Document:

Exhibit 10.2

 

TRANSITIONAL ADMINISTRATIVE AND
 MANAGEMENT SERVICES AGREEMENT

 

THIS TRANSITIONAL ADMINISTRATIVE AND MANAGEMENT SERVICES AGREEMENT (this “Agreement”) is dated as of November 30, 2015, between GAMCO Investors, Inc., a Delaware corporation (“GAMCO”), and Associated Capital Group, Inc., a Delaware corporation (“ACG”, and together with GAMCO, “Parties”, or each individually, a “Party”).

 

WHEREAS, following the consummation of the distribution (the “Distribution”) contemplated by the Separation and Distribution Agreement dated of even date herewith among GAMCO and ACG (the “Distribution Agreement”), ACG desires that GAMCO provide certain administrative and management services to ACG, and GAMCO desires that ACG provide certain administrative services to GAMCO; and

 

WHEREAS, subject to the terms and conditions of this Agreement, each Party is willing to provide the other Party with such services for a transitional period.

 

NOW, THEREFORE, GAMCO and ACG agree as follows:

 

SECTION 1.                         Services.  In addition to the Management Services described in Section 2, GAMCO agrees to provide, or to coordinate the provision by others, to ACG the transitional services set forth on Exhibit A hereto (the “GAMCO Services”), and ACG agrees to provide, or to coordinate the provision by others, to GAMCO the transitional services set forth on Exhibit B hereto (the “ACG Services” and, together with the GAMCO Services, the “Services”).  Without limiting the foregoing, the Parties may modify the Services from time to time and may identify additional services to incorporate into this Agreement.  In connection with the office space and the office equipment and furniture, in accordance with Section 5.8 of the Distribution Agreement, ACG may elect to be added with GAMCO to the lease for the premises at 401 Theodore Fremd Avenue, Rye, New York and, to the extent feasible and appropriate, substituted on any lease for leased office equipment or furniture, paying its proportionate share of any expenses related to such premises or equipment.

 

SECTION 2.                         Provision of Management Services.

 

(a)              Management Services.  As part of the Services, commencing at the time of the Distribution, GAMCO shall provide general corporate management services (the “Management Services”) to ACG, which may include, but not be limited to, operations, supervision of operating subsidiaries, strategic planning, acquisition analysis, investment banking and financial advisory services, supervision of the preparation of corporate tax returns, supervision of financial reporting and other applicable regulatory matters.  In providing the Services, including the Management Services, GAMCO may, subject to the prior written consent of ACG, employ consultants and other advisors in addition to utilizing its own employees.  Such Management Services are intended to be generally comparable in type and quantity to that which GAMCO provided to ACG, it affiliates and its businesses prior to the Distribution.

 

 

(b)              Limitation of Liability; Indemnification of ACG.  GAMCO shall have no liability to ACG with respect to GAMCO’s furnishing any of the Management Services hereunder except for liabilities arising out of willful misconduct or gross negligence occurring after the Distribution.  GAMCO will indemnify, defend and hold harmless ACG, its affiliates and its businesses in respect of all liabilities related to, arising from, asserted against or associated with such willful misconduct or gross negligence.  Such indemnification obligation shall be a liability of GAMCO.  In no event shall GAMCO have any liability for any incidental, indirect, special or consequential damages, whether or not caused by or resulting from negligence or breach of obligations hereunder and whether or not informed or aware of the possibility of the existence of such damages.

 

(c)               Limitation of Liability; Indemnification of GAMCO.  ACG shall indemnify and hold harmless GAMCO, its affiliates and its businesses in respect of all liabilities related to, arising from, asserted against or associated with GAMCO’s furnishing or failing to furnish the Management Services provided for in this Agreement, other than liabilities arising out of the willful misconduct or gross negligence of GAMCO following the Distribution.  Such indemnification obligation shall be a liability of ACG.  In no event shall ACG have any liability for any incidental, indirect, special or consequential damages, whether or not caused by or resulting from negligence or breach of obligations hereunder and whether or not informed or aware of the possibility of the existence of such damages.

