Sample Business Contracts

Employment Agreement - Advanced Materials Group Inc. and Steve F. Scott

Employment Forms

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  • Sales Representative Contract. Independent sales representatives offer companies the potential to increase the sale of products or services without the burden of increasing headcount. Both parties should understand how commissions are calculated, when commissions will be paid, as well as how the representative will treat confidential information from the company and whether the representative may also sell a competing line of products or services.
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                            EMPLOYMENT AGREEMENT
     THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered July 1, 1998 by and
between ADVANCED MATERIALS GROUP, INC corporation (the "Company") and STEVE F.
SCOTT ("Executive").
     WHEREAS, the Company and Executive desire to enter into this Agreement to
assure the Company of the continuing and exclusive service of Executive and to
set forth the terms and conditions of Executive's employment with the Company.
     NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties agree as follows:
     1. TERM. The Company agrees to employ Executive and Executive hereby
accepts such employment, in accordance with the terms of this Agreement,
commencing July 1, 1998 and ending June 30, 2004, unless this Agreement is
earlier terminated as provided herein.
     2. SERVICES AND EXCLUSIVITY OF SERVICES. So long as this Agreement shall
continue in effect, Executive shall devote Executive's full business time,
energy and ability to the business, affairs and interests of the Company and
matters related thereto, shall use Executive's best efforts and abilities to
promote the Company's interests and shall perform the services contemplated by
this Agreement in accordance with policies established by and under the
direction of the Board of Directors of the Company (the "Board").
     Without the prior express written authorization of the Board, Executive
shall not, directly or indirectly, during the term of this Agreement: (a) render
services to any other person or firm for compensation or (b) engage in any
activity competitive with or adverse to the Company's business, whether alone,
as a partner, officer, director, employee or significant investor of or in any
other entity. (An investment of greater than 5% of the outstanding capital or
equity securities of an entity shall be deemed significant for these purposes.)
     However, the expenditure of reasonable amounts of time for educational,
charitable or investment activities shall not be deemed a breach of this
Agreement if those activities do not materially interfere with the services
required under this Agreement. Furthermore, this Agreement shall not be
interpreted to prohibit Executive from making passive personal investments or
conducting private


business affairs if those activities do not materially interfere with the
services required under this Agreement.

     Executive represents to the Company that Executive has no other outstanding
professional commitments inconsistent with any of the terms of this Agreement or
the services to be rendered hereunder.
     3. DUTIES AND RESPONSIBILITIES. Executive shall serve as President and
Chief Executive Officer of the Company for the duration of this Agreement. In
the performance of executive duties, Executive shall report directly to the
Board of Directors of the Company and shall be subject to the direction of the
Board and to such limits on Executive's authority as the Board may from time to
time impose.
     Executive agrees to observe and comply with the rules and regulations of
the Company as adopted by the Board respecting the performance of Executive's
duties and agrees to carry out and perform orders, directions and policies of
the Company and its Board as they may be, from time to time, stated either
orally or in writing. The Company agrees that the duties which may be assigned
to Executive shall be usual and customary duties of the office(s) of President
and Chief Executive Officer and shall not be inconsistent with the provisions of
the charter documents of the Company or applicable law. Executive shall have
such corporate power and authority as shall reasonably be required to enable
Executive to perform the duties required in any office that may be held.
     During the term of this Agreement, the Company agrees to pay Executive a
base salary at the rate of $201,400 per year until December 1, 1998, and
thereafter shall pay Executive a base salary at the rate of $225,000 per year,
payable in accordance with the Company practices in effect from time to time the
("Base Salary"). Base Salary will be adjusted annually, to the median base
salary based on market conditions and current size of the Company, measured by
revenues, earnings, or market capitalization, or any other pertinent factors in
an annual independent Compensation Survey such as the one conducted by Personnel
Systems in April, 1998 for the Compensation Committee.
     Executive shall also be entitled to all rights and benefits for which
Executive is otherwise eligible under any bonus plan, incentive, participation
or extra


compensation plan, pension plan, profit-sharing plan, life, medical, dental,
disability, or insurance plan or policy or other plan or benefit that the
Company may provide for Executive or (provided Executive is eligible to
participate therein) for senior officers of the Company generally, as from time
to time in effect, during the term of this Agreement (collectively, "Additional
Benefits"). Until further notice during the term hereof, Executive will continue
to receive the Additional Benefits he now receives, and in no event will his
Additional Benefits be reduced below the current level.

