EXHIBIT 10.31
SELLING AGREEMENT
This SELLING AGREEMENT dated May 15, 1999 (the "Agreement") is made and
entered into by and between Auto-Graphics, Inc., a California corporation
(the "Company") on the one hand and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual
("▇▇▇▇▇▇") on the other hand.
RECITALS
WHEREAS, the Company would like to obtain additional equity capital
through the offer and sale of shares of its authorized but unissued
Common Stock in a private and/or public offering of such stock
(collectively the "Securities Offerings");
WHEREAS, the Company would like to offer and sell between 200,000 and
450,000 shares of its authorized but unissued Common Stock in a private
offering (restricted stock) for a price per share of $2.50 (the "Private
Offering");
WHEREAS, if the Private Offering is successful (the Company raises at
least $500,000 in such Offering as more fully defined herein), then the
Company would like to proceed to offer and sell up to an additional
1,000,000 shares of its authorized and unissued shares of Common Stock
at a minimum price of $5 per share in an SEC registered offering (the
"Public Offering");
WHEREAS, ▇▇▇▇▇▇ has a background and experience in the finance and
securities areas and desires to assist the Company with the above
referenced Securities Offerings and the Company desires to secure such
services;
WHEREAS, the Company and ▇▇▇▇▇▇ desire to memorialize in this Agreement
their understandings and agreements regarding assistance by ▇▇▇▇▇▇ in
respect of such Securities Offerings;
AGREEMENT
NOW, THEREFORE, the undersigned parties intending to be legally bound
and obligated thereby, in consideration of the premises and the
covenants contained in this Agreement, and subject to the conditions
set forth herein, do hereby agree as follow:
1. Selling Assistance. During the Term of this Agreement, and subject
to paragraph 7 hereof, ▇▇▇▇▇▇ agrees to assist and the Company hereby
engages ▇▇▇▇▇▇ to assist the Company in respect of the Securities
Offerings (the "Services"). Such Services shall be on a substantially
full-time basis (no less than an average of 35 hours per week). For
purposes of rendering the Services, Patick's activities shall be
generally described as "Vice-President - Special Projects" or such other
position or name as the Company and ▇▇▇▇▇▇ shall subsequently determine
to be appropriate for purposes of the Services to be rendered and
rendered by ▇▇▇▇▇▇ in connection with the Securities Offerings.
2. Limitations On Services. Due to the special, limited nature of the
Services to be rendered by ▇▇▇▇▇▇ as provided for under this Agreement,
▇▇▇▇▇▇ agrees and promises not to attempt to and/or actually bind and/or
obligate the Company in respect of any matters or things other than the
subject matter of the Securities Offering as specifically reviewed and
approved by the Company's Board of Directors and set forth in the
securities disclosure document(s) submitted to and approved by the Board
or as otherwise authorized by the Company's Board of Directors in writing.
3. Term. The Term of this Agreement shall commence on May 15, 1999 and
continue on a continuous basis, unless earlier terminated pursuant to
paragraph 7 hereof, for a period of nine (9) months ending February 14,2000
(herein the "Term").
4. Compensation. During the Term of the Agreement, in consideration for
the Services, the Company shall pay ▇▇▇▇▇▇ and ▇▇▇▇▇▇ will receive from
the Company the following compensation and other opportunities:
A. Payments. In consideration for the Services, the Company will pay
▇▇▇▇▇▇ a monthly payment of $15,000; and
B. Performance Opportunity/Private Offering. If the Private Offering
is in fact successful, defined as no less than $500,000 actually raised
and received by the Company in a Private Offering, complying in all
respects with applicable securities laws, rules and regulations,
within one hundred and twenty (120) days of the date of this Agreement
("Successful Offering"), then ▇▇▇▇▇▇ shall have the right ("Performance
Opportunity") to purchase from the Company warrants at a price of $.01
per warrant entitling ▇▇▇▇▇▇, for a period of three (3)years from the
date of issuance, to purchase shares of the Company's authorized and
unissued Common Stock at a price equal to the par value ($.10) of such
stock in a private offering (restricted stock including a legend
restricting transfer with an appropriate stop transfer instruction on
file with the Company's stock transfer agent). Subject to the above
requirement for a Successful Offering, for each share sold in the
Private Offering ▇▇▇▇▇▇ shall be entitled to .1875 warrants (each whole
warrant representing the right to purchase one share of stock) rounded to
the nearest whole number of warrants up to a maximum of 80,000 warrants
and underlying shares of the Company's restricted Common Stock (the
"Warrants"). The Warrants shall not be assignable or transferable by
▇▇▇▇▇▇ absent the approval of the Company which will not be unreasonably
withheld. Such Performance Opportunity shall not be deemed or treated as
compensation to ▇▇▇▇▇▇ but rather an investment opportunity to ▇▇▇▇▇▇
conditioned upon the success of the Private Offering as provided for
herein. If the Company is not able to conduct and complete a Successful
Offering, then the Company shall have the right to terminate this
Agreement as provided for in paragraph 7 hereof.
