Exhibit 10.31
EMPLOYMENT AGREEMENT
This EMPLOYMENT 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 Corey M. Patick, an
individual ("Patick") on the other hand.
R E C I T A L S
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, Patick 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 Patick desire to memorialize in this
Agreement their understandings and agreements regarding Patick's
employment with the Company to provide services to the Company for
purposes of such Securities Offerings;
A G R E E M E N T
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. Employment/Position. During the Term of this Agreement,
and subject to paragraph 7 hereof, the Company agrees to employ and Patick
agrees to be employed by the Company to assist the Company in respect of
the Securities Offerings (the "Services"). Such employment with the
Company shall be on a substantially full-time basis (no less than an
average of 35 hours per week). Patick will be employed in the position of
"Vice-President - Special Projects". Unless and until mutually agreed
upon in writing by the Company and Patick, Patick will not be appointed an
officer or director of the Company.
2. Limitations On Employment. Due to the special nature of
the employment assignment, Patick 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. Employment Compensation. During the Term of the
Agreement, in consideration for the Services, the Company shall pay Patick
and Patick will receive from the Company the following salary and other
opportunities:
A. Salary. In consideration for the Services, the
Company will pay Patick a monthly salary of $15,000, payable in the normal
course and manner consistent with the Company's payroll policies and
procedures; 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 Patick shall have the right
("Performance Opportunity") to purchase from the Company warrants at a
price of $.01 per warrant entitling Patick, for a period of three (3)
years from the date of issuance, to purchase shares of the Company's
authorized and unissued Common Stock at a price equal to the par value
($.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 Patick 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
Patick. Such Performance Opportunity shall not be deemed or treated as
compensation to Patick but rather an investment opportunity to Patick
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 Patick 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.
Patick 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, Patick 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. Patick will be responsible for his own
travel and related expenses paid or incurred by Patick in performing the
Services, and the Company shall have no obligation to Patick in respect of
any such costs or expenses (and Patick will not obligate the Company in
respect of any such costs/expenses).
5. Certain Covenants By The Company And Patick 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 Patick
agrees and promises to use, exclusively, such Offering Materials to
conduct the Private Offering and, further Patick 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.
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 Patick 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 Patick any further compensation and to
sell and issue Patick 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 Employment. At the end of the Term of this
Agreement, Patick and the Company will negotiate the terms and conditions
of Patick's continued employment with 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 Patick's
employment with the Company otherwise ends, Patick 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) Patick will use his best efforts to
treat, preserve and protect all Confidential Information provided to or
obtained by him during the period of his employment with the Company and
thereafter; (C) at the time when Patick is no longer employed by 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 employment with 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)
Patick will not while he is employed by the Company or for a period of one
(1) year after his employment with the Company ends, solicit, induce or
attempt to induce any employee of the Company to terminate his/her
employment with the Company; and that (E) Patick will not while he is
employed by the Company or for a period of one (1) year after his
employment with the Company ends, 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 Patick was employed by 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, Patick agrees and promises that, at the time that he
is no longer employed by 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 employment
with the Company.
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 Patick conceived,
discovered, undertaken, written, made, developed or otherwise coming into
existence during the period of time that Patick is employed by the
Company, whether during or after regular business hours, shall be owned,
without the payment by the Company of any additional compensation to
Patick, entirely by the Company; and Patick 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 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.
3201 Temple Avenue
Pomona, CA 91768-3200
With a copy to -
Robert H. Bretz, Esq.
520 Washington Blvd, PMB #428
Marina del Rey, CA 90292
If To Patick
Corey M. Patick
2806 Sheridan Way
Stockton, CA 95207
With a copy to -
Bill D. Ringer, Esq.
1401 N. Hunter Street
San Joaquin, CA 95202
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, to assign or otherwise transfer this Agreement
including any of their rights, duties, responsibilities and/or obligations
hereunder to any person or entity. Patick acknowledges that the Company
regards the Services to be rendered hereunder by him as personal and
unique to Patick and that the Company would not elect to enter into this
Agreement with any one but Patick.
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/ Robert S. Cope
Robert S. Cope, President
By ss/Daniel E. Luebben
Daniel E. Luebben, Secretary
("Patick")
ss/ Corey M. Patick
Corey M. Patick