Executive Consulting Agreement - YP.Net Inc. and Sunbelt Financial Concepts Inc.
EXECUTIVE CONSULTING AGREEMENT
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This Agreement made effective as of, September 20th, 2002, by and between
YP.Net, Inc. of 4840 East Jasmine Street, suite 105, Mesa, Arizona 85205
("YPNT"), as the party to receive services and Sunbelt Financial Concepts, Inc.
of 7579 E. Main Street suite 200 Scottsdale, Arizona 85251 ("Company") as the
party who shall be providing the services.
WHEREAS Company has a background in Business Management and Administration
and is willing to provide services to YPNT and YPNT desires to have the services
provided by Company and;
WHEREAS Company has provided different levels of service to YPNT since
February 2000 including that of Chief Executive Officer, Chairman and President
and that YPNT has survived and prospered during difficult times under the
stewardship of Company. YPNT separately acknowledges those accomplishments, and;
WHEREAS YPNT faces additional challenges caused in part by activities of
the former Chief Financial Officer. Such as; The Business Software Alliance,
failure to file tax returns when due, EEOC complaints as well as the need to
continue YPNT's profitable successes and the need to alert the Investment
Community to these successes it is now apparent between the parties that YPNT
needs to secure the services of Company for a longer term In whatever capacity
or titles the Company is willing to provide those services;
THEREFORE it is agreed that this contract shall supercede all prior
agreements between the parties and shall become effective on the date signed
below which will have culminated by the recommendation of the Compensation
Committee of YPNT. It is further agreed by the parties that;
1. Description of Services. Company will continue to make available its
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current services as well as the new ones listed below;
a. The services of a Chief Executive Officer ("CEO"), Chairman and
President initially in the person of Angelo Tullo.
b. The services of an administrative person to assist the person in
number 1a above. Initially that person would hold the title of
Executive Assistant to the Chairman and Administrative Vice
President.
Executive Consulting Agreement
Sunbelt/YP.Net, Inc.
September 20th, 2002
Page 1 of 9
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c. The services of at least 1 part time administrative person, or
"Gal/Guy Friday" to assist in all areas of YPNT's business as
directed by the Company.
d. In the event that YPNT determines that another individual should
serve in one or more of those positions it is fully a liberty to do
so at its own cost. It is clearly understood that the services the
Company provides herein are valuable to YPNT no matter the titles
the employees of Company are asked to take while providing the
services to YPNT. In the case where another is named to any of the
titles herein above that Company would continue to provide
consulting services on an as needed basis in order to fulfill its
obligations hereunder.
e. The employees herein shall be employees of Company and not of YPNT
but shall be able to hold themselves out as Employees of YPNT by the
use of their respective titles, and in the course of their duties
with respect to the signing of contracts, etc.
f. The Company duties shall be to monitor and manage the affairs and
employees of YPNT such that YPNT maximizes profits and growth and
enhances shareholder value by alerting the Investment Community to
the successes of YPNT should there continue to be successes.
g. This is not an employment contract of Angelo Tullo or any other
employee of Company and the money paid under this contract is
payable to Company and is earned by the Company not by Tullo or any
of the other employees of Company, who merely work for the Company.
h. Maintain all of the minute books and legal records in a fidiuciary
capacity for YPNT.
i. Interact with shareholders, lenders, board members, the investment
community at large.
j. Such other tasks as the Board of YPNT may reasonably require of
Company or its employees.
2. Performance of Services. Company shall determine the manner in which
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Services are to be performed and the specific hours to be worked by
Company or its employees. YPNT will rely upon Company to work as many
hours as may be reasonably needed to fulfill Company's obligations under
this Agreement. YPNT specifically acknowledges that Company has other
clients and that each of the Company's employees will work on projects
both related to and unrelated to YPNT.
3. Payment. YPNT shall pay fees and other compensation to Company for
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Services under this contract according to the following schedule;
a. Monthly fees of $32,000.00 per month in year one with a 10% increase
in each succeeding year, This fee shall be payable monthly, no later
than the first day of each month preceding the period during which
the Services are to be performed. Services are deemed earned at the
moment they are due. Company will not be required to send an invoice
for services.
Executive Consulting Agreement
Sunbelt/YP.Net, Inc.