 

(d)              Subrogation of Rights Vis-A-Vis Third Party Contractors.  In the event any liability arises from the performance of Management Services hereunder by a third party contractor, upon indemnification of GAMCO and/or its representatives, including but not limited to GAMCO’s officers, directors, employees, accountants, counsel, investment bankers, financial advisors and consultants, ACG shall be subrogated to such rights, if any, as GAMCO may have against such third party contractor with respect to the Management Services provided by such third party contractor.

 

(e)               Laws and Governmental Regulations.  ACG shall be solely responsible for compliance with all laws, rules and regulations including the Investment Advisers Act of 1940.

 

(f)                 Relationship of Parties.  Nothing in this Agreement shall be deemed or construed by the Parties or any third party as creating the relationship of principal and agent, partnership or joint venture between the Parties, it being understood and agreed that no provision contained herein, and no actions of the Parties, shall be deemed to create any relationship between the Parties other than the relationship of independent contractor nor be deemed to vest any rights, interest or claims in any third parties.

 

SECTION 3.                         Term; Standard of Care.  Each of GAMCO and ACG shall provide the Services, including the Management Services, to the other Party as the other Party may request for a period of up to twelve (12) months from the date of the Distribution; provided that any or all of the Services may be terminated by either Party at any time and for any reason on not less than thirty (30) days’ prior written notice to the other Party.  In providing the Services hereunder, each Party will exercise the same degree of care as it has exercised in providing such Services to its affiliates prior to the date hereof, including the same level of quality, responsiveness and timeliness as has been exercised by each Party with respect to the Services.

 

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SECTION 4.                         Operating Committee.

 

(a)              Organization. The Parties shall create an operating committee (the “Operating Committee”) and shall each appoint one (1) employee to the Operating Committee for the Term.  The Operating Committee will oversee the implementation and application of this Agreement and shall at all times reasonably and in good faith attempt to resolve any dispute between the Parties. Each of the Parties shall have the right to change its Operating Committee member at any time with employees of comparable knowledge, expertise and decision-making authority.

 

(b)              Decision Making. All Operating Committee decisions shall be taken unanimously. If the Operating Committee fails to make a decision, resolve a dispute, agree upon any necessary action, or if a Party so requests, in the event of a material breach of this Agreement, a senior officer of GAMCO and a senior officer of ACG, neither of whom shall have any direct oversight or responsibility for the subject matter in dispute, shall attempt within a period of fourteen (14) days to conclusively resolve any such unresolved issue.

 

(c)               Meetings. During the Term, the Operating Committee members shall meet, in person or via teleconference, at least once in each month, or less frequently if agreed by the members of the Operating Committee. In addition, the Operating Committee shall meet as often as necessary in order to promptly resolve any disputes submitted to it by any representative of either Party.

 

SECTION 5.                         Compensation.

 

(a)              Charges for Services.  Each Party will pay the other Party the charges, if any, the applicable charges, if any, set forth on Exhibit A and Exhibit B hereto (collectively, the Transition Services Schedules”) for the Services set forth herein as may be adjusted, from time to time, in accordance with this Agreement or, if no charges are specifically indicated otherwise on the Transition Services Schedule, the cost of services provided.  The Parties intend, having regard to the reciprocal and transitional nature of the Agreement as well as other factors, for the charges to be easy to administer and justify; and therefore recognize it may be counter-productive to try and recover every cost, charge or expense, particularly those which are insignificant or de minimis.

 

(b)              Taxes. The fees and charges payable under this Agreement are exclusive of any sales tax or excise tax or other similar charges which may be imposed by a governmental authority.  Each Party agrees to remit to the other any such charges promptly upon being billed by the other Party.

 

(c)               Corrections/Adjustments. The Parties agree to develop, through an Operating Committee or their Boards of Directors, mutually acceptable reasonable processes and procedures for conducting any reviews and making adjustments thereof.  Payments will then be promptly billed and paid.

 

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SECTION 6.                         Personnel.

