SURGE COMPONENTS, INC.
0000 Xxxxx Xxxxxxxxx
Xxxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
As of December 4, 2000
Equilink Capital Partners, LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs/Madams:
Reference is made to that certain Investment Banking
Agreement, dated as of November 24, 2000 (the "Agreement"), between Surge
Components, Inc. ("Surge") and Equilink Capital Partners, LLC ("Equilink"). This
letter summarizes, confirms and memorializes the allocation of the nature and
amount of compensation due under the Agreement for (a) the various services
performed and to be preformed by Equilink and (b) reimbursement of expenses
incurred and to be incurred by Equilink, on Surge's behalf, in the performance
of such services. This letter shall also serve to confirm that, notwithstanding
the Agreement, a portion of the securities issuable by Surge pursuant to the
Agreement were intended by the parties to the Agreement to be issued, and were
in fact issued, to employees, consultants and designees of Equilink, as more
fully set forth in Schedule A attached to and made part of this letter.
Notwithstanding anything to the contrary contained in the
Agreement, it is hereby agreed as follows:
1. Of the 60,000 shares of the Non-Voting Redeemable
Convertible Series C Preferred Stock, par value $.001 per share (the
"Series C Stock") of Surge, issued pursuant to paragraph 4(a) of the
Agreement, (a) a total of 15,000 shares of Series C Stock have been
issued as reimbursement of expenses incurred by Equilink, on Surge's
behalf, in connection with the proposed transaction (the "Orbit
Transaction") between Surge and Orbit Network, Inc. which was
terminated in August 1999 and (b) a total of 45,000 shares of Series C
Stock have been issued as reimbursement of expenses incurred by
Equilink, on Surge's behalf, in connection with the proposed
transaction (the "Global Transaction") between Surge and Global
DataTel, Inc. which was terminated in November 2000. Such 60,000 shares
of Series C Stock have been issued to the parties as set forth on
Schedule A to this letter.
2. Of the 900,000 shares of the common stock,
par value $.001 per share (the "Common Stock"), of Surge issued
pursuant to paragraph 4(b) of the Agreement, (a) a
SURGE COMPONENTS, INC.
Equilink Capital Partners, LLC
As of December 4, 2000
Page - 2 -
total of 697,500 shares of Common Stock have been issued for services
rendered by Equilink, on Surge's behalf, in connection with the Global
Transaction, (b) a total of 2,500 shares of Common Stock have been
issued for Equilink's agreement to provide further services, on Surge's
behalf, in connection with the termination of the Global Transaction,
(c) a total of 100,000 shares of Common Stock have been issued for
services rendered by Equilink, on Surge's behalf, in connection with
the Orbit Transaction and (d) a total of 100,000 shares of Common Stock
have been issued for services rendered by Equilink and as reimbursement
of expenses incurred by Equilink, each on Surge's behalf and through
November 30, 2000, in connection with the transaction (the "MailEncrypt
Transaction") between Surge and XxxxXxxxxxx.xxx, Inc. which was
consummated in November 2000. Such 900,000 shares of Common Stock have
been issued to the parties as set forth on Schedule A to this letter.
3. Of the 10,000 shares of Series C Stock issued
pursuant to paragraph 4(b) of the Agreement, (a) a total of 5,000
shares of Series C Stock have been issued for services rendered by
Equilink and as reimbursement of expenses incurred by Equilink, each on
Surge's behalf, in connection with the MailEncrypt transaction, and (b)
a total of 5,000 shares of Series C Stock have been issued for services
rendered and to be rendered by Equilink and as reimbursement of
expenses incurred and to be incurred by Equilink, each on Surge's
behalf, in connection with the proposed recapitalization transaction
(the "Superus Transaction") between Surge and Superus Holdings, Inc.
Such 10,000 shares of Series C Stock have been issued to the parties as
set forth on Schedule A to this letter.
4. Of the 2,000,000 warrants (each, a "Warrant") of
Surge, each warrant entitling the holder thereof to purchase one share
of Common Stock at a purchase price of $3.00 per share and expiring on
November 24, 2005, (a) a total of 500,000 Warrants have been issued for
services rendered by Equilink, in connection with the Global
Transaction, (b) a total of 400,000 Warrants have been issued for
Equilink's Agreement to provide services and to incur expenses, each on
Surge's behalf and on or after December 1, 2000, in connection with the
Superus Transaction, (c) a total of 100,000 Warrants have been issued
for investment banking services rendered and to be rendered by Equilink
and as reimbursement of expenses incurred and to be incurred by
Equilink, each on Surge's behalf, in connection with Surge's private
placement of Convertible Promissory Notes of Surge due December 31,
2001 and any other bridge financing, and (d) a total of 1,000,000
Warrants have been issued for Equilink's agreement to provide
additional investment banking services and to incur expenses, each on
Surge's behalf through the term of the Agreement. Such 2,000,000
warrants have been issued to the parties as set forth in Schedule A to
this letter.
5. Following the filing with the Securities and
Exchange Commission of the Annual Report on Form 10-KSB of the
Corporation for the fiscal year ended
SURGE COMPONENTS, INC.
Equilink Capital Partners, LLC
As of December 4, 2000
Page - 3 -
November 30, 2000, the Corporation shall use its best efforts to
promptly cause the registration for resale, under the Securities Act of
1933, as amended, of the aggregate 463,000 shares of Common Stock
issued to Xxxxxx XxXxxx and Xxxxx Xxxxx pursuant to paragraph 4(b) of
the Agreement and paragraph 2 of this letter. The Corporation shall
register such shares on Form S-8, or such other form as the
Corporation, in its sole discretion, shall so choose and Xx. XxXxxx and
Xx. Xxxxx shall assist the Corporation in such registration by
providing the Corporation with such information and documents as the
Corporation may reasonable request.
Please indicate your confirmation that the above-stated
allocation of the consideration payable under the Agreement and other subject
matters of this letter accurately reflects the agreement between Surge and
Equilink with respect to such consideration and other matters by executing the
duplicate copy of this letter in the space indicated for such below and return
such executed duplicate copy to Surge.
Very truly yours,
Surge Components, Inc.
By: /s/ Xxx Xxxx
--------------------------------
Xxx Xxxx, President
Confirmed, agreed and accepted
as of the date set forth above:
Equilink Capital Partners, LLC
By: /s/ Xxxxxx XxXxxx
--------------------------------------
Xxxxxx Xxxxxx, Chief Executive Officer
