Exhibit 10.3

 

PROMISSORY NOTE

 

$250,000,000.00

November 30, 2015

 

FOR VALUE RECEIVED, the undersigned, GAMCO Investors, Inc., a Delaware
corporation (the “Maker”), hereby promises to pay to Associated Capital
Group, Inc., a Delaware corporation (the “Holder”), the Outstanding Principal
Amount (as defined herein) of this Promissory Note (this “Note”), in lawful
money of the United States of America, in accordance with the terms, and on the
dates, set forth herein.  This Note has been executed by the Maker and delivered
to and accepted by the Holder on the date set forth above (the “Effective
Date”).

 

1.                                      Definitions.  For purposes of this Note,
the following terms shall have the meanings set forth below:

 

(a)                                 “Bankruptcy Law” means Title 11 of the
United States Code (11 U.S.C. 101 et seq.), as amended from time to time, and
any successor statute, or if the context so requires, any similar federal or
state law.

 

(b)                                 “Business Day” means any day except
Saturday, Sunday or any day on which banking institutions in The City of New
York, New York are authorized or required by law, regulation or executive order
to remain closed.

 

(c)                                  “Effective Date” shall have the meaning set
forth in the Preamble.

 

(d)                                 “Event of Default” shall have the meaning
set forth in Section 7.

 

(e)                                  “Holder” shall have the meaning set forth
in the Preamble.

 

(f)                                   “Interest Payment Date” shall have the
meaning set forth in Section 4.

 

(g)                                  “Interest Rate” shall have the meaning set
forth in Section 3.

 

(h)                                 “Maker” shall have the meaning set forth in
the Preamble.

 

(i)                                     “Material Subsidiary” means any
Subsidiary that meets either of the following conditions:  (1) the Maker’s and
its Subsidiaries’ investments in and advances to such Subsidiary exceed 10% of
the Maker’s and its Subsidiaries’ total assets consolidated (determined in
accordance with United States generally accepted accounting principles) as of
the end of the most recent fiscal quarter; or (2) the Maker’s and its
Subsidiaries’ proportionate share of the total assets (after intercompany
eliminations) of such Subsidiary exceeds 10% of the Maker’s and its
Subsidiaries’ total assets consolidated (determined in accordance with United
States generally accepted accounting principles) as of the end of the most
recent fiscal quarter.

 

(j)                                    “Note” shall have the meaning set forth
in the Preamble.

 

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(k)                                 “Original Principal Amount” means two
hundred and fifty million dollars ($250,000,000.00), which is the original
aggregate principal amount of this Note on the Effective Date.

 

(l)                                     “Original Principal Amount Maturity
Date” shall have the meaning set forth in Section 5.

 

(m)                             “Original Principal Payment Date” shall have the
meaning set forth in Section 5.

 

(n)                                 “Outstanding Principal Amount” means
principal amount of this Note that is outstanding from time to time, which, for
the avoidance of doubt shall be the Original Principal Amount, plus any PIK
Amounts that at such time has been added thereto, less any payments or
prepayments of principal made in cash pursuant to the terms hereof, including,
without limitation, Sections 5 and 6 hereof.

 

(o)                                 “Person” means a corporation, an
association, a partnership, a limited liability company, an individual, a joint
venture, a joint stock company, a trust, an unincorporated organization or a
government or an agency or a political subdivision thereof.

 

(p)                                 “PIK Amount” shall have the meaning set
forth in Section 4.

 

(q)                                 “PIK Amount Maturity Date” shall have the
meaning set forth in Section 5.

