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 ”).

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:

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agreements, whether written or oral, pertaining to the Company’s employment of Spaeth are terminated, replaced and superseded by this Agreement.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.

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, whet