EXHIBIT 10.2
SELLING STOCKHOLDER AGREEMENT
THIS SELLING STOCKHOLDER AGREEMENT is made this 5th day of September,
2001 (the "Agreement") by and between Mark A. DiSalvo (hereinafter referred to
as the "Selling Stockholder") and GUMP & COMPANY, INC., a Delaware corporation.
W I T N E S S E T H:
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WHEREAS, the Company has filed a registration statement on Form SB-2 with
the Securities and Exchange Commission (the "Commission") which includes
1,000,000 shares of the Company's common stock owned by Selling Stockholder; and
WHEREAS, the Company and Selling Stockholder are entering into this
Agreement to set the rights, duties and obligations of the Company and Selling
Stockholder in connection with the Registration Statement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. As used in this Agreement, the following terms shall
have the meaning set forth below:
(a) "Commission" shall mean the United States Securities and
Exchange Commission or any other federal agency at the time administering
the Securities Act.
(b) "Common Stock" shall mean the Company's common stock, par
value $0.01 per share.
(c) "Company" shall mean Gump & Company, Inc., a Delaware
corporation.
(d) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and
regulations of the Commission hereunder, all as the same shall be in
effect at the time.
(e) "Indemnifying Party" shall have the meaning as set forth in
Section 5 of the Agreement.
(f) "Person" shall mean an individual, a corporation, a
partnership, a limited liability company, a joint venture, a trust, an
estate, an unincorporated organization, a government and any agency or
political subdivision thereof.
(g) "Registration Expenses" shall mean all expenses incurred in
effecting the registration, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements
of counsel for the Company, underwriting expenses, broker commissions or
discounts, expenses of any Company audits incident to or required by any
such registration and Company expenses of complying with the securities
or blue sky laws of any jurisdictions (including fees and disbursements
of counsel and other agents for the Selling Stockholder).
(h) "Registrable Securities" means those Securities identified
on Schedule A hereto to be included in the registration statement.
Registrable Securities shall not include securities which can be freely
sold to the public in the United States without registration under the
Securities Act. To the extent any securities may be sold pursuant to the
provisions of Rule 144(k) under the Securities Act, such securities shall
be deemed capable of being "freely sold to the public" within the meaning
of this subsection.
EXHIBIT 10.2 - Page 1
(i) "Securities Act" shall mean the Securities Act of 1933, as
amended.
2. Registration.
(a) Effective Registration. The Company hereby agrees to file
as soon as practicable or as soon as reasonably practicable, an amendment
to its registration statement on Form SB-2 which was filed with the
Commission on July 13, 2001 with respect to all of the Registrable
Securities (the "Registration"). The Company agrees to use its
commercially reasonable efforts to have the Registration declared
effective as soon as reasonably practicable after such filing and to keep
the Registration continuously effective (i) for a period of 90 days
following the date on which the Registration is declared effective by the
Commission or (ii) until all Registrable Securities included in the
Registration have been sold by the Selling Stockholder pursuant to the
Registration or (iii) until such Registrable Securities can be publicly
offered and sold without registration under Rule 144(k) or otherwise,
whichever is earlier.
(b) Plan of Distribution. Upon effectiveness of the
Registration, the Registrable Securities may be offered by the Selling
Stockholder from time to time in open market transactions (which may
include block transactions), or in private transactions at prices
relating to prevailing market prices or at negotiated prices. The Selling
Stockholder may effect such transactions by selling Registrable
Securities to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions
from the Selling Stockholder and/or the purchasers of Registrable
Securities for whom such broker-dealers may act as agent or to whom they
sell as principal or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The Selling
Stockholder and any broker-dealer acting in connection with the sale of
the Registrable Securities offered under the Registration may be deemed
to be "underwriters" within the meaning of the Securities Act, in which
event any discounts, concessions or commissions received by them, which
are not expected to exceed those customary in the types of transactions
involved, or any profit on resales of the Registrable Securities by them,
may be deemed to be underwriting commissions or discounts under the
Securities Act.
