SEPARATION
AGREEMENT AND MUTUAL RELEASE
THIS
AGREEMENT by and between Penny Spaeth (“Spaeth”)
and YP
Corp., a Nevada corporation (the “Company”),
is
entered into and effective as of July
1, 2005
(the
“Effective
Date”).
Background
Spaeth
has served as an employee and officer of the Company (the “Relationships”).
Spaeth’s employment services to the Company were provided pursuant to that
certain Employment Agreement, dated November 1, 2004 (the “Employment
Agreement”),
specifying the terms and conditions of Spaeth’s employment as Chief Operating
Officer.
Spaeth
and the Company now desire to end all Relationships and resolve all outstanding
matters each has, might have, or has had between Spaeth and the Company and
its
stockholders, officers, and directors.
NOW
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
Agreement
1.
Resignation.
Spaeth
has resigned or hereby resigns from all positions with the Company and no longer
serves as Chief Operating Officer of the Company and hereby terminates all
Relationships. The Employment Agreement and all other agreements, whether
written or oral, pertaining to the Company’s employment of Spaeth are
terminated, replaced and superseded by this Agreement.
2.
Waiver
of Severance.
Spaeth
waives any right to severance benefits under the Employment Agreement in
connection with the termination of her employment as Chief Operating Officer
and
will only be entitled to payments,
benefits, or compensation as provided herein.
3.
Payments.
In
consideration for the mutual and general release of all claims against the
Company by Spaeth contained herein and in complete and full satisfaction of
all
obligations owed to Spaeth by the Company (including, but not limited to,
severance payments, commissions, vacation, bonus, additional issuances of
capital stock, including without limitation, any right to stock pursuant to
Section 4(b) of the Employment Agreement (it being understood that Spaeth hereby
forfeits all shares of the Company’s common stock issued to her out of the
Company’s 2003 Stock Plan and any other unvested capital stock of the Company,
or unvested options to purchase such stock, received by Spaeth while employed
with the Company), and any and all claims for compensation and benefits from
the
Company or any and all of its affiliates, subsidiaries, corporate parents,
agents, officers, owners, employees, attorneys, successors, and assigns
(the
“Company
Agents”)),
the
Company will compensate Spaeth in
the
following amounts (collectively, the “Payments”)
subject to and consistent with the Company’s existing payroll procedures and
policy after deducting and withholding all applicable federal and state payroll,
FICA and other taxes and obligations.
a.
Severance.
The
Company will pay Spaeth a severance amount equal to $80,000, payable in two
lump
sums of $40,000 each on July 8,
2005
and October 2, 2005, respectively. These payments will be made regardless of
a
change of control or management of the Company.
b.
Health
Insurance.
The
Company will continue to provide Spaeth with the current form of health
insurance until the four month anniversary of the Effective Date, at which
time,
the Company will cancel Spaeth’s health insurance group policy. To the extent
provided by federal COBRA law or, if applicable, state insurance laws, and
by
the Company’s current group health insurance policies Spaeth will be able to
continue her insurance benefits at her own expense. Later, Spaeth may be able
to
convert to an individual policy through the provider of the Company’s health
insurance.
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4.
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Mutual
and General Releases.
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a.
Spaeth
Release.
Spaeth
releases, discharges, cancels, waives, and acquits, for Spaeth and for Spaeth’s
marital community, heirs, executors, administrators, and assigns, the Company
and the Company Agents, including its officers and directors, from any and
all
rights, claims, demands, causes of action, obligations, damages, penalties,
fees, costs, expenses, and liabilities of any nature whatsoever, whether in
law
or equity, that Spaeth has, had, or may hereafter have against the Company
or
the Company Agents arising out of, or by reason of any cause, matter, or thing
whatsoever existing as of the date of execution of this Agreement, WHETHER
KNOWN
TO THE PARTIES AT THE TIME OF EXECUTION OF THIS AGREEMENT OR NOT. THIS FULL
RELEASE OF ALL CLAIMS includes, without limitation, any claims, demands, or
causes of action arising out of or under, or relating in any manner whatsoever
to the Employment Agreement and/or termination of the employment of Spaeth
with
the Company, the Civil Rights Acts of 1964 and 1991, as amended, the Fair Labor
Standards Act, the Family Medical Leave Act, the Arizona Employment Protection
Act, Arizona’s Wage Payment statute, or any other applicable state or federal
statute, or any common law cause of action, including claims for breach of
any
express or implied contract, wrongful discharge, tort, personal injury, or
any
claims for attorney’s fees or other costs, as well as any claims that related to
other agreements or arrangements, whether written or oral, between the Company
and Spaeth. Spaeth further covenants and agrees that, except for making an
unemployment claim, she has not instituted, or caused to be instituted on
Spaeth’s behalf, any legal proceeding, including filing any claims or complaint
with any government agency alleging any violation of law or public policy
against the Company or the Company Agents premised upon any legal theory or
claim whatsoever (except to enforce the terms of this Agreement), including
without limitation, contract, tort, wrongful discharge, and breach of
contract.
