MEMBER NEW YORK STOCK EXCHANGE
MEMBER
NEW YORK STOCK EXCHANGE
November
28, 2007
12000-G
▇▇▇▇▇▇▇▇▇▇ NE
Albuquerque,
NM 87112
Attn:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CEO
RE:
Engagement Letter for Surfect Holdings, Inc.
Dear
▇▇▇▇▇:
We
are
pleased to submit to you this binding Engagement Letter (the “Agreement”) that
sets forth the arrangement whereby Westminster Securities Corp. (“Westminster”)
will act as exclusive placement agent to Surfect Holdings, Inc. and its
successor corporations or partnerships (collectively referred to as the
“Company”) in connection with a bridge loan financing for the Company of up to
$120,000; followed by up to $5,000,000 in common stock or other equity-linked
securities, in one or more financings (collectively, the “Financing”), in
amounts and upon terms acceptable to the Company.
Our
proposed services under this Agreement are subject to the following conditions
(all cash consideration payable in US Dollars unless otherwise
agreed):
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1.
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Cash
Consideration:
At
each closing of a Financing, the Company shall pay to Westminster
a cash
commission equal to 7% of the gross proceeds of each such closing,
except
for purchasers where Canaccord ▇▇▇▇▇ is entitled to a fee from the
Company
pursuant to existing contractual rights of Canaccord ▇▇▇▇▇,
in which such instances the cash commission shall be 9%, which Westminster
shall pay over to Canaccord ▇▇▇▇▇ as a selected dealer fee.
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2.
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Warrant
Consideration:
At
each closing of a Financing, the Company shall issue to Westminster
or its
designees warrants to purchase 7% of the total common stock issued
and
issuable from the Financing (including common stock underlying warrants
and convertible securities), exercisable at the lowest of the purchase,
conversion, or exercise price per share of any securities issued
to
investors in such Financing. Such warrants shall have registration,
antidilution, and cashless exercise rights under the same terms as
any
warrants issued to investors in such Financing, and otherwise under
customary, mutually agreeable
terms.
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3.
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Exclusivity/Westminster
Rights:
Upon execution hereof, the Company grants Westminster the following
rights:
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a.
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Westminster’s
engagement hereunder shall be exclusive for a period of 60 days from
the
date hereof
(the “Term”) subject to paragraph (e) below.
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▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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Westminster
shall have the non-exclusive right to offer strategic alliances and
merger
and/or acquisition opportunities to the Company, subject to mutually
agreed upon terms and conditions.
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c.
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In
connection with the Financing, Westminster shall have the right to
associate itself with other members of the Financial Industry Regulatory
Authority (“FINRA”) and/or agents who will share in compensation. The
selection of other agents and their compensation shall be at Westminster’s
sole discretion, but shall not result in any increased expense to
the
Company,
and shall be in compliance with applicable
law.
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d.
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For
one (1) year following the expiration of the Term,
Westminster shall be entitled to receive, and the Company shall be
obligated to pay to Westminster, the fees set forth in Paragraphs
2 and 3
herein with respect to any such transactions entered into by the
Company
with any entity (x) introduced directly to the Company by Westminster,
(y)
introduced indirectly to the Company by Westminster (including, but
not
limited to, entities introduced or referred to the Company by or
on behalf
of entities introduced to the Company by Westminster, and entities
which
are affiliates of entities introduced to the Company by Westminster)
or
(z) with whom ▇▇▇▇▇▇▇▇▇▇▇ was working on behalf of the Company at
the
Company’s direction,
a
list of which entities shall be provided to the Company at the end
of the
Term.
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e.
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Should
Westminster complete a Financing of at least $1,500,000 during the
Term,
the parties further agree that Westminster shall have a right of
first
refusal to serve as exclusive placement agent to the Company in connection
with any proposed equity financing by the Company for a period of
fourteen
(14) days upon prior written notice from the Company that it is seeking
placement agent services (the “Right of First Refusal”). Westminster shall
have the Right of First Refusal for a period of one (1) year following
the
expiration of the Term.
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4.
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Indemnification:
The Company agrees to indemnify Westminster to the extent of and
in
accordance with the provisions of Schedule A hereto, which is incorporated
by reference herein and made a part
hereof.
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5.
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Due
Diligence:
This Agreement is subject to customary due diligence by Westminster.
The
Company shall assist with and take whatever actions necessary to
facilitate Westminster’s due diligence review of the Company and its
operations.
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6.
