Exhibit 99.2
[logo] IMPERIAL CAPITAL
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX 00000
Phone: (000) 000-0000 / (800) 929-2299
October 26, 2004
Xx. Xxxxxxx X. Xxxx
Chief Executive Officer
PURADYN FILTER TECHNOLOGIES, INC.
0000 Xxxx Xxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
Dear Xx. Xxxx:
Pursuant to this letter (the "Agreement") Puradyn Filter Technologies,
Inc. (which together with its subsidiaries is hereinafter referred to as the
"Company") agrees to engage Imperial Capital, LLC ("IC") to act as exclusive
financial advisor to the Company in connection with (a) any private placement of
debt or equity securities for the Company (the "Financing"), on a best efforts
basis on the terms satisfactory to the Company and in compliance with federal
and state securities laws and (b) a possible transaction or series of
transactions representing a merger, consolidation or any other business
combination, sale of all or a substantially all of the business securities or
assets of the Company, one or more divisions of the Company, any
recapitalization or spinoff or any transaction which is structured to
substantially achieve the same result (each, a "Transaction").
Section 1. Services to be Rendered. In connection with a Financing,
IC's services to the Company may include: (i) assisting in the preparation of
materials describing the Company, its operations, historical performance and
future prospects including materials to be used in selling any securities of the
Company (the "Offering Materials"); (ii) identifying and contacting selected
qualified purchasers approved by the Company (the "Purchasers") of the proposed
Financing and furnishing them, on behalf of the Company, with copies of the
Offering Materials; (iii) arranging for potential Purchasers to conduct business
investigations and (iv) assisting you in choosing the form of and structuring
and negotiating the Financing. Nothing contained herein constitutes a commitment
on the part of IC to purchase any of the securities comprising the Financing. In
connection with this engagement, in respect to a Transaction, IC's services may
include: (i) advising on a proposed purchase or sale price and form of
consideration; (ii) assisting the Company in structuring a Transaction; (iii)
identifying and contacting selected qualified buyers ("Buyers") for any
Transaction; (iv) arranging for potential Buyers to conduct business
investigations; (v) assisting in negotiating the financial aspects of any
Transaction; and (vi) assisting the Company in preparing and/or updating
Offering Materials describing the Company and its subsidiaries as well as
historical performance and future prospects.
Section 2. Compensation. As reasonable compensation for services to be
provided by IC hereunder, the Company agrees to pay IC:
(a) a retainer of $100,000 (the "Retainer") payable in cash upon
the Company's acceptance of this engagement letter;
(b) with respect to a Transaction, a success fee equal to 2.5% of
the Aggregate Consideration (defined below) received by the
Company or its shareholders in connection with the sale of all
or substantially all of the securities or assets of the
Company; and
(c) with respect to a Financing, a cash fee of 2.5% of the
principal amount of any debt or equity securities sold or
arranged to any purchasers not listed on Schedule II.
Xx. Xxxxxxx X. Xxxx
PURADYN FILTER TECHNOLOGIES, INC.
October 26, 2004
The exclusion (with respect to Section 2(c)) of the purchasers listed on
Schedule II will expire 90 days after the signing of this Agreement and will be
limited to $5.0 million in Financing. Fees payable to IC under Section 2(a) will
be credited against any fees due under Section 2(b) or Section 2(c). The cash
fees in Section 2(b) and Section 2(c) will be payable out of the proceeds of and
upon consummation of any Transaction or Financing.
"Aggregate Consideration" in a Transaction shall mean the aggregate amount of
consideration received by the Company and/or its respective shareholders, the
amount of any debt assumed or repaid, any preferred stock redeemed and
consideration received with respect to the exercise or termination of options,
warrants or other rights of conversion.
A Transaction shall be deemed to have been consummated upon the earliest of any
of the following events to occur: (i) the acquisition of a majority of the
outstanding common stock of the Company or one of its divisions; (ii) a merger
or consolidation of the Company or one of its divisions; (iii) the acquisition
of substantially all assets of the Company or one of its divisions; or (iv) in
the case of any other Transaction, the consummation thereof. The proposed
Financing shall be deemed to have been consummated upon the closing thereof.
In the event that the consideration in a Transaction is paid in whole or in part
in the form of securities or other assets, the value of such securities or other
assets, for the purposes of calculating IC's fee, shall be the fair market value
thereof, as the parties hereto shall mutually agree, on the day prior to the
consummation of a Transaction; provided that, if such consideration includes
securities with an existing public trading market, the value thereof shall be
determined by the average of the last sales price for such securities on the
last 10 trading days thereof prior to such consummation.