September 20th, 2002
Page 2 of 9
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b. Company shall also be paid for attending Board Meetings with at
least one individual. Company shall be paid $2000.00 per day for
each board meeting or $2,000.00 per quarter whichever is greater, no
matter how many of Company's employees attend. This amount shall be
raised if a majority of board members whether inside or outside
board members receive a larger amount. Company shall not be paid for
Board committee work.
c. Company shall also be provided with a 3 Cell Phone allowance for its
employees performing services for YPNT.
d. Company can allocate this monthly payment in any manner it instructs
YPNT to pay it and to whomever it so designates. It may be used to
pay for automobiles in YPNT's name, medical expenses or insurance,
mobile phone, etc. so long as the aggregate does not exceed the
amounts above.
e. Employee(s) of Company shall be offered participation in any stock
option plan approved by the Board of Directors of YPNT that are
offered to other executives and employees, whether key or not during
the term of this agreement. Any options and or stock obtained
pursuant to this plan shall also be held as collateral under the
terms of the line of credit above.
4. Expense Reimbursement. Company shall be entitled to reimbursement from
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YPNT for all "out of pocket" expenses. Examples of some but not all of the
reimbursable expenses are; gasoline, travel, hotels, insurance, flight
insurance, meals, entertainment for business. In addition, Company and its
employees providing services to YPNT may be provided with credit or debit
cards so that they pay for expenses incurred while performing services for
YPNT as they occur. Company shall be authorized to approve any and all
expenses on YPNT's card without liability to the Company. If Company or
employee or principal of Company is the primary signer for the Credit Card
provided to Company or anyone else for the benefit of YPNT than Company
shall hereby be indemnified for any and all expenses incurred on said card
or cards by YPNT or other employees of YPNT who may also be allowed to use
the card(s).
5. Stock Compensation. In order to more clearly align the efforts of Company
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with the Shareholders of YPNT and to reward the Company for its superior
past performance on behalf of YPNT's shareholders the Board of Directors
of YPNT deems it prudent to award 4 million shares of its Common stock to
Company. That Stock is currently valued (as traded on the OTC Electronic
Bulletin Board on Friday June 21st, 2002) at 6 cents per share. According
to Generally Accepted Accounting Principles and as required by the SEC
this compensation would be accounted for at 90% of that value or at the
current amount required under the rules. YPNT further acknowledges that it
will pay any Federal or State Incomes taxes that the Company may have to
pay on this stock award as they may come due to the Company. This stock
shall be so encumbered as part of the flex compensation below and as part
of the customer acquisition requirement. If YPNT's customer count does not
exceed 177,000 customers within 12 months from October 1, 2002 than the
stock is forfit in prorata share based on the customer count actually
obtained. The base amount for calculations is 100,000 customers, so the
Executive Consulting Agreement
Sunbelt/YP.Net, Inc.
September 20th, 2002
Page 3 of 9
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company would have to achieve an increase of 77,000 additional customers
during the period. For example; if there were 160,000 customers this could
amount to 60,000 additional customers. your would that would be 78% of
Goal. So 22% of the stock would be forfit back to YPNT.
6. Guarantee of YPNT obligations. As an accommodation to YPNT the Company or
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any of its employees may elect to provide personal or corporate guarantees
for any indebtedness incurred by YPNT. If they so chose to do so by
signing below YPNT hereby indemnifies those Employees of the Company or
the Company itself for any loss, claim, or damages suffered by the Company
or its employees by way of this guarantee(s).
7. Signing of Documents. As a further accommodation to YPNT the employees of
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the Company agree to execute documents, SEC Filings, and or to be
authorized signers on YPNT's Bank or Financial Accounts as needed. By
signing below YPNT hereby agrees to indemnify the Company and its
Employees or Agents for any actions they may take on behalf of YPNT or any
damages they may sustain for this accommodation.
8. Bonus for previous year's achievements. By prior order of the Board of
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Directors and as a condition of executing this contract a bonus was awared
to Company for its services in the amount of $208,000.00. Said bonus is
payable on October 1, 2002 and for both parties shall be expensed or
indicated as income in the period beginning October 1, 2002. Further YPNT
shall bonus to Company any Federal and/or State Income taxes that may be
due by the Company for this bonus when Company files it's 2002 income tax
forms.
9. Line of Credit. Under the Previous Contract YPNT provided a line of
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Credit to Company in the aggregate amount of $200,000.00 fully secured
against any and all YPNT stock owned by the Company or by Angelo Tullo. In
exchange for this new contract the Company agrees to pay off this line of
Credit within 45 days of the signing of this agreement.
10. Flex Compensation. YPNT shall make available to the Company additional
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income, which shall be called "Flex-Compensation". The maximum amount that
can be immediately drawn upon shall be $220,000.00 (as a base in each
fiscal year), except as modified below. However that base shall increase
by 10% on each 12-month anniversary thereafter during the term of this
contract.
This Flex Compensation is a part and parcel of the Compensation to be paid
to the Company by YPNT. However as part of the mutual accommodations
between the parties Company agrees not to take all of
Executive Consulting Agreement
Sunbelt/YP.Net, Inc.
