Document:

gbl8knotepurchagr_100308.htm

     

    EXECUTION
VERSION

     

     

    NOTE
PURCHASE AGREEMENT

     

    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"), Mario J. Gabelli
("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 Sullivan & Cromwell, 125 Broad Street, New York, New York 10004,
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, Meagher & Flom 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 Dorsey & 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, Meagher & Flom 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 Dorsey & 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.

     

    One
Corporate Center

     

    Rye, New
York 10580

     

    Attn:  General
Counsel

     

    Facsimile:
(914) 921-5384

     

    With copy
to:

     

    Skadden,
Arps, Slate, Meagher & Flom LLP

     

    Four
Times Square

     

    New York,
New York 10036

     

    Attn:
Richard Prins, Esq.

     

    Facsimile:
(212) 735-3000

     

    If to
Buyer:

     

    Cascade
Investment, L.L.C.

     

    2365
Carillon Point

     

    Kirkland,
WA  98033

     

    Attn:  General
Counsel

     

    Facsimile:
(425) 803-0459

     

    With copy
to:

     

    Sullivan
& Cromwell LLP

     

    125 Broad
Street

     

    New York,
New York 10004

     

    Attn:
Duncan C. McCurrach

     

    Facsimile:
(212) 558-3588

    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/  Douglas R.
      Jamieson                                                          

            	
              By:      /s/  Michael
      Larson                                            

            
	
              Douglas
      R. Jamieson

              President
      and Chief Operating Officer

            	
              Michael
      Larson

              Business
      Manager

            
	 	 
	
              GABELLI
      STOCKHOLDERS

            	 
      
	 
      	 
      
	
              By:       /s/  Mario J.
      Gabelli

            	 
	
              MARIO
      J. GABELLI

              (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/  Michael
      Chieco                                                         

            	 
      
	
              Michael
      Chieco

              Secretarygbl8kpromnote.htm

    NEITHER
THIS CONVERTIBLE PROMISSORY NOTE (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 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 GAMCO INVESTORS, INC.
HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO GAMCO INVESTORS,
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

     

    
      	 $60,000,000.00	 Dated:  October
      2, 2008
	 	 Rye, New
      York
	 	 

    

     

    FOR VALUE
RECEIVED, the undersigned, GAMCO INVESTORS, INC., a New York corporation (“GAMCO”), promises to pay to
the order of CASCADE INVESTMENT, L.L.C., 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 October 2, 2018 (the “Stated Maturity”), the
principal sum of SIXTY MILLION and NO/100 DOLLARS ($60,000,000) minus the
principal amount converted or sold pursuant to the Put Option, the Change of
Control Put Option or the Fundamental Change Put Option (as each such term is
defined below) (such amount, as of any determination date, the “Unpaid Principal Amount”) on
or before October 2, 2018, and to pay interest thereon from and including
October 2, 2008 (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 March 31
and September 30 in each year, commencing March 31, 2009, and at Maturity (each,
an “Interest Payment
Date”) at the rate of 6.5% per annum until the principal hereof is paid
or made available for payment; provided, however, that (i)
notwithstanding anything in this Note to the contrary the amount payable to the
Holder at Stated Maturity shall be reduced by an amount equal to (A) the Teton
Value (as defined below) minus (B) the
aggregate Teton Deductions (as defined below) with respect to all prior
exercises of the Put Option, the Change of Control Put Option and the
Fundamental Change Put Option (the “Teton Adjustment”),
(ii) upon the occurrence and during the continuance of an Event of Default
(as defined below) this Note and (iii) 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 or any other applicable
jurisdiction).  The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will be paid to the Person in whose
name this Note is registered at the close of business on the day immediately
prior to such Interest Payment Date (whether or not a Business
Day).  Payment of the principal of and interest on this Note will be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.

     

    Any
payments in respect of this Note shall first be applied to Enforcement Costs (as
defined below), then to interest and then to principal.  If it is ever
determined that any rate of interest payable in respect of this Note exceeds the
maximum rate (if any) prescribed by applicable law, then any portion of interest
payments representing any amounts in excess of said maximum shall be applied as
provided in the preceding sentence.

     

    As used
herein, “Maturity” means
the date on which the principal of this Note becomes due and payable as provided
herein, whether at its Stated Maturity, by declaration of acceleration or
otherwise, “Holder”
means, at any time, the person in whose name this Note is registered in the Note
Register (as defined below) and “Business Day” means any day
other than a Saturday, a Sunday or any other day on which banking institutions
in the Borough of Manhattan, The City of New York are authorized or
required by law or executive order to be closed.

     

    This Note
was issued by GAMCO pursuant to that certain Note Purchase Agreement, dated as
of October 2, 2008 (the “Purchase Agreement”), among
GAMCO, 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.

     

    The
Holder agrees to engage in good faith discussions with the GAMCO regarding the
possible subordination of the Note in October 2009.

     

    No Redemption or Prepayment
Prior to October 2, 2013

     

    GAMCO
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
GAMCO.  Accordingly, GAMCO acknowledges and agrees that prior to
October 2, 2013 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.  GAMCO may redeem this Note in whole
but not in part on any date on or after October 2, 2013 (the “Redemption Date”) if
(i) at least 30 days’ prior to the Redemption Date, GAMCO delivers to
Holder a written notice stating that it intends to effect such a redemption and
specifying the Redemption Date, (ii) on the Redemption Date, GAMCO delivers
to Holder a certificate, dated the Redemption Date, duly executed and delivered
by the chief executive officer of GAMCO certifying that, to the best of his
knowledge after reasonable investigation, neither he nor GAMCO is then in
possession of any non-public information concerning GAMCO, any of its
subsidiaries or any of their businesses or operations which could reasonably be
expected to have a material positive effect on the market price (or, if no such
market price exists, the fair market value) of the Common Stock or other
consideration issuable upon conversion of the Note and (iii) on the
Redemption Date, GAMCO pays to Holder by wire transfer of immediately available
funds cash in an amount equal to (A) (i) 101% of the Unpaid Principal Amount
minus (ii) the Teton Adjustment plus (B) all accrued but unpaid interest thereon
to but excluding the Redemption Date (the delivery of such notice and
certificate and the making of such payment are referred to herein collectively
as the “Required
Actions”).  If the market price of the Common Stock could not
reasonably be expected to exceed the then current Conversion Price after
disclosure of any non-public information concerning GAMCO, any of its
subsidiaries or any of their businesses of operations, then such non-public
information shall be conclusive presumed not to have a material positive effect
for purposes of the immediately preceding sentence.  This Note will be
fully discharged and cease to have any further legal force or effect if and when
GAMCO has fully performed all of the Required Actions on the Redemption Date,
and the Holder agrees to return this Note to GAMCO promptly following such full
performance.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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 judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority):

