Document:

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                      TERMINATION AND SEPARATION AGREEMENT

         This Termination and Separation Agreement (the "Agreement") is entered
into as of the 9th day of July 2001, by and among Craig Carlson ("Carlson"), an
individual residing at 3 Jennifer Place, San Francisco, California 94107, Surge
Components, Inc., a New York corporation with its principal place of business at
95 East Jefryn Boulevard, Deer Park, New York 11729 ("Surge"), and Superus
Holdings, Inc., a Delaware corporation with its principal place of business
address c/o Surge, 95 East Jefryn Boulevard, Deer Park, New York 11729
("Superus"). Except as hereinafter provided, Surge and Superus, together with
Surge's subsidiaries MailEncrypt, Inc. ("MailEncrypt"); SolaWorks, Inc.
("SolaWorks"), Challenge Surge, Inc. ("Challenge") and Surge/Lelon, LLC ("Surge
Lelon") are hereinafter sometimes collectively referred to as the "Company."

         A. Carlson and Surge entered into an employment agreement, dated as of
March 20, 2000 (the "Employment Agreement"), pursuant to which Carlson was
employed as Vice President, Corporate Development of Surge at a base salary of
$150,000 per year and pursuant to which Carlson was granted an option to
purchase certain stock of Superus, which option was forfeited and, subsequently,
an option (the "Carlson Option") was granted to Carlson by Surge to purchase an
aggregate of 200,000 shares of the common stock, par value $.001 per share (the
"Surge Common Stock") of Surge. Unless specifically set forth herein, all
capitalized terms shall have the definitions and meanings ascribed to them in
the Employment Agreement.

         B. Carlson has also been appointed as an officer of Superus, from which
position Carlson is hereby resigning.

         C. Carlson has agreed to return for cancellation and forfeiture the
Carlson Option, except for the right to purchase 124,001 shares of Surge, which
shares are currently exercisable, in exchange for the mutually beneficial terms
and releases set forth herein.

         D. Carlson, Surge and Superus believe it will be mutually beneficial
for all parties to terminate the Employment Agreement on the terms and
conditions contained herein, and for Carlson to resign from all officer
positions with Surge and Superus.

         NOW THEREFORE, it is agreed as follows:

                  Carlson acknowledges and agrees that he has received all
compensation payments and reimbursements due to him by the Company, whether
under the Employment Agreement or otherwise, other than reimbursement of
expenses incurred by Carlson on the Company's behalf for the months of March,
April and May 2001 as set forth in Schedule A to this Agreement. Reimbursement
of such expenses shall be made by regular check of Surge, payable to Carlson, in
the amount of $1,598.49, and forwarded to Carlson, via pre-paid, certified mail,
return receipt requested, to the address of Carlson first set forth above, no
later than five business days from the date of this Agreement. No other benefits
or payments are to be provided to Carlson by the Company, except as provided in
this Agreement. In return for this Agreement and in full and final
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settlement, compromise and release by Carlson of any claims, as set forth in
greater detail below, the parties hereto further agree to the following:

         1.       Employment Agreement Severance.
                  ------------------------------

                  (a) It is stipulated, consented and agreed that the Employment
Agreement is, in all respects, hereby terminated in full and is null and void
and of no further force or effect. Carlson hereby voluntarily resigns from his
employment by, and from all officer and directorship positions with, Surge and
Superus, effective immediately. If and to the extent that Carlson is deemed an
employee, officer and director of any other entity within the Company, Carlson
hereby voluntarily resigns from such position(s), effective immediately.
Notwithstanding the provisions of this paragraph 1(a), in the event that Surge
shall dispose of its current equity interest in MailEncrypt, which consists of
100 shares of the common stock, par value $.01 per share, of MailEncrypt,
Carlson may accept any positions offered to him by MailEncrypt.

                  (b) Carlson shall receive severance compensation in the gross
sum of $47,307.71 (the "Severance Amount"), the Severance Amount being equal to
the sum of (i) the Base Salary, as in effect as of the date of this Agreement,
for a three-month period of $37,500.00 and (ii) $9,807.71 representing accrued
and unpaid vacation time, holiday pay and sick leave. Carlson hereby waives all
other accrued and unpaid vacation time, holiday pay or sick leave. Simultaneous
with the execution of this Agreement, Surge shall deposit with Continental Stock
Transfer & Trust Company (the "Escrow Agent") the Severance Amount, minus such
amount as would equal the obligatory withholding requirements of applicable
federal, state and local taxing authorities for the Severance Amount payable
over a three month period. Pursuant to an Escrow Agreement, substantially in the
form as attached as Exhibit 1(a) to this Agreement (the "Escrow Agreement"),
entered into as of the date of this Agreement among Surge, Carlson and the
Escrow Agent, the Severance Amount, minus all applicable withholding
requirements of federal, state and local governmental taxing authorities, will
be tendered to Carlson in substantially equal amounts over a three-month period
in conformity with Surge's customary payroll practices for executive officers,
as in effect on the date hereof, commencing with the first payroll payment date
immediately following the date of this Agreement. The amount of all such
applicable withholding requirements shall be the sole obligation of Surge and
Surge shall tender such amounts in accordance with the applicable rules and
regulations of such taxing authorities. All other benefits, bonuses, health
benefits or other expenses being reimbursed shall immediately cease on the date
hereof, except as otherwise specifically continued if and as provided herein.
Payment of the Severance Amount shall be subject to cessation as provided in the
Escrow Agreement.

                  (c) Carlson acknowledges and agrees that he has not accrued or
earned any bonus, and no increases to Base Salary have been implemented or are
otherwise owing to Carlson.

                  (d) Neither Surge, Superus nor any other entity comprising the
Company shall protest or otherwise inhibit Carlson from obtaining medical/health
insurance coverage under Surge's medical/health insurance plan pursuant to the
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"). Surge agrees to provide to Carlson, at the address for the

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giving of notices under paragraph 13(f) below, all information and documentation
required by COBRA with respect to terminated employees within the time period(s)
prescribed by COBRA.

         2.       Options: Forfeiture and Restrictions on Exercise.
                  ------------------------------------------------

                  (a) All options and similar rights held by Carlson to purchase
common stock and other securities of Surge, Superus or any other entity
comprising the Company in effect as of the date of this Agreement are hereby
terminated and may not be exercised following the execution of this Agreement,
with the exception of the option (the "Remaining Option") to purchase up to
124,001 shares of Surge Common Stock (the "Remaining Option Shares"),
exercisable at $2.90 per share, under the Carlson Option, which Remaining Option
Shares shall remain exercisable until the earlier to occur of (i) any material
breach by Carlson of this Agreement, or (ii) the close of business one year and
one day after the date of this Agreement, if and to the extent that such
Remaining Option Shares have not previously been exercised.

                  (b) Surge hereby covenants and agrees to (i) file, as promptly
as possible but in no case later than the first registration statement filed by
Surge with the Securities and Exchange Commission (the "SEC") (other than a
Registration Statement on Form S-4 or S-8), a registration statement with the
SEC registering for resale by Carlson, under the Securities Act of 1933, as
amended, all of the Remaining Option Shares, (ii) use its best efforts to cause
such registration of the Remaining Option Shares to become effective and (iii)
use its best efforts to cause such registration of the Remaining Option Shares
to remain effective through the third anniversary of the date of this Agreement.
Surge shall register the Remaining Option Shares on Form S-3 or such other form
as Surge, in its sole discretion, shall so choose and Carlson shall assist Surge
in such registration by providing Surge with such information and documents as
Surge may reasonably request.

         3.       Covenants and Restrictions.
                  --------------------------

                  (a) On or prior to the date of this Agreement, Carlson shall
have returned for forfeiture and cancellation all right, title and interest in
all or any options to purchase any shares of Surge, Superus or any other entity
comprising the Company, except for the Remaining Option, which Remaining Option
shall be free and clear of any and all liens, encumbrances, options, warrants
and any other similar rights or restrictions of any nature, except as provided
in this Agreement or as provided in the certificates evidencing the Carlson
Option (except to the extent specifically provided for in this Agreement, in
which case the provisions of this Agreement shall govern).

                  (b) Carlson hereby covenants and agrees that Carlson will not
at any time subsequent to the date hereof, directly or indirectly, reveal,
divulge, use (whether or not for his own profit) or make known to any person or
entity any Confidential Information (as hereinafter defined) made known to
Carlson or of which Carlson has become aware, regardless of whether developed,
prepared, devised or otherwise created in whole or in part by the efforts of
Carlson and except to the extent so authorized in writing by Surge or except as
required by law. For purposes of this Agreement, the term "Confidential
Information" shall mean (i) the existence and terms of this Agreement and the
nature of the relationship contemplated hereby, (ii) any technical, scientific
or

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engineering information relating to the products and/or services of any party
hereto or any such party's affiliates, including any entity with whom a party
hereto has entered into an acquisition agreement or other binding or non-binding
agreement related to the acquisition of a third party by a party hereto (each, a
"Party" and, collectively, the "Parties"), (iii) information relating to any
customer of any of the Parties, including without limitation, the names,
addresses, telephone numbers and sales records of, or pertaining to any such
customer, (iv) price lists, methods of operation and other information
pertaining to any of the Parties and which any such Party, in its sole
discretion, regards as confidential and in the nature of trade secrets, and (v)
anything else that Carlson has knowledge of by virtue of his being or serving as
an employee, officer and/or director of Surge, Superus and/or any other Company,
that is not publicly known as of the date of this Agreement. Notwithstanding
anything contained herein to the contrary, Confidential Information as used
herein shall not include that which (x) was in the public domain prior to
receipt by Carlson, (y) subsequently becomes known to Carlson as a result of
disclosure by third parties (other than MailEncrypt stockholders or affiliates)
not in the course of this Agreement and as a matter of right and without
restriction on disclosure, or (z) subsequently comes into the public domain in
the same context as the disclosure by a Party through no fault of Carlson. The
provisions of this Section 3 shall no longer be applicable with respect to
Confidential Information of MailEncrypt (to the extent subsequently waived by
MailEncrypt) in the event that Surge disposes of its current equity interest in
MailEncrypt.

