Exercise Date (the "Put Consideration"). The Put Consideration

shall be payable to the Holder by wire transfer of immediately available funds

on the Exercise Date against the delivery to Gabelli of this Note duly endorsed

to it or in blank; provided, however, that if only a portion of the principal

amount of this Note is being purchased, then concurrently with such delivery

Gabelli shall duly execute and deliver to the Holder a new Note of the same

tenor as this Note but with a principal amount equal to the principal amount of

this Note not being purchased. In order to exercise the Put Option, the Holder

must deliver a written notice of its election to exercise to Gabelli at least 30

days prior to the Exercise Date. The closing of any exercise of the Put Option

will be held at 10:00 A.M. at the principal executive offices of the Holder on

the Exercise Date, or at such other time and place upon which the Holder and

Gabelli shall agree.

 

<PAGE>

 

 

Change of Control Put Option

----------------------------

 

                  If a Change of Control or a Key Executive Change occurs at any

time, the Holder shall have the right and option, but not the obligation, to

cause Gabelli to purchase on the Change of Control Exercise Date (as defined

below) all or any portion of the Unpaid Principal Amount of this Note (the

"Change of Control Put Option") for a purchase price in cash equal to 101% of

the principal amount of the Note to be purchased plus accrued and unpaid

interest thereon to but excluding the Change of Control Exercise Date (the

"Change of Control Put Consideration"). The Put Consideration shall be payable

to the Holder by wire transfer of immediately available funds on the Change of

Control Exercise Date against the delivery to Gabelli of this Note duly endorsed

to it or in blank; provided, however, that if only a portion of the principal

amount of this Note is being purchased, then concurrently with such delivery

Gabelli shall duly execute and deliver to the Holder a new Note of the same

tenor as this Note but with a principal amount equal to the principal amount of

this Note not being purchased. Gabelli shall give the Holder prompt written

notice if a Change of Control or a Key Executive Change occurs (a "Notice"). In

order to exercise the Change of Control Put Option with respect to any Change of

Control or Key Executive Change, the Holder must deliver a written notice of its

election to exercise to Gabelli within 30 days after it has received the Notice

relating thereto and the closing of any exercise of the Change of Control Put

Option will be held at 10:00 A.M. at the principal executive offices of the

Holder on the 30th day after Gabelli receives such written notice, or at such

other time and place upon which the Holder and Gabelli shall agree (the "Change

of Control Exercise Date").

 

                  "Change of Control" means the occurrence of any of the

following: (i) the sale, lease, transfer, conveyance or other disposition (other

than by way of merger or consolidation), in one or more related transactions, of

all or substantially all of the properties and assets of Gabelli and its

Subsidiaries, taken as a whole, to any Person or group (as such term is defined

for purposes of Rule 13d-5 under the 1934 Act or any successor rule), (ii) the

adoption of a plan relating to the liquidation or dissolution of Gabelli, (iii)

the consummation of any transaction or other event (including, without

limitation, any merger or consolidation) the result of which is that any

"person" (as defined above), other than Mario J. Gabelli and the Gabelli

Entities (considered as a single Person solely for this purpose), becomes the

"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under

the 1934 Act), directly or indirectly, of more than 40% of the total voting

power of all the then outstanding shares of Voting Stock of Gabelli or any

Person with which Gabelli consolidates or into which Gabelli merges, and more of

the total voting power of all such shares than is beneficially owned at such

time by Mario J. Gabelli and the Gabelli Entities (considered as a single Person

solely for this purpose), or (iv) the first day on which a majority of the

members of the Board of Directors of Gabelli are not Continuing Directors.

 

                   "Continuing Directors" means, as of any date of determination,

any member of the Board of Directors of Gabelli who (i) was a member of such

Board of Directors on the Issue Date or (ii) was nominated for election or

elected to such Board of Directors with the approval, recommendation or

endorsement of a majority of the Continuing Directors who were members of such

Board of Directors at the time of such nomination or election.

 

<PAGE>

 

 

                  "Key Executive Change" shall be deemed to have occurred at any

time that (for any reason) Mario J. Gabelli ceases to provide the predominant

executive leadership to Gabelli and its Subsidiaries, taken as a whole.

 

Information Obligations

-----------------------

 

          Gabelli will deliver to the Holder (without duplication):

 

     (a)   as soon as available and in any event within 90 days after the end of

          each fiscal year of Gabelli, a consolidated balance sheet of Gabelli

          and its Subsidiaries as of the end of such fiscal year and the related

          statements of operations and cash flow for such fiscal year, setting

          forth in each case in comparative form the figures for the previous

          fiscal year, and accompanied by a report thereon of an independent

           public accountant of nationally recognized standing;

 

     (b)   as soon as available and in any event within 45 days after the end of

          each of the first three quarters of each fiscal year of Gabelli, a

          consolidated balance sheet of Gabelli and its Subsidiaries as of the

          end of such quarter and the related statements of operations and cash

          flow for such quarter and for the portion of Gabelli's fiscal year

          then ended, setting forth in each case in comparative form the figures

          for the corresponding quarter and the corresponding portion of

          Gabelli's previous fiscal year, all certified (subject to normal

          year-end adjustments) as to fairness of presentation, consistency and,

           except for the absence of footnotes, generally accepted accounting

          principles by the chief financial officer or the chief accounting

          officer of Gabelli;

 

     (c)   promptly upon the furnishing thereof to the security holders of

           Gabelli or any of its Subsidiaries generally, copies of all financial

          statements, reports, proxy statements and any other information or

          reports so furnished;

 

     (d)   as soon as available, all filings of Gabelli pursuant to the 1933 Act

          and the 1934 Act (other than Schedules 13D and 13G, Forms 13F and

          Forms 3, 4 and 5), if any, with the Securities and Exchange

          Commission; and

 

     (e)   within five days after any officer of Gabelli obtains knowledge of any

          Event of Default or any event which, with notice or lapse of time or

          both, would constitute an Event of Default (a "Default"), if such

          Event of Default or Default is then continuing, a certificate of the

          chief financial officer or the chief accounting officer of Gabelli

          setting forth the details thereof and the action which G