     The Board shall, prior to the end of each fiscal year, consider whether in
its reasonable discretion to award a bonus to Executive based on Executive's
performance, and the Company's performance, during such fiscal year.
     Executive shall be entitled to paid vacation in accordance with the plans,
policies, programs and practices as in effect generally with respect to other
senior executives of the Company.
     During the term of this agreement, the Company shall provide Executive with
a vehicle allowance in the amount of at least $860 per month in accordance with
the Company's automobile policy as from time to time in effect.
For business travel, Executive shall be authorized, and is encouraged, to fly
business class when available; otherwise, Executive shall fly coach class.

     5. TERMINATION. This Agreement and all obligations hereunder (except the
obligations contained in Sections 8, 9, 10, 11, 12, 13 and 14 (subject to the
last sentence thereof) (Confidential Information, Inventions and Patents,
Non-Competition, Non-Solicitation of Customers, Noninterference with Executives
and Assistance in Patent Applications, Indemnity) which shall survive any
termination hereunder) shall terminate upon the earliest to occur of any of the
     (a) EXPIRATION OF TERM. The expiration of the term provided for in Section
1 or the voluntary termination by Executive or retirement from the Company in
accordance with the normal retirement policies of the Company.

     (b) DEATH OR DISABILITY OF EXECUTIVE. For the purposes of this Agreement,
disability shall mean the absence of Executive performing Executive's duties
with the Company on a fulltime basis for a period of three consecutive months,
or for



shorter periods aggregating ninety or more business days in any twelve (12)
month period, as a result of incapacity due to mental or physical illness
which is determined to be total AND PERMANENT by a physician selected by the
Company or its insurers and acceptable to Executive or Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably). If Executive shall become totally disabled as described above,
Executive's employment may be terminated by written notice from the Company
to Executive. If Executive's employment is terminated by reason of
Executive's death or disability, this Agreement shall terminate without
farther obligations to Executive (or Executive's heirs or legal
representatives) under this Agreement, other than for (1) payment of the sum
of (A) fifty percent (50%) of Executive's annual Base Salary, payable
periodically as provided herein through June 30, 2004, (B) any compensation
previously deferred by Executive (together with any accrued interest or
earnings thereon), (C) any accrued vacation pay, in each case to the extent
not theretofore paid and (D) a pro rata portion of any bonus to which
Executive would have been entitled pursuant to Section 4(b) (the sum of the
amounts described in clauses (A), (B) (C) and (D) shall be hereinafter
referred to as the "Accrued Obligations"), which (except as provided in
Section 5(b)(A)) shall be paid to Executive or Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days after the
date of termination or any earlier time required by applicable law, and upon
the recipient thereof signing a release in customary form and mutually
satisfactory to the parties thereto; and (2) payment to Executive or
Executive's estate or beneficiary, as applicable, of any amount due pursuant
to the terms of any applicable welfare benefit plan (provided however that
the amount of any insurance benefits or welfare benefit plans actually paid
to Executive and with respect to which premiums were paid by the Company
shall be deducted from the amount of the Accrued Obligations).

     (c) FOR CAUSE.
     The Company may terminate Executive's employment and all of Executive's
rights to receive Base Salary and any Additional Benefits hereunder for cause.
For purposes of this Agreement, the term "cause" shall be defined as any of the
      (i) Executive's material breach of any of the duties and
responsibilities under this Agreement (other than as a result of incapacity
due to Executive's disability);

     (ii) Executive's conviction by, or entry of a plea of guilty or nolo
contenders in, a court of competent jurisdiction for a felony, or any crime
which materially adversely affects the Company and/or its reputation in the



or which involves moral turpitude or is punishable by imprisonment in the
jurisdiction involved;

     (iii) Executive's commission of an act of fraud upon the Company;
     (iv)  Executive's willful failure or refusal to perform Executive's
duties or responsibilities under this Agreement or Executive's material
violation of any duty of loyalty to the Company or a breach of Executive's
fiduciary duty.

