EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement”)
is made and
entered into on September 21, 2004 by
and between YP Corp., a Nevada corporation (the “Company”) and
Xxxx Xxxxx
(“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 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 $165,000 (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 $181,500 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. Within
ten days of the signing of this agreement Executive shall receive a cash bonus
of $35,000. . All applicable withholdings, including taxes, will be deducted
from such payments. Promptly following the commencement of each fiscal year,
Executive will receive a bonus of 50,000 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(c) will be
subject to all applicable withholdings, including taxes.
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(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 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;
(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).
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(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 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.
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.
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(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 2 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 Noninterference.
(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 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.
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(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 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.
1) 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
representatives, executors, heirs, administrators, successors, distributors,
devisees and legatees.
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(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
4840 East
Jasmine Street
Mesa,
Arizona 00000-0000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
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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. A copy of all notices sent to Executive shall be simultaneously
sent to Xxxxxxxx Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000;
attention: Xxxxx X. Xxxxxxxx, Esq.
20. 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.
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. 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.
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.
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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/ Xxxx Xxxxx | ||
|
Xxxxx
X. Xxxxxxxx |
Xxxx
Xxxxx |
||
|
Chief
Executive Officer |
[XXXX
XXXXX EMPLOYMENT AGREEMENT]
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