 

(a)              Right to designate and change personnel.  The Party providing the Services (“Service Provider”) will have the right to designate which personnel it will assign to perform the Services.  The Service Provider also will have the right to remove and replace any such personnel at any time or designate any of its Affiliates or a Subcontractor (as defined below) at any time to perform the Services, subject to the provisions of Section 6(d): provided, however, that the Service Provider will use Commercially Reasonable Efforts (as defined below) to limit the disruption to the other Party (“Service Recipient”) in the transition of the Services to different personnel or to a Subcontractor.  In the event that personnel with the designated level of experience are not then employed by the Service Provider, the Service Provider will use Commercially Reasonable Efforts to provide such personnel or Subcontractor personnel having an adequate level of experience; provided, however, that the Service Provider will have no obligation to retain any individual employee for the sole purpose of providing the applicable Services.  For the purposes of this Agreement, the term “Commercially Reasonable Efforts” means the efforts that a reasonable and prudent person desirous of achieving a business result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible in the context of commercial relations of the type envisaged by this Agreement; provided, however, that an obligation to use Commercially Reasonable Efforts under this Agreement does not require the Person subject to that obligation to assume any material obligations or pay any material amounts to a third party.

 

(b)              Financial Responsibility.  The Service Provider will pay for all personnel expenses, including wages, of its employees performing the Services

 

(c)               Service Managers and Chief Representatives.  During the Term of this Agreement, each Party will appoint (i) one of its employees (the “Service Manager”) who will have overall responsibility for managing and coordinating the delivery of the Services and who shall serve as such Party’s representative on the Operating Committee and (ii) one of its employees for each service as indicated in each Transition Service Schedule (the “Chief Representative”).  The Service Manager and the Chief Representatives will coordinate and consult with the Service Recipient.  The Service Provider may, at its discretion, select other individuals to serve in these capacities during the Term of this Agreement upon providing notice to the other Party.  For the avoidance of doubt, a Chief Representative may serve as such in respect of one or more Transition Service Schedules.

 

(d)

 

(1)                                 Subcontractors.  The Service Provider may, subject to Section 6(d)(2), engage a “Subcontractor” to perform all or any portion of the Service Provider’s duties under this Agreement, provided that any such Subcontractor agrees in writing to be bound by confidentiality obligations at least as protective as the terms of Section 10(n) of this Agreement regarding confidentiality and non-use of information, and provided further that the Service Provider remains responsible for the performance of such Subcontractor and for paying the Subcontractor.  As used in this Agreement, “Subcontractor” will mean any person or entity engaged to perform hereunder, other than employees of the Service Provider of its Affiliates.

 

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(2)                                 Assignment.  In the event of any subcontracting by the Service Provider to a non-Affiliate of the Service Provider of all or any portion of the Service Provider’s duties under this Agreement, the Service Provider shall assign and transfer to the Service Recipient the full benefit of all such non-Affiliate subcontractor’s performance covenants, guarantees, warranties or indemnities (if any), to the extent same are transferable or assignable, in the respect of the portion of the Services provided to the Service Recipient pursuant to such subcontracting; and if such guarantees, warranties, indemnities and benefits are not assignable, the Service Provider shall use Commercially Reasonable Efforts to procure the benefit of same for the Service Recipient through other legal permissible means.  The Service Provider will also reasonably endeavor to permit the assignment of any Subcontractor engagement to a Service Recipient or its Affiliates at the request of the Service Recipient upon termination of Service hereunder.

 

(e)               Insurance.  Each party shall obtain and maintain at its own expense insurance of the type generally maintained in the ordinary course of its business.  Except as otherwise specified in the Transition Service Schedule, the Service Provider shall not be required to obtain and maintain any particular insurance in relation to providing any Service.

 

SECTION 7.                         Consents of Third Parties.  GAMCO shall use commercially reasonable efforts, at ACG’s direction and expense, to obtain any consents or software licenses from third parties necessary for the continuation of the requested Services; provided, that GAMCO shall have no obligation to provide Services for which such consent is required and shall not have been obtained, despite GAMCO’s use of commercially reasonable efforts to obtain such consent.