     

    
      	
               
      

            	
              (a)

            	
              Payment
      Default.  GAMCO 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)

            	
              Escrow Agreement
      Default.  The Escrow Agent shall fail to honor a request
      for disbursement of the funds under the Escrow Agreement to Cascade, or
      GAMCO shall breach its obligations with respect to the Escrow Agreement 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.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Put Option
      Default.  GAMCO 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 or Fundamental Change Put Option Default.  GAMCO
      shall fail to pay or cause to be paid all or any portion of the Change of
      Control Put Consideration or the Fundamental Change Put Consideration when
      it becomes due and payable; or

            

    

     

    
      	
               
      

            	
              (e)

            	
              Breach of
      Representation or Warranty.  Any representation or
      warranty made by GAMCO 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.  GAMCO 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 (d) above, and any such failure shall remain unremedied for thirty
      (30) days after written notice thereof shall have been given to GAMCO
      by the Holder; provided,
      however, that if any such failure is not susceptible to cure within
      30 days and GAMCO commences to cure such failure within said 30-day
      period, then no Event of Default shall be deemed to have occurred if GAMCO
      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).  GAMCO or any of its Subsidiaries
      that are at the time significant subsidiaries of GAMCO within the meaning
      of Rule 1-02(w) of Regulation S-X promulgated by the Securities
      and Exchange Commission (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 (f) until expiration of, without cure, any period for cure
      contained in any other agreement regarding such indebtedness;
      or

            

    

     

    
      	
               
      

            	
              (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 twenty-five million dollars ($25,000,000) in
      the aggregate for all such judgments and orders is entered by a court or
      courts of competent jurisdiction against GAMCO 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 twenty-five million dollars
      ($25,000,000) 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 GAMCO or
      any of its Significant Subsidiaries (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 GAMCO) occurs and is continuing, the Holder may
declare (A) (i) the Unpaid Principal Amount of this Note minus (ii) the Teton
Adjustment and (B) 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 GAMCO, the Unpaid Principal Amount of the Note
and all accrued and unpaid interest hereon shall automatically become and be
immediately due and payable without any declaration or other act on the part of
the Holder or any other Person.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Conversion
Rights

     

    The
Holder shall have the right to convert this Note as provided in Exhibit A
hereto, which Exhibit shall be incorporated by reference herein.

     

    If the
Closing Price (as hereinafter defined) of the Common Stock is at least 125%,
150%, 175% or 200%, as the case may be, of the Conversion Price (as hereinafter
defined) on each Trading Day (as hereinafter defined) during any period of
20 consecutive Trading Days (each, a “Qualified Trading Period”)
occurring within any six month period beginning on the Exercise Date (as
hereinafter defined) or any six month anniversary thereof and ending on the next
six month anniversary of the Exercise Date (each, a “Six Month Period”), then on
any date on or after the tenth Business Day following the last trading day of
any such Qualified Trading Period during such Six Month Period (each a “Conversion Date”) GAMCO 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 GAMCO 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
GAMCO from converting the full Maximum Conversion Amount with respect to any Six
Month Period and GAMCO 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 GAMCO 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 GAMCO no
later than the tenth day after the Conversion Date, to cause GAMCO 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 GAMCO (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
later of the ninth Trading Day immediately following the date on which the Share
Put Notice is delivered to GAMCO or the first day on which all regulatory
approvals and requirements applicable to such closing shall have been obtained
or satisfied, or at such other time and place upon which the Holder and GAMCO
shall agree.  At such closing, GAMCO shall pay the Share Put
Consideration to the Holder in cash by wire transfer of immediately available
funds against the delivery to GAMCO of a certificate representing the Forced
Conversion Shares with respect to which the Share Put Option has been exercised,
duly endorsed to GAMCO or in blank, and concurrently with such delivery GAMCO
shall, or shall cause the applicable transfer agent for such shares to, duly
execute and deliver to the Holder a new share certificate representing the
number of Forced Conversion Shares with respect to which the Share Put Option
has not been exercised.

     

    The
“Maximum Conversion
Amount” means, with respect to any Six Month Period,
(i) $15 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 GAMCO 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) $30 million, if the Qualified Trading Price is at least 150% but
less than 175% of the Conversion Price, (iii) $45 million, if the
Qualified Trading Price is at least 175% but less than 200% of the Conversion
Price, or (iv) $60 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
GAMCO effects a Forced Conversion, then on such Conversion Date the Holder shall
surrender the Note at the principal executive offices of GAMCO (which, if GAMCO
shall so require, shall be duly endorsed to GAMCO or in blank, or be accompanied
by proper instruments of transfer to GAMCO or in blank), accompanied by
irrevocable written notice to GAMCO 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
GAMCO 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 GAMCO
to purchase all or any portion of the Unpaid Principal Amount of this Note (the
“Put Option”) on October
2, 2009 (the “Exercise
Date”) for a purchase price in cash (the “Put Consideration”) equal to
(i) 100% of the principal amount of the Note to be purchased plus accrued and
unpaid interest thereon to but excluding the Exercise Date minus (ii) the Teton
Deduction (as defined below). The Put Consideration shall be payable to the
Holder by wire transfer of immediately available funds on the Exercise Date
against the delivery to GAMCO 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 GAMCO 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 GAMCO at least 30 days prior to the Exercise
Date.  Notwithstanding the foregoing, if the Holder has not delivered
written notice of its election to exercise the Put Option in whole, the Holder
may change the Exercise Date to October 2, 2010 by delivering a written notice
of such change to GAMCO at least 30 days prior to October 2, 2009 and from and
after the delivery of such written notice the Exercise Date shall be deemed to
be October 2, 2010 for all purposes of this Note. 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 GAMCO shall agree.

     

     “Teton Deduction” shall mean,
with respect to any exercise of the Put Option, the Change of Control Put Option
or Fundamental Change Put Option, the product of (i) the Teton Value and (ii) a
fraction the numerator of which shall be the principal amount of the Note to be
purchased pursuant to such exercise and the denominator of which shall be
$60,000,000.