September 20th, 2002
Page 4 of 9
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the Compensation at one time but that in any event the Company is the
final arbiter of when and if YPNT is capable of paying the bonus at that
time, except that at all times YPNT shall have sufficient cash on hand or
anticipated to cover its next 30 days of operating expenses exclusive of
marketing expenses.
Since it is assumed that the entire amount shall be taken in each fiscal
year so for accounting purposes the Accountants shall accrue as an
expense, in the case of YPNT and as income, in the case of Company 1/12th
of the total amount available on a monthly basis or the amount actually
taken; whichever is greater.
YPNT is making this Flex Compensation available to the Company as a way to
induce the Company to continue to perform services for the entire term of
the contract. To insure that the Company does not take the Flex
Compensation at the beginning of the term and then resign the Company
hereby grants to YPNT a first position lien right on all of the stock
granted by the YPNT to either the Company or Angelo Tullo. If the Company
takes the Flex Compensation, and resigns it has the choice of either
returning the unused flex compensation for that fiscal year and retaining
the stock or returning the stock to the company. The Company and Tullo
would not be allowed to sell, assign or further transfer this stock
without the permission of YPNT, which permission shall not be unreasonable
withheld. However, because of the valuable nature of these services YPNT
would be obligated to take title of these shares in the event of a valid
enforceable lien or judgment against Company that would encumber these
shares and by signing below Company warrants that it would not interfere.
By signing below the Company and Tullo agree that the Security Agreement
signed last year as part of the Lien of Credit previously offered by YPNT
is hereby amended with the provisions on number 8 herein and shall
continue as a security agreement for the purposes of this Flex
Compensation until amended or changed by the parties, in writing.
11. Support Services. YPNT will provide the following support services for
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the benefit of Company; office space (2 offices and one cubicle, with the
furniture currently inside) and office supplies, 3 telephones, three
computers, and personnel to answer one Company telephone number. In the
event of termination of this agreement than YPNT will if requested by
Company assign the lease for the offices to the Company. Said monthly
lease if assigned can-not exceed $500.00 per month till the end of the
term of this agreement. Any amount above $500.00 per month would still by
the responsibility of YPNT. The computer & general office equipment,
excluding phones would be turned over to Company by the payment by the
Company to YPNT within 45 days of cancellation in the amount of $3,000.00
in year one, $2,000.00 in years two through 5.
Executive Consulting Agreement
Sunbelt/YP.Net, Inc.
September 20th, 2002
Page 5 of 9
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12. Termination. This agreement shall continue until September 30, 2007
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whereupon it shall automatically renew for another similar period unless
either party notifies the other of its intent not to renew 30 days prior
to the renewal date at the address provided for herein for notices.
Company may terminate this agreement at anytime by providing YPNT with a
30-day termination notice, with no penalty to either party.
In the Event of a termination by YPNT for malfeasance, theft or
embezzlement in regards to YPNT and while Company is providing services to
YPNT and where such malfeasance, theft or embezzlement is proven in a
competent court of law to have directly damaged YPNT than all Stock of
YPNT received by the Company, then in Company's possession or control
shall be surrendered to YPNT.
In the Event of a termination by YPNT for any reason other those listed
above than Company shall be entitled to a termination fee equal to the 30
% of the balance of the contract but in any case not less than 12 months
fees plus the release of the stock collateral given in number 8 above
regarding the flex compensation.
13. Due on Sale Clause. In the event that there is a change in control of
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YPNT as defined by the United States Securities and Exchange Commission or
the Internal Revenue Services of the United Stares of YPNT of the entire
company now know as YPNT, Telco Billing or the majority ot YPNT's assets
are sold, (excluding a factoring arrangement which is defined herein as a
financing agreement) than 30% of the balance of this contract or 12 months
worth of fees, whichever is greater becomes immediately due and payable by
YPNT to Company, at the Company's option. Further that all debts by
Company to YPNT would be forgiven and any liability by YPNT to Company for
any tax payments due Company for previous grants hereunder are also due.
14. Relationship of the Parties. It is understood that Company is an
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independent contractor with respect to YPNT and that it will be providing
services of similar kind to others. YPNT will not provide fringe benefits,
including health insurance benefits, paid vacation or other employee
benefits for the benefit of Company except as paid by Company as provided
herein.
15. Employees. Company's employees, who perform services for YPNT under this
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agreement shall also be bound by the provisions of this Agreement. At the
request of YPNT, Company shall provide adequate evidence that such persons
are Company's employees, members or agents, (" Company Employees", or
"Employees").
Executive Consulting Agreement
Sunbelt/YP.Net, Inc.
