EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT ("Agreement") is
made and entered into on November
1, 2004 by and between YP Corp., a Nevada corporation (the "Company") and
Xxxxx
Xxxxxx ("Executive").
In
consideration of the mutual promises, covenants and agreements herein contained,
intending
to be legally bound, the parties agree as follows:
1. Employment. The
Company hereby agrees to employ Executive, and Executive hereby
agrees to serve, subject to the provisions of this Agreement, as an employee of
the Company
in the position of Chief Operating Officer, Executive will perform all services
and acts reasonably
necessary to fulfill the duties and responsibilities of her position and will
render such services on the terms set forth herein and will report to the
Company's Chief Executive Officer (the "CEO").
Executive agrees to devote her business time, attention and energies to the
extent reasonably necessary to perform the duties assigned hereunder, and to
perform such duties diligently,
faithfully and to the best of her abilities. It is expressly understood and
agreed that Executive
shall have the right to engage in any activities that are generally engaged in
by executives
of her position and status, provided that Executive agrees to refrain from any
activity that
does, will or could reasonably be deemed to conflict with the best interests of
the Company.
2. Term. This
Agreement is for the two-year period (the "Term")
commencing on the date
hereof and terminating on the second anniversary of such date, or upon the date
of termination of
employment pursuant to Section
8 of this
Agreement; provided, however, that
commencing on the
second anniversary of the date hereof and each anniversary thereafter the Term
will automatically
be extended for one additional year unless, not later than 30 days prior to any
such anniversary,
either party hereto will have notified the other party hereto that such
extension will not take
effect, in which event the Term shall end on the last day of the then current
period.
3. Place
of Performance. Except
for required travel on the Company's business, Executive
will perform the majority of her duties and conduct the majority of her business
on behalf of
the Company at the Company's offices in Mesa, Arizona.
4. Compensation.
(a) Salary.
Executive's salary during the first year of this Agreement will be at
the
annual rate of $137,500 (the "Annual
Salary"),
payable in accordance with the Company's regular
payroll practices. All applicable withholdings, including taxes, will be
deducted from such payments.
The Annual Salary will be increased to $151,250 during the second year of this
Agreement.
Thereafter, the Annual Salary will be as determined by the Compensation
Committee of the
Board, but shall in no event be less than 110% of the previous year's Annual
Salary,
(b) Performance
Bonuses. Upon
signing this agreement Executive shall receive a cash
Bonus of $1,000. Promptly following the commencement of each fiscal year
Executive will receive a
bonus of 25,000 shares of the Company's common stock, $.001 par value per share
issued
out of the Company's 2003 Stock Plan and pursuant to the Company's standard form
of Restricted
Stock Agreement ("Restricted
Stock") in the
event that the Company's basic earnings per share
(as reported in the Company's filings with the Securities and Exchange
Commission) for that
respective fiscal year ended September 30, exceed the prior fiscal year's basic
earnings per share by
a minimum of 50%. To the extent such test is met, the bonus will be paid to
Executive no later
than 30 days after the Company receives from its independent public accountants
the audited financial
statements for the relevant fiscal year indicating that the Company's basic
earnings per share for such fiscal year exceed the basic earnings per share for
the prior year by a minimum of 50%. All bonuses payable under this Section
4 will be
subject to all applicable withholdings, including
taxes.
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(c)Car
Allowance.
Executive shall be provided with a four hundred dollar per month
allowance for automobile usage.
(d) Cell
Phone.
Executive shall be reimbursed for cell phone usage with a ceiling
of one hundred dollars per month.
(c) Office.
Executive shall be provided with an executive office suitable for her
position
and status.
5. Business
Expenses. During
the Term, the Company will reimburse Executive for all business
expenses incurred by her in connection with her employment, upon submission by
the Executive
of receipts and other documentation in conformance with the Company's normal
procedures
for executives of Executive's position and status.
6. Vacation,
Holidays and Sick Leave. During
the Term, Executive will be entitled to paid
vacation (15 business days per calendar year), paid holidays and paid sick leave
in accordance with the
Company's standard policies for its officers, as may be amended from time to
time.
7. Benefits. During
the Term, Executive will be eligible to participate fully in all health,
disability and dental benefits, insurance programs, pension and retirement plans
and other employee
benefit and compensation arrangements (collectively, the "Employee Benefits")
available
to senior officers of the Company generally, as the same may be amended from
time to time by the Board
8. Termination
of Employment.