     

    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 GAMCO 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 (the “Change of Control Put
Consideration”) equal to (i) 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 minus (ii) the Teton
Deduction.  The Change of Control 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 GAMCO 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 GAMCO 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.  GAMCO 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 GAMCO 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 GAMCO receives such written notice, or at such other time and place upon
which the Holder and GAMCO 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 GAMCO 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 Securities Exchange Act of 1934, as amended (the “1934 Act”) or any successor
rule), (ii) the adoption of a plan relating to the liquidation or
dissolution of GAMCO, (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 GAMCO or any Person with which GAMCO consolidates or into which
GAMCO 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 GAMCO are not Continuing Directors.

     

    “Continuing Directors” means,
as of any date of determination, any member of the Board of Directors of GAMCO
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.

     

    “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 GAMCO and its
Subsidiaries, taken as a whole.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Fundamental Change Put
Option

     

     

    If a
Fundamental Change (as defined below) occurs prior to October 2, 2013, then the
Holder shall have the right and option, but not the obligation, to cause GAMCO
to purchase on the Fundamental Change Exercise Date (as defined below) all or
any portion of the Unpaid Principal Amount of this Note (the “Fundamental Change Option”)
for a purchase price in cash (the “Fundamental Change Put
Consideration”) equal to (i) the Fundamental Change Value (as defined
below) of the principal amount of this Note to be purchased plus accrued and
unpaid interest thereon to but excluding the Fundamental Change Exercise Date
minus (ii) the
Teton Deduction. The Fundamental Change Put Consideration shall be payable to
the Holder by wire transfer of immediately available funds on the Fundamental
Change Exercise Date against the delivery to GAMCO 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 GAMCO 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.
GAMCO shall give the Holder prompt written notice if a Fundamental Change occurs
(a “Fundamental Change
Notice”). In order to exercise the Fundamental Change Put Option with
respect to any Fundamental Change, the Holder must deliver a written notice of
its election to exercise to GAMCO within 30 days after it has received the
Fundamental Change Notice relating thereto and the closing of any exercise of
such Fundamental Change Option will be held at 10:00 A.M. at the principal
executive offices of the Holder on the 30th day after GAMCO receives such
written notice, or at such other time and place upon which the Holder and GAMCO
shall agree (the “Fundamental
Change Exercise Date”). If the Holder does not exercise the Fundamental
Change Put Option, this Note shall remain outstanding as adjusted pursuant to
the provisions of Section 6 of Exhibit A to this Note.

     

    “Fundamental Change” means (i)
the occurrence of any of the events described in clauses (i), (ii) or (iii) of
the definition of Change of Control, (ii) any recapitalization, reclassification
or other transaction in which all or substantially all of the Common Stock is
converted into, or exchanged for cash, securities or other property and (iii)
any merger or consolidation of GAMCO with or into any other Person or other than
any such merger or consolidation (a) pursuant to which the holders of 50% or
more of the total voting power of all of the shares of capital stock of GAMCO
entitled to vote generally in elections of directors immediately prior to such
transaction have the right to exercise, directly or indirectly, 50% or more of
the total voting power of all shares of capital stock entitled to vote generally
in the election of directors of the continuing or surviving corporation
immediately after such transaction, (b) that does not result in a
reclassification, conversion, exchange or cancellation of the Common Stock, (c)
which is effected solely to change our jurisdiction of incorporation and results
in a reclassification, conversion or exchange of the Common Stock solely into
shares of common stock of the surviving entity, or (d) in which more of the 90%
or more of the consideration payable for the Common Stock (excluding cash
payments for fractional shares and cash payments made pursuant to dissenters’
appraisal rights) in such transaction consists of shares of common stock or
American Depositary Receipts in respect of shares of common stock that are
listed and publicly traded on any of The New York Stock Exchange, the NASDAQ
Global Market or the NASDAQ Global Select Market (or any of their respective
successors) or that will be so traded or quoted immediately following the
transaction and as a result of such transaction or transactions this Note will
become convertible into cash and/or such shares of such common stock or such
American Depositary Receipts pursuant to Section 8 of Exhibit A to this
Note.

     

    “Fundamental Change Value”
means, with respect to any principal amount of this Note, the fair market value
of such principal amount, as determined by the Independent Expert (as defined
below) appointed for such purpose, using one or more valuation methods that the
Independent Expert in its best professional judgment determines to be the most
appropriate, assuming such principal amount is to be sold in an arm’s length
transaction where there is no compulsion on the part of any party to buy or sell
and taking into account all relevant factors, including without limitation the
option value of such principal amount.

     

    “Independent Expert” means a
nationally recognized investment banking firm mutually agreed by the Holder and
GAMCO which does not have any material financial interest or other material
economic relationship with either party or any of their Affiliates. If the
parties cannot agree on an Independent Expert, each of them shall choose a
Person otherwise qualified to be an Independent Expert and the Persons so
selected will promptly select the Independent Expert.

     

    

    Information
Obligations

     

    GAMCO
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 GAMCO, a consolidated balance sheet of GAMCO 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 GAMCO, a
      consolidated balance sheet of GAMCO 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 GAMCO’s fiscal year then ended,
      setting forth in each case in comparative form the figures for the
      corresponding quarter and the corresponding portion of GAMCO’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
  GAMCO;

            

    

     

    
      	
               
      

            	
              (c)

            	
              promptly
      upon the furnishing thereof to the security holders of GAMCO or any of its
      Subsidiaries generally, copies of all financial statements, reports, proxy
      statements and any other information or reports so
    furnished;

            

    

     

    
      	
               
      

            	
              (d)

            	
              promptly
      after they are so filed, or furnished, all documents filed with, or
      furnished to the SEC by GAMCO pursuant to the 1933 Act and the 1934 Act
      (other than Schedules 13D and 13G, Forms 13F and Forms 3, 4
      and 5); and

            

    

     

    
      	
               
      

            	
              (e)

            	
              within
      five days after any officer of GAMCO 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 GAMCO setting forth
      the details thereof and the action which GAMCO is taking or proposes to
      take with respect thereto.

            

    

     

    Notwithstanding
the foregoing, if GAMCO is then subject to the reporting requirements under
Section 13 or 15(d) of the 1934 Act or any successor statute, (i) the
delivery to the Holder of GAMCO’s Annual Report on Form 10-K or any
successor form for the relevant fiscal year within the time periods provided for
in clause (a) shall satisfy the requirements of such clause and
(ii) the delivery to the Holder of GAMCO’s Quarterly Report on
Form 10-Q or any successor form for the relevant fiscal quarter within the
time periods provided for in clause (b) shall satisfy the requirements of
such clause.