September 20th, 2002
Page 6 of 9
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16. Injuries. Company acknowledges Company's obligation to obtain appropriate
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insurance coverage for the benefit of Company (and Company's employees, if
any). Company waives any rights to recovery from YPNT for any injuries
that Company (and/or Company's employees) may sustain while performing
services under this Agreement and that are the result of negligence of
Company or Company's employees.
17. Return of Records. Upon termination of this Agreement, Company shall
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deliver all records, notes, data, memoranda, models and equipment of any
nature that are in Company's possession or under Company's control that
are YPNT's property or relate to YPNT's business except as retained by
other similar hired or employed Directors or Officers of YPNT.
18. Officers and Directors Insurance and Indemnification. YPNT shall maintain
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officers and directors insurance in amounts deemed necessary by Company
and the Directors of YPNT (in no event shall said insurance be less than
$2.5 million dollars in face amount) such that YPNT will indemnify Company
and its officers, agents and employees against any and all 3rd party
claims made against Company as more fully identified in YPNT's Bylaws and
Articles of Incorporation, attached hereto and made part of this agreement
herein by reference.
19. Default. In the event of a Default by YPNT for non-payment or and other
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breach of this agreement than YPNT shall pay a Default fee of $50.00 per
day for each day until cured. If after 15 days from receipt by written
notice of default YPNT has still not cured its default the entire balance
of the contract shall become due and payable including any termination
penalties. Company shall have the right to sue YPNT for damages and to
recover all attorneys' fees.
In the event of a default by Company, YPNT shall notify Company in writing
of the nature of the default and Company shall have 15 days to cure said
default. Failure to cure the default shall be grounds for the termination
of the agreement. All clauses of termination remain in effect. YPNT shall
have the right to sue Company for damages and to recover all attorneys'
fees.
It is expressly understood that in the event of a death, disability or by
some other reason that Angelo Tullo or any other individual then currently
providing services to YPNT becomes unable or unwilling to provide services
it does not void this contract. Company shall have up to four months to
replace the person performing those services with some one or multiple
personnel whose aggregate talents are equivalent to those of the person or
persons unable or unwilling to perform services. Company is the final
arbiter of the ability of its personnel to perform the necessary services.
In the event that Company is unable or unwilling to replace those services
than YPNT can cancel the contract by releasing the lien on collateral and
is not entitled to the return of the flex compensation and by paying a 12
month cancellation fee equal to 12 months fees.
Executive Consulting Agreement
Sunbelt/YP.Net, Inc.
September 20th, 2002
Page 7 of 9
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20. Notices: All notices required or permitted under this agreement shall be
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in writing and shall be deemed delivered when addressed in person and
mailed certified mail return receipt requested in the United States Mail
and addressed as follows (or to such future addresses that each party
shall inform the other in writing during the term of this agreement):
If to YPNT:
YP. Net, Inc.
DeVal Johnson
Secretary
4840 E. Jasmine Street Suite 105
Mesa, Arizona 85205
If to Company:
Sunbelt Financial Concepts, Inc.
Angelo Tullo
President
7579 E. Main Street, suite 100
Scottsdale, Arizona 85251
21. Entire Agreement. This Agreement contains the entire agreement of the
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parties and there are no other promises or conditions in any other
agreement whether oral or written. This agreement supersedes any prior
written or oral agreements between the parties.
22. Confidentiality and non-compete. The employees of Company agree to be
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bound by the confidentiality and non-compete provisions contained in
YPNT's Team member handbook as they may be amended from time to time and
as signed by the employees of Company actually providing services to YPNT.
23. Amendment. This agreement may be modified or amended if the amendment is
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made in writing and is signed by both parties.
24. Severability. If any provision of this Agreement shall be held to be
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invalid or unenforceable or any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision
of this Agreement is invalid or unenforceable but that by limiting such
provision it would become valid and enforceable, that such provision shall
be deemed to be written, construed and enforced as so limited.
Executive Consulting Agreement
Sunbelt/YP.Net, Inc.
September 20th, 2002
Page 8 of 9
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25. Waiver of Contractual Right. The failure of either party to enforce any
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provision of this agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Agreement.
26. Applicable Law. The laws of the State of Arizona shall govern this
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agreement.
By signing below we warrant and represent to each other that we have the
respective authorities from our respective Corporations to execute this document
and acknowledge that the other is relying upon those warranties and
representations. Further by signing below we acknowledge and agree that our
respective Corporations are hereby irrevocablely bound by the agreements herein;
Party receiving Services:
YP. Net, Inc.
By: /s/ DeVal Johnson
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DeVal Johnson
Secretary
Party providing Services:
Sunbelt Financial Concepts, Inc.
By: /s/ Angelo Tullo
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Angelo Tullo
President
Executive Consulting Agreement
Sunbelt/YP.Net, Inc.
September 20th, 2002
Page 9 of 9