     Notwithstanding the foregoing, Executive shall not be terminated for cause
pursuant to clauses (i) through (iv) of this Section 5(c) unless and until
Executive has received notice of a proposed termination for cause and Executive
has had a reasonable opportunity to cure any curable breach of this Agreement
and an opportunity to be heard before at least a majority of members of the
Board. Executive shall be deemed to have had such an opportunity if given
written or telephonic notice at least 72 hours in advance of a meeting if
scheduled in California or five (5) days in advance if such meeting is scheduled
outside California.
     Notwithstanding any other provision of this Section 5, and subject to
Section 7, the Board shall have the right to terminate Executive's employment
with the Company without cause at any time, provided however that within fifteen
(15) days following any such termination, other than as expressly provided in
Section 5(a), (b) or (c) or Section 7 herein, the Company shall pay to Executive
a lump sum in cash equal to the aggregate of (i) two (2) times his most recent
Annual Base Salary plus (ii) the aggregate annual cash value of his automobile
allowance and health insurance. In circumstances in which Section 7 applies,
this Section 5(d) shall not apply.
      (e) EXCLUSIVE REMEDY. Executive agrees that the payments expressly
provided and contemplated by this Agreement shall constitute the sole and
exclusive obligation of the Company in respect of Executive's employment with
and relationship to the Company and that the payment thereof shall be the sole
and exclusive remedy for any such termination of Executive's employment.

     During the term of this Agreement, to the extent that such expenditures
satisfy the criteria under the Internal Revenue Code for deductibility by the
Company (whether or not fully deductible by the Company) for federal income tax



purposes as ordinary and necessary business expenses, the Company shall
reimburse Executive promptly for reasonable business expenditures, including
travel, entertainment, parking, business meetings, and professional dues but
not the costs of (or dues associated with) maintaining club memberships, made
and substantiated in accordance with policies, practices and procedures
established from time to time by the Company generally with respect to other
senior officers and incurred in the pursuit and furtherance of the Company's
business and good will.

     (a) If there should occur a "change in control" of the Company (or any
successor), as defined below, and Executive is terminated during the term hereof
following such Change of Control for any reason other than as provided in
Sections 5(a), (b) or (c), then the Company, subject to Section 5 (c), shall, no
later than fifteen (15) days after the date of termination, pay to Executive a
lump sum severance payment equal to (i) five (5) times the aggregate amount of
his most recent annual Base Salary, plus (ii) the amount of the cash value of
his automobile allowance and health insurance for the remainder of the term
     (b) For purposes of the foregoing provisions, a "change of control" means,
and shall be deemed to have taken place, if, (i) any person or entity or group
of affiliated persons or entities, including a group which is deemed a "person"
by Section I 3(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date hereof first acquires in one or more
transactions, at least one of which is after the date of this Agreement,
ownership of 25% or more of the outstanding shares of stock then entitled to
vote in the election of directors of the Company, and (ii) as a result of, or in
connection with, any such acquisition or any related proxy contest, cash tender
or exchange offer, merger or other business combination, sale of all or
substantially all of the assets of the Company or any combination of the
foregoing transactions (other than a transaction unanimously approved by the
members of the Board voting thereon), hereinafter referred to as a
"Transaction", the persons who were directors of the Company immediately before
the acquisition shall cease to constitute three-fourths of the membership of the
Board or any successor to the Company during the period commencing with the
consummation of the Transaction and ending on the first to occur of the first
anniversary of such date or the conclusion of the next meeting of shareholders
to elect directors, except to the extent that any new directors during such
period were elected or nominated by at least three-fourths of such persons (or
new directors who were so nominated or elected). "OWNERSHIP means beneficial or
record ownership, directly or indirectly, other than (i) by a person owning such
shares merely of record (such as a member of a securities exchange,



a nominee, or a securities depositary system), (ii) by a person as a bona
fide pledgee of shares prior to a default and determination to exercise
powers as an owner of the shares, (iii) by a person who is not required to
file statements on Schedule 13D by virtue of Rule 13d-1(b) of the Securities
and Exchange Commission under the Exchange Act, or (iv) by a person who owns
or holds shares as an underwriter acquired in connection with an underwritten
offering pending and for purposes of their public resale or planned private
placement in increments of less than such 25% amount, or by specified
controlling persons as of the date hereof or their respective successors.
Without limitation, the right to acquire ownership shall not of itself
constitute ownership of shares.

     Executive acknowledges that the nature of Executive's engagement by the
Company is such that Executive shall have access to information of a
confidential and/or trade secret nature which has great value to the Company
and which constitutes a substantial basis and foundation upon which the
business of the Company is based. Such information includes financial,
manufacturing and marketing data, techniques, processes, formulas,
developmental or experimental work, work in process, methods, trade secrets
(including, without limitation, customer lists and lists of customer
sources), or any other secret or confidential information relating to the
products, services, customers, sales or business affairs of the Company or
its Affiliates (the "Confidential Information"). Executive shall keep all
such Confidential Information in confidence during the term of this Agreement
and at any time thereafter and shall not disclose any of such Confidential
Information to any other person, except to the extent such disclosure is (i)
necessary to the performance of this Agreement and in furtherance of the
Company's best interests, (ii) required by applicable law, (iii) lawfully
obtainable from other sources, or (iv) authorized in writing by the Company.
Upon termination of Executive's employment with the Company, Executive shall
deliver to the Company all documents, records, notebooks, work papers, and
all similar material containing any of the foregoing information, whether
prepared by Executive, the Company or anyone else.
     Except as may be limited by Section 2870 of the California Labor Code, all
inventions, designs, improvements, patents, copyrights and discoveries conceived
by Executive during the term of this Agreement which are useful in or directly
or indirectly related to the business of the Company or to any experimental work
carried on by the Company, shall be the property of the Company. Executive will



