EMPLOYMENT AGREEMENT
THIS
EMPOYMENT AGGREEMENT (“Agreement”)
is
made and entered into on February 6, 2006 by and between YP Corp., a Nevada
Corporation (the “Company”)
and
Xxxx Xxxxx (“Executive”).
This
agreement supersedes any other Agreement between Executive and
Company.
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 positions of Chief Operating Officer and Chief Technical Officer.
Executive will perform all services and acts reasonably necessary to fulfill
the
duties and responsibilities of his 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 his 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 his 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 his 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 his duties and conduct the majority of his 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 $181,500 (the “Annual
Salary”),
payable in accordance with the Company’s regular payroll practices. All
applicable withholdings, including taxes, will be deducted from such payments.
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) Bonuses.
On
April 1, 2006 Executive shall receive a cash bonus of $50,000. Following the
commencement of this agreement, either upon a Change of Control as defined
in
the Company’s 2003 Stock Plan or when the Company’s publicly traded stock
reaches $2.00 per share (whichever occurs first), Executive will receive a
bonus
of 150,000 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”).
To
the extent such an event is met, the bonus will be paid to Executive within
30
days of the event. All bonuses payable under this Section 4(c) will be
subject to all applicable withholdings, including taxes.
c) Office.
Executive shall be provided with an executive office suitable for his position
and status.
5. Business
Expenses. During the Term, the Company will reimburse Executive for all
business expenses incurred by him in connection with his 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 (21 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 form 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;
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 the Agreement, “Disability” will mean an illness injury or other
incapacitation 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 the
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 his duties hereunder;
ii. Executive’s
conviction of a felony, or his 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 his 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
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.
iv. Additional
Cause For Termination By Employee.
In
addition to
any
other
act or omission by either Party that grants the other Party the right to
terminate this Agreement, Employee shall have the right to terminate this
Agreement upon thirty (30) days’ notice in the event that Xxxxxx Xxxxx becomes
disassociated from YP.Corp. as a director.
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 his 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 his sole and exclusive remedy, a lump sum amount equal
to 3 months of payments that Executive would receive under the Agreement if
his
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 he 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 his 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 Noniterference.
a) Customers
and Suppliers. While employed by the Company and for a oneyear 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 his or its relationship with
the Company.
b) Employees.
i. Executive
recognizes that, as a result of Executive’s association with the Company, he
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 he 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
his
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 the Agreement, a “Competitor” will mean any other entity or person that
provides or proposes to provide services of 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 the 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 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 the Agreement, consistent with applicable law. The Company
and Executive each will pay its or his 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.
14. Binding
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 him, provided that all rights of the Executive hereunder shall
inure to the benefit of, and be enforceable by executive’s personal or legal
representative, executors, heirs, administrators, successors, distributors,
devisees and legatees.
b) In
addition
to any obligations impose 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 his
employment for any reason, he will promptly return all property of the Company,
its subsidiaries, affiliates and any divisions thereof he may have managed
that
is then in or thereafter comes into his 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, he 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 any other breach or default.
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 party may
subsequently give notice of hereunder in writing:
To
Executive at:
Xxxx
Xxxxx
Mesa,
AZ
Suite
105
0000
X
Xxxxxxx Xxxxxx
Xxxx,
Xxxxxxx 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
the
Section.
20. Severability.
In the event that any one or more of the previsions 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
the 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.
21. 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.
22. 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.
23. 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.
24. Heading.
All
descriptive headings of sections and paragraphs in this Agreement are intended
solely for convenience, and provision of this Agreement is to be construed
by
reference to the heading of any section or paragraph.
25. 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
OF PAGE INTENTINOALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
|
YP
CORP., a Nevada corporation
|
Executive
|
|
|
Xxxxxx
X. Xxxxx
|
Xxxx
Xxxxx
|
|
|
Chairman
of the Board
|
[XXXX
XXXXX EMPLOYMENT AGREEMENT]