3. Registration Procedures.
(a) The Company will use its commercially reasonable efforts to
cause the Registration to become effective as quickly as practicable,
and, in connection therewith, the Company will as expeditiously as
possible:
(i) notify the Selling Stockholder at any time when a
prospectus relating to the Registrable Securities is required to
be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material
fact or omits to state any fact required to be stated therein and
file promptly an appropriate supplement or amendment to such
prospectus correcting any material misstatement or omission;
(ii) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and prepare
and file with the Commission such amendments and post-effective
amendments to the registration statement as may be necessary to
keep the registration on Form SB-2 effective for 90 days to
complete the proposed distribution; cause the prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities
Act, and to comply fully with the applicable provisions of Rules
424 and 430A under the Securities Act in a timely manner; and
comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration
statement during the applicable period in accordance with the
intended method or methods of distribution by the seller thereof
set forth in such registration statement or supplement to the
prospectus;
EXHIBIT 10.2 - Page 2
(iii) advise the Selling Stockholder promptly and, if
requested by any Selling Stockholder, confirm such advice in
writing, (A) when the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the
registration statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the
Commission for amendments to the registration statement or
amendments or supplements to the prospectus or for additional
information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
registration statement under the Securities Act or of the
suspension by any state securities commission of the qualification
of the Registrable Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact
made in the registration statement, the prospectus, any amendment
or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or
changes in the registration statement or the prospectus in order
to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness
of the registration statement or any state securities commission
or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Registrable
Securities under state securities or blue sky laws, the Company
shall use its reasonable efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) furnish to the Selling Stockholder before filing
with the Commission, copies of the registration statement or any
prospectus included therein or any amendments or supplements to
any such registration statement or prospectus (including all
documents incorporated by reference after the initial filing of
such registration statement) and consult with the Selling
Stockholder prior to the filing of such registration statement or
prospectus;
(v) if requested by any Selling Stockholder, incorporate
in the registration statement or prospectus, pursuant to a
supplement or post-effective amendment if necessary, such
information as such Selling Stockholder may reasonably request to
have included therein, with respect to the number of Registrable
Securities being sold, the purchase price being paid therefor and
any other terms of the offering of the Registrable Securities to
be sold in such offering and make all required filings of such
prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment;
(vi) furnish to the Selling Stockholder without charge at
least one copy of the registration statement as first filed with
the Commission and of each amendment thereto, including all
documents and all exhibits incorporated therein by reference.
(vii) deliver to the Selling Stockholder without charge as
many copies of the prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as the Selling
Stockholder reasonably may request. The Company hereby consents to
the use of the prospectus and any amendment or supplement thereto
by the Selling Stockholder, in connection with the offering and
the sale of the Registrable Securities covered by the prospectus
or any amendment or supplement thereto;
EXHIBIT 10.2 - Page 3
(viii) register or qualify the Registrable Securities,
prior to any public offering of Registrable Securities, under the
securities or blue sky laws of such jurisdictions as the Selling
Stockholder may reasonably request and do any and all other acts
or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by the registration statement; provided, however, that the
Company shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to
the registration statement, in any jurisdiction where it is not
now so subject;
(ix) cooperate with the Selling Stockholder to facilitate
the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the Selling
Stockholder or any underwriter may reasonably request prior to any
sale of Registrable Securities;
(x) cause the Registrable Securities covered by such
registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Company to enable the
Selling Stockholder to consummate the disposition of the
Registrable Securities;
(xi) enter into such customary agreements (including an
underwriting agreement in customary form) in order to expedite or
facilitate the disposition of such Registrable Securities by the
Selling Stockholder;
(xii) make available for inspection by the Selling
Stockholder, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney,
accountant or other agent retained by the Selling Stockholder or
underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably
necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any
such Inspector in connection with such registration statement;
provided that records which the Company determines, in good faith,
to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement or (ii) the
release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction; provided, further,
the Selling Stockholder agrees that he will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at
his expense, to undertake appropriate action and to prevent
disclosure of the Records deemed confidential; and
(xiii) use its reasonable efforts to take all other steps
necessary to effect the registration of the Registrable Securities
contemplated hereby.
(b) Selling Stockholder agrees to furnish to the Company such
information regarding the Selling Stockholder and the distribution of
such Registrable Securities as requested by the Company and such other
information as the Company may from time to time reasonably request, and
Selling Stockholder shall promptly advise the Company in writing of any
material changes in the information so supplied by the Selling
Stockholder.
EXHIBIT 10.2 - Page 4
(c) Selling Stockholder agrees that upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 3(a)(i) hereof, the Selling Stockholder will forthwith
discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until the
Selling Stockholder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(a)(i) hereof and, if so
directed by the Company, the Selling Stockholder will deliver to the
Company all copies, other than permanent file copies then in the Selling
Stockholder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event
the Company shall give any such notice, the Company shall extend the
period during which such registration statement shall be maintained
effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice pursuant
to Section 3(a)(i) hereof to and including the date when the Selling
Stockholder shall have been sent the copies of the supplemented or
amended prospectus contemplated by Section 3(a)(i) hereof.