                  (c) Carlson further covenants and agrees that upon the
execution of this Agreement, he has delivered to Surge for delivery to the
applicable Company (and has not retained any copies of) all tangible embodiments
of all Confidential Information in his possession, including, without
limitation, all account lists, records and data related to all customers of
Surge and any other Company, and any notes or files related to the foregoing.
Furthermore, Carlson will retain any and all intangible Confidential Information
in trust for the sole benefit of Surge and the applicable Company and the other
parties to this Agreement, and will not divulge or deliver or show any of such
Confidential Information to any unauthorized person and will not make use of or
in any manner seek to turn to account any of such Confidential Information in an
independent business however unrelated to the business of Surge and any other
Company.

                  (d) If Carlson becomes legally compelled to disclose any
Confidential Information, Carlson shall provide prompt written notice of such
legal compulsion to Surge so that Surge and/or any other applicable Company may
seek a protective order or other remedy or waive compliance with this Agreement.
Carlson shall cooperate (without any cost or expense to Carlson) with Surge
and/or any such other Company in obtaining such protective order or other remedy
upon Surge's or such other Company's request. If, in the absence of a protective
order or the receipt of a waiver hereunder, Carlson is nonetheless compelled to
disclose Confidential Information to or at the direction of any tribunal or else
stand liable for contempt or suffer other censure or significant penalty,
Carlson may disclose such specifically requested Confidential Information to or
at the direction of such tribunal.

                  (e) Carlson agrees that any breach of this Section 3 will
cause Surge and/or any other Company substantial and irreparable damages that
would not be quantifiable and, therefore, in the event of any such breach or
threat of such a breach, in addition to other remedies that may be

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available, Surge and/or any other applicable Company shall have the right to
seek specific performance and other injunctive and equitable relief.

         4.       Proprietary Property.
                  --------------------

                  (a) Carlson, Surge and Superus hereby agree that Proprietary
Property (as hereinafter defined) shall be the sole and exclusive property of
the applicable Company. For purposes hereof, the term "Proprietary Property"
shall mean inventions, discoveries, improvements and ideas, whether patentable
or not, including, but not limited to, all Discoveries and Work Product under
the Employment Agreement made solely by Carlson or jointly with others, which
relate to the Company's business, including any of the Company's Confidential
Information or any of such Companies' products, services, processes, technology,
research, product development, marketing programs, manufacturing operations, or
engineering activities.

                  (b) Carlson shall promptly disclose to Surge in writing all
Proprietary Property, including those in the formative stages, in his possession
and shall promptly deliver to Surge any and all Proprietary Property that he may
have in his possession.

                  (c) Carlson hereby agrees and acknowledges that he has no
present right, title or interest in or with respect to any Proprietary Property
and will not in the future acquire any such right, title or interest therein. In
addition, Carlson covenants and agrees that he will at any time, promptly upon
the request and at the expense of Surge, execute any and all patent applications
and assignments so requested and take any and all action as required by Surge
and/or any of the Companies to perfect and maintain the rights and interests of
such party or parties in and with respect to the Proprietary Property.

                  (d) Carlson will not, directly or indirectly, disclose,
furnish, make available or utilize any of the Proprietary Property, other than
pursuant to the terms and conditions of this Agreement.

                  (e) The provisions of this Section 4 shall no longer be
applicable with respect to Proprietary Property of MailEncrypt (to the extent
subsequently waived by MailEncrypt) in the event that Surge disposes of its
current equity interest in MailEncrypt.

         5.       Restrictive Covenants
                  ---------------------

                  Except as otherwise provided in provided in paragraph 5(d)
below:

                  (a) Carlson shall not, during the term commencing on the date
of this Agreement and terminating one year from the date of this Agreement (the
"Restricted Period"), anywhere within the United States (the "Restricted
Territory"), directly or indirectly (whether as an owner, partner, shareholder,
agent, officer, director, employee, independent contractor, consultant, or
otherwise):

                           (i) perform services for, or engage in, any business
         that develops or sells products or services which are competitive with
         any products or services sold or developed

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         by the Company for which Carlson has provided any assistance in
         planning, development, marketing, training, support, or maintenance
         during the period of Carlson's employment with the Company (the
         "Products");

                           (ii) except on behalf of the Company, solicit any
         person or entity who is, or was at any time during the twelve-month
         period immediately prior to the date of this Agreement, a customer of
         the Company for the sale of the Products or any product or service of a
         type then sold by the Company for which Carlson provided any direct,
         material assistance in planning, development, marketing, training,
         support, or maintenance; or

                           (iii) solicit for employment any person who is, or
         was at any time during the twelve-month period immediately prior to the
         date of this Agreement, an employee of any Company, except for Adam J.
         Epstein.

                  (b) The parties acknowledge that the businesses of the Company
are and will be national and international in scope and thus the covenants in
this Section 5 would be particularly ineffective if the covenants were to be
limited to a particular geographic area of the United States. If any court of
competent jurisdiction at any time deems the Restricted Period unreasonably
lengthy, or the Restricted Territory unreasonably extensive, or any of the
covenants set forth in this Section 5 not fully enforceable, the other
provisions of this Section 5, and this Agreement in general, will nevertheless
stand and to the full extent consistent with law continue in full force and
effect, and it is the intention and desire of the parties that the court treat
any provisions of this Agreement which are not fully enforceable as having been
modified to the extent deemed necessary by the court to render them reasonable
and enforceable and that the court enforce them to such extent (for example,
that the Restricted Period be deemed to be the longest period permissible by
law, but not in excess of the length provided for in paragraph 5(a), and the
Restricted Territory be deemed to comprise the largest territory permissible by
law under the circumstances).

                  (c) Carlson acknowledges that all records, documents, and
tangible embodiments containing or of Proprietary Information prepared by
Carlson or coming into his possession by virtue of his employment by Surge and
Superus are and will remain the property of the applicable Company. Accordingly,
Carlson shall immediately return to Surge all such items in his possession and
all copies of such items.

                  (d) The provisions of this Section 5 shall no longer be
applicable with respect to MailEncrypt (to the extent subsequently waived by
MailEncrypt) in the event that Surge disposes of its current equity interest in
MailEncrypt.

         6. Termination. The provisions of this Agreement shall survive the
expiration or any termination hereof, and shall remain in full force and effect
following such expiration or termination to the maximum extent permitted by
applicable law. Carlson specifically acknowledges and agrees that the covenants,
agreements and representations made by him hereunder may be enforced against him
in accordance with their terms for the maximum permissible duration following
any expiration or termination, for whatever reason, of this Agreement.

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         7.       Disparagement; Public Announcements.
                  -----------------------------------

                  (a) Carlson and Surge and Superus covenant and agree that
neither party shall, directly or indirectly, disclose, publish, disseminate or
communicate in any way to any third party any information that is critical,
derogatory or is otherwise intended to disparage the other party or any of their
respective principals, officers, directors, shareholders or affiliates, whether
such information has been acquired prior to or after the date of this Agreement
(whether or not in the public domain or otherwise confidential).

                  (b) Surge agrees to execute and deliver, on one or more
occasions but only during a one year period commencing on the date of this
Agreement, at the request of Carlson made in writing, a letter in the form
attached hereto as Exhibit 7(b) and will comment substantially in accord with
the content of such letter if requested in writing by Carlson to provide an oral
reference.

                  (c) Surge's failure to comply with the provisions of
paragraphs 7(a) and/or 7(b) or Carlson's failure to comply with the provisions
of paragraph 7(a) shall nullify the other party's obligations under paragraph
7(a).

                  (d) No party to this Agreement shall make any public
announcements regarding this Agreement, the subject matter hereof or any other
matter related to any of the other parties hereto, and the parties further agree
that the content and/or wording of any press release or other public disclosure
that refers to Carlson's separation from Surge as Vice President, Corporate
Development shall be mutually agreed to by and between Carlson and Surge in
advance of its release, except as may otherwise be required of Surge under
applicable law. Carlson acknowledges and agrees that Surge shall disclose this
Agreement, the consummation of the transactions contemplated by this Agreement
and the effect(s) and possible effects, if any, on Surge's financial condition
and results of operations of the consummation of the transactions contemplated
by this Agreement in filings to be made, in the sole discretion of Surge in
consultation with counsel, with the Securities and Exchange Commission,
including, without limitation, a Current Report on Form 8-K, Quarterly Reports
on Form 10-QSB and Annual Reports on Form 10-KSB, and shall include a copy of
this Agreement as an exhibit to one or more of such filings.

                  (e) The result of either Carlson or the Company's breach of
this Section 7 will likely cause irreparable harm to the non-breaching party.
Therefore, the parties agree that the non-breaching party shall be entitled,
without the necessity of posting a bond to a decree or order by any court of
competent jurisdiction enjoining such threatened or actual violation of this
Section 7. Such decree or order, to the extent appropriate, shall specifically
enforce the full performance of this Section 7 by the breaching party and the
breaching party hereby consents to the jurisdiction of any such court of
competent jurisdiction. This remedy shall be in addition to all other remedies
available to the non-breaching party at law or equity.