     

    Consolidation, Merger and
Sale of Assets

     

    GAMCO
will not consolidate or merge with or into (whether or not GAMCO is the
surviving corporation), or directly and/or indirectly through its Subsidiaries
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the properties and assets of GAMCO and its Subsidiaries
taken as a whole in one or more related transactions, to any other Person
unless:

     

    
      	
               
      

            	
              (a)

            	
              the
      Person formed by or surviving any such consolidation or merger (if other
      than GAMCO) or to which such sale, assignment, transfer, lease, conveyance
      or other disposition shall have been made (the “Successor Company”) is a
      corporation, partnership, limited liability company or other similar
      business entity organized and validly existing under the laws of the
      United States, any state thereof or the District of
    Columbia;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      Successor Company assumes all the obligations of GAMCO under the Notes and
      the Purchase Agreement pursuant an agreement in form and substance
      reasonably satisfactory to the Holder;
and

            

    

     

    
      	
               
      

            	
              (c)

            	
              immediately
      after such transaction no Event of Default or event which, with notice or
      lapse of time or both, would constitute an Event of Default
      exists.

            

    

     

    Upon any
consolidation of GAMCO with, or merger of GAMCO into, any other Person or any
transfer, conveyance, sale, lease or other disposition of all or substantially
all of the properties and assets of GAMCO and its Subsidiaries taken as a whole
in one or more related transactions in accordance with this paragraph, the
Successor Company shall succeed to, and be substituted for, and may exercise
every right and power of, GAMCO under this Note and the Purchase Agreement with
the same effect as if such Successor Company had been named as GAMCO herein, and
thereafter, except in the case of a lease, GAMCO shall be relieved of all
obligations and covenants under this Note and the Purchase
Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Transfer and Related
Provisions

     

    The
Holder shall not offer, sell, contract to sell or otherwise dispose of this Note
without the prior written consent of GAMCO; provided, however, that the Holder
shall be permitted to transfer the Note (i) to any of its Affiliates and
(ii) to any other Person (A) in connection with a transfer of
substantially all of the investments of the original Holder, (B) if the
Holder is legally precluded from holding this Note and (C) during the
continuance of an Event of Default, provided, that such
transferee agrees to be bound by the terms contained herein.

     

    “Affiliate” means, with respect
to any specified Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person.  For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling,” “controlled by” and “under common control with”),
as used with respect to any specified Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.

     

    GAMCO
shall keep at its principal office a register (the “Register”) in which shall be
entered the name and address of the registered holder of this Note and
particulars of this Note and of all permitted transfers of this
Note.  Upon surrender for registration of a permitted transfer of this
Note to GAMCO, GAMCO shall execute and deliver, in the name of the designated
transferee or transferees, one or more new Notes, of any denominations of
$1,000,000 and multiples thereof and like aggregate principal
amount.  Notwithstanding the foregoing, GAMCO shall not be required to
register the transfer of or exchange this Note unless it has been duly
endorsed.  All Notes issued upon any registration of transfer or
exchange of this Note shall be the valid obligations of GAMCO, evidencing the
same debt, and entitled to the same benefits, as this Note.

     

    No
service charge shall be made for any registration of transfer or exchange of
this Note, but GAMCO may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection
therewith.

     

    Prior to
due presentment of this Note for registration of a permitted transfer, GAMCO and
its agents may treat the Person in whose name it is registered as the owner of
this Note for all purposes whatsoever, whether or not it is overdue and neither
GAMCO nor any of its agents shall be affected by notice to the
contrary.

     

    Replacement of
Note

     

    If this
Note has been mutilated and is surrendered to GAMCO, GAMCO shall execute and
deliver in exchange a new Note of the same principal amount and bearing a number
not then outstanding.  If the Holder shall deliver to GAMCO
(i) evidence reasonably satisfactory to GAMCO that this Note has been
destroyed, lost or stolen and (ii) such security or indemnity as may be
required by GAMCO to hold it and its agents harmless, then, in the absence of
notice that this Note has been acquired by a bona fide purchaser, GAMCO shall
execute and deliver, in lieu of this Note, a new Note of a like principal amount
and bearing a number not then outstanding.  The provisions of this
paragraph are exclusive and shall preclude (to the extent lawful) all other
rights and remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes.

     

    Miscellaneous

     

    GAMCO
waives presentment for payment, demand, notice of nonpayment, notice of protest
and protest of this Note, and all notices in connection with the delivery,
acceptance, or dishonor of this Note.

     

    GAMCO
agrees that (a) if for any reason any amount due hereunder is paid by
cashier’s, certified teller’s check or other check, there shall be no discharge
of GAMCO’s obligation until said check be finally paid by the issuer thereof;
and (b) the provisions of RCW 62A.3-311 shall not entitle GAMCO to any
accord and satisfaction of any now or hereafter existing claim in dispute
between the Holder and GAMCO (or any of their respective successors and
assigns), all of which provisions and rights are hereby waived.

     

    The
Holder shall not by any act or omission be deemed to waive any of its rights or
remedies under this Note or the Purchase Agreement unless such waiver shall be
in writing and signed by the Holder, and then only to the extent specifically
set forth therein.

     

    No right
or remedy herein conferred upon or reserved to the Holder is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

     

    This Note
may not be amended other than with the written consent of the Holder and
GAMCO.

     

    Upon
demand therefor, GAMCO agrees to pay to the Holder all costs and fees arising
out of enforcing this Note, whether incurred in any court action, arbitration,
or mediation, on appeal, in any bankruptcy (or state receivership or other
insolvency or similar proceedings or circumstances), in any forfeiture, and for
any post-judgment collection services (collectively, “Enforcement
Costs”).

     

    GAMCO
and, by its acceptance of this Note, the Holder agree that, subject to the
specific terms hereof and to the extent that Washington law applies, the
provisions of Article 3 of the Uniform Commercial Code of Washington
pertaining to instruments shall be applied to this Note, even if this Note is
not deemed to be an “instrument” or a “negotiable instrument”
thereunder.

     

    If this
Note will at any time become subject to the Trust Indenture Act of 1939, GAMCO
will make appropriate revisions hereto and will enter into an indenture with an
appropriate trustee so as to comply fully with such act.