(d) The Selling Stockholder agrees that he will comply with the
applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder in connection with the disposition of the
Registrable Securities covered by the registration statement, including,
as applicable, the timely filing of reports with the Commission as
required under Sections 13 and 16 of the Exchange Act (Schedule 13D, Form
3, Form 4, etc.).
4. Expenses. All expenses incident to the Company's performance of,
or compliance with, this Agreement including the fees and expenses of counsel to
the Selling Stockholder and special experts retained by the Selling Stockholder
in connection with the registration of the Registrable Securities and
underwriting discounts and commissions and brokerage fees attributable to the
sale of Registrable Securities and including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
"blue sky" laws (including fees and disbursements of registrations or exemptions
of the Registrable Securities); the fees and expenses associated with any filing
with the National Association of Securities Dealers, Inc.; messenger and
delivery expenses; fees and expenses of counsel for the Company and its
independent certified public accountants (including the expenses of any special
audit or "cold comfort" letters required by or incident to such performance);
and the fees and expenses of any special experts retained by the Company in
connection with such registration (all such expenses being herein called
"Registration Expenses"), shall be borne by the Selling Stockholder.
5. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Selling Stockholder from and against any and all losses, claims, damages,
liabilities and expenses arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus (or any amendment or supplement
thereto), or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise
out of, or are based upon, any untrue statement or omission or alleged
untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information
relating to the Selling Stockholder furnished in writing to the Company
by the Selling Stockholder expressly for use in connection therewith.
(b) If any action, suit or proceeding shall be brought against
the Selling Stockholder in respect of which indemnity may be sought
against the Company, the Selling Stockholder shall promptly notify the
parties against whom indemnification is being sought (collectively the
"Indemnifying Parties" and each an "Indemnifying Party"), and such
Indemnifying Parties shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses; provided,
however, that failure to so notify an Indemnifying Party shall not
relieve such Indemnifying Party from any liability unless and to the
extent it is prejudiced as a result of such failure. The Selling
Stockholder shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the
EXHIBIT 10.2 - Page 5
Selling Stockholder unless (i) the Indemnifying Parties have agreed in
writing to pay such fees and expenses, (ii) the Indemnifying Parties have
failed to assume the defense and employ counsel, or (iii) the named
parties to any such action, suit or proceeding (including any impleaded
parties) include the Selling Stockholder and the Selling Stockholder
shall have been advised in writing by its counsel that representation of
such indemnified party and any Indemnifying Party by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in
which case the Indemnifying Party shall not have the right to assume the
defense of such action, suit or proceeding on behalf of the Selling
Stockholder). It is understood, however, that the Indemnifying Parties
shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for the Selling Stockholder not having actual or
potential differing interests with the remaining Selling Stockholder or
among themselves, which firm shall be designated in writing by the
Selling Stockholder, and that all such fees and expenses shall be
reimbursed as they are incurred. The Indemnifying Parties shall not be
liable for any settlement of any such action, suit or proceeding effected
without their written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action,
suit or proceeding, the Indemnifying Parties agree to indemnify and hold
harmless the Selling Stockholder, to the extent provided in paragraph (a)
hereof, from and against any loss, claim, damage, liability or expense by
reason of such settlement or judgment.
(c) The Selling Stockholder agrees to indemnify and hold
harmless the Company, and its directors and officers, and any Person who
controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the indemnity
from the Company to the Selling Stockholder set forth in paragraph (a)
hereof, but only with respect to information relating to the Selling
Stockholder furnished in writing by or on behalf of the Selling
Stockholder expressly for use in the registration statement or
prospectus; provided, however that the Selling Stockholder shall not be
liable for any claims hereunder in an amount in excess of the net
proceeds received by the Selling Stockholder from the sale of the
Registrable Securities pursuant to the registration statement. If any
action, suit or proceeding shall be brought against the Company, any of
its directors or officers, or any such controlling Person based on the
registration statement or prospectus, and in respect of which indemnity
may be sought against a Selling Stockholder pursuant to this paragraph
(c), the Selling Stockholder shall have the rights and duties given to
the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof the Selling Stockholder shall not be required
to do so, but may employ separate counsel therein and participate in the
defense thereof, but the fees and expenses of such counsel shall be at
the expense of the Selling Stockholder), and the Company, its directors
and officers, and any such controlling Person shall have the rights and
duties given to the Selling Stockholder by paragraph (b) above.
