TERMINATION AGREEMENT
This
Termination Agreement, by and between YP Corp., a Nevada corporation, f/k/a
XX.Xxx, Inc. (the “Company”) and
Advanced Internet Marketing, Inc., an Arizona corporation (“AIM”), is
entered into and effective as of November 4, 2004 (the “Effective
Date”).
Background
AIM and
the Company previously entered into an Executive Consulting Agreement, dated
September 20, 2002 (“Consulting
Agreement”) that
specifies the terms and conditions of AIM’s provisions to the Company of the
services of Corporate Secretary, Vice President and a director. Under the
Consulting Agreement the Company is obligated to make payments to AIM until
September 30, 2007 of approximately $1 million. AIM and AIM’s officers,
directors, shareholders are collectively referred to throughout this Agreement
as “AIM.” In
certain cases, the reference to AIM may refer to an individual officer or
director of AIM.
Company
previously granted AIM and/or its employees shares of its common stock, at $.001
par value per share pursuant to Company’s 2003 Stock Plan, that are subject to
transfer restrictions and forfeiture back to Company in the event AIM ceases
providing services to Company (“Restricted
Stock”). The
shares of Restricted Stock are subject to a vesting schedule whereby the
transfer restrictions and forfeiture provisions lapse with respect to a portion
of such shares upon the passage of time and/or the achievement of certain
corporate objectives. The vesting schedules of the respective allotments of
Restricted Stock are set forth in one or more Restricted Stock Agreements
between Company and AIM or individually with AIM’s employees (“Restricted
Stock Agreements”).
AIM and
the Company acknowledge that in connection with the execution of this Agreement,
XxXxx Xxxxxxx has resigned as an officer of both Company and its wholly-owned
subsidiary, Telco Billing, Inc. XxXxx Xxxxxxx is the President of AIM and was
the person previously designated by both parties to provide the executive
officer services of Vice President and Corporate Secretary and the services of a
Director to the Company under the Consulting Agreement.
AIM and
the Company agree that it is in their respective best interests to terminate the
Consulting Agreement.
In
consideration of the payments and benefits set forth in this Agreement, AIM
desires to waive any payments and benefits to which it may otherwise be entitled
upon the termination of the Consulting Agreement.
Agreement
The
parties agree as follows:
1. Resignation
and Termination.
a. General. AIM and
the Company acknowledge that XxXxx Xxxxxxx has resigned as an officer of both
the Company and its wholly-owned subsidiary, Telco Billing, Inc., effective as
of the Effective Date. The resignation and termination were not due to
negligence, malfeasance, theft or embezzlement by Xxxxxxx or any other employees
of AIM while in the employ of the Company.
b. Termination
of Consulting Agreement. As of
the Effective Date, the Consulting Agreement is hereby terminated and is of no
further force or effect.
c. Waiver
of Severance. AIM
waives any right to severance benefits under the Consulting Agreement in
connection with the termination of the Consulting Agreement.
d. Waiver
of Reinstatement. AIM and
its affiliates acknowledge and agree that Company is under no obligation to
reinstate, renegotiate or re-execute the Consulting Agreement or the terms
thereof or reinstate or employ any of AIM’s officers, agents or employees, and
it hereby waives any rights to recall or reinstatement of any past or future
wages, bonuses, compensation not specifically provided in this Agreement.
2. Buy-Out
Payments. In
complete and full satisfaction and in lieu of all claims for compensation,
benefits, severance or related payments from Company or any and all of its
affiliates, subsidiaries, corporate parents, agents, officers, shareholders,
employees, attorneys, successors, and assigns, and as compensation for the
services specified in this Agreement, Company will pay to AIM an aggregate of
$367,570 in periodic payments (“Buy-Out
Payments”) as
follows:
a. $14,865
payable at the beginning of each month for 18 months commencing December 1,
2004;
b. $50,000
upon signing of this Agreement; and
c. $50,000
on January 1, 2005.
Upon the
sale of all or substantially all of the assets of the Company and Company’s
wholly-owned subsidiary, Telco Billing, Inc., or a change of control as defined
by the Securities and Exchange Commission, all the foregoing Buy-Out Payments
will be immediately due and payable.
