GBL Gamco Investors Inc

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

GGCP, through Holdings, owns a majority of our Class B Stock representing approximately 91% of the combined voting power and approximately 62% of the outstanding shares of our common stock at December 31, 2016.  Mr. Mario Gabelli serves as the Chief Executive Officer, a director and is the controlling shareholder of GGCP.  Various family members of Mr. Mario Gabelli are shareholders of GGCP including Mr. Marc Gabelli and Ms. Wilson.  Mr. Marc Gabelli serves as President and Managing Director of GGCP.

GCIA owns 4.4 million shares of our Class A Stock, representing approximately 2% of the combined voting power and 15% of the outstanding shares of our common stock at December 31, 2016.

 For 2016, the Company incurred variable costs of $352,699 for actual usage (but not the fixed costs) relating to our use of aircraft in which GGCP owns the fractional interests.

We lease an approximately 60,000 square foot building located at 401 Theodore Fremd Avenue, Rye, New York as our headquarters (the “Building”) from M ⁴ E, an entity that is owned by family members of Mr. Mario Gabelli, including Mr. Marc Gabelli and Ms. Wilson. Under the lease for the Building, which was extended for an additional five year term on June 11, 2013 with no change to the base rental of $18 per square foot and now expires on December 31, 2028, we are responsible for all operating expenses, costs of electricity and other utilities and taxes. For the period January 1, 2016 through December 31, 2016, the rent was $1,191,299, or $19.85 per square foot.  As members of M ⁴ E, Mr. Marc Gabelli and Ms. Wilson each are entitled to receive their pro-rata share of payments received by M ⁴ E under the lease.

As of April 1, 2016, we lease approximately 15,000 square feet in the Building to AC.  AC pays rent at the rate of $21.62 per square foot plus $3 per square foot for electricity, subject to adjustment for increases in taxes and other operating expenses.  The total amount paid in 2016 for rent and other expenses under this lease was $276,237.

We sublease approximately 3,300 square feet in the Building to LICT, a company for which Mr. Mario Gabelli serves as Chairman and CEO and is deemed to be the controlling shareholder.  LICT pays rent to us at the rate of $28 per square foot plus $3 per square foot for electricity, subject to adjustment for increases in taxes and other operating expenses. The total amount paid to us in 2016 for rent and other expenses under this lease was $116,564.  This sublease expires on December 5, 2023.

We also sublease approximately 1,600 square feet in the Building to Teton, a company for which, since March 1, 2017, GAMCO serves as a subadvisor, and Mr. Gabelli serves as portfolio manager under that subadvisory agreement. Mr. Gabelli previously served as portfolio manager for Teton from 1998 to February 2017. Teton is an asset management company which was spun-off from the Company in March 2009.   Teton pays rent to us at the rate of $37.75 per square foot plus $3 per square foot for electricity, subject to adjustment for increases in taxes and other operating expenses. The total amounts paid in 2016 to us for rent and other expenses under this lease were $68,205.  

We lease approximately 1,599 square feet of office space in Reno, Nevada from Miami Oil Producers, Inc., for which Mr. Avansino serves as the Chairman and President.  We pay a base rent of $3,118 per month plus the cost of parking and subject to adjustment annually for changes in the consumer price index.  We entered into the current lease on January 1, 2011 with a 3 year term and thereafter subject to an option to extend the term for a year at a time. We extended the term by one year on January 1, 2015 with it remaining subject to an option to extend the term for one year at a time.  We further extended the term by one year on January 1, 2016 with it remaining subject to an option to extend the term for one year at a time. We are currently in negotiations to extend the term for an additional one year through December 31, 2017.  For the period January 1, 2016 through December 31, 2016, the rent was $39,984, or $25.01 per square foot.  In 2009, GAMCO entered into a sublease of a portion of this office space in Reno, Nevada to CIBL, Inc. (“CIBL”).  Mr. Mario Gabelli is a director of CIBL, and an affiliate of Mr. Gabelli is its largest shareholder.  Under the terms of the Reno sublease, the Company granted CIBL the right to use such part of GAMCO’s Reno office as the Company and CIBL shall from time to time agree.  The sublease granted CIBL the right to use space in the Reno office until July 31, 2009 with an automatic renewal for one additional calendar year which extended the sublease until July 31, 2010.  Since August 1, 2010, the space has been subleased on a month-to-month basis. For 2016, the rent for the Reno sublease was $6,000.