 

SECTION 8.                         Limitations; Indemnity for Services Other Than Management Services.  Except as otherwise provided by Section 2 hereof with respect to Management Services, GAMCO will indemnify, defend and hold harmless ACG its affiliates and its businesses and each of their respective directors, officers, agents and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (a “ACG Indemnitee”) from and against all claims, damages, losses, liabilities, costs, expenses, reasonable attorney’s fees, and court or arbitration costs (“Losses”) (i) arising out of a claim by a third party against a ACG Indemnitee to the extent resulting from or alleged to have resulted from any act or omission of a member of the GAMCO Group (as such term is defined in the Distribution Agreement) under or related to this Agreement, or (ii) in the event of (A) the gross negligence, willful misconduct or fraud of a member of the GAMCO Group; (B) the failure of GAMCO to perform the Services in accordance with the terms of this Agreement; or (C) the breach by GAMCO of this Agreement.  ACG will indemnify, defend and hold harmless GAMCO its affiliates and businesses and each of their respective directors, officers, agents and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (each, a “GAMCO Indemnitee”), from and against all Losses (i) arising out of a claim by a third party against a GAMCO Indemnitee to the extent resulting from or alleged to have resulted from any act or omission of a member of the ACG Group (as such term is defined in the Distribution Agreement) under or related to this Agreement, or (ii) in the event of (A) the gross negligence, willful misconduct or fraud of a member of the ACG Group; (B) the failure of ACG to perform the Services in accordance with the terms of this Agreement; or (C) the breach by ACG of this Agreement.

 

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SECTION 9.                         Disclaimer of Warranties.  SUBJECT TO Section 3 HEREOF, EACH OF THE PARTIES DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES PROVIDED HEREUNDER.  NEITHER GAMCO NOR ACG MAKES ANY REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY, SUITABILITY OR ADEQUACY OF THE SERVICES FOR ANY PURPOSE OR USE.

 

SECTION 10.                  Miscellaneous Provisions.

 

(a)              Complete Agreement; Construction.  Except as set forth in the Tax Indemnity and Sharing Agreement and the Distribution Agreement, each dated of even date herewith, between the Parties, this Agreement shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

 

(b)              Counterparts.  For the convenience of the Parties hereto, this Agreement may be executed in separate counterparts, each such counterpart being deemed to be an original instrument, and which counterparts shall together constitute the same agreement.

 

(c)               Notices.  Any notice, request, instruction or other document to be given hereunder by any Party to the other shall be in writing and shall be deemed to have been duly given (i) on the date of delivery if delivered by facsimile (upon confirmation of receipt) or personally, (ii) on the first business day following the date of dispatch if delivered by FedEx or other next-day courier service, or (iii) on the third business day following the date of mailing if delivered by United States Certified Mail, return receipt requested, postage prepaid.  All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:

 

If to GAMCO, at:                                                GAMCO Investors, Inc.

One Corporate Center

Theodore Fremd Avenue

Rye, NY 10580-1422

Attn: Kevin Handwerker

Facsimile: (914) 921-5392

Telephone: (914) 921-5192

 

If to ACG, at:                                                                     Associated Capital Group, Inc.

401 Theodore Fremd Avenue

Rye, NY 10580

Attn:   David Goldman 

Facsimile: (914) 921-5392

Telephone: (914) 921-7793

 

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(d)              Waivers.  The failure of any Party hereto to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

 

(e)               Modification or Amendments.  The Parties hereto may modify or amend this Agreement by written agreement executed and delivered by authorized officers of the respective Parties.

 

(f)                 Assignment; Successors and Assigns.  No Party to this Agreement shall convey, assign or otherwise transfer any of its rights or obligations under this Agreement without the express written consent of each of the other Party hereto in its sole and absolute discretion.  Any such conveyance, assignment or transfer without the express written consent of each of the other parties shall be void ab initio.  No assignment of this Agreement or any rights hereunder shall relieve each of the assigning parties of its obligations hereunder.  Any successor by merger to a Party to this Agreement shall be substituted for such Party as a party to this Agreement, and all obligations, duties and liabilities of the substituted party under this Agreement shall continue in full force and effect as obligations, duties and liabilities of the substituting party, enforceable against the substituting party as a principal, as though no substitution had been made.

 

(g)              Third Party Beneficiaries.  This Agreement is for the purpose of defining the respective rights and obligations of the Parties hereto and is not for the benefit of any employee; creditor or other third party, except as may be expressly set forth herein.