(a) Notwithstanding
any provision of this Agreement to the contrary, the employment
of Executive hereunder will terminate on the first to occur of the following
dates;
(i) the date
of Executive's death;
(ii) the date
on which Executive has experienced a Disability (as defined below),
and the Company gives Executive notice of termination on account of
Disability;
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(iii)
the date on
which Executive has engaged in conduct that constitutes Cause (as
defined below), and the Company gives Executive notice of termination for
Cause;
(iv) expiration
of the Term without renewal or extension;
(v) the date
on which the Company gives Executive notice of termination for any
reason other than the reasons set forth in (i) through (iv) above;
or
(vi) the date
on which Executive gives the Company notice of termination for Good
Reason (as defined below).
(b) For
purposes of this Agreement, "Disability" will mean an illness injury or
other
incapacitating condition as a result of which Executive is unable to perform,
with reasonable accommodation,
the services required to be performed under this Agreement for 180 consecutive
days
during the Term, In any such event, the Company, in its sole discretion, may
terminate this Agreement by giving notice to Executive of termination for
Disability. Executive agrees to submit to such
medical examinations as may be necessary to determine whether a Disability
exists, pursuant
to such reasonable requests made by the Company from time to
time. Any determination as to the
existence of a Disability will be made by a physician mutually selected by the
Company and
Executive.
(c) For
purposes of this Agreement, "Cause" will mean the occurrence of any of
the
following events, as reasonably determined by the Board:
(i) Executive's
willful failure to substantially perform her duties hereunder;
(ii) Executive's
conviction of a felony, or her guilty plea to or entry of a nolo
contendere plea to a felony charge;
(iii)
the
willful engaging by Executive in conduct that is materially injurious
to the Company's business or reputation; or
(iv) Executive's
breach of any material term of this Agreement or the Company's
written policies and procedures, as in effect from time to time; provided,
however, that with
respect to (i), (iii) or (iv) above, such termination for Cause will only be
effective if the conduct
constituting Cause is not cured by Executive within 5 days of receipt by
Executive of notice
specifying in reasonable detail the nature of the alleged breach.
(d) For
purposes of this Agreement, "Good Reason" will mean the occurrence of any of the
following events, as reasonably determined by Executive:
(i) the
failure of the Company to pay Executive her total Annual Salary and/or
bonuses earned (not including discretionary bonuses);
(ii) the
Company's breach of any material term of this Agreement; provided
that in all cases Executive will have provided the Company with notice and not
less than a 15
calendar day opportunity to cure the conduct that Executive claims constitutes
Good Reason; and/or
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(iii) a
Change of Control shall have occurred. For purposes of this Agreement,
"Change of Control" shall have the meaning ascribed to it in the Company's 2003
Stock
Plan.
9. Compensation
in Event of Termination. Upon
termination of the Term, this Agreement
will terminate and the Company will have no further obligation to Executive
except to pay the
amounts set forth in this Section
9.
(a) In the
event Executive's employment is terminated pursuant to Sections 8(a)(i),
(ii), (iii) or (iv) on or before the expiration of the Term, Executive or her
estate, conservator or
designated beneficiary, as the case may be, will be entitled to payment of any
earned but unpaid Annual
Salary for the year in which the Executive's employment is terminated through
the date of termination,
as well as any accrued but unused vacation, reimbursement of expenses and vested
benefits
to which Executive is entitled in accordance with the terms of each applicable
Employee Benefits
plan.
(b) In the
event Executive's employment is terminated pursuant to Section 8(a)(v) or
(vi) on or before the expiration of the Term, Executive will be entitled to
receive on the date of
termination, as her sole and exclusive remedy, a lump sum amount equal to 2
months of payments
that Executive would receive under the Agreement if her employment with the
Company had not
been terminated, including, but not limited to, the Annual, Salary in effect at
the time of termination
and bonuses (payable at time they would be otherwise be payable), vacation,
benefits and
reimbursement of expenses.
10. Confidentiality.
Executive covenants and agrees that she will not at any time during or after
the end of the Term,
without
written consent of the Company or as may be required, by law or valid
legal process, directly or indirectly, use for her own account, or disclose to
any person, firm or
corporation, other than authorized officers, directors, attorneys, accountants
and employees of the
Company or its subsidiaries. Confidential Information (as hereinafter defined)
of the Company.