C. Possible Further Performance Bonus/Public Offering. The parties
agree that they will defer discussion and agreement as to what, if any,
possible further performance bonus opportunity the Company might make
available to and ▇▇▇▇▇▇ might receive in respect of the proposed Public
Offering and the success of Patick's efforts to assist the Company to
arrange and the Company's actual ability to conduct and successfully
complete such possible offering during the Term of this Agreement. The
parties acknowledge that they may not ultimately reach a mutually
acceptable agreement in respect of this particular further performance
opportunity matter and that, if they do not reach any such mutual
agreement at any time in the future, no rights, benefits, entitlements,
duties, responsibilities, obligations and/or liabilities shall attach
thereto or result therefrom on the part of either party relating to such
performance bonus opportunity as referenced herein. ▇▇▇▇▇▇ further
acknowledges that the Company's ability to proceed with and conduct
any such Public Offering, or any alternative public offering, is subject
to numerous uncertainties many of which are beyond the Company's control
such as the Company's ability to obtain "effectiveness" of the
registration statement covering such offering with the U.S. Securities
and Exchange Commission and the registration and/or qualification of such
Offering with the various state regulatory agencies who would have
jurisdiction over any such Offering. Accordingly, ▇▇▇▇▇▇ agrees and
promises not to provide any prospective investor or other person with any
assurances that any such Public Offering or any securities offering by
the Company will be actually undertaken or, if undertaken, will be
successfully completed or otherwise represent any benefit to the Company
and/or investors in the Private Offering.
D. Expenses. ▇▇▇▇▇▇ will be responsible for his own travel and related
expenses paid or incurred by ▇▇▇▇▇▇ in performing the Services, and the
Company shall have no obligation to ▇▇▇▇▇▇ in respect of any such costs
or expenses (and ▇▇▇▇▇▇ will not obligate the Company in respect of any
such costs/expenses).
5. Certain Covenants By The Company And ▇▇▇▇▇▇ Re Private Offering. The
Company with the assistance of its outside legal counsel and independent
certified public accountants will cause to be prepared the Private
Offering memorandum, including any necessary or advisable investor
subscription and related documentation, to be used for and in conducting
the Private Offering (collectively the "Offering Materials"); and ▇▇▇▇▇▇
agrees and promises to use, exclusively, such Offering Materials to
conduct the Private Offering and, further ▇▇▇▇▇▇ agrees and promises not
to provide any prospective or actual investor in the Private Offering with
any information, statements, materials, and/or assurances which have not
previously been reviewed and approved in writing by the Company for such
purpose. The Company further agrees and covenants to use its best efforts
to ensure that all of the Offering Materials are accurate and complete in
all material respects and do not contain any false or misleading
statements or omit to make any statements which, based on the statements
that are contained in such Offering Materials, render such statements
false or misleading in any material respect. Except for the use of the
Offering Materials by ▇▇▇▇▇▇ as provided for herein intended to facilitate
compliance with applicable securities laws pertaining to the Private
Offering, the Company will not seek to or have the right to direct or
control, and will not interfere with, Patick's activities to locate
prospective investors and to cause such prospective investors to subscribe
to the Private Offering; provided that all of Patick's activities,
including the methods and means of conducting the subject Private
Offering, are lawful which ▇▇▇▇▇▇ represents and warrants will be the
case.