 

(h)              Indemnification for Expenses; Attorney Fees.  A Party in breach of this Agreement shall, on demand, indemnify and hold harmless the other Party hereto for and against all out-of-pocket expenses, including, without limitation, reasonable legal fees, incurred by such other Party by reason of the enforcement and protection of its rights under this Agreement, should such Party prevail in such action.  The payment of such expenses is in addition to any other relief to which such other Party may be entitled hereunder or otherwise.

 

(i)                 Captions.  All Article, Section and paragraph captions herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.

 

(j)                 Specific Performance.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall have the right of specific performance and injunctive relief giving effect to its or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is hereby waived.

 

(k)              Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflicts of law principles.

 

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(l)                 Severability.  If any provision of this Agreement or the application thereof to any person or circumstance is determined to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.  Upon any such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the Parties.

 

(m)           Cooperation; Further Assurances.  The Parties will use good faith efforts to cooperate with each other in all matters relating to the provision of the Services.  Each Party will take such actions as may be necessary or reasonably appropriate to implement or give effect to this Agreement.

 

(n)              Records; Confidentiality.  Each Party shall keep full and detailed records dealing with all aspects of the Services performed by it and shall provide access to the other Party to such records at all reasonable times.  Each Party hereto shall keep, and shall cause its officer, directors, employees, accountants, counsel, investment bankers, financial advisors, consultants and other representatives (“Representatives”) to keep the other Party’s information, whether furnished orally or in writing or by any other means or gathered by inspection and regardless of whether the same is specifically marked or designated as “confidential” or “proprietary,” together with any and all notes, memoranda, analyses, compilations, studies or other documents (whether in hard copy or electronic media) prepared by the receiving Party or any of its Representatives which contain or otherwise reflect such information, together with any and all copies, extracts or other reproductions of any of the same (the “Information”), strictly confidential and will disclose such Information only to such of its Representatives who need to know such Information, and who agree to be bound by this Section 10(n) and not to disclose such Information to any other person.  Without the prior written consent of the other parties, neither Party nor any of its respective Representatives shall disclose the other Party’s Information to any person or entity except as may be required by law or judicial process and in accordance with this Section 10(n).  The term “Information” does not include information that: (i) is or becomes generally available to the public through no wrongful act of the receiving Party or its Representatives; (ii) is or becomes available to the receiving Party on a non-confidential basis from a source other than the providing Party or its Representatives, provided that such source is not known by the receiving Party to be subject to a confidentiality agreement with the providing Party; or (iii) has been independently acquired or developed by the receiving Party without violation of any of the obligations of the receiving Party or its Representatives under this Agreement.

 

(o)              Arbitration.  Any dispute with respect to this Agreement shall be arbitrated in Westchester County, NY, in accordance with the rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  There will be a single neutral arbitrator selected who resides in Westchester County, NY.  The American Arbitration Association will provide a list of five (5) neutral arbitrators.  The claimant and respondent will take turns, with the respondent going first, striking

 

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one name at a time from the list of five neutral arbitrators.  Each Party will have no more than twenty-four (24) hours to take its turn striking a name of a neutral arbitrator.  The final remaining arbitrator will serve as the neutral arbitrator.  Either Party may apply to the arbitrator seeking injunctive relief until the arbitrator’s award is rendered or the controversy is otherwise resolved.  Either Party also may, without waiving any remedy under this agreement, seek from any New York court having jurisdiction, any interim or provisional relief that is necessary to protect the rights and/or property of that Party, pending the determination of the arbitrator.