In addition to the sublease of space in the Building, we entered into a number of agreements in connection with the Company’s distribution of the shares of Class A and B common stock in Teton in March 2009.  These agreements are as follows: a Separation and Distribution Agreement, an Administrative and Management Services Agreement (“Administrative Agreement”) and Service Mark and Name License Agreement (the “License Agreement”).  Pursuant to the Administrative Agreement, we provide certain services to Teton including senior executive functions, strategic planning and general corporate management services; mutual fund administration services; treasury services, including insurance and risk management services and administration of benefits; operational and general administrative assistance including office space, office equipment, administrative personnel, payroll, and procurement services as needed; accounting and related financial services; legal, regulatory and compliance advice, including the retention of a Chief Compliance Officer; and human resources functions, including sourcing of permanent and temporary employees as needed, recordkeeping, performance reviews and terminations.  Effective January 1, 2011, the Administrative Agreement was amended to be based on a tiered formula as opposed to a fixed rate.  Under the amended agreement, the Company is compensated by Teton 20 basis points annually on the first $370 million of average assets under management (“AUM”) in the Teton funds, 12 basis points annually on the next $630 million of average AUM in the Teton funds, and 10 basis points annually of average AUM in the Teton funds in excess of $1 billion. The License Agreement provides Teton and the funds that it manages the use of certain names and service marks.  Effective April 1, 2014, the Administrative Agreement was further amended to increase the fixed monthly component of it from $15,000 per month to $25,000 per month.  Pursuant to the Administrative Agreement and the License Agreement, the Company was compensated in 2016 by Teton in the amount of $25,000 per month for the first nine months and $18,750 for the last three months, or $281,250 for the full year, plus an average of 14.1 basis points of the average AUM in the Teton funds (pursuant to the tiered formula) for providing mutual fund administration services to these funds, or $1,701,098 for 2016. We sublease space in the Building to Teton as discussed above.   G.distributors, LLC (“G.distributors”), an affiliated broker-dealer of the Company, served as distributor to the seven mutual funds that are managed by Teton during 2016.  In 2016, the funds managed by Teton paid G.distributors $3,576,897 in distribution fees, of which $3,282,814 was reallocated to other broker dealers by G.distributors.  In 2016, Mr. Mario Gabelli earned $1,458,148 in portfolio manager compensation for acting as co-manager of the GAMCO Westwood Mighty Mites Fund, a Teton micro-cap fund; such amount is excluded from his compensation earned for 2016 shown earlier in the Summary Compensation Table for 2016 as indicated in footnote (c) to that table.

Effective January 1, 2014, GAMCO and Funds Advisor each entered into a research services agreement with G.research, LLC, a wholly-owned subsidiary of GCIA (which is a wholly-owned subsidiary of Associated Capital subsequent to the spin-off), for G.research, LLC to provide them with the same types of research services that it provides to its other clients.  In 2016, GAMCO and Funds Advisor paid G.research, LLC $1,500,000 and $1,530,000, respectively.

In connection with the spin-off of Associated Capital in November 2015, we entered into certain other agreements with Associated Capital to define our ongoing relationship with Associated Capital after the spin-off. These other agreements define responsibility for obligations arising before and after the distribution date, including certain transitional services and taxes and are summarized below.