promptly and fully disclose to the Company all such inventions, designs,
improvements, patents, copyrights and discoveries (whether developed
individually or with other persons) and shall take all steps necessary and
reasonably required to assure the Company's ownership thereof and to assist
the Company in protecting or defending the Company's proprietary rights

     Executive acknowledges hereby receipt of written notice from the Company
pursuant to California Labor Code Section 2872 that this Agreement (to the
extent it requires an assignment or offer to assign rights to any invention of
Executive) does not apply fully to an invention which qualifies fully under
California Labor Code Section 2870.
     In order to protect the Confidential Information, Executive agrees that
during the term of Executive's employment, and for a period of two year(s)
thereafter, Executive shall not directly, or indirectly, whether as an owner,
partner, shareholder, agent, employee, creditor, or otherwise, promote,
participate or engage in any activity or other business competitive with the
Company's business or the business of any present Affiliate of the Company in
any of the counties in California or in any state in the United States, or in
any other country in the world in which the Company currently operates if such
activity or other business involves any use by the Executive of any of the
Confidential Information.
     Executive agrees that for a period of two (2) year(s) after the
termination of employment with the Company, Executive will not, on behalf of
Executive or on behalf of any other individual, association or entity, call
on any of the customers of the Company or any Affiliate of the Company for
the purpose of soliciting or inducing any of such customers to acquire (or
providing to any of such customers) any product or service provided by the
Company or any Affiliate of the Company, nor will Executive in any way,
directly or indirectly, as agent or otherwise, in any other manner solicit,
influence or encourage such customers to take away or to divert or direct
their business to Executive or any other person or entity by or with which
Executive is employed, associated, affiliated or otherwise related.

     In order to protect the Confidential Information, Executive agrees that
during the term hereof and for a period of two year(s) thereafter, Executive



not, directly or indirectly, induce or entice any Executive of the Company to
leave such employment or cause anyone else to leave such employment.

     Executive agrees to assist the Company in obtaining United States or
foreign letters patent and copyright registrations covering inventions assigned
hereunder to the Company and that Executive's obligation to assist the Company
shall continue beyond the termination of Executive's employment but the Company
shall compensate Executive at a reasonable rate for time actually spent by
Executive at the Company's request with respect to such assistance. If the
Company is unable because of Executive's mental or physical incapacity or for
any other reason to secure Executive's signature to apply for or to pursue any
application for any United States or foreign letters patent or copyright
registrations covering inventions assigned to the Company, then Executive hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Executive's agent and attorney-in-fact to act for and in
Executive's behalf and stead to execute and file any such applications and to do
all other lawfully permitted acts to further the prosecution and issuance of
letters patent or copyright registrations thereon with the same legal force and
effect as if executed by Executive. Executive hereby waives and quitclaims to
the Company any and all claims, of any nature whatsoever, which Executive now or
hereafter may have for infringement of any patent or copyright resulting from
any such application for letters patent or copyright registrations assigned
hereunder to the Company. Executive will further assist the Company in every way
to enforce any copyrights or patents obtained including, without limitation,
testifying in any suit or proceeding involving any of the copyrights or patents
or executing any documents deemed necessary by the Company, all without further
consideration but at the expense of the Company. If Executive is called upon to
render such assistance after the termination of Executive's employment, then
Executive shall be entitled to a fair and reasonable per them fee in addition to
reimbursement of any expenses incurred at the request of the Company.
     14. INDEMNITY.
     To the fullest extent permitted by applicable law and the bylaws of the
Company, as from time to time in effect, the Company shall indemnify Executive
and hold Executive harmless for any acts or decisions made in good faith while
performing services for the Company, and the Company shall use its best efforts
to obtain or maintain coverage for Executive under any liability insurance
policy or policies now in force or hereafter obtained during the term of this
Agreement that cover other officers of the Company having comparable or lesser
status and


responsibility. To the same extent, the Company will pay and, subject to any
legal limitations, advance all expenses, including reasonable attorneys' fees
and costs of court approved settlements, actually and necessarily incurred by
Executive in connection with the defense of any action, suit or proceeding
and in connection with any appeal thereon, which has been brought against
Executive by reason of Executive's service as an officer or agent of the
Company or of any Affiliate of the Company. Executive's right to indemnity
shall survive any termination of this Agreement, save as to any matter which
resulted in Executive's being terminated for cause hereunder.