         8.       Waiver and Release.
                  ------------------

                  (a) In consideration of the payments and options to be made
and consideration set forth in Section 1 and 2 of this Agreement, Carlson
irrevocably and unconditionally releases and

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forever discharges, gives up and waives any and all claims and rights he had,
has or may have against Surge, Superus and each other entity comprising the
Company, existing at any time up to and including the date of this Agreement.
This release shall also apply to all of the directors, officers, shareholders,
affiliates, agents, employees, attorneys, subsidiaries, insurers and
representatives of Surge, Superus and each other entity comprising the Company
and/or their respective successors and assigns, and against all who succeed to
any of the rights and responsibilities of any of the foregoing parties
(collectively, the "Released Parties").

                  (b) Specifically, but not limited herein, Carlson releases the
Released Parties from any and all claims, liens, complaints, charges, demands,
liabilities, suits (judicial, administrative, or otherwise), rights or causes of
action, at law or equity, whether founded upon contract (expressed or implied),
tort (including, but not limited to, defamation), statute or regulation
(federal, state or local), common law and/or any other theory or basis, from the
beginning of the world to the date hereof, including, but not limited to, any
claim that Carlson has asserted, now asserts or could have asserted or
otherwise, including, but not limited to, claims, charges, demands, suits,
causes or rights of action relating to breach of contract or public policy,
wrongful, retaliatory or constructive discharge, any claims under the United
States and California Constitutions, any claims under Title VII of the Civil
Rights Act of 1964, as amended, the Civil Rights Act of 1991, the California
Fair Employment and Housing Act, the Americans with Disabilities Act, The Family
Medical Leave Act, The California Workers' Compensation Law, the Equal Pay Act,
and all regulations promulgated thereunder, claims for any other type of
discrimination based on race, color, national origin, ancestry, religion,
physical or mental handicap, medical condition, sex, pregnancy-related
condition, age or sexual orientation, physical or personal injury, infliction of
emotional distress, tortious interference with economic advantage, any federal
or state executive order and any express or implied employment contract between
any Company and Carlson, additional compensation or fringe benefits, and any and
all rights to or claims for continued employment, attorneys' fees or damages
(including contract, compensatory, punitive or liquidated damages), or equitable
relief, which Carlson may ever have had, has now or could have or which
Carlson's heirs, executors or assigns can or shall have, against any or all of
them, whether known or unknown, on account of or arising out of his employment
with any Company (including their respective predecessors and successors) or any
related entities or his separation from such employment. The release by Carlson
provided by this Section 8 also includes a release by Carlson of any claims for
breach of contract, wrongful discharge and all claims for alleged physical or
personal injury, emotional distress relating to or arising out of Carlson's
employment with Surge, Superus and any other Company or the termination of such
employment; and all claims under the Employee Retirement Income Security Act,
such as claims relating to pension or health plan benefits. Carlson specifically
waives the benefit of any statute or rule of law which, if applied to this
Agreement, would otherwise exclude from its binding effect any claims not now
known by Carlson to exist. Carlson therefore specifically waives any and all
claims or rights of which he is not aware and not specifically mentioned in this
release. This paragraph does not affect Carlson's right to apply for benefits as
specified in paragraph 1(d) above.

                  (c) As a material inducement to Carlson to enter into this
Agreement, Surge and Superus hereby (and Surge agrees to cause each other
Company to) irrevocably and unconditionally waive, release and discharge
Carlson, and Carlson's affiliates, agents, representatives and attorneys,
successors and assigns, from any and all claims, liens, complaints, charges,
demands, liabilities,

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rights or causes of action, at law or equity, suits (judicial, administrative,
or otherwise), damages, debts, demands, obligations of any other nature, past or
present, known or unknown, whether in law or in equity, whether founded upon
contract (expressed or implied), tort (including, but not limited to,
defamation), statute or regulation (federal, state or local), common law and/or
any other theory or basis, from the beginning of the world to the date hereof,
including, but not limited to, any claim that Surge or Superus has asserted, now
asserts or could have asserted, or otherwise.

                  (d) It is understood and agreed by the parties hereto that the
facts and respective assumptions of law in contemplation of which this Agreement
is made may hereafter prove to be other than or different from those facts and
assumptions now known, made or believed by them to be true. The parties hereto
expressly accept and assume the risk of the facts and assumptions to be so
different, and agree that all terms of this Agreement shall be in all respects
effective and not subject to termination or reclusion by any such difference in
facts or assumptions of law.

                  (e) Carlson and Surge and Superus covenant not to, and Surge
covenants to cause each other Company not to, sue each other, and not to file
any judicial or administrative charges against the other, with respect to any
liability arising out of or pertaining to Carlson's former employment by Surge,
Superus and/or any such other Company and the cessation thereof.

                  (f) Carlson expressly waives and relinquishes all rights and
benefits afforded by Section 1542 of the Civil Code of the State of California,
and does so understanding and acknowledging the significance of such specific
waiver of Section 1542. Section 1542 states as follows:

         "A general release does not extend to claims which the creditor does
         not know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor."

Notwithstanding the provisions of said Section 1542, Carlson expressly
acknowledges that this release is intended to include both claims that Carlson
knows about and those he does not know or suspect to exist.

                  (h) The releases as provided in this Section 8 shall not be
applicable to the enforceability of this Agreement nor the Escrow Agreement.

         9.       Indemnity.
                  ---------

                  (a) Carlson agrees to indemnify, defend and hold harmless,
Surge, Superus and all other entities comprising the Company, including any and
all of its officers, directors, shareholders, affiliates, partners, employees,
agents, representatives and controlling persons (collectively, the "Indemnified
Parties") from and against any and all losses, claims, damages, liabilities,
costs and expenses (and all actions, suits, proceedings or claims in respect
thereof) and any legal or other expenses (including all attorneys' fees and fees
and expenses of expert witnesses) in giving testimony or furnishing documents in
response to a subpoena or otherwise (including, without limitation, the cost of
investigating, preparing or defending any such action, suit, proceeding or
claim, whether or not in connection with any action, suit, proceeding

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or claim in which Carlson or any Indemnified Party is a party), as and when
incurred, directly or indirectly, caused by, relating to, based upon or arising
out of (i) Carlson's employment with Surge, Superus and any other Company, or
(ii) as a result of the breach or inaccuracy of any representation, warranty,
covenant or agreement of Carlson contained in this Agreement for which all
parties to this Agreement and their respective officers, directors,
shareholders, affiliates, subsidiaries, partners, employees, agents,
representatives and controlling persons shall be indemnified and held harmless
by Carlson.

                  (b) The indemnity by Carlson as set forth in paragraph 9(a)
above shall exclude all matters for which there is an obligation of Surge,
Superus and/or any other Company or their respective insurers to indemnify
Carlson for losses, claims, damages, liabilities, costs and expenses (and all
actions, suits, proceedings or claims in respect thereof) and any legal or other
expenses (including all attorneys' fees and fees and expenses of expert
witnesses) in giving testimony or furnishing documents in response to a subpoena
or otherwise (including, without limitation, the cost of investigating,
preparing or defending any such action, suit, proceeding or claim, whether or
not in connection with any action, suit, proceeding or claim in which Carlson or
any Indemnified Party is a party) arising with respect to Carlson's employment
by Surge, Superus and/or any other Company, but only to the extent that the
By-laws, state of incorporation law, California law, or director and officers'
liability insurance of Surge or of a specific Company subsidiary specifically
provide for such indemnification. Accordingly, Surge, Superus and/or any other
applicable Company shall continue to indemnify and hold harmless Carlson against
and from (i) any and all claims arising from the conduct of Carlson arising from
any negligent or otherwise wrongful act or omission by the Company, (ii)
negligent act or omission by Carlson during his employment with any Company, and
(iii) all costs, expenses and liabilities incurred on or in connection with each
such claim or action or proceeding brought therein. In case any action or
proceeding is brought against Carlson by reason of any such claim, Surge and/or
the appropriate Company upon notice from Carlson shall resist or defend such
action or proceeding at the Company's sole expense. In the event Carlson refuses
to cooperate in the defense of any such claim, Surge and each other Company
shall have no obligation to defend and indemnify Carlson.

                  Notwithstanding the foregoing, Carlson represents and warrants
hereby that he has no knowledge of any claims of gross negligence, intentional
misconduct, criminal conduct, illegal or fraudulent conduct, or a crime of moral
turpitude concerning him during the course of his employment by Surge, Superus
or any other Company.

                  (c) Surge acknowledges and agrees that Surge shall indemnify,
defend and hold harmless Carlson to the extent provided under the laws of the
State of New York and the Certificate of Incorporation and By-Laws of Surge.

         10.      Representations and Covenants of Carlson.
                  ----------------------------------------

                  (a)      Carlson represents and certifies that he:

                           (i) understands the importance of this agreement and
         has read its entire contents carefully;

                                       10
<PAGE>

                           (ii) fully understands the provisions of this
         Agreement;
                           (iii) has been advised and hereby is advised in
         writing to consider the terms of this Agreement and consult with an
         attorney of Carlson's choosing prior to executing this Agreement;
                           (iv) has determined that it is in his best interest
         to enter into this Agreement;
                           (v) has not been influenced to sign this Agreement by
         any statement or representation by the Company or any other party to
         this Agreement, or any party acting on behalf of any of the foregoing,
         not contained in this Agreement;
                           (vi) is, through this Agreement, releasing the
         Company and its affiliates from any and all claims Carlson may have
         against any of them (except as provided in Section 10 of this
         Agreement;
                           (vii) knowingly and voluntarily agrees to all of the
         terms set forth in this Agreement; (viii) knowingly and voluntarily
         intends to be legally bound by this Agreement; and
                           (ix) enters into this Agreement knowingly and
         voluntarily, with the consent of Surge and the parties agree that
         Carlson's separation from the Company will be deemed to be a voluntary
         resignation.