3. Default.
a. If the
Company fails to make any payment to AIM hereunder when due and the nonpayment
lasts more than 10 days AIM shall send written notice of default by registered
U.S. mail to the Company at the address herein with a 20-day grace period for
the Company to cure. If the amount remains uncured at the end of that period the
Company would be in default under this agreement.
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b. A filing
under the Bankruptcy Statutes or the appointment of a receiver for a substantial
portion of the Company’s and its subsidiary’s assets would be a default under
this Agreement.
c. After the
second occurrence of the Company’s failure to make a Buy-Out Payment when due,
after the grace period and opportunity to cure as provided in Section
3(a) above,
the delinquent Buy-Out Payment will be subject to a 5% penalty fee. If at any
time the Company fails to cure a default, this shall cause all Buy-Out Payments
due under this Agreement to be immediately due and payable together with a
penalty of 5% on the entire balance. From that point forward, the balance shall
accrue default interest at the default rate of 10% per annum until paid in full.
4. Retention
of Restricted Stock. Except
as otherwise provided in this Agreement, the Restricted Stock Agreements remain
in full force and effect. AIM and its employees will be permitted to receive and
retain the shares of Restricted Stock as authorized by the Board of Directors
and reflected in the minutes of the Company, and such shares will continue to
vest in accordance with the vesting schedule set forth in the Restricted Stock
Agreements.
5. Transition
and Consultation. From
the Effective Date and during the period in which the Company is paying AIM the
Buy-Out Payments, and without any additional consideration not provided for
herein, AIM will comply with all reasonable requests made by Company to
facilitate an orderly and successful transition of the duties and services
previously fulfilled and provided by AIM. Additionally, during such period, and
without any additional consideration not provided for herein, AIM will make
available to Company, any specific AIM officer, director, consultant, or
employee, requested by Company, as well as AIM’s collective expertise and
experience for the benefit of Company either at the Company’s facilities or
elsewhere and will cause such officers, directors, consultants, or employees
requested by Company to cooperate with Company in good faith to facilitate an
orderly and successful transition of the duties previously fulfilled and
provided by AIM (“Consultation
Obligation”). The
duties which shall fall under the purview of this agreement are those limited to
graphic design, website design, development of Company marketing materials and
assistance in reference to Company historical or archival material. The failure
of AIM to produce or make physically available an officer, director, consultant
or employee of AIM due to physical impossibility or the death or physical
incapacity of such individual will not be deemed a breach or violation of this
Section
5 or
Agreement. XxXxx Xxxxxxx will remain a director or consultant of AIM at all
times during the term of this Agreement. AIM represents and warrants to Company
that any services provided to Company pursuant to this Agreement will be
performed in a professional and workmanlike manner. AIM acknowledges that AIM
and its officers, directors, employees and consultants do not have any authority
to execute contracts, agreements, documents or instruments, or negotiate on
behalf of Company or otherwise to bind Company, unless expressly authorized by
Company’s Chief Executive Officer. Notwithstanding any provision hereof, for all
purposes of this Agreement, each party will be and act as an independent
contractor and not as partner, joint venturer, or agent of the other, and will
not bind nor attempt to bind the other to any contract. As an independent
contractor, AIM is solely responsible for all taxes, withholdings, and other
statutory or contractual obligations of any sort except as provided
herein.
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6. Surviving
Provisions from the Consulting Contract incorporated herein.
a. As
regards indemnity for actions taken by AIM on behalf of Company, the indemnity
provisions included in the Bylaws as published, Nevada Statues, or the
Consulting Agreement, whichever is broader, shall survive and are incorporated
in this Agreement. In connection with any and all indemnity provisions,
reasonable and prudent professional services and costs needed or expended by AIM
for the Company’s regulatory inquiries (if any), Company’s litigation or filings
of or by Company shall be billed by AIM in addition to the sums payable under
Section
2 above.
AIM and its agents may select accountants and lawyers separate from those
employed to represent Company, the reasonable and prudent fees of which shall be
paid by the Company.
b. The tax
provisions for taxes included in the Consulting Agreement for 2002, 2003 and
2004, until October 31, 2004, if any, shall survive and be included in this
Agreement.
c. Paragraph
10 of the original Consulting Agreement called for the election and payment of
$1,000 by AIM for certain office equipment owned by the Company that would then
be transferred to AIM. By signing below the Company acknowledges that AIM has
elected to and will make this payment under that contract
7. Mutual
Covenants. Where
indicated, AIM and its officers, directors, employees and consultants agree to
comply with each of the following covenants (the “Covenants”), the
violation or breach of which will permit Company, in accordance with
Section
9 of this
Agreement, to utilize the remedies set forth in Section
9.