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Expenses: The
Company will reimburse Westminster for its accountable fees, disbursements
and expenses reasonably incurred in
connection with the services proposed in this Agreement, including,
but
not limited to, Westminster’s: (i) legal fees, which shall be a flat fee
of up to $30,000, payable
from the proceeds of the bridge loan closing, (ii) travel and
entertainment, (iii) printing, telecommunications and mailing costs
and
(iv) due diligence review expenses,
provided that the aggregate of all such costs and expenses referred
to in
(ii), (iii) and (iv) for which Westminster shall be entitled shall
not
exceed $15,000.
Reimbursement shall be made within twenty (20) days of receipt of
invoice
by the Company or, if earlier, at any closing of Financing. The Company
shall also reimburse Westminster upon presentation of any costs incurred
by Westminster for collection of any fees due to Westminster under
this
Agreement, including but not limited to reasonable attorneys’ fees and
court costs.
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7.
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Publicity.
Neither party will make any public or other disclosures concerning
any
proposed Financing or pursuant
to this Agreement, except with respect to the solicitation of any
Financing,
subject to any agreement between the parties, applicable law, and
each
party’s legal obligations. Subsequent to the closing of any
Financing,
and subject to each party’s legal obligations, each party may make factual
references to the Financing,
provided any press releases, or other descriptive disclosures referencing
the other party shall require the other party’s prior written consent.
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8.
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Limitation
on Services; Information.
Westminster shall not be obligated to provide advice or perform services
to the Company that are not specifically addressed in this Agreement.
In
connection with Westminster providing the services described above,
the
Company shall provide Westminster with
any information that Westminster reasonably requires
for the purpose of providing its services hereunder, subject to a
non-disclosure agreement with the Company.
The Company hereby acknowledges that Westminster will be using and
relying
on said information without independent verification and that Westminster
assumes no responsibility for the accuracy and completeness of any
information provided to it by the Company.
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9.
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Limitations.
The Company hereby acknowledges that Westminster is not a fiduciary
of the
Company and that Westminster makes no representations or warranties
regarding the Company’s ability to secure financing, whether now or in the
future. The obligations of Westminster described in this Agreement
consist
solely of commercially reasonable best efforts services to the Company,
and in no event shall Westminster be required to act as the agent
of the
Company or to provide legal or accounting services. All final decisions
with respect to acts of the Company or its affiliates, whether or
not made
pursuant to or in reliance upon information or advice furnished by
Westminster hereunder, shall be those of the Company or such affiliates,
and Westminster shall under no circumstances be liable for any expense
incurred or loss suffered by the Company as a consequence of such
decisions.
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10.
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Authority.
The Company hereby represents that it has all requisite corporate
power
and authority to enter into this Agreement and the transactions
contemplated hereby. This Agreement has been duly and validly authorized
by all necessary corporate action on the part of the Company and
has been
duly executed and delivered by the Company and constitutes a legal,
valid
and binding agreement of the Company, enforceable in accordance with
its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency or similar laws).
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11.
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Governing
Law; Dispute Resolution.
This Agreement will be governed by and construed in accordance with
the
laws of the State of New York, without giving effect to its conflict
of
laws principles or rules. If a dispute or claim shall arise with
respect
to any of the terms or provisions of this Agreement, or with respect
to
the performance by any of the parties under this Agreement, then
the
parties agree to submit the dispute to binding and non-appealable
arbitration in a venue located in New York, NY in accordance with
the
rules of the American Arbitration Association (“AAA”). The prevailing
party shall be reimbursed by the nonprevailing party for all reasonable
attorney's fees and costs (including all arbitration costs) incurred
by
the prevailing party in resolving such dispute. Any award rendered
in
arbitration may be enforced in any court of competent jurisdiction.
Notwithstanding the foregoing, any action by either Westminster or
the
Company to obtain specific performance of any provision of this Agreement
by the other party may be brought in any appropriate judicial
forum.
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12.
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Successors
and Assigns.
This Agreement shall be binding upon and inure to the benefit of
the
parties and their respective successors and authorized assigns. Any
attempt by either party to assign (other than by operation of law
pursuant
to a merger) any rights, duties or obligations which may arise under
this
Agreement without the prior written consent of the other party shall
be
void.
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| 13. |
Entire
Agreement; Severability.