                  (b) Carlson further represents and warrants to the Company
that he has at all times during the course of his employment by Surge, Superus
and any other Company (including their respective predecessors), fully disclosed
to the Board of Directors of Surge all material facts and circumstances related
to the business and operations of the Company, not engaged in any self-dealing
and has performed his duties in accordance with his fiduciary and other duties
to the Company and its shareholders, and in accordance with applicable laws,
rules and regulations.

                  (c) For the two months following the date of this Agreement,
Carlson shall hold himself ready to assist Surge, Superus and each other Company
and their respective successors, upon reasonable notice, in furnishing advice
and recommendations with respect to such aspects of the business and affairs of
the Company relating to matters as to which he has knowledge gained during his
employment by Surge, Superus and/or other Company that may from time to time
reasonably be requested by Surge and/or its successors. Nothing herein shall
require Surge or Superus and/or their respective successors to utilize Carlson's
services for any particular transaction, nor shall this Agreement limit
Carlson's obligations arising under any other agreement or understanding. All
obligations of Carlson contained herein shall be subject to his reasonable
availability for such performance, in view of the nature of the requested
service and the amount of notice received.

                  (d) Carlson acknowledges and agrees that this Agreement
confers no authority upon him to act in any way for or on behalf of any of the
other parties hereto and that, in the absence of specific written authority to
such effect, he has no authority to hold himself out as representing or to act
on behalf of or to bind Surge, Superus or any other Company, and/or their
respective successors. In addition, Carlson agrees that he shall take no action
whatsoever pursuant to this Section 10, specifically including contacting any
third parties, except strictly in accordance with written instructions from the
Company.

                                       11
<PAGE>

                  11. Property of the Company. It is acknowledged that Carlson
has vacated his office located in the offices of Superus at One Embarcadero
Center, San Francisco, California (the "Premises"), and has delivered to Surge's
representative all keys and passes with respect to the Premises. at the time of
such delivery, Carlson represents that the items listed on Schedule B to this
Agreement were located at the Premises. Carlson further covenants and agrees to
deliver to Surge, at Surge's cost and expense, all other items or assets of
Surge and/or any other Company in Carlson's possession or control.

                  12. Specific Performance. Carlson acknowledges that his breach
or threatened violation of any of the covenants contained in this Agreement,
specifically including Sections 3, 4, 5, 7, 8, 9 or 10 of this Agreement, may
cause irreparable damage to the other parties, for which remedies at law would
be inadequate. The parties further acknowledge that all such covenants are
essential terms and conditions of this Agreement. The parties therefore agree
that the non-breaching party shall be entitled, without the necessity of posting
bond, to a decree or order by any court of competent jurisdiction enjoining such
threatened or actual violation of any of such covenants. Such decree or order,
to the extent appropriate, shall specifically enforce the full performance of
any such covenant by the breaching party and the same hereby consents to the
jurisdiction of any such court of competent jurisdiction. This remedy shall be
in addition to all other remedies available to the parties at law or equity. If
any portion of any such covenant shall be adjudicated to be invalid or
unenforceable, this Agreement shall be deemed amended to modify, to the extent
practicable, or delete therefrom the portion so adjudicated, such deletion to
apply only with respect to the operation of such covenant in the jurisdiction in
which such adjudication is made.

                  13.      Miscellaneous
                           -------------

                  (a) This Agreement shall inure to the benefit of and be
binding upon Surge, Superus, and their respective successors and assigns, and
upon Carlson and his heirs, executors, administrators, legatees and legal
representatives.

                  (b) Should any part of this Agreement, for any reason
whatsoever, be declared invalid, illegal, or incapable of being enforced in
whole or in part, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated,
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement without including therein
any portion which may for any reason be declared invalid.

                  (c) This Agreement shall each be construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in such State without application of the principles of
conflicts of laws of such State. Each of the parties hereto hereby consents to
the venue and jurisdiction of the courts of the State of New York for any action
or proceeding relating to this Agreement, and hereby waives any objection based
on the convenience of such forum, or otherwise. Each of the parties hereby
consents to service of process within the state of New York and California, in
addition to any other jurisdictions where process could be made under New York
law.

                                       12
<PAGE>

                  (d) This Agreement and all rights hereunder are personal to
Carlson and shall not be assignable, and any purported assignment in violation
thereof shall be null and void. Any person, firm or corporation succeeding to
the business of the Company by merger, consolidation, purchase of assets or
otherwise, shall assume by contract or operation of law the obligations of the
Company hereunder; provided, however, that the Company shall, notwithstanding
such assumption and/or assignment, remain liable and responsible for the
fulfillment of the terms and conditions of the Agreement on the part of the
Company.

                  (e) This Agreement constitutes the entire agreement between
the parties hereto with respect to the terms and conditions of Carlson's
engagement by the Company, as distinguished from any other contractual
arrangements between the parties pertaining to or arising out of their
relationship, and this Agreement supersedes and renders null and void any and
all other prior oral or written agreements, understandings, or commitments
pertaining to Carlson's engagement by the Company. This Agreement may only be
amended upon the written agreement of all parties hereto.

                  (f) Any notice, statement, report, request or demand required
or permitted to be given by this Agreement shall be in writing, and shall be
sufficient if delivered in person or if addressed and sent by certified mail,
return receipt requested, postage prepaid, to the parties at the addresses set
forth above, or at such other place that either party may designate by notice in
the foregoing manner to the other. If mailed as aforesaid, any such notice shall
be deemed given three days after being so mailed.

                  (g)      Arbitration.
                           -----------

                           (i) Any dispute arising between the parties to this
         Agreement, including, but not limited to, those pertaining to the
         formation, validity, interpretation, effect or alleged breach of this
         Agreement ("Arbitrable Dispute") will be submitted to arbitration in
         New York, New York, before an experienced panel of arbitrators selected
         in accordance with the rules of the American Arbitration Association.
         The arbitrators shall be entitled to award costs and fees of an
         Arbitrable Dispute to the prevailing party in such Arbitrable Dispute,
         in the sole discretion of such arbitrators.

                           (ii) Should any party to this Agreement hereafter
         institute any legal action or administrative proceedings against
         another party by any method other than said arbitration with respect to
         the subject matters of this Agreement, notwithstanding the provisions
         of this paragraph 13(f), the responding party shall be entitled to
         recover from the initiating party all damages, costs, expenses and
         attorney's fees incurred as a result of such action.

                  (h) The failure of either party to insist upon the strict
performance of any of the terms, conditions and provisions of this Agreement
shall not be construed as a waiver or relinquishment of future compliance
therewith, and said terms, conditions and provisions shall remain in full force
and effect. No waiver of any term or any condition of this Agreement on the part
of either party shall be effective for any purpose whatsoever unless such waiver
is in writing and signed by such party.

                                       13
<PAGE>

                  (i) In the event a lawsuit is instituted by any party
concerning a dispute under this Agreement, the prevailing party in such lawsuit
shall be entitled to recover from the losing party all reasonable attorneys'
fees, costs of suit and expenses (including fees, costs and expenses of appeals
and of expert witnesses), in addition to whatever damages or other relief the
injured party is otherwise entitled to under law and in connection with such
dispute.

                  (j) The headings of the paragraphs herein are inserted for
convenience and shall not affect any interpretation of this Agreement.

                  (k) This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

         PLEASE READ CAREFULLY. THIS AGREEMENT AND ATTACHMENTS IS 29 PAGES IN
LENGTH AND INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS BY CARLSON, EXCEPT
AS SPECIFICALLY PROVIDED HEREIN.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.

                         SURGE COMPONENTS, INC.

                         By:                     /s/ Ira Levy
                                ----------------------------------------------
                                              Ira Levy, President

                         SUPERUS HOLDINGS, INC.

                         By:                     /s/ Ira Levy
                                ----------------------------------------------
                                      Ira Levy, Executive Vice President

                                           /s/ Craig Carlson
                         -----------------------------------------------------
                                             Craig Carlson

                                       14<PAGE>

                      TERMINATION AND SEPARATION AGREEMENT

         This Termination and Separation Agreement (the "Agreement") is entered
into as of the 11th day of July 2001, by and among Adam Epstein ("Epstein"), an
individual residing at 156 Lower Terrace, San Francisco, California 94114, Surge
Components, Inc., a New York corporation with its principal place of business at
95 East Jefryn Boulevard, Deer Park, New York 11729 ("Surge"), and Superus
Holdings, Inc., a Delaware corporation with its principal place of business
address c/o Surge, 95 East Jefryn Boulevard, Deer Park, New York 11729
("Superus"). Except as hereinafter provided, Surge and Superus, together with
Surge's subsidiaries MailEncrypt, Inc. ("MailEncrypt"); SolaWorks, Inc.
("SolaWorks"), Challenge Surge, Inc. ("Challenge") and Surge/Lelon, LLC ("Surge
Lelon") are hereinafter sometimes collectively referred to as the "Company."

         A. Epstein and Surge entered into an employment agreement, dated as of
February 16, 2000 (the "Employment Agreement"), pursuant to which Epstein was
employed as Chairman of the Board and Acting Chief Executive Officer of Surge
and as Chairman of the Board and Chief Executive Officer of Superus at a base
salary of $200,000 per year and pursuant to which Epstein was granted an option
to purchase certain stock of Superus, which option was forfeited and,
subsequently, options (the "Epstein Options") were granted to Epstein by Surge
to purchase an aggregate of 1,500,000 shares of the common stock, par value
$.001 per share (the "Surge Common Stock") of Surge. Unless specifically set
forth herein, all capitalized terms shall have the definitions and meanings
ascribed to them in the Employment Agreement.

         B. Epstein has also been appointed as a Board member and officer of
Surge and Superus, from which positions Epstein is hereby resigning.