Separation and Distribution Agreement

On November 30, 2015, we entered into a Separation and Distribution Agreement with Associated Capital (the “Separation Agreement”), which contains the key provisions relating to the separation of Associate Capital’s business from that of GAMCO and the distribution of the Associated Capital common stock. The Separation Agreement identified the assets transferred, liabilities assumed and contracts assigned to Associated Capital by GAMCO and by Associated Capital to GAMCO in the spin-off and describes when and how these transfers, assumptions and assignments occurred. The Separation Agreement also includes procedures by which GAMCO and Associated Capital became separate and independent companies. The Separation Agreement also provides that, as of November 30, 2015, each party released the other party and their respective affiliates and their directors, officers, employees and agents from all claims, demands and liabilities, in law and in equity, against such other party, which such releasing party has or may have had relating to events, circumstances or actions taken by such other party prior to the distribution. This release does not apply to claims arising from the Separation Agreement.

Indemnification

GAMCO has agreed to indemnify Associated Capital and its directors, officers, employees, agents and affiliates (collectively, ‘‘Associated Capital indemnitees’’) against all losses, liabilities and damages incurred or suffered by any of the Associated Capital indemnitees arising out of:

•   GAMCO’s business;

•   the failure or alleged failure of GAMCO or any of its subsidiaries to pay, perform or otherwise discharge in due course any of GAMCO  liabilities;

•   a breach by GAMCO of any of its obligations under the Separation Agreement;  and

•   any untrue statement or alleged untrue statement of a material fact: (i) contained in any document filed with the SEC by GAMCO pursuant to any securities rule, regulation or  law, (ii) otherwise disclosed by GAMCO or its subsidiaries to investors or potential investors in GAMCO or its subsidiaries or (iii) furnished to any Associated Capital indemnitee by GAMCO or any of its subsidiaries for inclusion in any public disclosures to be made by any Associated Capital indemnitee; or any omission or alleged omission to state in any information described in clauses (i), (ii) or (iii) a material fact necessary to make the statements not misleading. The indemnity described in this paragraph is available only to the extent that Associated Capital losses are caused by any such untrue statement or omission or alleged untrue statement or omission, and the information which is the subject of such untrue statement or omission or alleged untrue statement or omission was not supplied after the spin-off by Associated Capital or its agents.

Similarly, Associated Capital has agreed to indemnify GAMCO and its directors, officers, employees, agents and affiliates (collectively, ‘‘GAMCO indemnitees’’) against all losses, liabilities and damages incurred or suffered by any of the GAMCO indemnitees arising out of:

•   Associated Capital’s business;

•   the failure or alleged failure of Associated Capital or any of its subsidiaries to pay, perform or otherwise discharge in due course any of Associated Capital liabilities;

 

•   a breach by Associated Capital of any of its obligations under the Separation Agreement; and

•   any untrue statement or alleged untrue statement of a material fact: (i) contained in any document filed with the SEC by Associated Capital following the distribution pursuant to any securities rule, regulation or law, (ii) otherwise disclosed following the distribution by Associated Capital or its subsidiaries to investors or potential investors in Associated Capital or its subsidiaries or (iii) furnished to any GAMCO indemnitee by Associated Capital or any of its subsidiaries for inclusion in any public disclosures to be made by any GAMCO indemnitee; or any omission or alleged omission to state in any information described in clauses (i), (ii) or (iii) a material fact necessary to make the statements not misleading. The indemnity described in this paragraph is available only to the extent that GAMCO losses are caused by any such untrue statement or omission or alleged untrue statement or omission, and the information which is the subject of such untrue statement or omission or alleged untrue statement or omission was not supplied by GAMCO or its agents.

Transitional Administrative and Management Services Agreement

On November 30, 2015, we entered into a Transitional Administrative and Management Services Agreement with Associated Capital (the “Transition Services Agreement”) pursuant to which GAMCO will provide Associated Capital with a variety of services and Associated Capital will provide payroll services to GAMCO following the spin-off.  Among the principal services GAMCO will provide to Associated Capital are:

•

accounting, financial reporting and consolidation services, including the services of a financial and operations principal;

•

treasury services, including, without limitation, insurance and risk management services and administration of benefits;

•   tax planning, tax return preparation, recordkeeping and reporting services;

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

•   legal and compliance advice, including the services of a Chief Compliance Officer;

•   technical/technology consulting; and

•   operations and general administrative assistance, including office space, office equipment and furniture, payroll, procurement, and administrative  personnel.

