SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_____________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported) is March 31, 2005
YP
CORP.
(Exact
name of registrant as specified in its charter)
|
Nevada |
000-24217 |
85-0206668 | ||
|
(State
or other jurisdiction of incorporation or jurisdiction) |
(Commission
File Number) |
(IRS
Employer Identification Number) |
|
4940
E. Jasmine Street, Suite 105, Mesa, Arizona |
85205 |
|||
|
(Address
of principal executive
office) |
|
(Zip
Code) |
|
Registrant’s
telephone number, including area code: (480) 654-9646
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |
| o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 1.01.
Entry into a Material Definitive Agreement.
Transfer
and Repayment Agreement
On April
1, 2005, YP Corp. (“YP”) and Morris & Miller, Ltd. and Matthew and Markson,
Ltd., (together, the “Shareholders”) entered into a Transfer and Repayment
Agreement (the “Agreement”). Under the Agreement, the Shareholders satisfied
their outstanding debt obligations to YP of $3,895,000 as follows:
|
· |
Agreed
to surrender and deliver to YP 1,889,566 shares of YP common stock
previously owned by the Shareholders. |
|
· |
Forgave
$115,865 of debt owed by YP to the
Shareholders. |
|
· |
Released
any liens they previously had on any shares of YP common
stock. |
|
· |
Assigned
intellectual property from the Shareholders to
YP. |
|
· |
Agreed
to a non-compete and non-solicitation agreement whereby the Shareholders
and their affiliates agree not to compete with YP or solicit any YP
customers for a period of five years. |
By way of
background, Mathew and Markson and Telco Billing, Inc. (“Telco”) executed that
certain Exclusive Licensing Agreement, dated September 21, 1998 (the “Licensing
Agreement”), pursuant to which Mathew and Markson granted a 20-year exclusive
license to Telco with respect to the name “YELLOW-PAGE.NET,” including the name,
the trade name, trademark and the URL www.yellow-page.net (collectively, the
“Name”) in exchange for certain payments.
In March
1999, YP, the Shareholders and Telco executed a Stock Purchase Agreement
pursuant to which YP acquired all of the outstanding shares of Telco, including
those shares owned by the Shareholders. In connection with the acquisition of
Telco, YP agreed to pay an accelerated payment under the Licensing Agreement in
exchange for the acquisition of the Name.
In
September 2000, YP and the Shareholders executed an amendment to the original
Stock Purchase Agreement whereby certain rights held by the Shareholders to
require YP to repurchase YP common stock held by the Shareholders were
extinguished in exchange for the creation of lines of credit extended by YP to
the Shareholders under which the Shareholders could borrow funds from YP.
These
credit lines were terminated by agreement in October 2003 in exchange for a
series of final, predetermined advances to the Shareholders and the continuing
payment of quarterly dividends to all YP Shareholders, subject to available
funds and compliance with applicable law. The final balance of all debt owed by
the Shareholders to YP after all final advances had been extended under this
arrangement was $3,895,000.
In
December 2001, YP and Mathew and Markson executed a binding term sheet to
address previous and existing defaults by YP on payments owed to Mathew and
Markson in connection with the payments for the acquisition of the Name. This
agreement provided for a final payment by YP to Mathew and Markson of $550,000
to be evidenced by a promissory note and secured by a pledge of 2,000,000 shares
of YP stock. Of the original $550,000 promissory note, $115,865 remained unpaid
immediately prior to execution of the Agreement. As described above, under the
Agreement, this remaining debt was forgiven by the Shareholders and the
Shareholders released any and all liens they held on the 2,000,000 shares of YP
stock.
YP
expects this transaction to result in a non-cash charge to its earnings for the
third fiscal quarter ended June 30, 2005 equal to the difference between the
$3,895,000 of debt forgiven and the value of the consideration received. YP is
not able to quantify the charge at this time.
Amendment
of Director Fees Policy
On March
31, 2005, the Board of Directors revised YP’s existing policy with respect to
director fees. All current director fees and compensation policies that are
specific to individual directors will remain unchanged and in effect with the
following exceptions:
|
· |
Each
director will now receive $2,500 per meeting (rather than the greater of
$2,000 per meeting or per quarter). |
|
· |
Directors
who are members of duly authorized and designated board committees will
receive $500 per committee meeting (rather than $250 per
hour). |
|
· |
Directors
will receive the foregoing fees for both regular and special meetings and
regardless of whether the director participates in person or
telephonically. |
|
· |
The
Chairman of the Audit Committee will receive an additional $1,500 per
month. |
|
· |
Directors
Kurtzweil and Gottlieb will receive a one-time bonus of $3,000 for
additional effort and time previously provided to the Company as directors
and/or committee members. |
|
· |
The
Compensation Committee or Board is authorized to grant each director
100,000 Shares of Restricted Stock under the Company’s 2003 Stock Plan,
the transfer restrictions of which will lapse upon the earlier of (i) a
change of control of the Company within one year from the date of grant or
(ii) the Company’s common stock reaching an average closing price of $7.00
for three consecutive trading days. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| YP CORP. | ||
| |
|
|
| Date: April 1, 2005 | /s/ Peter Bergmann | |
|
Peter
Bergmann, Chairman and Chief Executive Officer | ||