Document:

Unassociated Document

    

    MEMBER
      NEW YORK STOCK EXCHANGE

    November
      28, 2007

    

    Surfect
      Holdings, Inc.

    12000-G
      Candelaria NE

    Albuquerque,
      NM 87112

    Attn:
      Steve Anderson, CEO

    

    RE:
      Engagement Letter for Surfect Holdings, Inc.

    

    Dear
      Steve:

    

    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):

     

    
      	 	
              1.

            	
              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 Adams is entitled to a fee from the
                Company
                pursuant to existing contractual rights of Canaccord Adams,
                in which such instances the cash commission shall be 9%, which Westminster
                shall pay over to Canaccord Adams as a selected dealer fee.
                

            

    

    

    
      	 	
              2.

            	
              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.

            

    

    

    
      	 	
              3.

            	
              Exclusivity/Westminster
                Rights:
                Upon execution hereof, the Company grants Westminster the following
                rights:

            

    

    

    
      	 	
              a.

            	
              Westminster’s
                engagement hereunder shall be exclusive for a period of 60 days from
                the
                date hereof
                (the “Term”) subject to paragraph (e) below. 

            

    

    

    
      
        

      

    

    100
      Wall
      Street, 7th
      Floor,
      New York NY 10005 Tel: (212) 878-6500 Fax: (212) 878-6598

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
            	b.	
              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. 

            

    

    

    
      	 	
              c.

            	
              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.

            

    

    

    
      	 	
              d.

            	
              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 Westminster 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.

            

    

    

    
      	 	
              e.

            	
              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.

            

    

    

    
      	 	
              4.

            	
              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.

            

    

    

    
      	 	
              5.

            	
              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. 

            

    

     

    
      	 	
              6.

            	
              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. 

            

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    

    
      	 	
              7.

            	
              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.
                

            

    

    

    
      	 	
              8.

            	
              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.

            

    

    

    
      	 	
              9.

            	
              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.

            

    

    

    
      	 	
              10.

            	
              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). 

            

    

    

    
      	 	
              11.

            	
              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.

            

    

    

    
      	 	
              12.

            	
              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.

            

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	
            	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.

            

    

    

    
      	 	
              14.

            	
              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.

            

    

    

    
      	 	
              15.

            	
              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.

            

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    [SIGNATURE
      PAGE TO ENGAGEMENT LETTER]

    

    If
      the
      foregoing correctly sets forth the understanding between us, please sign below
      where indicated. 

    

    Very
      truly yours,

    

    
      	
              WESTMINSTER
                SECURITIES CORP.

            
	 	 
	
              By:
                

            	/s/
              John P. O’Shea
	
              Name:
                John P. O’Shea

            
	
              Title:
                Chairman and CEO

            

    

    

    
      	
              SURFECT
                HOLDINGS, INC.

            
	 	 
	
              By:
                

            	/s/
              Steven Anderson 
	
              Name:
                Steven Anderson

            
	
              Title:
                President and CEO

            

    

    

    ACCEPTED
      AND AGREED TO AS OF THE 28th DAY OF November, 2007.   

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    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    

    
      
        
        

      

      
        6Unassociated Document

    Surfect
      Holdings, Inc.

    1800
      West
      Broadway Road

    Tempe,
      Arizona 85252

     

    December
      3, 2007

     

    Reference
      is made to the Engagement Letter, dated November 28, 2007 (“Letter”), between
      Surfect Holdings, Inc. (the “Company) and Westminster Securities Corp. Section 2
      of the Letter shall be deleted in its entirety and replaced with the following
      in lieu thereof:

     

    “2. Warrant
      Consideration:
      At each
      closing of a Financing, the Company shall issue to Westminster or its designees
      warrants to purchase 7% (or
      with
      respect to securities placed through other brokerage firms, 9% of the securities
      placed through such firms) 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.”

     

    Except
      as
      modified and amended herein, the Letter shall remain in full force and effect
      in
      accordance with its terms.

     

    
      	 	 	 	 Sincerely,
              
	 	 	 	 
	 	 	 	 Surfect
              Holdings,
	 	 	 	 
	 	 	 	
              By:

            	/s/
              Steven Anderson
	 	 	 	 	
              Steven
                Anderson, President and CEO

            
	 	 	 	 	 
	 Acknowledged
              and Agreed:	 	 	 
	 	 	 	 
	 WESTMINSTER
              SECURITIES CORP.	 	 	 
	 	 	 	 
	
              By:

            	/s/
              John P. O’Shea	 	 	 
	
               

            	
              
                Name:
                  John P. O’Shea

                Title: Chairman
                  and CEO

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