     15. REMEDIES.
     The parties hereto agree that the services to be rendered by Executive
pursuant to this Agreement, and the rights and privileges granted to the Company
pursuant to this Agreement, are of a special, unique, extraordinary and
intellectual character, which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and that a breach by Executive of any of the terms of this Agreement will cause
the Company great and irreparable injury and damage. Executive hereby expressly
agrees that the Company shall be entitled to the remedies of injunction,
specific performance and other equitable relief to prevent a breach of this
Agreement by Executive. This Section 15 shall not be construed as a waiver of
any other rights or remedies which the Company may have for damages or
     If any provision of this Agreement is held to be unenforceable for any
reason, it shall be adjusted rather than voided, if possible, to achieve the
intent of the parties to the extent possible. In any event, all other provisions
of this Agreement shall be deemed valid and enforceable to the extent possible.
     17. SUCCESSION.
     This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement, by operation of law or
otherwise. The obligations and duties of Executive hereunder are personal and
otherwise not assignable. Executive's obligations and representations under this



Agreement will survive the termination of Executive's employment, regardless
of the manner of such termination.

     18. NOTICES.
     Any notice or other communication provided for in this Agreement shall be
in writing and sent if to the Company to its principal office at:
     Advanced Materials Group, Inc.
     20211 5. Susana Road
     Rancho Dominguez, CA 90221
     Attention: Chairman of the Board
or at such other address as the Company may from time to time in writing
designate, and if to Executive at such address as Executive may from time to
time in writing designate. Each such notice or other communication shall be
effective (i) if given by telecommunication, when transmitted to the applicable
number so specified in (or pursuant to) this Section 18, (ii) if given by mail,
three days after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when actually delivered at such address.

     This Agreement contains the entire agreement of the parties relating to the
subject matter hereof and supersedes any prior agreements, undertakings,
commitments and practices relating to Executive's employment by the Company,
including without limitation the agreement dated May 2,1997.
     20. AMENDMENTS.
     No amendment or modification of the terms of this Agreement shall be valid
unless made in writing and duly executed by both parties.
     21. WAIVER.
     No failure on the part of any party to exercise or delay in exercising any
right hereunder shall be deemed a waiver thereof of any other right, nor shall
any single or partial exercise preclude any farther or other exercise of such
right or any other right.


     This Agreement, and the legal relations between the parties, shall be
governed by and construed in accordance with the laws of the State of
California without regard to conflicts of law doctrines and any court action
arising out of this Agreement shall be brought in any court of competent
jurisdiction within the State of California, County of Los Angeles.
     If any litigation shall occur between Executive and the Company which
litigation arises out of or as a result of this Agreement or the acts of the
parties hereto pursuant to this Agreement, or which seeks an interpretation of
this Agreement, the prevailing party shall be entitled to recover all costs and
expenses of such litigation, including reasonable attorneys' fees and costs.
     All compensation payable hereunder, including salary and other benefits
shall be subject to applicable taxes, withholding and other required, normal or
elected employee deductions.

     This Agreement and any amendment hereto may be executed in one or more
counterparts. All of such counterparts shall constitute one and the same
agreement and shall become effective when a copy signed by each party has been
delivered to the other party.
     26. HEADINGS.
     Section and other headings contained in this Agreement are for convenience
of reference only and shall not affect in any way the meaning or interpretation
of this Agreement.
     The Company and Executive each acknowledge that each party to this
Agreement has been represented by counsel in connection with this Agreement and
the matters contemplated by this Agreement. Accordingly, any rule of law, or any
legal decision that would require interpretation of any claimed ambiguities in
this Agreement against the party that drafted it has no application and is


expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intent of the parties.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                       THE COMPANY
                                       Advanced Materials Group, Inc.

                                       /s/ Timothy R. Busch
                                       By:  Timothy R. Busch
                                       Its: Chairman
                                       /s/ Steve F. Scott
                                       Steve F. Scott
                                       935 Third Street
                                       Hermosa Beach, CA 90254