         C. Epstein has agreed to return for cancellation and forfeiture the
Epstein Options, except for the right to purchase 125,000 shares of Surge, which
shares are currently exercisable, in exchange for the mutually beneficial terms
and releases set forth herein.

         D. Epstein, Surge and Superus believe it will be mutually beneficial
for all parties to terminate the Employment Agreement on the terms and
conditions contained herein, and for Epstein to resign from all director or
officer positions with Surge and Superus.

         NOW THEREFORE, it is agreed as follows:

                  Epstein acknowledges and agrees that he has received all
compensation payments and reimbursements due to him by the Company, whether
under the Employment Agreement or otherwise, other than reimbursement of
expenses incurred by Epstein on the Company's behalf for the months of March,
April and May 2001 as set forth in Schedule A to this Agreement. Reimbursement
of such expenses shall be made by regular check of Surge, payable to Epstein, in
the amount of $4,917.63, and forwarded to Epstein, via pre-paid, certified mail,
return receipt requested, to the address of Epstein first set forth above,
contemporaneously with the execution of this Agreement. No other benefits or
payments are to be provided to Epstein by the Company, except as provided in
this Agreement. In return for this Agreement and in full and final settlement,

<PAGE>

compromise and release by Epstein of any claims, as set forth in greater detail
below, the parties hereto further agree to the following:

         1.       Employment Agreement Severance.
                  ------------------------------

                  (a) It is stipulated, consented and agreed that the Employment
Agreement is, in all respects, hereby terminated in full and is null and void
and of no further force or effect. Epstein hereby voluntarily resigns from his
employment by, and from all officer and directorship positions with, Surge and
Superus, effective immediately. If and to the extent that Epstein is deemed an
employee, officer and director of any other entity within the Company, Epstein
hereby voluntarily resigns from such position(s), effective immediately.
Notwithstanding the provisions of this paragraph 1(a), in the event that Surge
shall dispose of its current equity interest in MailEncrypt, which consists of
100 shares of the common stock, par value $.01 per share, of MailEncrypt,
Epstein may accept any positions offered to him by MailEncrypt.

                  (b) Epstein shall receive severance compensation in the gross
sum of $100,000 (the "Severance Amount"), the Severance Amount being equal to
the Base Salary, as in effect as of the date of this Agreement, for a six-month
period. Epstein hereby waives any accrued and unpaid vacation time, holiday pay
or sick leave. Simultaneous with the execution of this Agreement, Surge shall
deposit with Continental Stock Transfer & Trust Company (the "Escrow Agent") the
Severance Amount, minus such amount as would equal the obligatory withholding
requirements of applicable federal, state and local taxing authorities for the
Severance Amount payable over a six-month period. Pursuant to an Escrow
Agreement, substantially in the form as attached as Exhibit 1(a) to this
Agreement (the "Escrow Agreement'), entered into as of the date of this
Agreement among Surge, Epstein and the Escrow Agent, the Severance Amount, minus
all applicable withholding requirements of federal, state and local governmental
taxing authorities, will be tendered to Epstein in substantially equal amounts
over a six-month period in conformity with Surge's customary payroll practices
for executive officers, as in effect on the date hereof, commencing with the
first payroll payment date immediately following the date of this Agreement. The
amount of all such applicable withholding requirements shall be the sole
obligation of Surge and Surge shall tender such amounts in accordance with the
applicable rules and regulations of such taxing authorities. All other benefits,
bonuses, health benefits or other expenses being reimbursed shall immediately
cease on the date hereof, except as otherwise specifically continued if and as
provided herein. Payment of the Severance Amount shall be subject to cessation
as provided in the Escrow Agreement.

                  (c) Epstein acknowledges and agrees that he has not accrued or
earned any bonus, and no increases to Base Salary have been implemented or are
otherwise owing to Epstein.

                  (d) Neither Surge, Superus nor any other entity comprising the
Company shall protest or otherwise inhibit Epstein from obtaining medical/health
insurance coverage under Surge's medical/health insurance plan pursuant to the
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"). Surge agrees to provide to Epstein, at the address for the giving of
notices under paragraph 13(f) below, all information and documentation required
by COBRA with respect to terminated employees within the time period(s)
prescribed by COBRA.

                                       2
<PAGE>

         2.       Options: Forfeiture and Restrictions on Exercise.
                  ------------------------------------------------

                  (a) All options and similar rights held by Epstein to purchase
common stock and other securities of Surge, Superus or any other entity
comprising the Company in effect as of the date of this Agreement are hereby
terminated and may not be exercised following the execution of this Agreement,
with the exception of the option (the "Remaining Option") to purchase up to
125,000 shares of Surge Common Stock (the "Remaining Option Shares"),
exercisable at $2.90 per share, under the Epstein Options, which Remaining
Option Shares shall remain exercisable until the earlier to occur of (i) any
material breach by Epstein of this Agreement, or (ii) the close of business one
year and one day after the date of this Agreement, if and to the extent that
such Remaining Option Shares have not previously been exercised.

                  (b) Surge hereby covenants and agrees to (i) file, as promptly
as possible but in no case later than the first registration statement filed by
Surge with the Securities and Exchange Commission (the "SEC") (other than a
Registration Statement on Form S-4 or S-8), a registration statement with the
SEC registering for resale by Epstein, under the Securities Act of 1933, as
amended, all of the Remaining Option Shares, (ii) use its best efforts to cause
such registration of the Remaining Option Shares to become effective and (iii)
use its best efforts to cause such registration of the Remaining Option Shares
to remain effective through the third anniversary of the date of this Agreement.
Surge shall register the Remaining Option Shares on Form S-3 or such other form
as Surge, in its sole discretion, shall so choose and Epstein shall assist Surge
in such registration by providing Surge with such information and documents as
Surge may reasonably request.

         3.       Covenants and Restrictions.
                  --------------------------

                  (a) On or prior to the date of this Agreement, Epstein shall
have returned for forfeiture and cancellation all right, title and interest in
all or any options to purchase any shares of Surge, Superus or any other entity
comprising the Company, except for the Remaining Option, which Remaining Option
shall be free and clear of any and all liens, encumbrances, options, warrants
and any other similar rights or restrictions of any nature, except as provided
in this Agreement or as provided in the certificates evidencing the Epstein
Options (except to the extent specifically provided for in this Agreement, in
which case the provisions of this Agreement shall govern).

                  (b) Epstein hereby covenants and agrees that Epstein will not
at any time subsequent to the date hereof, directly or indirectly, reveal,
divulge, use (whether or not for his own profit) or make known to any person or
entity any Confidential Information (as hereinafter defined) made known to
Epstein or of which Epstein has become aware, regardless of whether developed,
prepared, devised or otherwise created in whole or in part by the efforts of
Epstein and except to the extent so authorized in writing by Surge or except as
required by law. For purposes of this Agreement, the term "Confidential
Information" shall mean (i) the existence and terms of this Agreement and the
nature of the relationship contemplated hereby, (ii) any technical, scientific
or engineering information relating to the products and/or services of any party
hereto or any such party's affiliates, including any entity with whom a party
hereto has entered into an acquisition agreement or other binding or non-binding
agreement related to the acquisition of a third party by

                                       3
<PAGE>

a party hereto (each, a "Party" and, collectively, the "Parties"), (iii)
information relating to any customer of any of the Parties, including without
limitation, the names, addresses, telephone numbers and sales records of, or
pertaining to any such customer, (iv) price lists, methods of operation and
other information pertaining to any of the Parties and which any such Party, in
its sole discretion, regards as confidential and in the nature of trade secrets,
and (v) anything else that Epstein has knowledge of by virtue of his being or
serving as an employee, officer and/or director of Surge, Superus and/or any
other Company, that is not publicly known as of the date of this Agreement.
Notwithstanding anything contained herein to the contrary, Confidential
Information as used herein shall not include that which (x) was in the public
domain prior to receipt by Epstein, (y) subsequently becomes known to Epstein as
a result of disclosure by third parties (other than MailEncrypt stockholders or
affiliates) not in the course of this Agreement and as a matter of right and
without restriction on disclosure, or (z) subsequently comes into the public
domain in the same context as the disclosure by a Party through no fault of
Epstein. The provisions of this Section 3 shall no longer be applicable with
respect to Confidential Information of MailEncrypt (to the extent subsequently
waived by MailEncrypt) in the event that Surge disposes of its current equity
interest in MailEncrypt and such current equity interest is, in part, acquired
by Epstein.

                  (c) Epstein further covenants and agrees that upon the
execution of this Agreement, he has delivered to Surge for delivery to the
applicable Company (and has not retained any copies of) all tangible embodiments
of all Confidential Information in his possession, including, without
limitation, all account lists, records and data related to all customers of
Surge and any other Company, and any notes or files related to the foregoing.
Furthermore, Epstein will retain any and all intangible Confidential Information
in trust for the sole benefit of Surge and the applicable Company and the other
parties to this Agreement, and will not divulge or deliver or show any of such
Confidential Information to any unauthorized person and will not make use of or
in any manner seek to turn to account any of such Confidential Information in an
independent business however unrelated to the business of Surge and any other
Company.

                  (d) If Epstein becomes legally compelled to disclose any
Confidential Information, Epstein shall provide prompt written notice of such
legal compulsion to Surge so that Surge and/or any other applicable Company may
seek a protective order or other remedy or waive compliance with this Agreement.
Epstein shall cooperate (without any cost or expense to Epstein) with Surge
and/or any such other Company in obtaining such protective order or other remedy
upon Surge's or such other Company's request. If, in the absence of a protective
order or the receipt of a waiver hereunder, Epstein is nonetheless compelled to
disclose Confidential Information to or at the direction of any tribunal or else
stand liable for contempt or suffer other censure or significant penalty,
Epstein may disclose such specifically requested Confidential Information to or
at the direction of such tribunal.