b.
The
Company Release.
The
Company and the Company Agents, including its officers and directors, release,
discharge, cancel, waive, and acquit Spaeth and
Spaeth’s
marital community, heirs, executors, administrators, and assigns, from any
and
all rights, claims, demands, causes of action, obligations, damages, penalties,
fees, costs, expenses, and liabilities of any nature whatsoever, whether in
law
or equity, that the Company is aware of and may have against Spaeth arising
out
of, or by reason of any cause, matter, or thing whatsoever existing as of the
date of execution of this Agreement, WHETHER KNOWN TO THE PARTIES AT THE TIME
OF
EXECUTION OF THIS AGREEMENT OR NOT. THIS FULL RELEASE OF ALL CLAIMS includes,
without limitation, any claims, demands, or causes of action arising out of
or
under, or relating in any manner whatsoever to the Employment Agreement or
the
employment of Spaeth with the Company, as well as any claims relating to any
other agreements or arrangements, whether written or oral, between the Company
and Spaeth. The Company further covenants and agrees that it has not instituted,
or caused to be instituted on the Company’s behalf, any legal proceeding,
including filing any claims or complaint with any government agency alleging
any
violation of law or public policy against Spaeth premised upon any legal theory
or claim whatsoever (except to enforce the terms of this Agreement), including
without limitation, contract, tort, wrongful discharge,
and breach of contract.
Covenants.
c.
Consulting
Services.
Spaeth
shall provide the Chief Executive Officer of the Company with consulting
services from time to time, as requested by the CEO, during the six month period
following the Effective Date.
d.
Confidentiality
and Non-Disclosure.
The
trade secrets, proprietary information, and know-how of the Company
(e.g.,
any
information, materials, records, financial statements, or books from which
the
Company derives independent economic value from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use and which is subject of efforts
that are reasonable under the circumstances to maintain secrecy and to which
Spaeth has had access to and knowledge of) and the terms of this Agreement
(collectively, the “Confidential
Information”),
are
valuable, special and
unique
assets of the Company’s business. Spaeth will not, in whole or in part, disclose
such Confidential Information to any third
party for any reason or purpose whatsoever and the Company shall not disclose
the terms of this Agreement to any third party for any reason or purpose
whatsoever, unless required to do so by law (except that parties can disclose
the terms of this Agreement to their professionals for tax and legal
purposes).
(i)
Nonsolicitation
of Customers. Spaeth,
whether personally or as an agent, employee, partner, representative, affiliate,
or in any other capacity on behalf of any person or entity, shall
not
during
the two year period following the Effective Date, directly or indirectly
solicit
business
from or with any active customer
of the Company with whom Spaeth alone, or in combination with others,
worked
with or solicited
as
an
employee of
the
Company
at any time during the one year period immediately preceding the
Effective Date, and with
whom
Spaeth derived her relationship first solely because of her relationship with
the Company, for
the
purpose of soliciting such Customer to sell the same, similar, or related
services that the Company provided
as of
the Effective Date.
(ii)
Nonsolicitation
of
Employees.
Spaeth
shall not, during the two year period following the Effective Date, 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, solicit
or induce any Company Employee or
Independent Contractor to end their relationship with the Company. For the
purpose of this paragraph, “Company Employee
or
Independent Contractor”
means
anyone
performing
services for the Company as an employee or
independent contractor as of the Effective Date.
f.
Public
Statements. Each party will refrain from making any public statements or
comments, whether orally, in writing, or transmitted electronically, concerning
or in any way related to the other that may, directly or indirectly, have a
material adverse effect upon that party or its or her business, prospects,
reputation, or goodwill.
g.