As used herein, "Confidential Information" of the Company means information
about the
Company of any kind, nature or description, including but not limited to, any
proprietary information,
trade secrets, data, formulae, supplier, client and customer lists or
requirements, price lists or pricing structures, marketing and sales
information, business plans or dealings and financial information
and plans as well as all papers, resumes and records (including computer
records) that are
disclosed to or otherwise known to Executive as a direct or indirect consequence
of Executive's employment
with the Company, which information is not generally known to the public or in
the businesses
in which the Company is engaged. Confidential Information also includes any
information furnished to the Company by a third party with restrictions on its
use or further disclosure.
11. Nonsolicitation
and Noninterference.
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(a) Customers
and Suppliers. While
employed by the Company and for a one-year
period thereafter, Executive will not, directly or indirectly, solicit or
influence or attempt to solicit
or influence any current or prospective customer, client vendor or supplier of
the Company or any of
its affiliates or subsidiaries to divert their business to any Competitor (as
defined below) of the Company (whether or not exclusive) or otherwise terminate
her or its relationship with the Company.
(b) Employees.
(i) Executive
recognizes that, as a
result of
Executive's association with the
Company, she will possess confidential information about other employees or
consultants of the Company
and its subsidiaries and affiliates relating to their education, experience,
skills, abilities, compensation
and benefits, and their interpersonal relationships with customers. Executive
acknowledges and agrees that the information she possesses or will possess about
these other employees
or consultants is not generally known, is of substantial value to the Company
and its affiliates
and subsidiaries in developing its business and in securing and retaining
customers, and is, will
be or may be known to Executive because of her employment with the
Company.
(ii) Accordingly,
Executive agrees that, while employed by the Company and for a
one-year period thereafter, Executive will not, directly or indirectly, induce,
solicit or recruit
any employee or consultant of the Company or its subsidiaries or affiliates for
the purpose of (A) being employed by Executive or by any Competitor of the
Company or (B) causing such individual
to terminate his or her employment relationship with the Company for any purpose
or no purpose,
(iii)
For
purposes of this Agreement, a "Competitor" will mean any other entity or
person that provides or proposes to provide services or products similar in kind
or purpose to those provided or proposed to be provided by the Company during
the Term.
(iv) The
provisions of Sections 11 (a) and (b) above shall not apply in the event
that Executive terminates this Agreement for Good Reason.
12. Rights
and Remedies upon Breach. In the
event that Executive breaches, or threatens to breach, any of the material
agreements or material covenants set forth herein, the Company
will have the right and remedy to seek to obtain injunctive relief, it being
agreed that any breach or
threatened breach of any of the confidentiality, nonsolicitation or other
restrictive covenants
and agreements contained herein would cause irreparable injury to the Company
and that money
damages would not provide an adequate remedy at law to the Company.
13. Dispute
Resolution. Except
for an action exclusively seeking injunctive relief, any disagreement,
claim or controversy arising under or in connection with this Agreement,
including Executive's
employment or termination of employment with the Company will be resolved
exclusively
by arbitration before a single arbitrator in accordance with the National Rules
for the Resolution
of Employment Disputes of the American Arbitration Association (the "Rules"),
provided
that, the arbitrator will allow for discovery sufficient to adequately arbitrate
any statutory claims, including access to essential documents and witnesses;
provided further, that the Rules will be
modified by the arbitrator to the extent necessary to be consistent with
applicable law. The arbitration
will take place in Phoenix, Arizona. The award of the arbitrator with respect to
such disagreement,
claim or controversy will be in writing with sufficient explanation to allow for
such meaningful
judicial review as permitted by law, and that such decision will be enforceable
in any court of competent jurisdiction and will be binding on the parties
hereto. The remedies available in arbitration
will be identical, to those allowed at law. The arbitrator will be entitled to
award reasonable
attorneys' fees to the prevailing party in any arbitration or judicial action
under this Agreement,
consistent with applicable law. The Company and Executive each will pay its or
her own
attorneys' fees and costs in any such arbitration, provided that, the Company
will pay for any costs,
including the arbitrator's fee, that Executive would not have otherwise incurred
if the dispute were adjudicated in a court of law, rather than through
arbitration,
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14. Rinding
Agreement. (a) This
Agreement is a personal contract and the rights and interests of Executive
hereunder may not be sold, transferred, assigned, pledged, encumbered or
hypothecated
by her, provided that all rights of the Executive hereunder shall inure to the
benefit of, and
be enforceable by Executive's personal or legal representatives, executors,
heirs, administrators,
successors, distributors, devisees and legatees,
(b) In addition
to any obligations imposed by law upon any successor to Company
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the assets of Company, by agreement in form and
substance satisfactory to Executive,
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would by required to perform if no such
succession had taken place.