     

    Except as
noted below, this Note shall be governed by and construed in accordance with the
laws of the State of Washington without giving effect to the conflict of laws
rules thereof.  In any court proceeding, GAMCO agrees to submit to the
jurisdiction of the federal court selected by the Holder, and venue of any
action concerning this Note shall be in King County, Washington
state.  In the event that the federal court selected by the Holder
shall not have jurisdiction, GAMCO agrees to submit to the jurisdiction of the
Washington state court in King County selected by the Holder.  GAMCO
hereby irrevocably waives to the fullest extent permitted by law any objection
which it may now or hereafter have to the laying of such venue and any claim
that any such forum is an inconvenient forum.  Nothing in this Section
shall impair the right of the Holder to bring any action or proceeding against
GAMCO or its property in the courts of any other county or jurisdiction and
GAMCO irrevocably submits to the nonexclusive jurisdiction of the appropriate
courts (as selected by the Holder) of the jurisdiction in which GAMCO is
organized or any place where any property or any office of GAMCO is
located.  In the event Holder transfers or assigns this Note to a
person not one of its Affiliates, then this Note shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the conflict of laws rules thereof and the consent to jurisdiction in the State
of Washington stated above is hereby revoked concurrently with such
transfer.

     

    NOTICE:
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, and intending to be legally bound, the undersigned has duly
executed and delivered this Note as of the date first written
above.

     

    GAMCO INVESTORS,
INC.,

    a New
York corporation

    

    By:   /s/  Douglas R.
Jamieson                                                          

    Douglas R. Jamieson

    Its:President
and Chief Operating Officer

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    Exhibit
A

     

    Conversion
Rights

     

    1. Right of
Conversion.  At the option of the Holder, this Note or any
portion of the principal amount hereof which is $1,000,000 or an integral
multiple thereof, may be converted at the principal amount hereof, or such
portion hereof, into fully paid and nonassessable shares of the Common Stock
(calculated as to each conversion to the nearest 1/100 of a share of Common
Stock) at the Conversion Price (as hereinafter defined) in effect at the time of
conversion, or into such additional or other securities, cash or property and at
such other rates as required in accordance with the provisions set forth
herein.  Such conversion right shall expire at the close of business
on October 2, 2018.  If this Note is redeemed in accordance with its
terms, then such conversion right shall expire at the close of business on the
Redemption Date unless GAMCO fails to take any of the Required Actions on or
prior to the Redemption Date.

     

    2. Conversion
Procedures.  In order to exercise the conversion right, the
Holder shall surrender this Note at the principal executive offices of GAMCO
(which, if GAMCO shall so require, shall be duly endorsed to GAMCO or in blank,
or be accompanied by proper instruments of transfer to GAMCO or in blank),
accompanied by irrevocable written notice to GAMCO to the effect that the Holder
elects so to convert this Note or, if less than the entire principal amount
hereof is to be converted, the portion hereof to be converted (which notice
shall specify the name or names (with address or addresses) in which a
certificate or certificates evidencing the shares of Common Stock to be issued
upon such conversion are to be issued).  Except as otherwise
expressly set forth herein, no payment or adjustment shall be made upon any
conversion of the Note on account of any interest accrued on this Note or on
account of any dividends accrued on the shares of Common Stock issued upon such
conversion.

     

    GAMCO
shall, as soon as practicable after the surrender of this Note at the office
referred to above and compliance with the other conditions herein contained,
deliver at such office, to the person or persons entitled thereto (as specified
in the applicable written notice of conversion), a certificate or certificates
evidencing the number of full shares of Common Stock to which such person or
persons shall be entitled as aforesaid, together with a cash adjustment in
respect of any fraction of a share of Common Stock as hereinafter
provided.  Such conversion shall be deemed to have been made as of the
date of such surrender of this Note (or, if later, the date of compliance with
such other conditions), and the person or persons entitled to receive the Common
Stock deliverable upon conversion of this Note shall be treated for all purposes
as the record holder or holders of such Common Stock on such date.

     

    If this
Note is to be converted in part only, upon such conversion GAMCO shall execute
deliver to the Holder, at the expense of GAMCO, a new Note or Notes of like
tenor in denominations of $1,000,000 and any integral multiple thereof and with
an aggregate principal amount equal to the unconverted portion of the principal
amount of this Note.

     

    3. No
Fractional Shares.  No
fractional shares of Common Stock shall be issued upon conversion of this
Note.  Instead of any fractional share of Common Stock that would
otherwise be issuable to the Holder upon conversion of this Note (or any
specified portion hereof), GAMCO shall pay a cash adjustment in respect of such
fractional share in any amount equal to the same fraction of the Closing Price
(as hereinafter defined) on the day of conversion.

     

    4. Reservation
of Shares; Etc.  GAMCO shall at all times reserve and keep
available, free from preemptive rights out of its authorized but unissued Common
Stock, solely for the purpose of effecting the conversion of this Note, the full
number of shares of Common Stock that would then be deliverable upon the
conversion of all of the principal amount of this Note and any other outstanding
Notes.  The shares of Common Stock issuable upon the conversion of
this Note have not been registered under the Act, will carry a legend
substantially the same as the legend set forth on this Note, and will be subject
to the terms of the Registration Rights Agreement, dated as of August 14,
2001 and as amended on October 2, 2008, between the initial Holder and GAMCO,
and the Purchase Agreement.

     

    If any
shares of Common Stock required to be reserved for purposes of conversion of
this Note require registration with or approval of any governmental authority
under any Federal or State law before such shares may be issued or freely
transferred upon conversion, GAMCO will in good faith and as expeditiously as
possible endeavor to cause such shares to be duly registered or approved as the
case may be.  If the Common Stock is quoted on the New York Stock
Exchange or any other U.S. national securities exchange, GAMCO will, if
permitted by the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable upon
conversion of this Note and any other outstanding
Notes.  Notwithstanding the foregoing, the reference to free
transferability in the first sentence of this paragraph and the reference to
listing in the second sentence of this paragraph shall apply only when this Note
shall have become freely transferable under the federal securities
laws.