In providing the services pursuant to this agreement, GAMCO may, subject to the prior written consent of Associated Capital, employ consultants and other advisers in addition to utilizing its own employees. Services provided by GAMCO to Associated Capital or by Associated Capital to GAMCO under the Transition Services Agreement are charged at cost and for the fiscal year ended December 31, 2016, we paid Associated Capital approximately $4,656,441, and Associated Capital paid $12,164,746 to us.

The Transition Services Agreement had an initial term of twelve months and has not been terminated to date. The Transition Services Agreement is terminable by either party on 30 days’ prior written notice to the other party.

Each of the following named executives of GAMCO earned an amount during 2016 for services rendered to Associated Capital pursuant to the Transition Services Agreement and/or, in some cases, an additional amount that was earned by them directly for incentive-based variable compensation from Associated Capital.

Tax Indemnity and Sharing Agreement

On November 30, 2015, we entered into a Tax Indemnity and Sharing Agreement with Associated Capital that provides for certain agreements and covenants related to tax matters involving Associated Capital and us. This agreement covers time periods before and after the distribution. Among the matters addressed in the agreement are filing of tax returns, retention and sharing of books and records, cooperation in tax matters, control of possible tax audits and contests and tax indemnities. The agreement also provides for limitations on certain corporate transactions that could affect the qualification of the spin-off as tax free under the Internal Revenue Code.

Promissory Note

In connection with the spin-off of Associated Capital on November 30, 2015, the Company issued a $250 million promissory note (the “AC 4% PIK Note”) payable to Associated Capital.  The AC 4% PIK Note bears interest at 4.0% per annum.  The original principal amount has a maturity date of November 30, 2020.  Interest on the AC 4% PIK Note will accrue from the date of the last interest payment, or if no interest has been paid, from the effective date of the AC 4% PIK Note .  At the election of the Company, payment of interest on the AC 4% PIK Note may be paid in kind (in whole or in part) on the then-outstanding principal amount (a “PIK Amount”) in lieu of cash. The Company will repay the original principal amount of the AC 4% PIK Note to Associated Capital in five equal annual installments of $50 million on each interest payment date up to and including the maturity date.  All PIK Amounts added to the outstanding principal amount of the AC 4% PIK Note will mature on the fifth anniversary from the date the PIK Amount was added to the outstanding principal of the AC 4% PIK Note .  In no event may any interest be paid in kind subsequent to November 30, 2019.  The Company may prepay the AC 4% PIK Note (in whole or in part) prior to maturity without penalty.  During 2016, the Company prepaid $150 million of principal of the AC 4% PIK Note.  $50 million of the prepayment was applied against the principal amount due on November 30, 2016, $40 million against the principal amount due on November 30, 2017, $30 million against the principal amount due on November 30, 2018, and $30 million against the principal amount due on November 30, 2019.  Of the $100 million principal amount outstanding at December 31, 2016, $10 million is due on November 30, 2017, $20 million is due on November 30, 2018, $20 million is due on November 30, 2019, and $50 million is due on November 30, 2020.  During 2016, GAMCO accrued interest expense of $7,747,854 for the AC 4% PIK Note.

Service Mark and Name License Agreement

On November 30, 2015,  we entered into the Service Mark and Name License Agreement with Associated Capital pursuant to which Associated Capital has certain  rights to use the ‘‘Gabelli’’ name and the ‘‘GAMCO’’ name.