This document contains the entire agreement between the parties with
respect to the subject matter hereof, and neither party is relying
on any
agreement, representation, warranty, or other understanding not expressly
stated herein. In the event that any provision of this Agreement
shall be
held to be invalid, illegal or unenforceable in any circumstances,
the
remaining provisions shall nevertheless remain in full force and
effect
and shall be construed as if the unenforceable portion or portions
were
deleted.
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14.
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Survival.
The parties acknowledge that certain provisions of this Agreement
must
survive any termination or expiration thereof in order to be fair
and
equitable to the party to whom any promise or duty to perform is
owed
under such provision prior to such termination or expiration of the
Agreement. Therefore, the parties agree that each of the numbered
provisions herein shall survive the termination or expiration of
this
Agreement for the period required to meet and satisfy any obligations
and
promises arising therein and
thereunder.
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15.
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Counterparts;
Facsimile Signatures.
This Agreement may be executed in counterparts, each of which shall
be
deemed an original and all of which together will constitute one
and the
same instrument. This Agreement may be executed by facsimile
signatures.
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[REMAINDER
OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]
[SIGNATURE
PAGE TO ENGAGEMENT LETTER]
If
the
foregoing correctly sets forth the understanding between us, please sign below
where indicated.
Very
truly yours,
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WESTMINSTER
SECURITIES CORP.
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By:
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/s/ ▇▇▇▇ ▇. ▇’▇▇▇▇ |
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Name:
▇▇▇▇ ▇. ▇’▇▇▇▇
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Title:
Chairman and CEO
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By:
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
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Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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ACCEPTED
AND AGREED TO AS OF THE 28th DAY OF November, 2007.
SCHEDULE
A TO ENGAGEMENT LETTER
INDEMNIFICATION
The
Company agrees to indemnify Westminster, its employees, directors, officers,
agents, affiliates, and each person, if any, who controls it within the meaning
of either Section 20 of the Securities Exchange Act of 1934 or Section 15 of
the
Securities Act of 1933 (each such person, including Westminster, is referred
to
as an "Indemnified Party") from and against any losses, claims, damages and
liabilities, joint or several (including, all legal and other expenses
reasonably incurred by an Indemnified Party in connection with the preparation
for or defense of any threatened or pending claim, action or proceeding, whether
or not resulting in any liability) ("Damages"), to which such Indemnified Party
in connection with its services or arising out of its engagement hereunder,
may
become subject under any applicable Federal or state law or otherwise, including
but not limited to, liability (i) caused by or arising out of an untrue
statement or an alleged untrue statement of a material fact or the omission
or
the alleged omission to state a material fact necessary in order to make the
statement not misleading in light of the circumstances under which it was made,
(ii) caused by or arising out of any act, or (iii) arising out of Westminster's
engagement or the rendering by any Indemnified Party of its services under
this
Agreement; provided, however, that Company will not be liable to the Indemnified
Party hereunder to the extent that any damages are found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence, bad faith or willful misconduct of the Indemnified
Party seeking indemnification hereunder.
These
indemnification provisions shall be in addition to any other liability, which
Company may otherwise have to any Indemnified Party.
If
for
any reason other than a final non-appealable judgment finding any Indemnified
Party liable for Damages for its gross negligence, bad faith or willful
misconduct the foregoing indemnity is unavailable to an Indemnified Party or
insufficient to hold an Indemnified Party harmless, then Company shall
contribute to the amount paid or payable by an Indemnified Party as a result
of
such Damages.
Promptly
after receipt by the Indemnified Party of notice of any claim or of the
commencement of any action in respect of which indemnity may be sought, the
Indemnified Party will promptly notify Company in writing of the receipt or
commencement thereof; however Company shall not have the right to assume the
defense of such claim or action (including the employment of counsel). The
Indemnified Party shall have the right to retain counsel reasonably satisfactory
to Company, at Company's expense, to represent the Indemnified Party in any
claim or action in respect of which indemnity may be sought and agrees to
cooperate with Company and Company's counsel in the defense of such claim or
action. The omission by an Indemnified Party to promptly notify Company of
the
receipt or commencement of any claim or action in respect of which indemnity
may
be sought will relieve Company from any liability Company may have to such
Indemnified Party only to the extent that such a delay in notification
materially prejudices Company's ability to defend such claim or action. Company
shall not be liable for any settlement of any such claim or action effected
without its written consent, which shall not be unreasonably withheld or
delayed. The Company shall not agree to settle any action or claim without
the
Indemnified Party’s or Parties’ consent unless such settlement provides for a
complete release of the Indemnified Party or Parties.
Initials
SA Initials
JO