15. Disclosure
Obligations. During
the Term, Executive agrees to make prompt and full disclosure
to the Company of any change of facts or circumstances that may affect
Executive's obligations
undertaken and acknowledged herein, and Executive agrees that the Company has
the right to
notify any third party of the existence and content of Executive's obligations
hereunder.
16. Return
of Company Property.
Executive agrees that following the termination of her
employment for any reason, she will promptly return all property of the Company,
its subsidiaries,
affiliates and any divisions thereof she may have managed that is then in or
thereafter comes
into her possession, including, but not limited to, documents, contracts,
agreements, plans, photographs,
books, notes, electronically stored data and all copies of the foregoing, as
well as any materials or equipment supplied by the Company to
Executive.
17. Entire
Agreement. This
Agreement contains all the understandings between the parties
hereto pertaining to the matters referred to herein, and supersedes all
undertakings and agreements,
whether oral or written, previously entered into by them with respect thereto,
Executive
represents that, in executing this Agreement, she does not rely, and has not
relied, on any representation
or statement not set forth herein made by the Company with regard to the subject
matter,
bases or effect of this Agreement or otherwise.
18. Amendment
or Modification, Waiver. No
provision of this Agreement may be amended
or waived unless such amendment or waiver is agreed to in writing, signed by
Executive and by a
duly authorized officer of the Company. The failure of either party to this
Agreement to enforce
any of its terms, provisions or covenants will not be construed as a waiver of
the same or of the right
of such party to enforce the same. Waiver by either party hereto of any breach
or default by the
other party of any term or provision of this Agreement will not operate as a
waiver of anv other
breach or default.
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19. Notices. Any
notice to be given hereunder will be in writing and will be deemed given
when) delivered personally, sent by courier or fax or registered or certified
mail, postage prepaid,
return receipt requested, addressed to the party concerned at the address
indicated below or to such other address as such xxxxx may subsequently give
notice of hereunder in writing:
To
Executive at:
Xxxxx
Xxxxxx.
Mesa,
Az.
Suite
105
4840 East
Jasmine Street
Mesa,
Arizona 00000-0000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
To the
Company at:
Suite
105
4840 East
Jasmine Street
Mesa,
Arizona 00000-0000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
Attention:
Board of Directors
Any
notice delivered personally or by courier under this Section will be deemed
given on the date delivered.
Any notice sent by fax or registered or certified mail, postage prepaid, return
receipt requested,
will be deemed given on the date faxed or mailed. Each party may change the
address to which
notices are to be sent by giving notice of such change in conformity with the
provisions of this
Section.
Severability. In the
event that any one or more of the provisions of this Agreement will be held to
be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remainder of the Agreement
will not in any way be affected or impaired thereby. Moreover, if any one or
more of the
provisions contained in this Agreement will be held to be excessively broad as
to duration, activity
or subject, such provisions will be construed by limiting and reducing them so
as to be enforceable
to the maximum extent allowed by applicable law.
20. Survivorship. The
respective rights and obligations of the parties hereunder will survive
any termination of this Agreement to the extent necessary for the intended
preservation of such
rights and obligations.
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21. Each
Party the Drafter. This
Agreement and the provisions contained in it will not be
construed or interpreted for or against any party to this Agreement because that
party drafted or caused that party's legal representative to draft any of its
provisions.
22. Governing
Law. This
Agreement will be governed by and construed in accordance with the
laws of the State of Arizona, without regard to its conflicts of laws
principles.
23. Headings. All
descriptive headings of sections and paragraphs in this Agreement are
intended solely for convenience, and no provision of this Agreement is to be
construed by reference
to the heading of any section or paragraph.
24. Counterparts. This
Agreement may be executed in counterparts, each of which will be deemed
an original, but all of which together will constitute one and the same
instrument.
[REMAINDER
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first
written above,
|
YP
CORP., a Nevada corporation |
EXECUTIVE | |
|
/s/
Xxxxx X. Xxxxxxxx |
/s/
Xxxxx Xxxxxx | |
|
Xxxxx
X. Xxxxxxxx |
Xxxxx
Xxxxxx | |
|
Chief
Executive Officer |
[XXXXX
XXXXXX EMPLOYMENT AGREEMENT]
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