 

(r)                                    “Subsidiary” means, with respect to the
Maker, any Person (excluding an individual) a majority of the outstanding voting
stock, partnership interests, membership interests or other equity interest, as
the case may be, of which is owned or controlled, directly or indirectly, by the
Maker or by one or more other Subsidiaries of the Maker.  For the purposes of
this definition, (i) “voting stock” means stock having voting power for the
election of directors, trustees or managers, as the case may be, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency and (ii) in the case of a partnership, such
partnership shall only be deemed to be a Subsidiary of the Maker if (A) the
Maker or a Subsidiary of the Maker is the sole general partner or the managing
general partner of such partnership or (B) the only general partners of such
partnership are the Maker or one or more Subsidiaries of the Maker (or a
combination thereof).

 

For the avoidance of doubt, all references to “principal” or “principal amount”
in this Note shall include principal in the form of any PIK Amount that at such
time has been added to the Outstanding Principal Amount of this Note.

 

2.                                      Spin-off Transaction.  This Note is
being issued to partially capitalize Holder in connection with the spin-off of
the Maker’s alternative investment management business, its institutional
research services business and certain cash and other assets to Holder.

 

3.                                      Interest Rate.  Interest shall accrue on
the Outstanding Principal Amount of this Note from and including the Effective
Date until the date all of the Outstanding Principal Amount is paid in full, in
cash, at the rate of four percent (4.0%) per annum (the “Interest

 

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Rate”).  Interest on the Outstanding Principal Amount of this Note shall not
accrue on such Outstanding Principal Amount, or any portion thereof, for the day
on which such Outstanding Principal Amount or such portion is paid.  The Maker
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal, if any, at the rate equal to 2.0% per
annum in excess of the then applicable interest rate on the Note to the extent
lawful.  The Maker shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.  Interest will be computed on the basis of a 360-day year of twelve
30-day months.

 

4.                                      Payment of Interest.  The Maker agrees
to make annual interest payments at the Interest Rate in cash to the Holder on
the Outstanding Principal Amount in arrears on each anniversary of the Effective
Date (each such date, an “Interest Payment Date”).  Interest on this Note will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the Effective Date; provided, however, at the
election of the Maker, payments of this Note may, in lieu of being paid in cash,
be paid, in whole or in part, in kind (each such in kind interest, a “PIK
Amount”) on the then-Outstanding Principal Amount (which shall thereby increase
the then-Outstanding Principal Amount by adding such PIK Amount due on such
Interest Payment Date to the then-Outstanding Principal Amount). 
Notwithstanding the foregoing, in no event shall any interest be paid in kind
pursuant to the preceding sentence with respect to any Interest Payment Date
subsequent to November 30, 2019.

 

5.                                      Payment of Principal.  Subject to
Section 6(d) hereof, the Maker agrees to repay the Original Principal Amount of
this Note to the Holder, in cash, in five equal annual installments of fifty
million dollars ($50,000,000.00) on each Interest Payment Date (each, an
“Original Principal Payment Date”) up to and including November 30, 2020 (the
“Original Principal Amount Maturity Date”) and shall repay all PIK Amounts added
to the Outstanding Principal Amount of this Note to the Holder, in cash, on the
fifth anniversary of the date on which each such PIK Amount was added to the
Outstanding Principal Amount of this Note (such fifth anniversary date with
respect to any PIK Amount, a “PIK Amount Maturity Date”), with all PIK Amounts
to be paid by Holder no later than November 30, 2024.

 

6.                                      Application of Payments; Prepayment.

 

(a)                                 All cash payments in respect of this Note
shall be applied as follows: (i) first, to the payment in full of the accrued
and unpaid interest hereunder that is not paid in kind in the form of PIK
Amounts pursuant to the proviso in the second sentence of Section 4 hereof, and
(ii) second, to the payment of the Outstanding Principal Amount, including the
PIK Amounts included therein, in accordance with Section 5.

 

(b)                                 Upon payment in full of the entire
Outstanding Principal Amount, including all PIK Amounts included therein, in
cash, and all accrued and unpaid interest thereon to such date in cash pursuant
to the proviso in the second sentence of Section 4 hereof, this Note shall be
deemed cancelled and the Holder shall cause this Note to be marked “Paid in
Full” and promptly returned to the Maker.