Where
indicated, the Company and its officers, directors, employees and consultants
agree to comply with each of the following covenants (the “Covenants”), the
violation or breach of which will permit AIM, in accordance with Section
3 of this
Agreement, to immediately terminate this Agreement and cause an acceleration of
all sums due AIM from Company to be immediately due and payable including the
retention of all of the unvested restricted stock of Company issued to AIM or
its employees, agents, officers and directors.
a. Confidentiality
and Non-Disclosure. Both
Parties recognize and acknowledge that Company’s and AIM’s trade secrets,
proprietary information and know-how (including, without limitation, any
information, materials, records, financial statements or books provided to
either during the term of this Agreement), as they may exist from time to time
(“Confidential
Information”), to
which either has had and will continue to have access to and knowledge of, are
valuable, special and unique assets of their business. Neither Company, its
employees, agents and consultants, nor AIM or its employees, agents and
consultants will, during or after the term of this Agreement, in whole or in
part, disclose such Confidential Information to any party for any reason or
purpose whatsoever, nor will either make use of any such Confidential
Information for its or his own purposes or for the benefit of any third-party
under any circumstances during or after the term of this Agreement, provided that
these restrictions will not apply to such Confidential Information that is in
the public domain (provided that Company or AIM was not responsible, directly or
indirectly, for the respective dissemination into the public domain). AIM will
use its best efforts to cause all persons or entities to whom any Confidential
Information will be disclosed by it hereunder to observe the terms and
conditions set forth herein as though each such person or entity was bound
hereby. This restriction does not apply to disclosures required by law, legal
process, or disclosures to professionals to make appropriate filings required by
law, including but not limited to, tax returns and SEC reports.
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b. Public
Statements. AIM and
Company, and each of their employees, agents or consultants will refrain from
making any public statements or comments, whether orally, in writing, or
transmitted electronically, concerning or in any way related to Company that, in
the reasonable judgment of the Board of Directors of each, may, directly or
indirectly, have a material adverse effect upon each business, prospects or
goodwill, except that AIM is allowed to promote the success that AIM achieved
for the Company during its tenure there.
c. Disparaging
Comments. AIM and
Company and each of their employees, agents or consultants will refrain from
making any disparaging comments, directly or indirectly, publicly or privately,
about or in any way related to the other or the other’s officers, directors,
employees and affiliates, including, without limitation, Each party’s business,
management, prospects or services.
d. Communication
with Certain Parties. Unless
specifically authorized, AIM and Company will refrain from communicating, either
orally, in writing, or via electronic transmission, with any parties with which
the other has a contractual or business relationship, including, without
limitation, any employee, customer, or shareholder, with respect to matters
concerning the other’s business or the other’s prospects; provided,
however, that
they may, subject to the other provisions of this Agreement, and notice to the
other’s Chief Executive Officer, communicate with executive officers, directors,
employees, customers, vendors, partners and shareholders of the other as
necessary to reasonably and properly satisfy their obligations under this
Agreement. Both recognize that the other may have existing relationships with
vendors, shareholders, customers, or even employees and ex-employees of the
other that are not related to the other and may continue to do so, so long as
the relationship and activities are not intended to compete with or disparage or
damage the other.
e. Bad
Faith Acts. AIM and
Company will refrain from directly or indirectly engaging in any act or omission
that is in bad faith and to the material detriment of the other or the other’s
business, prospects or goodwill.
f. Non-Competition. Neither
Company nor AIM, their officers, directors and employees or consultants, nor
their respective affiliates will, directly or indirectly, either individually or
in connection with another entity or any third-party, compete with the other or
participate in the development of a product or the provision of services that
reasonably could be deemed to be competitive with any of the other’s products,
services, concepts or lines of business, for a period of six years from the
Effective Date. AIM’s payment for this provision is expressly recognized to be
AIM’s reduction in compensation under this Agreement from that in the Consulting
Agreement. Company’s business, products, services or lines of business are
specifically defined as the creation and production of an online business
directory similar to the
printed Yellow Pages, which
includes direct marketing in the yellow page industry.