Other Related Party Transactions

On November 18, 2015, the Company commenced a tender offer (the “Offer”) to purchase for cash up to $100 million aggregate principal amount of its senior unsecured notes due June 1, 2021 at a price of 101% of the principal amount.  In connection with the Offer, the Company borrowed $35.0 million from GGCP.  The loan had a term of one year and bore interest at 90-day LIBOR plus 3.25%, reset and payable quarterly.  Under the terms of the loan agreement, the Company was required to fully pay the loan prior to any accelerated payment of the AC 4% PIK Note.  On March 18, 2016, the Company paid back $15.0 million of the loan.  During the second quarter of 2016 the Company paid back the remaining $20.0 million of the loan.  During 2016, GAMCO recorded interest expense of $415,000.

In connection with the issuance of the Convertible Note, GGCP deposited cash equal to the principal amount of the Note and six months interest into an escrow account established pursuant to an escrow agreement by and among GGCP, the Company, the Convertible Note holder and the escrow agent.  The Company paid the annual costs of setting up the escrow account in the amount of $55,000 and will continue to pay them as long as the escrow account is open.  The Company did not pay any fees to GGCP in connection with the funding of the escrow account.

GAMCO Asset Management Inc. (“GAMCO Asset Management”), a wholly-owned subsidiary of the Company, has entered into an agreement to provide advisory and administrative services to MJG Associates, which has been wholly-owned by our Chairman and CEO, Mr. Mario Gabelli, since 1990, with respect to the private investment funds that it manages. Pursuant to this agreement, MJG Associates paid GAMCO Asset Management $10,000 (excluding reimbursement of expenses) for 2016. Mr. John Gabelli, the brother of our Chairman and CEO, is the sole shareholder of an entity that is the general partner of two investment partnerships - Manhattan Partners I, L.P. (“Manhattan I”) and Manhattan Partners II, L.P. (“Manhattan II”).  Manhattan I and Manhattan II paid GAMCO Asset Management investment advisory fees in the amount of $11,274 for 2016.  In addition, an entity that Mr. John Gabelli’s wife is the sole shareholder of is the co-general partner of S.W.A.N. Partners, LP (“S.W.A.N.”), which is a separately managed account of GAMCO Asset Management.  S.W.A.N. paid GAMCO Asset Management investment advisory fees in the amount of approximately $18,206 for 2016.

GAMCO serves as the investment advisor for twenty-one open-end funds, fifteen closed-end funds and one exchange traded managed fund under the Gabelli, GAMCO and Comstock brands (collectively, the “Funds”)  and earns advisory fees based on predetermined percentages of the average net assets of the Funds. In addition, G.distributors, LLC, the broker dealer subsidiary of GAMCO, has entered into distribution agreements with each of the Funds.  As principal distributor, G.distributors, LLC incurs certain promotional and distribution costs related to the sale of Fund shares, for which it receives a distribution fee from the Funds or reimbursement from the investment advisor.  For 2016, G.distributors, LLC received $40,976,387 in distributions fees.  Advisory and distribution fees receivable from the Funds were $32,925,046 at December 31, 2016.  

Pursuant to an agreement between GCIA and Funds Advisor, Funds Advisor pays to GCIA 90% of the net revenues received by Funds Advisor related to being the advisor to the SICAV.  Net revenues are defined as gross advisory fees less expenses related to payouts and expenses of the SICAV paid by Funds Advisor.  The amount paid by Funds Advisor to GCIA for 2016 was $2,708,084.

We incur expenses for certain professional and administrative services, and purchase services from third party providers, such as payroll, transportation, insurance and public relations services, on behalf of GGCP and MJG Associates.  GGCP and MJG Associates reimburse us for these expenses.  GGCP also incurs expenses for certain professional and administrative services on behalf of the Company, and we reimburse GGCP for these expenses.  The net amount reimbursable from GGCP and MJG Associates to us for such expenses for 2016 was $82,830 and $639,640, respectively.  At December 31, 2016, $45,187 was owed to the Company by GGCP, and $639,460 was owed to the Company by MJG Associates.  The GGCP amount was paid in full to the Company on February 2, 2017, and the MJG Associates amount was paid in full to the Company on March 20, 2017.