Disparaging
Comments. Spaeth will refrain from making any disparaging comments, either
directly or indirectly, about or in any way related to the Company
or
the
Company Agents, including,
without
limitation, the Company’s business, the Company’s prospects, either publicly or
privately. Similarly, the Company’s executive officers and directors will
refrain from making any disparaging comments, either directly or indirectly,
about or in any way related to Spaeth, either publicly or
privately.
h.
Cooperation.
Spaeth and the Company shall cooperate reasonably in connection with any steps
required to be taken as part of their obligations under this Agreement, and
shall (a) furnish upon request of the other further information; (b) execute
and
deliver to the other such other documents; and (c) do such other acts and
things, all as the other may reasonably request, for the purpose of carrying
out
the intent of this Agreement, including, without limitation, the re-execution
of
this Agreement and providing a good faith effort to collect, organize and
forward all pertinent Company materials, including, but not limited to,
electronic mail, voice mail, documents
and
contracts.
i. Representations.
The
parties hereto represent and warrant to the other as follows:
(i)
Each
has
been
given the opportunity and has,
in
fact, read this entire Agreement,
and
that each has
had all
questions regarding its meaning answered to their
satisfaction.
(ii)
Each
has
been given the full opportunity to obtain the independent advice and counsel
from an attorney of their own choosing and has in fact done so.
(iii)
Each
party’s full release of all claims under this Agreement is
given in
return for valuable consideration, in addition to anything of value to which
each
is
already entitled, as provided under the terms of this Agreement.
(iv)
Spaeth
has delivered to the Company all Company records, documents, notes, manuals,
lists, and other tangible items in her possession or control.
The
Company will deliver to Spaeth all of her personal property in its possession
or
control.
5.
Termination.
Upon
the reasonable determination by the Company that Spaeth has materially breached
one or more of the covenants set forth in Section
5,
the
Company may terminate the Payments set forth under Section
3.
Notwithstanding the termination of the Payments, the releases set forth in
Section
4
of this
Agreement and the covenants set forth in Section
5
will
survive and continue to be in effect.
6.
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 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.
7.
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.
8.
Headings.
The
headings in this Agreement are for reference only and will not affect the
interpretation of this Agreement.
9.
Attorney’s
Fees.
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
reasonable attorneys’ fees and costs of suit, with the Court or decision maker
taking into account the reasonableness of each party’s positions during such
dispute in determining who is the prevailing party and the reasonableness of
attorney’s fees.
10.
Indemnity.
The
Company indemnifies, holds harmless, and will defend its former officers and
directors, including Spaeth, from claims, suits, or losses arising out of such
individuals’ position as a director or officer of the Company; provided that
such former officer or director acted in good faith and in a manner he or she
reasonably believed to be in, and not opposed to, the best interests of the
Company and its shareholders.
11.
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 be held
invalid.
12.
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
Employment 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.
13.
Injunctive
Relief.
Because
a violation of this Agreement will cause the Company immediate and irreparable
injury and damage, which is not readily measurable and to protect each party’s
interests, each party may, in addition to instituting legal proceedings to
recover damages resulting from a breach of this Agreement, seek to enforce
this
Agreement with an action for injunctive relief to cease or prevent any actual
or
threatened violation of this Agreement.
14.
No
Admission Clause.
Neither
the consideration furnished pursuant to this Agreement, nor this Agreement,
is
an admission of any violation of rights by the Company, any Company Agent,
Spaeth, or any of Spaeth’s agents. The Company and Company Agents, and Spaeth
and Spaeth’s agents, deny any violation of rights and deny any liability to the
other.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
IN
WITNESS WHEREOF, The Company has caused this Separationt Agreement and Mutual
Release to be signed by its authorized representative and Spaeth has signed
this
Separation Agreement and Mutual Release, in her individual capacity, as of
the
date first written above.
CAUTION!
THIS IS A RELEASE! READ BEFORE SIGNING!
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YP
CORP., INC.,
a
Nevada Company
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/s/
Penny Spaeth
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Penny
Spaeth
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/s/
Peter J. Bergmann
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By:
Peter J. Bergmann
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Its:
Chairman and Chief Executive Officer
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Address:
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4840
E. Jasmine Street
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Suite
105
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Mesa,
Arizona 85205
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SIGNATURE
PAGE TO SEPARATION AGREEMENT AND MUTUAL RELEASE