Notwithstanding anything in the Agreement to the contrary, the
Company is at all times permitted to operate in the Yellow Pages
industry.
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g. Non-Solicitation
(i) Non-Solicitation
of Customers. Neither
AIM nor Company, nor their respective affiliates, whether personally or as an
agent, employee, consultant, or in any other capacity on behalf of any person or
entity, will, for a period of six years from the Effective Date, directly or
indirectly solicit, do business with, call upon, handle, deliver products or
render services to any active or prospective Customer (as defined below) of the
other, for the purpose of soliciting or selling such Customer the same as,
similar to, or related products or services that the other provides, as defined
above. For purposes of this paragraph, “Customer” shall mean the corporate
customer itself, the representatives of the corporate customer, and any
affiliated entity of the corporate customer.
(ii) Non-Solicitation
of Employees and Independent Contractors. For a
period of six years from the Effective Date, neither AIM, Company, nor their
respective affiliates will, either alone or as an agent, employee, partner,
representative, affiliate, or in any other capacity on behalf of any person or
entity, directly or indirectly, go into business with or hire any Company
employee or independent contractor or solicit, induce, or recruit any Company
employee or independent contractor to end its relationship with Company for the
purpose of having such Company employee or independent contractor engage in
services that are the same as, similar to or related to the services that such
Company employee or independent contractor provided for Company. This
provision does not apply in the event of a change of control as defined by the
Securities and Exchange Commission, a sale of all or substantially all of
either’s assets, the default of payment of the sums described in its
Agreement.
h. Reasonableness
of Restrictions and Provision for Reduction. AIM and
Company expressly acknowledge and agree that the time and scope limitations
contained above in subparagraphs f and g of this Section
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entirely reasonable and are properly and necessarily required for the adequate
protection of the business and intellectual property of Company. If a court of
competent jurisdiction determines that six years from the Effective Date is
unreasonable or unenforceable, then the period will be five years. If a court of
competent jurisdiction determines that five years from the Effective Date is
unreasonable or unenforceable, then the period will be four years. If a court of
competent jurisdiction determines that four years from the Effective Date is
unreasonable or unenforceable, then the period will be three years. If a court
of competent jurisdiction determines that three years from the Effective Date is
unreasonable or unenforceable, then the period will be two years. If a court of
competent jurisdiction determines that two years from the Effective Date is
unreasonable or unenforceable, then the period will be one year.
i. Further
Assurances and Cooperation. AIM and
the Company will cooperate reasonably with each other and with each other’s
representatives, officers, directors and agents in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and will (a) upon request, furnish to each other such further
information; (b) execute and deliver to each other such other documents; and (c)
do such other acts and things, all as each may reasonably request for the
purpose of carrying out the intent of this Agreement, including, without
limitation, the re-execution of this Agreement. Each specifically agrees to
cooperate with the other on all outstanding legal and administrative matters or
issues either of them or any of their affiliates has been involved with during
the term of the Consulting Agreement or their involvement with each other. This
obligation includes spending adequate time for preparation to testify or give
depositions, and cooperating with each other’s attorneys in gathering
information regarding any legal matter.
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8. Representations
and Warranties. AIM and
Company, acknowledging that each is relying upon the truth and accuracy of such
representations and warranties, represent and warrant to each other as
follows:
a. No
Knowledge of Fraud or Misrepresentation. Neither
Company, AIM, nor any of their officers or directors is aware of or has
knowledge of any misrepresentation or misstatement contained in the Company’s
filings made, either publicly or privately, with the Securities and Exchange
Commission concerning the beneficial ownership of Company securities of any
current or former officer or director of Company or any beneficial owner of the
Company’s securities, nor, except
as disclosed in the Company’s filings with the Securities and Exchange
Commission, of any
fraud, embezzlement, or malfeasance, that involves or involved Company’s
management, Company consultants or Company employees while in the employment of
Company or while providing services to Company that should have been disclosed.
b. Review
of Agreement. AIM and
Company have been given the opportunity and have, in fact, read this entire
Agreement, and it is in plain language, and each has had all questions regarding
its meaning answered to their satisfaction.
c. Independent
Advice. Each
party has been given the full opportunity to obtain the independent advice and
counsel from an attorney of its own choosing and has in fact done so or has
knowingly declined such advice and counsel.
d. Understanding
of Terms. Each
party fully understands the terms, contents and effects of this
Agreement.
e. Voluntary
Act. Each
party enters into this Agreement knowingly and voluntarily in exchange for the
promises in this Agreement and that no other representations have been made to
it to induce or influence its execution of this Agreement.