     

    5. Prior
Notice of Certain Events.  If GAMCO shall authorize any
transaction that would require an adjustment to the Conversion Price (other than
a transaction referred to in clauses (a) or (c) of Section 6 below) or there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
GAMCO, then GAMCO shall notify the Holder, at least 20 days (or, in the
case of a transaction referred to in clauses (b), (d) or (e) of
Section 6 below, 10 days) prior to the applicable record, expiration
or consummation date hereinafter specified, a notice stating (i) the record
date fixed for the determination of holders of Common Stock entitled to the
applicable issuance, dividend or distribution or (ii) the date of
expiration of the applicable tender or exchange offer, as the case may
be.

     

    6. Adjustment
of Conversion Price.

     

    (a) In case
GAMCO shall pay or make a dividend or other distribution on any class of Capital
Stock of GAMCO payable in Common Stock, the Conversion Price in effect at the
opening of business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination.  (For the purposes of determining adjustments
to the Conversion Price as set forth herein, shares of Common Stock held in the
treasury of GAMCO, and distributions or issuances in respect thereof shall be
disregarded.)

     

    (b) In case
GAMCO shall issue rights or warrants to all or substantially all holders of its
Common Stock entitling them, for a period of not more than 60 days, to
subscribe for or purchase shares of Common Stock at a price per share less than
the Current Market Price (as hereinafter defined) on the date fixed for the
determination of stockholders entitled to receive such rights or warrants, the
Conversion Price in effect at the opening of business on the day following the
date fixed for termination of such subscription or purchase period shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock actually purchased upon exercise of such rights or
warrants would have purchased at such Current Market Price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock actually purchased upon exercise of such rights or warrants, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such termination.

     

    (c) In case
outstanding shares of Common Stock shall be subdivided into a greater number of
shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes
effective.

     

    (d) Subject
to paragraph (g) below, in case GAMCO shall, by dividend or otherwise,
distribute to all or substantially all holders of its Common Stock evidences of
indebtedness, shares of capital stock of any class or series, other securities,
cash or assets (other than Stapled Securities (as hereinafter defined), Common
Stock, rights or warrants referred to in clause (b) of this Section 6,
a dividend or distribution payable exclusively in cash or a Spin Off (as
defined below)), the Conversion Price in effect immediately prior to the close
of business on the date fixed for the payment of such distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the Current Market Price on the date fixed for such payment
less the then fair market value (as determined in good faith by the Board of
Directors of GAMCO (the “Board
of Directors”), whose good faith determination shall be conclusive and
described in a resolution of the Board of Directors) (as to any securities or
other property, the "Fair
Market Value") of the portion of such evidences of indebtedness, shares
of capital stock, other securities, cash and assets distributed per share of
Common Stock and the denominator shall be such Current Market Price, such
reduction to become effective immediately prior to the opening of business on
the day following the date fixed for such payment.  Subject to
paragraph (g) below, in case GAMCO shall, by dividend or otherwise, distribute
to all or substantially all holders of Common Stock shares of any capital stock
of, or other equity interest in, any Subsidiary or other business unit of GAMCO
and, immediately after such distribution, such capital stock or other equity
interest is registered under the 1934 Act and listed and publicly traded on a
national securities exchange registered under Section 6 of the 1934 Act
(each, a “Spin-Off”),
then the Conversion Price in effect immediately prior to the close of business
on the tenth day of such trading immediately following and including the
effective date of the Spin Off (the “Tenth Trading Day”) shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be (i) the average of the Closing Prices of the Common
Stock on the first ten days of such public trading immediately following and
including such effective date (the “Ten Trading Days”) less
(ii) the average of the Closing Prices of the amount of such capital stock
or other equity interests distributed per share of Common Stock on such exchange
during the Ten Trading Days (the “Average Spin Off Price”) and
the denominator shall be the average of the Closing Prices calculated pursuant
to the preceding clause (i), such reduction to become effective immediately
after the close of business on the Tenth Trading Day.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e) In case
GAMCO shall, by dividend or otherwise, make a distribution to all or
substantially all holders of its Common Stock payable exclusively in cash in any
twelve month period (excluding any distributions declared prior to the date of
this Note) which, in the aggregate, exceed $1.12 per share of Common Stock (the
“Twelve Month Dividend
Threshold” and the amount of such excess per share of Common Stock, the
“Excess Amount”), the
Conversion Price in effect immediately prior to the close of business on the
date fixed for such payment shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be the Current Market Price on
the date fixed for such payment less the Excess Amount and the denominator shall
be such Current Market Price, such reduction to become effective immediately
prior to the opening of business on the day following the date fixed for such
payment; provided,
however, that notwithstanding the foregoing whenever the Conversion Price
is adjusted pursuant to this Section 6 the Twelve Month Dividend Threshold
shall be proportionally adjusted in the same manner.

     

    (f) In case
GAMCO or any of its Subsidiaries shall consummate a tender or exchange offer for
all or any portion of the Common Stock, the Conversion Price in effect
immediately prior to the close of business on the date of expiration of such
tender or exchange offer shall be reduced by multiplying such Conversion Price
by a fraction of which the numerator shall be the Current Market Price on such
date of expiration less the Per Share Premium Amount (as hereinafter defined)
paid in such tender or exchange offer and the denominator shall be such
Current Market Price, such reduction to become effective immediately prior to
the opening of business on the day following such date of
expiration.

     

    (g) Notwithstanding
anything to the contrary in Section 6(d), no adjustment to the Conversion Price
shall be made as a result of the distribution to GAMCO's stockholders of common
stock of Teton Advisors, Inc. (the “Teton Spin-off”) and, in lieu
thereof, GAMCO shall deliver to the Holder such number of shares of common stock
of Teton Advisors, Inc. (the “Teton Common Stock”) that it
would have received in the Teton Spin-off if it had converted this Note
immediately prior to the close of business on the day immediately prior to the
record date fixed for such transaction. The "Teton Value" shall mean the
product of (i) (A) if at the time of the Teton Spin-off the Teton Common Stock
is registered under the 1934 Act and listed and publicly traded on a national
securities exchange registered under Section 6 of the 1934 Act, the Average
Spin Off Price of the Teton Common Stock or (B) in all other cases, the Fair
Market Value of the amount of Teton Common Stock distributed per share of Common
Stock and (ii) the number of shares of Teton Common Stock delivered to the
Holder pursuant this Section 6(g). In order to participate in the Teton
Spin-off, the Holder agrees to execute all agreements. questionnaires and other
documents that are reasonably requested by the Company and that are required by
the holders of the Common Stock.