6. Indemnity By The Parties. The parties hereby each agree and promise
to indemnify and hold harmless the other against any claims, debts,
judgments, obligations, costs, expenses (including reasonable attorney's
and professional's fees) and/or liabilities of whatsoever kind or nature
which arise or otherwise result from the refusal and/or failure of the
indemnifying party to timely and fully perform such party's agreements
and promises as set forth herein.
7. Termination By The Company. In the event that the Company is not able
for any reason to timely conclude a Successful Offering (as defined herein
in paragraph 4.B.), then either the Company or ▇▇▇▇▇▇ shall have the
absolute right, in either of such party's sole and absolute discretion and
election to terminate this Agreement and all of such parties'
responsibilities and obligations (including without limitation the
Company's obligation to pay ▇▇▇▇▇▇ any further compensation and to sell
and issue ▇▇▇▇▇▇ any Warrants or underlying shares of stock) under this
Agreement, except only that the parties' respective rights and obligations
under paragraphs 10 and 11 hereof shall survive any such termination.
8. Subsequent Services. At the end of the Term of this Agreement, ▇▇▇▇▇▇
and the Company will negotiate the terms and conditions of the continuation
of Services and/or alternative services by ▇▇▇▇▇▇ to the Company for a
minimum period of one year.
9. Compliance With Securities Laws. The offer, sale and issuance of the
Securities, including the shares of stock in the Private Offering and the
Warrants and underlying shares of stock, shall be in compliance with all
applicable securities laws, rules and regulations.
10. Confidential Information/Covenant Not To Compete. In the event this
Agreement is earlier terminated or expires in accordance with its terms
(including the Term as defined herein), or when the period of Services by
▇▇▇▇▇▇ otherwise ends, ▇▇▇▇▇▇ hereby agrees and promises that (A) he will
not directly or indirectly take, avail himself of, use or otherwise seek
to take advantage of any confidential, trade secret or other proprietary
materials and/or information of the Company ("Confidential Information");
(B) ▇▇▇▇▇▇ will use his best efforts to treat, preserve and protect all
Confidential Information provided to or obtained by him during the period
of his Services to the Company and thereafter; (C) at the time when ▇▇▇▇▇▇
is no longer rendering Services to the Company, he will return and/or
deliver to the Company all written documents, writings and things including
information provided to him by the Company or otherwise obtained by him
from any source in connection with his rendering Services to the Company
or otherwise, without retaining any copies or other duplicates including
excerpts thereof, and that he will provide the Company with a certificate
under penalty of perjury under California law confirming his compliance
with this subparagraph (C); (D) ▇▇▇▇▇▇ will not while he is rendering
Services to the Company or for a period of one (1) year after the period
of his Services to the Company ends, solicit, induce or attempt to induce
any employee and/or other representative of the Company to terminate
his/her employment with and/or other services to the Company; and that
(E) ▇▇▇▇▇▇ will not while he is rendering Services to the Company or for
a period of one (1) year after the termination or cessation of such
Services, solicit, induce or attempt to induce any person or entity having
a business relationship with the Company formed prior to or during the
period of time when ▇▇▇▇▇▇ was rendering Services to the Company to
terminate such business relationship with the Company or to do any thing,
directly or indirectly, to interfere in a materially adverse manner with
any such relationship between the Company and any such person or entity.
Further, ▇▇▇▇▇▇ agrees and promises that, at the time that he is no longer
rendering Services to the Company, he will not, directly or indirectly,
including through employment, consulting or other relationship and/or
ownership interest in any company or business venture, compete with the
Company in respect of its business as now or then engaged in by the Company
for a period of one (1) year from the last date of his rendering Services
to the Company under this Agreement.