                  (e) Epstein agrees that any breach of this Section 3 will
cause Surge and/or any other Company substantial and irreparable damages that
would not be quantifiable and, therefore, in the event of any such breach or
threat of such a breach, in addition to other remedies that may be available,
Surge and/or any other applicable Company shall have the right to seek specific
performance and other injunctive and equitable relief.

                                       4
<PAGE>

         4.       Proprietary Property.
                  --------------------

                  (a) Epstein, Surge and Superus hereby agree that Proprietary
Property (as hereinafter defined) shall be the sole and exclusive property of
the applicable Company. For purposes hereof, the term "Proprietary Property"
shall mean inventions, discoveries, improvements and ideas, whether patentable
or not, including, but not limited to, all Discoveries and Work Product under
the Employment Agreement made solely by Epstein or jointly with others, which
relate to the Company's business, including any of the Company's Confidential
Information or any of such Companies' products, services, processes, technology,
research, product development, marketing programs, manufacturing operations, or
engineering activities.

                  (b) Epstein shall promptly disclose to Surge in writing all
Proprietary Property, including those in the formative stages, in his possession
and shall promptly deliver to Surge any and all Proprietary Property that he may
have in his possession.

                  (c) Epstein hereby agrees and acknowledges that he has no
present right, title or interest in or with respect to any Proprietary Property
and will not in the future acquire any such right, title or interest therein. In
addition, Epstein covenants and agrees that he will at any time, promptly upon
the request and at the expense of Surge, execute any and all patent applications
and assignments so requested and take any and all action as required by Surge
and/or any of the Companies to perfect and maintain the rights and interests of
such party or parties in and with respect to the Proprietary Property.

                  (d) Epstein will not, directly or indirectly, disclose,
furnish, make available or utilize any of the Proprietary Property, other than
pursuant to the terms and conditions of this Agreement.

                  (e) The provisions of this Section 4 shall no longer be
applicable with respect to Proprietary Property of MailEncrypt (to the extent
subsequently waived by MailEncrypt) in the event that Surge disposes of its
current equity interest in MailEncrypt and such current equity interest is, in
part, acquired by Epstein.

         5.       Restrictive Covenants
                  ---------------------

                  Except as otherwise provided in provided in paragraph 5(d)
below:

                  (a) Epstein shall not, during the term commencing on the date
of this Agreement and terminating one year from the date of this Agreement (the
"Restricted Period"), anywhere within the United States (the "Restricted
Territory"), directly or indirectly (whether as an owner, partner, shareholder,
agent, officer, director, employee, independent contractor, consultant, or
otherwise):

                           (i) perform services for, or engage in, any business
         that develops or sells products or services which are competitive with
         any products or services sold or developed by the Company for which
         Epstein has provided any assistance in planning, development,

                                       5
<PAGE>

         marketing, training, support, or maintenance during the period of
         Epstein's employment with the Company (the "Products");

                           (ii) except on behalf of the Company, solicit any
         person or entity who is, or was at any time during the twelve-month
         period immediately prior to the date of this Agreement, a customer of
         the Company for the sale of the Products or any product or service of a
         type then sold by the Company for which Epstein provided any direct,
         material assistance in planning, development, marketing, training,
         support, or maintenance; or

                           (iii) solicit for employment any person who is, or
         was at any time during the twelve-month period immediately prior to the
         date of this Agreement, an employee of any Company, except for Craig
         Carlson.

                  (b) The parties acknowledge that the businesses of the Company
are and will be national and international in scope and thus the covenants in
this Section 5 would be particularly ineffective if the covenants were to be
limited to a particular geographic area of the United States. If any court of
competent jurisdiction at any time deems the Restricted Period unreasonably
lengthy, or the Restricted Territory unreasonably extensive, or any of the
covenants set forth in this Section 5 not fully enforceable, the other
provisions of this Section 5, and this Agreement in general, will nevertheless
stand and to the full extent consistent with law continue in full force and
effect, and it is the intention and desire of the parties that the court treat
any provisions of this Agreement which are not fully enforceable as having been
modified to the extent deemed necessary by the court to render them reasonable
and enforceable and that the court enforce them to such extent (for example,
that the Restricted Period be deemed to be the longest period permissible by
law, but not in excess of the length provided for in paragraph 5(a), and the
Restricted Territory be deemed to comprise the largest territory permissible by
law under the circumstances).

                  (c) Epstein acknowledges that all records, documents, and
tangible embodiments containing or of Proprietary Information prepared by
Epstein or coming into his possession by virtue of his employment by Surge and
Superus are and will remain the property of the applicable Company. Accordingly,
Epstein shall immediately return to Surge all such items in his possession and
all copies of such items.

                  (d) The provisions of this Section 5 shall no longer be
applicable with respect to MailEncrypt (to the extent subsequently waived by
MailEncrypt) in the event that Surge disposes of its current equity interest in
MailEncrypt and such current equity interest is, in part, acquired by Epstein.

         6. Termination. The provisions of this Agreement shall survive the
expiration or any termination hereof, and shall remain in full force and effect
following such expiration or termination to the maximum extent permitted by
applicable law. Epstein specifically acknowledges and agrees that the covenants,
agreements and representations made by him hereunder may be enforced against him
in accordance with their terms for the maximum permissible duration following
any expiration or termination, for whatever reason, of this Agreement.

                                       6
<PAGE>

         7.       Disparagement; Public Announcements.
                  -----------------------------------

                  (a) Epstein and Surge and Superus covenant and agree that
neither party shall, directly or indirectly, disclose, publish, disseminate or
communicate in any way to any third party any information that is critical,
derogatory or is otherwise intended to disparage the other party or any of their
respective principals, officers, directors, shareholders or affiliates, whether
such information has been acquired prior to or after the date of this Agreement
(whether or not in the public domain or otherwise confidential).

                  (b) Surge agrees to execute and deliver, on one or more
occasions but only during a one year period commencing on the date of this
Agreement, at the request of Epstein made in writing, a letter in the form
attached hereto as Exhibit 7(b) and will comment substantially in accord with
the content of such letter if requested in writing by Epstein to provide an oral
reference.

                  (c) Surge's failure to comply with the provisions of
paragraphs 7(a) and/or 7(b) or Epstein's failure to comply with the provisions
of paragraph 7(a) shall nullify the other party's obligations under paragraph
7(a).

                  (d) No party to this Agreement shall make any public
announcements regarding this Agreement, the subject matter hereof or any other
matter related to any of the other parties hereto, and the parties further agree
that the content and/or wording of any press release or other public disclosure
that refers to Epstein's separation from Surge as Chairman and Acting Chief
Executive Officer shall be mutually agreed to by and between Epstein and Surge
in advance of its release, except as may otherwise be required of Surge under
applicable law. Epstein acknowledges and agrees that Surge shall disclose this
Agreement, the consummation of the transactions contemplated by this Agreement
and the effect(s) and possible effects, if any, on Surge's financial condition
and results of operations of the consummation of the transactions contemplated
by this Agreement in filings to be made, in the sole discretion of Surge in
consultation with counsel, with the Securities and Exchange Commission,
including, without limitation, a Current Report on Form 8-K, Quarterly Reports
on Form 10-QSB and Annual Reports on Form 10-KSB, and shall include a copy of
this Agreement as an exhibit to one or more of such filings.

                  (e) In the event that, during the six-month period commencing
as of the date of this Agreement, Surge makes any press release and/or
additional disclosures in filings by Surge with the SEC concerning Questionable
Payments and/or Similar Payments (as such terms are defined in paragraph 9(c)
below), other than as set forth in Surge's Quarterly Report on Form 10-QSB for
the quarter ended February 28, 2001 filed with the SEC on April 19, 2001 or with
respect to Surge's partial or full recovery of the Questionable Payments, Surge
shall include a statement substantially to the effect that Surge's recently
announced restructuring initiative, including the resignation of Adam J. Epstein
as Surge's Chairman of the Board and Acting Chief Executive Officer, are
completely unrelated to the Questionable Payments and/or Similar Payments.

                  (f) The result of either Epstein or the Company's breach of
this Section 7 will likely cause irreparable harm to the non-breaching party.
Therefore, the parties agree that the non-breaching party shall be entitled,
without the necessity of posting a bond to a decree or order by any

                                       7
<PAGE>

court of competent jurisdiction enjoining such threatened or actual violation of
this Section 7. Such decree or order, to the extent appropriate, shall
specifically enforce the full performance of this Section 7 by the breaching
party and the breaching party hereby consents to the jurisdiction of any such
court of competent jurisdiction. This remedy shall be in addition to all other
remedies available to the non-breaching party at law or equity.

         8.       Waiver and Release.
                  ------------------

                  (a) In consideration of the payments and options to be made
and consideration set forth in Section 1 and 2 of this Agreement, Epstein
irrevocably and unconditionally releases and forever discharges, gives up and
waives any and all claims and rights he had, has or may have against Surge,
Superus and each other entity comprising the Company, existing at any time up to
and including the date of this Agreement. This release shall also apply to all
of the directors, officers, shareholders, affiliates, agents, employees,
attorneys, subsidiaries, insurers and representatives of Surge, Superus and each
other entity comprising the Company and/or their respective successors and
assigns, and against all who succeed to any of the rights and responsibilities
of any of the foregoing parties (collectively, the "Released Parties").