(d) If the indemnification provided for in this Section 5 is
unavailable (except if inapplicable according to its terms) to an
indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein,
then an Indemnifying Party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Selling
Stockholder, on the other hand, from their sale of Registrable Securities
(it being expressly understood and agreed that the Company will receive
no proceeds from the sale of the Registrable Securities), or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
EXHIBIT 10.2 - Page 6
law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative
fault of the Company, on the one hand, and the Selling Stockholder, on
the other hand, in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative fault
of the Company, on the one hand, and that of the Selling Stockholder, on
the other hand, shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by the Selling
Stockholder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The Company and the Selling Stockholder agree that it would
not be just and equitable if contribution pursuant to this Section 5 were
determined by a pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities and expenses
referred to in paragraph (d) above shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any
claim or defending any such action, suit or proceeding. Notwithstanding
the provisions of this Section 5, the Selling Stockholder shall not be
required to contribute any amount in excess of the amount by which the
net proceeds received by him in connection with the sale of the
Registrable Securities exceeds the amount of any damages which the
Selling Stockholder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 5 and the representations and warranties of the Company set forth
in this Agreement shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Selling
Stockholder or the Company, its directors or officers or any Person
controlling the Company. A successor to a Selling Stockholder, or to the
Company, its directors or officers or any Person controlling the Company
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 5.
(g) No Indemnifying Party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such action, suit or proceeding.
6. Miscellaneous.
(a) Assignment. This Agreement may not be assigned by any of
the parties hereto.
(b) Entire Agreement. This Agreement, including all exhibits
and other instruments or documents referred to herein or delivered
pursuant hereto which form a part hereof, contains the entire
understanding of the parties hereto in respect of the subject matter
contained herein. There are no representations, warranties, promises,
covenants or undertakings other than those expressly set forth herein or
therein. This Agreement supersedes all prior agreements, whether written
or oral, between the parties with respect to the subject matter hereof.
This Agreement may be amended only by a written agreement duly executed
by the parties hereto. Any condition to a particular party's obligations
hereunder may be waived in writing by such party.
EXHIBIT 10.2 - Page 7
(c) Headings. The headings contained in this Agreement have
been inserted for convenience and reference purposes only and shall not
affect the meaning or interpretation hereof in any manner whatsoever.
(d) Invalidity. If any of the terms, provisions or conditions
contained in this Agreement shall be declared to be invalid or void in
any judicial proceeding, this Agreement shall be honored and enforced to
the extent of its validity, and those provisions not declared invalid
shall remain in full force and effect.
(e) Remedies. In the event of a breach or threatened breach by
either party of its obligations hereunder, each party acknowledges that
the other party will not have an adequate remedy at law and shall be
entitled to such equitable and injunctive relief as may be available to
restrain the other party from any violation of such obligations. Nothing
herein shall be construed as prohibiting either party from pursuing any
other remedies available for such breach or threatened breach, including
the recovery of damages.
(f) Disclosure. Any disclosure made in any exhibit hereto shall
be deemed to be disclosure in all other applicable exhibits hereto.
(g) Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be
deemed given when sent, postage paid, by Registered or Certified Mail,
Return Receipt Requested, addressed to each of the parties as follows:
If to the Company: Mark A. DiSalvo
President
Gump & Company, Inc.
192 Searidge Court
Shell Beach, California 93449
(805) 773-5350
If to a Selling Stockholder: At the address as set forth on
Schedule A
(h) Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of
Delaware.
(i) Counterparts. This Agreement may be executed in
counterparts each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
(j) Exhibits. All exhibits referred to herein shall be attached
hereto and shall be deemed to be a part hereof.
(k) Jurisdiction and Venue. Any action suit or proceeding
brought by or on behalf of either of such parties relating to such
matters shall be commenced, pursued, defended and resolved only in such
courts and any appropriate appellate court having jurisdiction to hear an
appeal from any judgment entered in such courts. The parties hereby agree
that service of process may be made in any manner permitted by the rules
of such courts and the laws of the State of Delaware.
EXHIBIT 10.2 - Page 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
GUMP & COMPANY, INC.
By: /s/ Mark A. DiSalvo
---------------------------------
Mark A. DiSalvo, President
SELLING STOCKHOLDER:
/s/ Mark A. DiSalvo
------------------------------------
MARK A. DiSALVO
EXHIBIT 10.2 - Page 9
SCHEDULE A
GUMP & COMPANY, INC.
SELLING STOCKHOLDER LIST
Percentage of
Shares of
the Company's
Common Stock
Name of Selling Registrable Being
Stockholder Address of Selling Stockholder Securities Registered
------------------ ------------------------------ ----------- -------------
Mark A. DiSalvo 192 Searidge Court 1,000,000 49.2%
Shell Beach, California 93449
EXHIBIT 10.2 - Page 10