Original GBL Prospectus - Gabelli

Prior to the OÅering, the Company and Mr. Gabelli entered into an Employment Agreement which
provides that Mr. Gabelli will receive an incentive-based management fee of 10% of the aggregate pre-tax
proÑts of the Company as computed for Ñnancial reporting purposes in accordance with generally accepted
accounting principles before consideration of this fee so long as he is an executive of the Company and
devoting the substantial majority of his working time to the business of the Company. The Employment
Agreement further provides that Mr. Gabelli will receive a deferred payment of $50 million on January 2,
2002, plus interest payable quarterly at an annual rate of 6%. See ""Management Ì Employment
Agreements.''
The Company and GFI have entered into a Management Services Agreement, with a one year term and
renewable annually, under which the Company will provide certain services for GFI, including furnishing
oÇce space and equipment, providing insurance coverage, overseeing the administration of its business and
providing personnel to perform certain administrative services.
EÅective with the OÅering, the Company will enter into an agreement with GFI (the ""Tax IndemniÑcation
Agreement'') to indemnify GFI and the shareholders of GFI (the ""Tax Indemnitees''), against certain
taxes due and payable by the Tax Indemnitees on or after the OÅering that relate to activities of GFI or
certain of its aÇliates in respect of periods prior to the OÅering (""Taxes''). Generally, when a corporation
owns assets and conducts a business prior to a public oÅering of its stock, such corporation continues to be
liable for any unpaid taxes relating to its business operations prior to such oÅering. However, since the
operations of the Company were conducted by GFI and not the Company prior to the OÅering, the Company
is not automatically liable for any unpaid taxes relating to such operations prior to the OÅering. Consequently,
the Tax IndemniÑcation Agreement has been agreed to by the Company and GFI to require the Company,
and not GFI or the shareholders of GFI, to bear the cost of Taxes relating to the assets and operations of the
Company prior to the OÅering. The Company will be required to make additional payments to oÅset any taxes
payable by a Tax Indemnitee in respect of payments made pursuant to the Tax IndemniÑcation Agreement.
Any payment of Taxes by the Company will be oÅset by any tax beneÑt received by the Tax Indemnitee. The
Tax IndemniÑcation Agreement includes provisions that permit the Company to control any tax proceeding or
contest which might result in the Company being required to make a payment under the Tax IndemniÑcation
Agreement.
The foregoing transactions are collectively referred to herein as the ""Formation Transactions.''
Transactions with Mr. Gabelli and AÇliates
Mr. Gabelli intends to continue devoting time to activities outside of the Company, including managing
his own assets and his family's assets, managing or controlling companies in other industries and managing
assets for other investors through the Permissible Accounts (approximately $110 million as of September 30,
1998). These activities may present conÖicts of interest or compete with the Company. In order to minimize
conÖicts and potential competition with the Company's investment management business, Mr. Gabelli has
undertaken that so long as he is associated with the Company or for a period of Ñve years from the
consummation of the OÅering, whichever is longer, he will not provide investment management services for
compensation other than in his capacity as an oÇcer or employee of the Company except for the Permissible
Accounts. Prior to establishing any additional Permissible Accounts, Mr. Gabelli has agreed to have a
committee of independent directors review any proposed new Permissible Account for conformity with the
speciÑc undertakings set forth under ""Risk Factors Ì Control by Mr. Gabelli; ConÖicts of Interests'', and to
accept the committee's determination as Ñnal. See ""Risk Factors Ì Control by Mr. Gabelli; ConÖicts of
Interest.'' The CertiÑcate of Incorporation of the Company expressly provides that in general Mr. Gabelli,
members of his immediate family who are oÇcers and directors of the Company and entities controlled by
such persons have an obligation to present corporate opportunities to the Company and resolve conÖicts of
interests through one of the processes described in the CertiÑcate of Incorporation, which include independent
director or independent shareholder approval. See ""Description of Capital Stock Ì CertiÑcate of Incorporation
and Bylaw Provisions Ì Overview of Corporate Opportunity and ConÖict of Interest Policies.'' As of the
completion of the OÅering, it is expected that there will be no members of Mr. Gabelli's immediate family
who are oÇcers or directors of the Company.
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