                  (b) Specifically, but not limited herein, Epstein releases the
Released Parties from any and all claims, liens, complaints, charges, demands,
liabilities, suits (judicial, administrative, or otherwise), rights or causes of
action, at law or equity, whether founded upon contract (expressed or implied),
tort (including, but not limited to, defamation), statute or regulation
(federal, state or local), common law and/or any other theory or basis, from the
beginning of the world to the date hereof, including, but not limited to, any
claim that Epstein has asserted, now asserts or could have asserted or
otherwise, including, but not limited to, claims, charges, demands, suits,
causes or rights of action relating to breach of contract or public policy,
wrongful, retaliatory or constructive discharge, any claims under the United
States and California Constitutions, any claims under Title VII of the Civil
Rights Act of 1964, as amended, the Civil Rights Act of 1991, the California
Fair Employment and Housing Act, the Americans with Disabilities Act, The Family
Medical Leave Act, The California Workers' Compensation Law, the Equal Pay Act,
and all regulations promulgated thereunder, claims for any other type of
discrimination based on race, color, national origin, ancestry, religion,
physical or mental handicap, medical condition, sex, pregnancy-related
condition, age or sexual orientation, physical or personal injury, infliction of
emotional distress, tortious interference with economic advantage, any federal
or state executive order and any express or implied employment contract between
any Company and Epstein, additional compensation or fringe benefits, and any and
all rights to or claims for continued employment, attorneys' fees or damages
(including contract, compensatory, punitive or liquidated damages), or equitable
relief, which Epstein may ever have had, has now or could have or which
Epstein's heirs, executors or assigns can or shall have, against any or all of
them, whether known or unknown, on account of or arising out of his employment
with any Company (including their respective predecessors and successors) or any
related entities or his separation from such employment. The release by Epstein
provided by this Section 8 also includes a release by Epstein of any claims for
breach of contract, wrongful discharge and all claims for alleged physical or
personal injury, emotional distress relating to or arising out of Epstein's
employment with Surge, Superus and any other Company or the termination of such
employment; and all claims under the Employee Retirement Income Security Act,
such as claims

                                       8
<PAGE>

relating to pension or health plan benefits. Epstein specifically waives the
benefit of any statute or rule of law which, if applied to this Agreement, would
otherwise exclude from its binding effect any claims not now known by Epstein to
exist. Epstein therefore specifically waives any and all claims or rights of
which he is not aware and not specifically mentioned in this release. This
paragraph does not affect Epstein's right to apply for benefits as specified in
paragraph 1(d) above.

                  (c) As a material inducement to Epstein to enter into this
Agreement, Surge and Superus hereby (and Surge agrees to cause each other
Company to) irrevocably and unconditionally waive, release and discharge
Epstein, and Epstein's affiliates, agents, representatives and attorneys,
successors and assigns, from any and all claims, liens, complaints, charges,
demands, liabilities, rights or causes of action, at law or equity, suits
(judicial, administrative, or otherwise), damages, debts, demands, obligations
of any other nature, past or present, known or unknown, whether in law or in
equity, whether founded upon contract (expressed or implied), tort (including,
but not limited to, defamation), statute or regulation (federal, state or
local), common law and/or any other theory or basis, from the beginning of the
world to the date hereof, including, but not limited to, any claim that Surge or
Superus has asserted, now asserts or could have asserted, or otherwise.

                  (d) It is understood and agreed by the parties hereto that the
facts and respective assumptions of law in contemplation of which this Agreement
is made may hereafter prove to be other than or different from those facts and
assumptions now known, made or believed by them to be true. The parties hereto
expressly accept and assume the risk of the facts and assumptions to be so
different, and agree that all terms of this Agreement shall be in all respects
effective and not subject to termination or reclusion by any such difference in
facts or assumptions of law.

                  (e) Epstein and Surge and Superus covenant not to, and Surge
covenants to cause each other Company not to, sue each other, and not to file
any judicial or administrative charges against the other, with respect to any
liability arising out of or pertaining to Epstein's former employment by Surge,
Superus and/or any such other Company and the cessation thereof.

                  (f) The provisions of paragraphs 8(a), 8(b) and 8(e) above
shall not be applicable with respect to any personal liability Epstein may have
to Kirkpatrick & Lockhart, LLP ("K&L") for fees and reimbursable expenses
arising in connection with services rendered by K&L for the benefit of Surge,
Superus and any other Company, and/or all officers, directors and/or employees
thereof in their capacities as officers, directors and/or employees of Surge,
Superus and such other Company (a "K&L Claim").

                  (g) Epstein expressly waives and relinquishes all rights and
benefits afforded by Section 1542 of the Civil Code of the State of California,
and does so understanding and acknowledging the significance of such specific
waiver of Section 1542. Section 1542 states as follows:

         "A general release does not extend to claims which the creditor does
         not know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor."

                                       9
<PAGE>

Notwithstanding the provisions of said Section 1542, Epstein expressly
acknowledges that this release is intended to include both claims that Epstein
knows about and those he does not know or suspect to exist.

                  (h) The releases as provided in this Section 8 shall not be
applicable to the enforceability of this Agreement nor the Escrow Agreement.

         9.       Indemnity.
                  ---------

                  (a) Epstein agrees to indemnify, defend and hold harmless,
Surge, Superus and all other entities comprising the Company, including any and
all of its officers, directors, shareholders, affiliates, partners, employees,
agents, representatives and controlling persons (collectively, the "Indemnified
Parties") from and against any and all losses, claims, damages, liabilities,
costs and expenses (and all actions, suits, proceedings or claims in respect
thereof) and any legal or other expenses (including all attorneys' fees and fees
and expenses of expert witnesses) in giving testimony or furnishing documents in
response to a subpoena or otherwise (including, without limitation, the cost of
investigating, preparing or defending any such action, suit, proceeding or
claim, whether or not in connection with any action, suit, proceeding or claim
in which Epstein or any Indemnified Party is a party), as and when incurred,
directly or indirectly, caused by, relating to, based upon or arising out of (i)
Epstein's employment with Surge, Superus and any other Company, or (ii) as a
result of the breach or inaccuracy of any representation, warranty, covenant or
agreement of Epstein contained in this Agreement for which all parties to this
Agreement and their respective officers, directors, shareholders, affiliates,
subsidiaries, partners, employees, agents, representatives and controlling
persons shall be indemnified and held harmless by Epstein.

                  (b) The indemnity by Epstein as set forth in paragraph 9(a)
above shall exclude all matters for which there is an obligation of Surge,
Superus and/or any other Company or their respective insurers to indemnify
Epstein for losses, claims, damages, liabilities, costs and expenses (and all
actions, suits, proceedings or claims in respect thereof) and any legal or other
expenses (including all attorneys' fees and fees and expenses of expert
witnesses) in giving testimony or furnishing documents in response to a subpoena
or otherwise (including, without limitation, the cost of investigating,
preparing or defending any such action, suit, proceeding or claim, whether or
not in connection with any action, suit, proceeding or claim in which Epstein or
any Indemnified Party is a party) arising with respect to Epstein's employment
by Surge, Superus and/or any other Company, but only to the extent that the
By-laws, state of incorporation law, California law, or director and officers'
liability insurance of Surge or of a specific Company subsidiary specifically
provide for such indemnification. In addition, the indemnity by Epstein as set
forth in paragraph 9(a) shall exclude matters related to the acquisition of
MailEncrypt by Surge and Surge's negotiations for and any disposition of
MailEncrypt. Accordingly, Surge, Superus and/or any other applicable Company
shall continue to indemnify and hold harmless Epstein against and from (i) any
and all claims arising from the conduct of Epstein arising from any negligent or
otherwise wrongful act or omission by the Company, (ii) negligent act or
omission by Epstein during his employment with any Company, (iii) a K&L Claim,
(iv) matters with respect to Questionable Payments and Similar Payments (as such
terms are defined in paragraph 9(c) below), (v) matters relating to the
acquisition of MailEncrypt by Surge and Surge's negotiations for and any
disposition of MailEncrypt (except

                                       10
<PAGE>

with respect to claims made by or on behalf of MailEncrypt or the former
stockholders of MailEncrypt.com, Inc. a California corporation, and/or any
purchaser(s) from Surge of Surge's current equity interest in MailEncrypt), and
(vi) all costs, expenses and liabilities incurred on or in connection with each
such claim or action or proceeding brought therein. In case any action or
proceeding is brought against Epstein by reason of any such claim, Surge and/or
the appropriate Company upon notice from Epstein shall resist or defend such
action or proceeding at the Company's sole expense. In the event Epstein refuses
to cooperate in the defense of any such claim, Surge and each other Company
shall have no obligation to defend and indemnify Epstein.

                  Notwithstanding the foregoing, Epstein represents and warrants
hereby that he has no knowledge of any claims of gross negligence, intentional
misconduct, criminal conduct, illegal or fraudulent conduct, or a crime of moral
turpitude concerning him during the course of his employment by Surge, Superus
or any other Company.

                  (c) Surge acknowledges and agrees that Surge shall indemnify,
defend and hold harmless Epstein to the extent provided under the laws of the
State of New York and the Certificate of Incorporation and By-Laws of Surge.
Further, Surge agrees to indemnify, defend and hold harmless Epstein and all of
his heirs and successors from and against any and all losses, claims, damages,
liabilities, costs and expenses (and all actions, suits, proceedings or claims
in respect thereof) and any legal or other expenses (including all attorneys'
fees and fees and expenses of expert witnesses) in giving testimony or
furnishing documents in response to a subpoena or otherwise (including, without
limitation, the cost of investigating, preparing or defending any such action,
suit, proceeding or claim, whether or not in connection with any action, suit,
proceeding or claim in which Epstein, Surge, Superus and/or any Company is a
party), as and when incurred, directly or indirectly, caused by, relating to,
based upon or arising out of arising out of (i) the "questionable payments of
$2,137,208.20 and $773,597.60, respectively" (the "Questionable Payments")
disclosed in the Quarterly Report on Form 10-QSB for the quarter ended February
28, 2001 filed with the SEC on April 19, 2001, (ii) any other payments similar
in nature to the Questionable Payments (the "Similar Payments") which might have
taken place during Epstein's affiliation with Surge, Superus and any other
Company as to which Epstein was unaware, (iii) any K&L Claim and (iv) matters
relating to the acquisition of MailEncrypt by Surge and Surge's negotiations for
and any disposition of MailEncrypt (except with respect to claims made by or on
behalf of MailEncrypt or the former stockholders of MailEncrypt.com, Inc. a
California corporation, and/or any purchaser(s) from Surge of Surge's current
equity interest in MailEncrypt).

