EMPLOYMENT AGREEMENT
AGREEMENT made this 6th day of
February, 2008 (the "Effective Date") by and between GAMCO Investors, Inc. (the
"Company"), a New York corporation, and Xxxxx X. Xxxxxxx (the
"Executive").
WHEREAS, the Executive has served as an
executive of the Company since the inception of the Company and its predecessors
in 1976.
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 the primary portfolio manager 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 the
Company and its predecessors in 1976, up until the Company’s initial public
offering in February 1999 (“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 the Company 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, the Company and the Executive
entered into an Employment Agreement dated February 9, 1999, in connection with
the Company’s IPO, which Employment Agreement, among other things, reduced the
Executive’s incentive-based management fee to ten percent (10%) of the Company’s
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, for each fiscal year of each of
the operating divisions of the Company and its Subsidiaries before consideration
of this fee, less applicable payroll and tax deductions, accrued monthly and
payable at least annually.
WHEREAS, the Company and the Executive
desire to amend and restate the Employment Agreement entered into in 1999 to
eliminate outdated provisions, allow for services to be performed for former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 management fee to be paid to
the Executive or an entity designated by him, and reflect the Company’s name
change, among other things.
WHEREAS, the Compensation Committee of
the Board of Directors of the Company has reviewed and approved this amended and
restated Employment Agreement and believes it to be in the best interests of the
Company.
WHEREAS, the Company desires that the
Executive or his designee continue to receive a management fee to provide an
incentive for the achievement of the Company's performance goals and the
enhancement of shareholder value.
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 Chairman
of the Board, Chief Executive Officer and Chief Investment Officer of the
Company, as an executive in various capacities for certain of the Company's
Subsidiaries as determined by the Executive, and 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 mutual fund
accounts or partnership investments, attracting 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 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 an entity designated
by him 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 of Directors of the Company will review at
least annually all Management Fee payments for compliance with the terms
hereof. In the event that the Executive is no longer an executive of
the Company or is no longer devoting the substantial majority of his working
time to the business of the Company and its Subsidiaries, the Executive's right
to accrue any additional Management Fee payments will terminate. 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 or its
Subsidiaries, except to (a) the funds in existence on February 10, 1999 (the
"IPO Date") (which serve no investors other than those in the funds as of the
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 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 the
Company as of the 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, 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 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 of Directors of the
Company 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 intends to serve as
a director, Chief Executive Officer and Chief Investment Officer of GGCP, Inc.
and its affiliates and be compensated for such service, and the Company agrees
that such service and compensation is permissible under this
Agreement.
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 fort in Paragraph
2 of this Agreement are personal to him.
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 of Directors of the Company.
IN WITNESS WHEREOF, the parties hereto
have duly executed this Agreement on the date first written above.
/s/ Xxxxx X.
Xxxxxxx
Xxxxx X.
Xxxxxxx
GAMCO
INVESTORS, INC.
By: /s/ Xxxxxxx X.
Xxxxxxxx