 

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(c)                                  If any payment under this Note (interest,
principal or otherwise) would otherwise be due on a day other than Business Day,
then such payment shall instead be due on the next succeeding Business Day and
no adjustment shall be made to the amount of such payment as a result of such
deferral.

 

(d)                                 The Maker may prepay all or any portion of
the then- Outstanding Principal Amount, including all PIK Amounts included
therein, of this Note at any time without penalty or premium.  Prepayments on
such Outstanding Principal Amount of this Note shall be applied to the Original
Principal Amount and any or all PIK Amounts included in the Outstanding
Principal Amount as directed by the Maker.  In the case of a partial prepayment
of the Original Principal Amount of this Note, the remaining Original Principal
Amount shall be paid ratably over the remaining Original Principal Payment Dates
until the Original Principal Amount Maturity Date.

 

7.                                      Events of Default.

 

(a)                                 Each of the following events shall
constitute an event of default (an “Event of Default”):

 

(i)                                     Failure of the Maker to pay any interest
when due in accordance with the terms of this Note and such failure is not cured
within 30 days;

 

(ii)                                  Failure of the Maker to pay any principal
amounts when due in accordance with the terms of this Note, including the
Original Principal Amounts payable on each Original Principal Payment Date and
on the Original Principal Amount Maturity Date and any PIK Amounts payable on
each PIK Amount Maturity Date;

 

(iii)                               The Maker or any of its Material
Subsidiaries (as defined below) pursuant to or under or within the meaning of
any Bankruptcy Law (as defined below):

 

(1)                                 commences a voluntary case or proceeding
seeking liquidation, reorganization or other relief with respect to the Maker or
any of its Material Subsidiaries or their debts or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of the Maker
or any of its Material Subsidiaries or any substantial part of the property of
the Maker or any of its Material Subsidiaries; or

 

(2)                                 consents to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against the Maker or any of its Material
Subsidiaries; or

 

(3)                                 consents to the appointment of a custodian
of it or for all or substantially all of its property; or

 

(4)                                 makes a general assignment for the benefit
of creditors; or

 

(iv)                              an involuntary case or other proceeding shall
be commenced against the Maker or any of its Material Subsidiaries seeking
liquidation, reorganization or other relief with respect to the Maker or any of
its Material Subsidiaries or their debts under any

 

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bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of the Maker or any of its Material Subsidiaries or any
substantial part of the property of the Maker or any of its Material
Subsidiaries, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of thirty (30) calendar days; or

 

(v)                                 a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:

 

(1)                                 is for relief against the Maker or any of
its Material Subsidiaries in an involuntary case or proceeding; or

 

(2)                                 appoints a trustee, receiver, liquidator,
custodian or other similar official of the Maker or any of its Material
Subsidiaries or any substantial part of the property of the Maker or any of its
Material Subsidiaries; or

 

(3)                                 orders the liquidation of the Maker or any
of its Material Subsidiaries;

 

and, in each case in this clause (v), the order or decree remains unstayed and
in effect for thirty (30) calendar days,

 

(b)                                 Acceleration.  Upon the occurrence of an
Event of Default set forth in Sections 7(a)(i) or 7(a)(ii) hereof, the Holder
may, by written notice to the Maker, declare this Note to be due and payable,
whereupon the Outstanding Principal Amount, including all PIK Amounts included
therein, together with all accrued and unpaid interest thereon and any and all
other amounts payable hereunder, shall become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, anything contained herein or in the documents
evidencing the same to the contrary notwithstanding.  If an Event of Default
specified in Sections 7(a)(iii), 7(a)(iv) or 7(a)(v) occurs, the Outstanding
Principal Amount, including all PIK Amounts included therein, together with all
accrued and unpaid interest thereon and any and all other amounts payable
hereunder, shall become immediately automatically due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the documents
evidencing the same to the contrary notwithstanding.