 

[Signatures begin on the following page]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

 

	
 
    	
GAMCO INVESTORS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Douglas R. Jamieson
    
	
 
    	
 
    	
Name:   
    	
Douglas   R. Jamieson
    
	
 
    	
 
    	
Title:   
    	
President   and Chief Operating Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ASSOCIATED CAPITAL GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Kieran Caterina
    
	
 
    	
 
    	
Name:   
    	
Kieran   Caterina
    
	
 
    	
 
    	
Title:   
    	
Chief   Financial Officer and Treasurer
    

 

[Signature Page to Transitional Administrative and Management Services Agreement]

 

 

EXHIBIT A

 

GAMCO Services

 

1.                                      Accounting, financial reporting and consolidation, including the services of a financial and operations principal

 

2.                                      Treasury, including, without limitation, insurance and risk management services and administration of benefits;

 

3.                                      Tax planning, tax return preparation, recordkeeping and reporting;

 

4.                                      Human resources, including but not limited to the sourcing of permanent and temporary employees as needed, recordkeeping, performance reviews and terminations;

 

5.                                      Legal and compliance advice, including the services of a Chief Compliance Officer;

 

6.                                      Technical/technology consulting;

 

7.                                      Operations and general administrative, including:

 

(a)              Office space;

 

(b)              Office equipment and furniture;

 

(c)               Payroll;

 

(d)              Procurement; and

 

(e)               Administrative personnel.

 

Exhibit A to Transitional Administrative and Management Services Agreement — 1

 

 

EXHIBIT B

 

ACG Services

 

Payroll services

 

Exhibit B to Transitional Administrative and Management Services Agreement — 1Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT made this 30th day of November, 2015 (the “Effective Date”) by and between Associated Capital Group, Inc. (the “Company”), a Delaware corporation, and Mario J. Gabelli (the “Executive”).

 

WHEREAS, the Executive has served as an executive of GAMCO Investors, Inc. and its predecessors (collectively, “GAMCO”) since the inception of GAMCO in 1976;

 

WHEREAS, the Company has been spun-off of GAMCO as of the date of this Employment Agreement (the “Spin-Off”);

 

WHEREAS, the Executive’s skills, position, knowledge and expertise in the management of portfolios such as those managed by the Company are unique;

 

WHEREAS, the Company is dependent upon the efforts of the Executive, in the capacities described herein in which he serves, and as a member of the portfolio management team for a significant majority of the Company’s assets under management;

 

WHEREAS, the loss of the Executive’s services would have a material adverse effect on the Company;

 

WHEREAS, since the inception of GAMCO in 1976, up until the GAMCO’s initial public offering in February 1999 (the “GAMCO IPO”), the Executive received an incentive-based management fee of twenty percent (20%) of the pre-tax profits, if any, as computed for financial reporting purposes in accordance with generally accepted accounting principles as applied by GAMCO and its subsidiaries and consolidated affiliates for financial reporting purposes (together, “Subsidiaries”) from time to time, for each fiscal year of each of the operating divisions of the Company and each of its Subsidiaries before consideration of this fee, less applicable payroll and tax deductions, accrued monthly and payable at least annually;

 

WHEREAS, GAMCO and the Executive entered into an Employment Agreement dated February 9, 1999 (the “1999 Employment Agreement”), in connection with the GAMCO IPO, which Employment Agreement, among other things, reduced the Executive’s incentive-based management fee to ten percent (10%) of GAMCO’s pre-tax profits, if any, as computed for financial reporting purposes in accordance with generally accepted accounting principles as applied by GAMCO and its Subsidiaries from time to time, for each fiscal year of each of the operating divisions of GAMCO and its Subsidiaries before consideration of this fee, less applicable payroll and tax deductions, accrued monthly and payable at least annually (the “GAMCO Management Fee”);

 

WHEREAS, on February 6, 2008, GAMCO and the Executive entered into a new Employment Agreement (the “2008 Employment Agreement”), which amended and restated the 1999 Employment Agreement to, among other things, eliminate outdated provisions, allow for services to be performed for former Subsidiaries that are spun off to shareholders or otherwise cease to be Subsidiaries in similar transactions, allow for the GAMCO Management Fee to be paid to the Executive or an entity designated by him;

 

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WHEREAS, the GAMCO Management Fee, as amended by the 2008 Employment Agreement, was applicable to the operations of the Company prior to the Spin-Off;

 

WHEREAS, the Company desires that the Executive or his designee receive a management fee with respect to the Company substantially equivalent to the management fee he was entitled to with respect to the Company’s operations prior to the Spin-Off to provide Executive with an incentive for the achievement of the Company’s performance goals and the enhancement of shareholder value;

 

WHEREAS, in connection with the Spin-Off, the Compensation Committee of the board of directors of the Company (the “Board”) has reviewed and approved this Employment Agreement and recommended its approval to the Board;

 

NOW THEREFORE, in consideration of the foregoing and of the mutual promises hereinafter set forth, the parties hereto agree as follows:

 

1.                                      Employment.

 

The Company hires and employs the Executive, and the Executive agrees to work for the Company, under the terms and conditions set forth herein.