     

    (h) In case
GAMCO or any of its Subsidiaries proposes to issue debt securities that are
convertible at the option of the holder thereof into, or exercisable for, Common
Stock after the Issue Date and prior to October 2, 2009 with a conversion price
that is lower or an interest rate that is higher than this Note (the “New Debt Securities”), GAMCO
shall, no later than  the tenth (10th) day  after the
consummation of such transaction (a “Proposed Transaction”), give
notice in writing to Holder of such  Proposed Transaction specifying
the different terms in reasonable detail.  By written notice to GAMCO
within thirty (30) days after the date on which the Holder receives such notice,
the Holder may elect to have the Conversion Price reduced to the Proposed
Transaction conversion price and/or the interest rate on this Note increased to
that of the Proposed Transaction.  Notwithstanding anything to the
contrary contained herein, this paragraph (h) shall not be applicable to: (i)
any issuances or grants of equity securities (including preferred stock), (ii)
the exercise or conversion of any options, warrants or convertible securities in
existence as of the date hereof, (iii) the issuance of debt securities, either
directly or indirectly, in connection with the Teton Spin-off or any
acquisition, strategic business combination or investment by GAMCO or any
of its subsidiaries in any party which is not prior to such transaction an
Affiliate of GAMCO or any of its subsidiaries (whether by merger, consolidation,
stock swap, sale of assets or securities, or otherwise), (iv) any issuance
of  any mandatorily convertible security (utilizing a forward purchase
contract, unit structure or otherwise) or any other debt security that is not
convertible into or exercisable for Common Stock at the option of the holder
thereof, or (v) any event that would otherwise result in an adjustment to the
Conversion Price pursuant to this Section 6. This paragraph (h) shall terminate
and be of no further force and effect on October 2, 2009.

     

    (i) In case
GAMCO shall, by dividend or otherwise, make a distribution referred to in
paragraph (d) or (e) above, the Holder converting this Note (or any portion
of the principal amount hereof) subsequent to the close of business on the date
fixed for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the Conversion Price adjustment
in respect of such distribution shall also be entitled to receive, for each
share of Common Stock into which this Note (or portion of the principal amount
being converted), the portion of the evidences of indebtedness, shares of
capital stock, other securities, cash and assets so distributed applicable to
one share of Common Stock; provided, however, that, at the
election of GAMCO (whose election shall be evidenced by a resolution of the
Board of Directors) with respect to all holders so converting, GAMCO may, in
lieu of distributing to such holder any portion or all of such evidences of
indebtedness, shares of capital stock, other securities, cash and assets to
which such holder is entitled as set forth above, (i) pay such holder an
amount in cash equal to the Fair Market Value thereof or (ii) distribute to
such holder a due bill therefor, provided that such due bill (A) meets any
applicable requirements of the principal national securities exchange or other
market on which the Common Stock is then traded and (B) requires payment or
delivery of such evidences of indebtedness, shares of capital stock, other
securities, cash or assets no later than the date of payment thereof to holders
of shares of Common Stock receiving such distribution.

     

    (j) GAMCO may
make such reductions in the Conversion Price, in addition to those required by
the foregoing paragraphs, as it considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.  In
addition, GAMCO from time to time may reduce the Conversion Price by any amount
for any period of time if the period is at least twenty days, the reduction is
irrevocable during the period, and the Board of Directors of GAMCO shall have
made a determination that such reduction would be in the best interest of GAMCO,
which determination shall be conclusive.  Whenever the Conversion
Price is reduced pursuant to the preceding sentence, GAMCO shall provide written
notice to the Holder of this Note and the holders of any other outstanding Notes
of the reduction at least fifteen days prior to the date the reduced Conversion
Price takes effect, and such notice shall state the reduced Conversion Price and
the period it will be in effect.

     

    (k) GAMCO may
not engage in any transaction if, as a result thereof, the Conversion Price
would be reduced to below the par value per share of the Common
Stock.

     

    (l) No
adjustment in the Conversion Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Conversion Price;
provided, however, that any adjustments
which by reason of this paragraph are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.

     

    (m) Whenever
the Conversion Price is adjusted as herein provided, GAMCO shall compute the
adjusted Conversion Price and shall prepare a certificate signed by the
Treasurer of GAMCO setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall be given by GAMCO to the Holder of this Note and the holders
of any other outstanding Notes.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7. Stapled
Securities.

     

    (a) Prior to
a Separation Event (as hereinafter defined) with respect to any Stapled
Securities, such Stapled Securities will be deemed, for purposes of the
adjustments contemplated hereby, to comprise part of the shares of Common Stock
to which such Stapled Securities appertain, and as a result, distributions in
respect of such Stapled Securities will be deemed, for such purposes, to be
distributions in respect of such shares.

     

    (b) If the
Holder converts this Note (or any portion of the principal amount hereof) after
a Separation Event with respect to any Stapled Securities, it shall be entitled
to receive upon such conversion, in addition to the shares of Common Stock
issuable upon such conversion, the same rights to which the Holder would have
been entitled under the Stapled Securities that would have appertained to such
shares of Common Stock if the Holder had effected such conversion before such
Separation Event.

     

    8. Consolidations,
Mergers or Sales of
Assets.  In the event of any consolidation of GAMCO with, or
merger of GAMCO into, any other Person, any merger of another Person to GAMCO
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of the Common Stock) or any sale
or transfer of all or substantially all of the assets GAMCO, the Person formed
by such consolidation or resulting from such merger or which acquires such
assets, as the case may be, shall enter into a written agreement with the
Holder, in form and substance reasonably acceptable to the Holder, providing
that the Holder shall have the right thereafter, during the period in which this
Note shall be convertible, to convert this Note (or portion of the principal
amount hereof) only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of shares of Common Stock into which this Note (or portion
thereof) might have been converted immediately prior to such consolidation,
merger, sale or transfer, assuming the Holder (i) is not a Person with
which GAMCO consolidated or into which GAMCO merged or which merged into GAMCO
or to which such sale or transfer was made, as the case may be, (a “Constituent Person”) or an
Affiliate of a Constituent Person and (ii) failed to exercise his or her
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer;
provided, however, that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of Common
Stock held immediately prior to such consolidation, merger, sale or transfer by
Persons other than a Constituent Person or an Affiliate thereof and in respect
of which such rights of election shall not have been exercised (each, a “Non-Electing Share”), then for
purposes of this Section 8 the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer by
each Non-Electing Share shall be deemed to be the kind and amount so receivable
per share by a plurality of the Non-Electing Shares.  Such written
agreement shall provide for adjustments which, for events subsequent to the
effective date of such agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Exhibit A.  The
provisions of this Section 8 shall similarly apply to successive consolidations,
mergers, sales or transfers.  If the conversion rights of the Holder
of this Note shall be adjusted pursuant to this Section 8, then GAMCO shall
cause to be given to the Holder and any other holders of outstanding
Notes, within 5 days after consummation of the transaction triggering
such adjustment, a notice describing such adjustment in appropriate
detail.