Certain directors and executive officers have immediate family members who are employed by us, our subsidiaries, and certain related entities. The base salaries and bonuses of each of these immediate family members are established in accordance with our compensation practices applicable generally to staff members with equivalent qualifications and responsibilities and holding similar positions. None of the directors or executive officers has a material interest in any of these employment relationships of their immediate family members, and all of the immediate family members of our directors mentioned below are financially independent adult children. None of the immediate family members mentioned below is an executive officer of GAMCO.  Mr. Marc Gabelli was an executive officer of Associated Capital during 2016.

A daughter of Mr. Avansino, one of our directors, is employed by one of our subsidiaries in a sales and marketing role and earned from GAMCO in 2016 incentive-based variable compensation based on revenues generated by certain relationships (“Variable Compensation”) of $303,323 plus usual and customary benefits. She also received 2,000 restricted stock awards on August 6, 2013 (600 of which vested in August 2016) with a grant date fair value of $57.86 per share and 500 restricted stock awards with an effective grant date, under FASB guidance, of December 23, 2014 and a legal grant date of January 15, 2015 with a grant date fair value of $87.99 per share.  The prices were reflective of the value of GAMCO’s stock prior to the spin. As with all Company restricted stock awards, fair value equals the closing price of the Company’s Class A Stock on the day preceding the effective grant date.  Compensation expense of $29,768 was recognized for all of her awards for financial statement reporting purposes for the fiscal year ended December 31, 2016 calculated in accordance with FASB guidance.  She also received $924 in accumulated dividends on the restricted stock awards that vested in August 2016. The total compensation that she earned from GAMCO in 2016 was $334,015.

A son of our Chairman, who has been employed by one of our subsidiaries since 1998, earned no base salary and $193,996 in Variable Compensation from GAMCO in 2016 plus usual and customary benefits. He also received 4,000 restricted stock awards on August 6, 2013 (1,200 of which vested in August 2016) with a grant date fair value of $57.86 per share, 1,000 restricted stock awards on November 27, 2013 with a grant date fair value of $81.55 per share, 1,000 restricted stock awards on September 15, 2014 with a grant date fair value of $73.41 per share, and 500 restricted stock awards with an effective grant date, under FASB guidance, of December 23, 2014 and a legal grant date of January 15, 2015 with a grant date fair value of $87.99 per share.  The prices were reflective of the value of GAMCO’s stock prior to the spin.  As with all Company restricted stock awards, fair value equals the closing price of the Company’s Class A Stock on the day preceding the effective grant date.  Total compensation expense of $64,582 was recognized for all of his awards for financial statement reporting purposes for the fiscal year ended December 31, 2016 calculated in accordance with FASB guidance. He also received $1,848 in accumulated dividends on the restricted stock awards that vested in August 2016. The total compensation that he earned from GAMCO in 2016 was $260,426.

  A son of our Chairman is employed by a subsidiary of Associated Capital, but he also earned from GAMCO in 2016 a bonus of $50,000, an allocation of $100,000 of the incentive-based management fee (10% of GAMCO pre-tax profits) by Mr. Mario Gabelli as described in the “Variable Compensation” section of the Compensation and Discussion Analysis and in footnote (c) to the Summary Compensation Table for 2016, and $410,376 in Variable Compensation plus usual and customary benefits. The total compensation that he earned from GAMCO in 2016 was $560,376.  

Mr. Marc Gabelli, a son of our Chairman was a director of the Company until May 3, 2016.  His compensation information is disclosed in the Director Compensation Table for 2016 on page 16 .