 

2.                                      Duties.

 

The Executive shall serve as Executive Chairman of the Board and, initially, as Chief Executive Officer of the Company, except that he will have no executive authority for G.research, LLC.  Executive shall also serve as portfolio manager for certain investment companies and separate accounts managed by the Company and its Subsidiaries as determined by the Executive.  The Executive or the Company may at any time limit or terminate the Executive’s service in one or more of the capacities referred to above.

 

3.                                      Term.

 

The term of this Agreement shall commence on the Effective Date and continue through the third anniversary of the Effective Date (the “Expiration Date”).  On each anniversary of the Effective Date commencing on the first anniversary (each, an “Anniversary Date”), this Agreement shall automatically be renewed and the term extended for an additional one (1) year period, unless such renewal is objected to by either the Company or by the Executive on written notice delivered to the other not less than ninety (90) days prior to an Anniversary Date.  The last day of each such extension shall become the new Expiration Date.

 

4.                                      Fees from Revenue Generating Activities (Revenue Fees).

 

For managing or overseeing the management of investment companies or partnerships, attracting investors for collective investment funds or partnership investments, attracting and/or managing separate accounts, providing investment banking services or otherwise generating revenues for the Company or its Subsidiaries, the Executive will be paid a percentage of the revenues or net operating contribution related to or generated by such business activities, in a manner and at payment rates as agreed to from time to time by the Executive and the Company

 

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or the affected Subsidiaries, which rates have been and generally will be the same as those received by other professionals in the Company or the affected Subsidiaries performing similar services.  The Executive shall be entitled to receive such payments within seventy-five (75) days of the date the Company actually receives the funds related to the business activities from which the Executive will receive payment.  Unless and until the Company receives such funds, the Executive shall not be entitled to receive payment.

 

5.                                      Incentive-Based Management Fee (The Management Fee).

 

The Executive or one or more entities or persons designated by Executive, in his sole discretion and control, will be entitled to receive an incentive-based management fee in the amount of ten percent (10%) of the aggregate annual pre-tax profits, if any, as computed for financial reporting purposes in accordance with generally accepted accounting principles as applied by the Company and its Subsidiaries from time to time, of the Company and each of its Subsidiaries before consideration of this fee, less applicable payroll and tax deductions, accrued monthly and payable at least annually (the “Management Fee”) but in no event later than March 15 of the year following the year with respect to which the Management Fee is being paid.  A committee or subcommittee (comprised solely of independent directors) of the Board will review at least annually all Management Fee payments for compliance with the terms hereof.  In the event that the Executive is no longer providing any services to the Company, the Executive’s right to accrue any additional Management Fee payments will terminate.  For the avoidance of doubt, the Executive will be deemed to be providing services to the Company if he is providing any services to the Company, including, without limitation, services as a director, employee, portfolio manager, advisor or consultant).  The Management Fee is separate and distinct from the Executive’s revenue fees pursuant to Paragraph 4 above.

 

6.                                      Extent of Service-Restrictive Covenant.

 

During the term of this Agreement, the Executive shall not provide investment management services for compensation other than in his capacity as an officer or employee of the Company, GAMCO or Teton Advisors, Inc. or their respective Subsidiaries or affiliates, except to (a) the funds in existence on February 10, 1999 (the “GAMCO IPO Date”) (which serve no investors other than those in the funds as of the GAMCO IPO Date, their successors, heirs, donees or immediate family, or new investors pursuant to the next sentence) and accounts managed by the Executive outside the Company under performance fee arrangements as of the GAMCO IPO Date or pursuant to the next sentence, and (b) successor funds and accounts (“New Outside Accounts”) which funds serve no investors other than those in the funds referred to in clause (a) or their successors, heirs, donees or immediate family and which accounts are for no investors other than those having an interest in the accounts referred to in clause (a) or their successors, heirs, donees or immediate family, which funds and accounts operate according to an investment style similar to such other funds or accounts, which style was not used at GAMCO as of the GAMCO IPO Date, and which are subject to performance fee arrangements (collectively, “Permissible Accounts”).  The Permissible Accounts may include new investors if all of the performance fees, less expenses (which will include relationship management fees paid to all), earned on assets attributable to those investors are paid to the Company or its Subsidiaries.  If any Subsidiaries of the Company are spun off from the Company or otherwise cease to be Subsidiaries in similar transactions, the Executive may continue providing investment