     

    9. Taxes.  GAMCO
shall pay any and all stock transfer, documentary stamp and other taxes that may
be payable in respect of any issuance or delivery of shares of Common Stock or
other securities issued or delivered on conversion of this
Note.  GAMCO shall not, however, be required to pay any such tax which
may be payable in respect of any transfer involved in the issuance or delivery
of shares of Common Stock or other securities in a name other than to the
Holder, and shall not be required to make any such issuance or delivery unless
and until the person otherwise entitled to such issuance or delivery has paid to
GAMCO the amount of any such tax or has established, to the satisfaction of
GAMCO, that such tax has been paid or is not payable.

     

    10. Certain
Definitions.  The following definitions shall apply to terms
used in this Exhibit A:

     

    “Closing Price” of any common
stock on any day means the last reported per share sale price, regular way, of
the common stock on such day, or, in case no such sale takes place on such day,
the average of the reported closing per share bid and asked prices, regular way,
of the common stock on such day, in each case on the New York Stock
Exchange or, if the common stock is not listed or admitted to trading on the
New York Stock Exchange, on the principal national securities exchange or
quotation system on which the common stock is listed or admitted to trading or
quoted, or, if the common stock is not listed or admitted to trading or quoted
on any national securities exchange or quotation system, the average of the
closing per share bid and asked prices of the common stock on such day in the
over-the-counter market as reported by a generally accepted national quotation
service or, if not so available in such manner, as furnished by any
New York Stock Exchange member firm selected from time to time by the Board
of Directors of GAMCO for that purpose or, if not so available in such manner,
as otherwise determined in good faith by the Board of Directors (whose good
faith determination shall be conclusive and described in a resolution of the
Board of Directors).

     

    “Common Stock” shall mean the
Class A Common Stock, par value $0.001 per share, of GAMCO or, subject to
Section 8, any shares of any class or classes resulting from any
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of GAMCO and which are not subject to redemption by
GAMCO; provided, however, that if at any time
there shall be more than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion which the total number
of shares of such class resulting from such reclassification bears to the total
number of shares of all such classes resulting from all such
reclassifications.

     

    “Conversion Price” initially
means $70.00, subject to adjustment from time to time as set forth
herein.

     

    “Current Market Price” on any
date in question means, with respect to any adjustment in conversion rights as
set forth herein, the average of the daily Closing Prices for the Common Stock
for the five consecutive Trading Days selected by the Board of Directors
commencing not more than 20 Trading Days before, and ending not later than,
the earlier of the date in question and the day before the Ex Date with respect
to the transaction requiring such adjustment; provided, however, that (i) if any
other transaction occurs requiring a prior adjustment to the Conversion Price
and the Ex Date for such other transaction falls after the first of the five
consecutive Trading Days so selected by the Board of Directors, the Closing
Price for each such Trading Day falling prior to the Ex Date for such other
transaction shall be adjusted by multiplying such Closing Price by the same
fraction by which the Conversion Price is so required to be adjusted as a result
of such other transaction and (ii) if any other transaction occurs
requiring a subsequent adjustment to the Conversion Price and the Ex Date for
such other transaction falls on or before the last of the five consecutive
Trading Days so selected by the Board of Directors, the Closing Price for each
such Trading Day falling on or after the Ex Date for such other transaction
shall be adjusted by dividing such Closing Price by the same fraction by which
the Conversion Price is so required to be adjusted as a result of such other
transaction.

     

    “Ex Date” means (i) when
used with respect to any dividend, distribution or issuance, the first date on
which the Common Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Price is obtained without the right to
receive such dividend, distribution or issuance, (ii) when used with
respect to any subdivision or combination of shares of Common Stock, the first
date on which the Common Stock trades regular way on such exchange or in such
market after the time at which such subdivision or combination becomes
effective, (iii) when used with respect to any tender or exchange offer,
the first date on which the Common Stock trades regular way on such exchange or
in such market after such tender or exchange offer expires and (iv) when
used with respect to any other transaction, the date of consummation of such
transaction.

     

    “Per Share Premium Amount”
means, with respect to any tender or exchange offer, (i) the Premium Amount
paid as part of such tender or exchange offer divided by (ii) the
Post-Tender Offer Number of Common Shares.

     

    “Post-Tender Offer Number of Common
Shares” means, with respect to any tender or exchange offer, the number
of shares of Common Stock outstanding at the close of business on the date of
expiration of such tender or exchange offer (before giving effect to the
acquisition of shares of Common Stock pursuant thereto) minus the number of
shares of Common Stock acquired pursuant thereto.

     

    “Premium Amount” means, with
respect to any tender or exchange offer, (i) the Tender Consideration paid
in such tender or exchange offer minus (ii) the product of the Current
Market Price on the date of expiration of such tender or exchange offer and the
number of shares of Common Stock acquired pursuant to such tender or exchange
offer.

     

    “Separation Event” has the
meaning set forth in the definition of the term “Stapled Securities”
below.

     

    “Stapled Securities” means
securities issued under any plan or agreement providing in substance that, until
such securities are redeemed or the rights thereunder are otherwise terminated
or a specified event occurs (a “Separation Event”), (i) a
specified number of such securities will appertain to each share of Common Stock
then issued or to be issued in the future (including shares issued upon
conversion of this Note) and (ii) each such security will be evidenced or
represented by the certificate representing the share of Common Stock to which
it appertains and will automatically trade with such share.

     

    “Tender Consideration” means,
with respect to any tender or exchange offer, the aggregate of the cash plus the
fair market value (as determined in good faith by the Board of Directors, whose
good faith determination shall be conclusive and described in a resolution of
the Board of Directors) of all non-cash consideration paid in respect of such
tender or exchange offer.

     

    “Trading Day” means a day on
which securities are traded on the national securities exchange or quotation
system or in the over-the-counter market used to determine Closing Prices for
the Common Stock.

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