Our Chairman’s spouse, who has been employed by a subsidiary of the Company in a sales and marketing role since 1984, has been a director of that subsidiary since 1991 and has been his spouse since 2002, earned from GAMCO in 2016 no base salary, an allocation of $200,000 of the incentive-based management fee (10% of GAMCO pre-tax profits) by Mr. Gabelli as described in the “Variable Compensation” section of the Compensation and Discussion Analysis and in footnote (c) to the Summary Compensation Table for 2016 , and $4,721,693 in Variable Compensation plus usual and customary benefits.  She also received 5,000 restricted stock awards on August 6, 2013 (1,500 of which vested in August 2016) with a grant date fair value of $57.86 per share, 2,000 restricted stock awards on November 27, 2013 with a grant date fair value of $81.55 per share, 1,500 restricted stock awards on September 15, 2014 with a grant date fair value of $73.41 per share, and 2,000 restricted stock awards with an effective grant date, under FASB guidance, of December 23, 2014 and a legal grant date of January 15, 2015 with a grant date fair value of $87.99 per share. The prices were reflective of the value of GAMCO’s stock prior to the spin.  As with all Company restricted stock awards, fair value equals the closing price of the Company’s Class A Stock on the day preceding the effective grant date. Total compensation expense of $113,004 was recognized by the Company for all of her awards for financial statement reporting purposes for the fiscal year ended December 31, 2016 calculated in accordance with FASB guidance. She also received $2,310 in accumulated dividends on the restricted stock awards that vested in August 2016. The total compensation that she earned from GAMCO in 2016 was $5,037,007.

A brother of our Chairman earned $419,974 in Variable Compensation from GAMCO in 2016 plus usual and customary benefits.

Ms. Wilson, a director and the daughter of our Chairman, is also a professional staff member of the Company.  Ms. Wilson has been on extended unpaid leave from the Company since January 1, 2004 and therefore received no compensation during 2016 other than compensation she received as a director disclosed in the Director Compensation Table for 2016 and her previously-discussed entitlement, as a member of M ⁴ E, to receive her pro-rata share of payments received by M ⁴ E under the lease on the Building.

The spouse of Ms. LaPointe, our Senior Vice President and Co-Chief Accounting Officer, is employed as the Executive Vice President, Chief Financial Officer and a Director of LICT, the Interim Chief Executive Officer and Chief Financial Officer of CIBL, and the Interim Chief Executive Officer, Chief Financial Officer and a Director of Morgan Group Holding, Inc. (“Morgan”).  In addition to serving as the Chairman and Chief Executive Officer of LICT and as a Director of CIBL, our Chairman and CEO, Mr. Mario Gabelli, also serves as the Chairman of Morgan.

On May 31, 2006, we entered into an Exchange and Standstill Agreement (“Standstill Agreement”) with Frederick J. Mancheski, a significant shareholder, pursuant to which, among other things, he agreed to exchange his 2,071,635 shares of Class B Stock for an equal number of shares of Class A Stock.  The substance of the Standstill Agreement is disclosed in footnote 1 to the beneficial ownership table under the heading “Certain Ownership of Our Stock.”   Pursuant to a Registration Rights Agreement that we entered into with Mr. Mancheski, we filed a shelf registration statement that was declared effective by the SEC on September 1, 2006 and amended on November 25, 2013, for the sale by Mr. Mancheski and others, including certain of our officers and employees, of up to 2,486,763 shares of Class A Stock.  Mr. Mancheski continues to hold 1,136,704 shares of the Company’s Class A Stock as reported in his Amendment No. 7 to Schedule 13D filed with the SEC on November 30, 2016.  The Standstill Agreement expired on May 31, 2016.

As required by our Code of Ethics, our staff members are required to maintain their brokerage accounts at G.research unless they receive permission to maintain an outside account. G.research offers all of these staff members the opportunity to engage in brokerage transactions at discounted rates. Accordingly, many of our staff members, including the executive officers or entities controlled by them, have brokerage accounts at G.research and have engaged in securities transactions through it at discounted rates. From time to time, we, through our subsidiaries, in the ordinary course of business have also provided brokerage or investment advisory services to our directors, the substantial shareholders listed in the table under “Certain Ownership of Our Stock” or entities controlled by such persons for customary fees.