 

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management services for compensation to such entities.  Prior to providing investment management services for compensation to any New Outside Accounts during the term hereof, the Executive agrees to have a committee or subcommittee (comprised solely of independent directors) of the Board review any proposed New Outside Accounts for compliance with the terms hereof and accept the determination of such committee or subcommittee as final.  The Company understands that the Executive serves as a director, Chief Executive Officer and Chief Investment Officer of GGCP, Inc. and Chairman and Chief Executive Officer of LICT Corporation, and Executive will be compensated for such services.  In addition, from time to time, the Executive may serve, with or without compensation, as a director or officer of other entities, including, without limitation, spin-off and other related entities of LICT Corporation.  The Company agrees that any services performed by, and compensation paid to, the Executive with respect to the entities described in this Paragraph 6 and their respective affiliates are permissible.

 

7.                                      Benefits.

 

The Executive shall be entitled to participate in all group health and insurance programs and all other fringe benefit or retirement plans which the Company may, in its sole and absolute discretion, elect to make available to its senior executives generally, provided that the Executive meets the qualifications therefor.

 

8.                                      Reimbursement of Expenses.

 

The Company shall reimburse the Executive for all reasonable and legitimate business expenses incurred after the date of employment by the Executive while conducting business, provided that the Executive submits vouchers for such expenses in a manner and form prescribed from time to time by the Company, except that up to $50,000 per year of such expenses may be non-accountable.

 

9.                                      Section 409A Compliance.

 

This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, so as to avoid the imposition of any tax pursuant to Section 409A, and, in the case of any ambiguity, shall be interpreted accordingly.  In the event that the Company or the Executive subsequently determine that the provisions of this Agreement would subject the Executive to tax under Section 409A, Company and the Executive shall negotiate in good faith to revise the Agreement so as to prevent the imposition of such tax, if possible, while preserving the original intent of the Agreement.

 

10.                               Assignability Clause.

 

This Agreement is binding upon the Company, the Executive and their respective successors and assigns.  The rights and obligations set forth under this Agreement may be assigned by the Company or by the Executive to a successor or to an assign, except the Executive acknowledges that the duties set forth in Paragraph 2 of this Agreement are personal to him.

 

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11.                               Governing Law.

 

This Agreement shall be governed by the law of the State of New York, without giving effect to the principles of conflicts of laws thereof.  The Executive and the Company agree that any claim arising hereunder shall be brought before the state or federal courts sitting in New York, New York, and the Executive and the Company each consent to jurisdiction and venue in New York, New York, as being proper and appropriate for the resolution of any such claim.

 

12.                               Entire Agreement; Modification.

 

This Agreement supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, written or oral, of the parties hereto, relating to the matters covered by this Agreement.  This Agreement may not be modified or amended except by a further written instrument duly executed by the Executive and the Company with the approval of a committee or subcommittee (comprised solely of independent directors) of the Board.

 

[Signatures Begin on the Following Page]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first written above.

 

 

	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/ Mario   J. Gabelli
    
	
 
    	
 
    	
Name:   
    	
Mario J. Gabelli
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
ASSOCIATED CAPITAL GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
Kieran   Caterina
    
	
 
    	
 
    	
Name:   
    	
Kieran   Caterina
    
	
 
    	
 
    	
Title:   
    	
Chief   Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
Kevin   Handwerker
    
	
 
    	
 
    	
Name:   
    	
Kevin   Handwerker
    
	
 
    	
 
    	
Title:   
    	
General   Counsel
    

 

[Signature Page to MJG Employment Agreement]

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