         10.      Representations and Covenants of Epstein.
                  ----------------------------------------

                  (a)      Epstein represents and certifies that he:

                           (i) understands the importance of this agreement and
         has read its entire contents carefully;
                           (ii) fully understands the provisions of this
         Agreement;
                           (iii) has been advised and hereby is advised in
         writing to consider the terms of this Agreement and consult with an
         attorney of Epstein's choosing prior to executing this Agreement;

                                       11
<PAGE>

                           (iv) has determined that it is in his best interest
         to enter into this Agreement;
                           (v) has not been influenced to sign this Agreement by
         any statement or representation by the Company or any other party to
         this Agreement, or any party acting on behalf of any of the foregoing,
         not contained in this Agreement;
                           (vi) is, through this Agreement, releasing the
         Company and its affiliates from any and all claims Epstein may have
         against any of them (except as provided in Section 10 of this
         Agreement;
                           (vii) knowingly and voluntarily agrees to all of the
         terms set forth in this Agreement;
                           (viii) knowingly and voluntarily intends to be
         legally bound by this Agreement; and
                           (ix) enters into this Agreement knowingly and
         voluntarily, with the consent of Surge and the parties agree that
         Epstein's separation from the Company will be deemed to be a voluntary
         resignation.

                  (b) Epstein further represents and warrants to the Company
that he has at all times during the course of his employment by Surge, Superus
and any other Company (including their respective predecessors), fully disclosed
to the Board of Directors of Surge all material facts and circumstances related
to the business and operations of the Company, not engaged in any self-dealing
and has performed his duties in accordance with his fiduciary and other duties
to the Company and its shareholders, and in accordance with applicable laws,
rules and regulations.

                  (c) For the two months following the date of this Agreement,
Epstein shall hold himself ready to assist Surge, Superus and each other Company
and their respective successors, upon reasonable notice, in furnishing advice
and recommendations with respect to such aspects of the business and affairs of
the Company relating to matters as to which he has knowledge gained during his
employment by Surge, Superus and/or other Company that may from time to time
reasonably be requested by Surge and/or its successors. Nothing herein shall
require Surge or Superus and/or their respective successors to utilize Epstein's
services for any particular transaction, nor shall this Agreement limit
Epstein's obligations arising under any other agreement or understanding. All
obligations of Epstein contained herein shall be subject to his reasonable
availability for such performance, in view of the nature of the requested
service and the amount of notice received.

                  (d) Epstein acknowledges and agrees that this Agreement
confers no authority upon him to act in any way for or on behalf of any of the
other parties hereto and that, in the absence of specific written authority to
such effect, he has no authority to hold himself out as representing or to act
on behalf of or to bind Surge, Superus or any other Company, and/or their
respective successors. In addition, Epstein agrees that he shall take no action
whatsoever pursuant to this Section 10, specifically including contacting any
third parties, except strictly in accordance with written instructions from the
Company.

                  11. Property of the Company. It is acknowledged that Epstein
has vacated his office, located at One Embarcadero Center - Suite 2040, San
Francisco, California (the "Premises"), and delivered to Surge's representative
all keys and passes with respect to the Premises. At the time

                                       12
<PAGE>

of such delivery, Epstein represents that the items listed on Schedule B to this
Agreement were located at the Premises. Epstein further covenants and agrees to
deliver to Surge, at Surge's cost and expense, all other items and/or assets of
Surge or any other Company in Epstein's possession or control.

                  12. Specific Performance. Epstein acknowledges that his breach
or threatened violation of any of the covenants contained in this Agreement,
specifically including Sections 3, 4, 5, 7, 8, 9 or 10 of this Agreement, may
cause irreparable damage to the other parties, for which remedies at law would
be inadequate. The parties further acknowledge that all such covenants are
essential terms and conditions of this Agreement. The parties therefore agree
that the non-breaching party shall be entitled, without the necessity of posting
bond, to a decree or order by any court of competent jurisdiction enjoining such
threatened or actual violation of any of such covenants. Such decree or order,
to the extent appropriate, shall specifically enforce the full performance of
any such covenant by the breaching party and the same hereby consents to the
jurisdiction of any such court of competent jurisdiction. This remedy shall be
in addition to all other remedies available to the parties at law or equity. If
any portion of any such covenant shall be adjudicated to be invalid or
unenforceable, this Agreement shall be deemed amended to modify, to the extent
practicable, or delete therefrom the portion so adjudicated, such deletion to
apply only with respect to the operation of such covenant in the jurisdiction in
which such adjudication is made.

                  13.      Miscellaneous
                           -------------

                  (a) This Agreement shall inure to the benefit of and be
binding upon Surge, Superus, and their respective successors and assigns, and
upon Epstein and his heirs, executors, administrators, legatees and legal
representatives.

                  (b) Should any part of this Agreement, for any reason
whatsoever, be declared invalid, illegal, or incapable of being enforced in
whole or in part, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated,
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement without including therein
any portion which may for any reason be declared invalid.

                  (c) This Agreement shall each be construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in such State without application of the principles of
conflicts of laws of such State. Each of the parties hereto hereby consents to
the venue and jurisdiction of the courts of the State of New York for any action
or proceeding relating to this Agreement, and hereby waives any objection based
on the convenience of such forum, or otherwise. Each of the parties hereby
consents to service of process within the state of New York and California, in
addition to any other jurisdictions where process could be made under New York
law.

                  (d) This Agreement and all rights hereunder are personal to
Epstein and shall not be assignable, and any purported assignment in violation
thereof shall be null and void. Any person, firm or corporation succeeding to
the business of the Company by merger, consolidation, purchase

                                       13
<PAGE>

of assets or otherwise, shall assume by contract or operation of law the
obligations of the Company hereunder; provided, however, that the Company shall,
notwithstanding such assumption and/or assignment, remain liable and responsible
for the fulfillment of the terms and conditions of the Agreement on the part of
the Company.

                  (e) This Agreement constitutes the entire agreement between
the parties hereto with respect to the terms and conditions of Epstein's
engagement by the Company, as distinguished from any other contractual
arrangements between the parties pertaining to or arising out of their
relationship, and this Agreement supersedes and renders null and void any and
all other prior oral or written agreements, understandings, or commitments
pertaining to Epstein's engagement by the Company. This Agreement may only be
amended upon the written agreement of all parties hereto.

                  (f) Any notice, statement, report, request or demand required
or permitted to be given by this Agreement shall be in writing, and shall be
sufficient if delivered in person or if addressed and sent by certified mail,
return receipt requested, postage prepaid, to the parties at the addresses set
forth above, or at such other place that either party may designate by notice in
the foregoing manner to the other. If mailed as aforesaid, any such notice shall
be deemed given three days after being so mailed.

                  (g)      Arbitration.
                           -----------

                           (i) Any dispute arising between the parties to this
         Agreement, including, but not limited to, those pertaining to the
         formation, validity, interpretation, effect or alleged breach of this
         Agreement ("Arbitrable Dispute") will be submitted to arbitration in
         New York, New York, before an experienced panel of arbitrators selected
         in accordance with the rules of the American Arbitration Association.
         The arbitrators shall be entitled to award costs and fees of an
         Arbitrable Dispute to the prevailing party in such Arbitrable Dispute,
         in the sole discretion of such arbitrators.

                           (ii) Should any party to this Agreement hereafter
         institute any legal action or administrative proceedings against
         another party by any method other than said arbitration with respect to
         the subject matters of this Agreement, notwithstanding the provisions
         of this paragraph 13(f), the responding party shall be entitled to
         recover from the initiating party all damages, costs, expenses and
         attorney's fees incurred as a result of such action.

                  (h) The failure of either party to insist upon the strict
performance of any of the terms, conditions and provisions of this Agreement
shall not be construed as a waiver or relinquishment of future compliance
therewith, and said terms, conditions and provisions shall remain in full force
and effect. No waiver of any term or any condition of this Agreement on the part
of either party shall be effective for any purpose whatsoever unless such waiver
is in writing and signed by such party.

                  (i) In the event a lawsuit is instituted by any party
concerning a dispute under this Agreement, the prevailing party in such lawsuit
shall be entitled to recover from the losing party all reasonable attorneys'
fees, costs of suit and expenses (including fees, costs and expenses of appeals

                                       14
<PAGE>

and of expert witnesses), in addition to whatever damages or other relief the
injured party is otherwise entitled to under law and in connection with such
dispute.

                  (j) The headings of the paragraphs herein are inserted for
convenience and shall not affect any interpretation of this Agreement.

                  (k) This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

         PLEASE READ CAREFULLY. THIS AGREEMENT AND ATTACHMENTS IS 30 PAGES IN
LENGTH AND INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS BY EPSTEIN, EXCEPT
AS SPECIFICALLY PROVIDED HEREIN.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.

                        SURGE COMPONENTS, INC.

                        By:                     /s/ Ira Levy
                               ----------------------------------------------
                                             Ira Levy, President

                        SUPERUS HOLDINGS, INC.

                        By:                     /s/ Ira Levy
                               ----------------------------------------------
                                     Ira Levy, Executive Vice President

                                          /s/ Adam Epstein
                        -----------------------------------------------------
                                            Adam Epstein

                                       15

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