11. Inventions/Copyright/Patent And Other Rights To The Company. Any and
all inventions, improvements, discoveries, processes, copyrights, patents
and all other creative efforts of ▇▇▇▇▇▇ conceived, discovered, undertaken,
written, made, developed or otherwise coming into existence during the
period of time that ▇▇▇▇▇▇ is rendering Services to the Company shall be
owned, without the payment by the Company of any additional compensation to
▇▇▇▇▇▇, entirely by the Company; and ▇▇▇▇▇▇ agrees and promises to make
immediate and full disclosure to the Company of any and all such
inventions, improvements, discoveries, processes, copyrights, patents and
other creative efforts and to cooperate and assist the Company in all ways
and manner to perfect and protect its right, title and interest in and to
such intellectual property.
12. Complete Agreement. This Agreement contains all of the parties'
statements, representations, understandings, agreements, promises,
covenants, assurances, warranties, guarantees and other matters regarding
the subject matter of the Agreement. The Recitals which appear at the
outset of this Agreement are incorporated and made a part of this Agreement.
This Agreement supersedes and corrects that certain prior agreement dated
as of this same date pertaining to the services by ▇▇▇▇▇▇ to the Company
in respect of the Securities Offerings by the Company. This Agreement may
only be supplemented, modified, amended or otherwise changed by a further
writing, referencing this paragraph, and signed by the party sought to be
bound by any such supplement, modification, amendment. This Agreement has
and shall be deemed for all purposes to have been drafted and otherwise
prepared by both of the parties and, should any ambiguity subsequently be
determined to exist in or in respect of this Agreement including the
language used herein or otherwise, then neither party shall suffer any
prejudice or disability as a result of any such ambiguity. Each of the
parties acknowledges to the other that they have had the opportunity to
have this Agreement and matters relating thereto reviewed by their own
respective individual attorney and/or other professional advisor.
13. Choice Of Law. This Agreement is made and shall be governed and
interpreted for all purposes under the laws of the State of California
without regard to its conflict of law provisions.
14. Notices. Notices to be given under or in respect of this Agreement
shall be provided in writing and shall be deemed effective upon receipt
if personally delivered or on the third (3rd) day following mailing in the
United States Mail by certified mail - return receipt requested, addressed
as follows:
If To The Company
Auto-Graphics, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
With a copy to -
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ #▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
If To ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to -
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any party may, from time to time, update or otherwise change its address
for purposes of notice under this Agreement by providing such notice in
accordance with the provisions of this paragraph.
15. Time Is Of The Essence. For purpose of this Agreement, including the
performance of the parties' responsibilities, duties and obligations
hereunder, time shall be deemed to be of the essence.
16. Assignment and Other Matters. The parties to this Agreement shall
not have the right, absent the other party's prior written approval and
consent which will not be unreasonably withheld, to assign or otherwise
transfer this Agreement including any of their rights, duties,
responsibilities and/or obligations hereunder to any person or entity.
▇▇▇▇▇▇ acknowledges that the Company regards the Services to be rendered
hereunder by him as personal and unique to ▇▇▇▇▇▇ and that the Company
would not elect to enter into this Agreement with any one but ▇▇▇▇▇▇.
17. Severability. If any provision of this Agreement is hereafter finally
determined to be unenforceable for any reason, then such provision shall
be deemed and treated for all purposes as severed from this Agreement; and
the balance of this Agreement shall remain in full force and effect as
between the parties notwithstanding any such unenforceable and severed
provision.
18. Attorney's Fees. If either party initiates any legal action or
proceeding seeking to enforce such party's rights or otherwise under or
in respect of this Agreement then, in additional to whatever other relief
such party may be entitled to receive as a result of such action/proceeding,
such party (or the other party if determined to be the prevailing party in
any such legal action or proceeding) shall be entitled to recover its
reasonable attorney's and other professional's fees and costs paid or
incurred by such party in connection with such legal action/proceeding
including in respect of an appeal in such action/proceeding.
19. Headings. The headings of the paragraphs (and any subparagraphs) of
this Agreement are included for the convenience of reference only and are
not intended to affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties thereunto duly authorized have executed
this Agreement in Pomona, California effective as of the date first set
forth above.
AUTO-GRAPHICS, INC.
(the "Company")
By ss/▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇, President
By ss/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇ . ▇▇▇▇▇▇▇, Secretary
("▇▇▇▇▇▇")
ss/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