9. Termination. Upon
the material breach of this Agreement, including, without limitation, the
Consultation Obligation by AIM, its agents, employees or consultants, a Covenant
by either party, its agents, employees or consultants, or upon the material
breach of any representation or warranty of one party to the other, and in each
case after written notice by the non-breaching party and (other than a breach of
a representation and warranty) a 30-day opportunity to cure (5-day opportunity
to cure in the case of a breach of the Consultation Obligation by AIM), the
other may terminate this Agreement if the breach is not cured. Notwithstanding
the termination of this Agreement, the representations and warranties set forth
in Section
8 and the
Covenants set forth in Section
7 will
survive and continue to be in effect.
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10. Governing
Law. The
interpretation, performance and enforcement of this Agreement will be governed
by the internal laws of the State of Arizona without giving effect to any choice
of law or rule that would cause the application of the laws of any jurisdiction
other than the internal laws of the State of Arizona to the rights and duties of
the parties. Except for the indemnity provisions which will follow Nevada
Statutes, as Company and its subsidiary are Nevada Corporations.
11. Severability. If any
provision of this Agreement or the application thereof is held to be invalid,
void or unenforceable for any reason, the remaining provisions not so declared
will be construed so as to comply with the law, and will nevertheless continue
in full force and effect without being impaired in any manner
whatsoever.
12. Headings. The
headings in this Agreement are for reference only and will not affect the
interpretation of this Agreement.
13. Notices. All
notices, demands, or other communications that are required or are permitted to
be given under this Agreement must be in writing and are sufficient upon
personal delivery, facsimile, or on the third business day following due deposit
in the United States Mail, postage prepaid, and sent certified mail, return
receipt requested, correctly addressed to the addresses of the parties as
follows:
|
If
to AIM: |
Advanced
Internet Marketing, Inc. |
|
_____________________________ | |
|
_____________________________ | |
|
phone:
( ) ____________________ | |
|
fax:
( ) ______________________ | |
|
If
to Company: |
Chief
Executive Officer |
|
0000
Xxxx Xxxxxxx Xxxxxx, Xxxxx 000 | |
|
Xxxx,
Xxxxxxx 00000-0000 | |
|
Fax:
(000) 000-0000 |
14. Indemnification. In the
event of any litigation or any other legal proceeding, including arbitration,
relating to this Agreement, including without limitation, any action to
interpret or enforce this Agreement, the prevailing party will be entitled to
two times the reasonable attorneys’ fees and costs of suit.
15. Intent
to be Binding. This
Agreement may be executed in any number of counterparts and by facsimile, and
each counterpart and/or facsimile constitutes an original instrument, but all
such separate counterparts and/or facsimiles constitute one and the same
agreement. Neither party to this Agreement will seek to have any term,
provision, covenant, or restriction of this Agreement to be held invalid. This
Agreement shall inure to the benefit of and be enforceable by the successors and
assigns of Company, any person or entity which purchases substantially all of
the assets of Company or with whom Company merges, and any subsidiary,
affiliate, corporation, or operating division of the previously described
entities.
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16. Entire
Agreement. This
Agreement supersedes all prior agreements, whether written or oral, between the
parties with respect to its subject matter (including, without limitation, the
Consulting Agreement, any letter of intent, conceptual agreement, or e-mail
communication) and constitutes a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended, supplemented, or otherwise modified except by a
written agreement executed by the party to be charged with the
amendment.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by
their respective authorized representatives as of the date first written
above.
|
ADVANCED
INTERNET MARKETING, INC. |
|||||
|
By: |
/s/
XxXxx Xxxxxxx |
By: |
/s/
Xxxxx
Xxxxxxxx |
||
|
XxXxx
Xxxxxxx, President |
Xxxxx
Xxxxxxxx |
||||
|
Chief
Executive Officer |
|||||
[SIGNATURE
PAGE TO AIM TERMINATION AGREEMENT]
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