 

8.                                      Miscellaneous.

 

(a)                                 Successors and Assigns.  The terms and
conditions of this Note shall inure to the benefit of and be binding upon the
respective executors, administrators, heirs, successors and permitted assigns of
the Maker and the Holder.  The Holder may not assign any of its rights or
obligations hereunder without the written consent of the Maker.  The Maker may
assign its rights and obligations hereunder to any affiliate of Maker, so long
as the Maker continues to remain obligated for its responsibilities, liabilities
and obligations hereunder.

 

(b)                                 Loss or Mutilation of Note.  Upon receipt by
the Maker of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Note (together with indemnity reasonably satisfactory to the
Maker), the Maker shall, in the case of loss, theft, destruction or

 

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mutilation, or the surrender and cancellation of this Note, execute and deliver
to the Holder a new promissory note of like tenor and denomination as this Note
to replace this Note.

 

(c)                                  Place of Payment.  All payments due
hereunder shall be made by checks or by wire transfer of United States Dollars
and in immediately available funds to one or more accounts designated by the
Holder to the Maker in writing.

 

(d)                                 GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.

 

(e)                                  WAIVER OF JURY TRIAL.  EACH OF THE MAKER
AND THE HOLDER, BY ACCEPTING THIS NOTE, AGREES THAT IT HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO JURY TRIAL OF ANY CLAIM, DEMAND,
ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS NOTE OR (II) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS IN RESPECT OF THIS
NOTE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY, OR OTHERWISE.  EACH OF THE MAKER AND THE HOLDER, BY
ACCEPTING THIS NOTE, HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT EACH OF THE HOLDER AND THE MAKER MAY FILE AN ORIGINAL COUNTERPART OF A COPY
OF THIS NOTE WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE HOLDER OR
THE MAKER TO THE WAIVER OF SUCH PERSON’S RIGHT TO TRIAL BY JURY.

 

(f)                                   Waiver and Amendment.  Any term of this
Note may be amended, waived or modified only with the written consent of the
Maker and the Holder.  The Maker hereby waives presentment for payment, demand,
notice of demand, notice of non-payment or dishonor, protest and notice of
protest of this Note and agrees that the Holder shall not be required first to
institute any suit, or to exhaust its remedies against the Maker in order to
enforce the payment of this Note.  No failure or delay on the part of the Holder
in exercising any right, power or privilege hereunder or under this Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude or require any other
or further exercise thereof or the exercise of any other right, power or
privilege.

 

(g)                                  Headings; Interpretation.  Section and
subsection headings in this Note are included for convenience purposes only and
shall not affect the construction or interpretation of any term or provision of
this Note.

 

(h)                                 Unsecured.  For the avoidance of doubt, the
Maker and the Holder acknowledge that this Note and all obligations, liabilities
and indebtedness evidenced hereby and/or incurred by the Maker hereunder are not
secured by any collateral and represent general unsecured obligations of the
Maker.

 

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(i)                                     Tax Matters.  The Maker shall be
entitled to withhold from any payment to Holder under this Note (and any such
withheld amounts shall be deemed paid to such Holder for the purposes of this
Note) if such withholding is otherwise required by applicable law.

 

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IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed and
delivered as of the date first above written.

 

 

 

 

MAKER:

 

 

 

 

 

GAMCO INVESTORS, INC.

 

 

 

 

 

By:

/s/ Douglas R. Jamieson

 

 

 

Name: Douglas R. Jamieson

 

 

 

Its: President and Chief Operating Officer

 

 

 

 

 

 

 

 

ACCEPTED AND AGREED:

 

 

 

 

 

 

 

 

HOLDER:

 

 

 

 

 

ASSOCIATED CAPITAL GROUP, INC.

 

 

 

 

 

By:

/s/ Kieran Caterina

 

 

 

Name: Kieran Caterina

 

 

 

Its: Chief Financial Officer and Treasurer

 

 

 

[Signature Page to GAMCO Note]

 

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