In addition, upon consummation of a Financing and/or Transaction, the Company
agrees to reimburse IC for all reasonable out-of-pocket expenses incurred by IC
in connection with this engagement. IC will be paid a cash advance of $15,000
upon execution of this agreement, which will be used by IC to defray its
out-of-pocket expenses and any unused amounts will be promptly returned to the
Company upon termination of the Agreement. Further, the Company will be
responsible for all other expenses associated with the Transaction and placement
of the Financing including, but not limited to, its own accounting and legal
fees, printing and travel costs, and legal costs of the Purchasers.
Reimbursement of any reasonable out-of-pocket expenses in excess of $15,000 will
be paid to IC promptly by the Company whether or not the proposed Financing
and/or Transaction is consummated.
As IC will be acting on your behalf, the Company agrees to the indemnification
and other obligations set forth in Schedule I attached hereto, which Schedule is
an integral part hereof and incorporated by reference herein.
Section 3. Term of Engagement. This Agreement may be terminated by
either party hereto upon 30 days written notice. Upon any termination or
expiration of this Agreement, IC will be entitled to prompt payment of all fees
accrued as a result of the completion of a Financing and/or Transaction and all
out-of-pocket expenses described above. Sections 2, 3, 5, 6, 9, 10 and 11 of
this Agreement and the indemnity and other provisions contained in Schedule I
will also remain operative and in full force and effect regardless of any
termination or expiration of this Agreement.
In addition, if at any time prior to 24 months after the termination or
expiration of this Agreement, the Company enters into a financing transaction(s)
or a transaction(s) with proposed Purchasers and/or Buyers introduced to the
Company by IC and the Company completes any financing transaction or any
transaction(s), IC, in addition to any expense reimbursement due, shall be
entitled to payment in full of the compensation described in Section 2 of this
Agreement with respect to such financing transaction(s) or any transaction(s).
Section 4. Cooperation. To the extent possible, the Company will
furnish IC with all financial and other information and data as IC reasonably
believes appropriate in connection with its activities on the Company's behalf,
and shall provide IC access to its officers, directors, employees and
professional advisors. In addition, the Company with the assistance of IC will
be responsible for preparing the Offering Materials relating to the proposed
Financing and/or Transaction. The Company agrees that it and its counsel will be
solely responsible for ensuring that a Financing and/or Transaction and the
Offering Materials comply in all respects with the applicable law, except with
regard to statements or representations with regard to IC. The Company, to the
extent possible, authorizes IC to transmit the Offering Materials to qualified
prospective Purchasers of the proposed Financing and/or Transaction who the
Company authorizes in
Xx. Xxxxxxx X. Xxxx
PURADYN FILTER TECHNOLOGIES, INC.
October 26, 2004
writing. The Company will also cause to be furnished to IC at the closing,
copies of such agreements, opinions, certificates and other documents delivered
at the closing as IC may reasonably request. The Company will promptly notify IC
if it learns of any material inaccuracy or misstatement in, or material omission
from, any information theretofore delivered to IC.
The Company recognizes and confirms that IC, in connection with performing its
services with respect to a Financing and/or Transaction: (i) will be relying
without investigation upon all information that is available from public sources
or supplied to it by or on behalf of the Company, or its advisors, (ii) shall
not in any respect be responsible for the accuracy or completeness of, or have
any obligation to verify, the same, (iii) will not conduct any appraisal of any
assets of the Company, and (iv) may require that the Offering Materials contain
appropriate disclaimers consistent with the foregoing. The Company recognizes
and confirms that IC will be relying on the Company for the information that it
will be providing to IC.
Section 5. Confidentiality. The Company agrees that any advice, written
or oral, provided by IC pursuant to this Agreement will be treated by the
Company as confidential, will be solely for the information and assistance of
the Company in connection with its consideration of a transaction of the type
referred to in Section I of this agreement and will not be used, circulated,
quoted or otherwise referred to for any other purpose, nor will it be filed
with, included in or referred to, in whole or in part, in any registration
statement, proxy statement or any other communication, whether written
(including, without limitation, the Offering Materials) or oral, prepared,
issued or transmitted by the Company or any affiliate, director, officer,
employee, agent or representative of any thereof, without, in each instance,
IC's prior written consent, provided, however, that the foregoing shall not
apply to any information which becomes publicly available other than as a result
of the breach of IC'S undertakings hereunder, or that which IC is required to
disclose by judicial or administrative process in connection with any action,
suit, proceeding or claim.
Further, in connection with this engagement of IC, it is contemplated that the
Company will supply to IC certain non-public or proprietary information
concerning the Company ("Confidential Information"). The Company agrees to use
its best efforts to appropriately xxxx all such information which is delivered
in written form. IC shall use Confidential Information solely for the purposes
of rendering services pursuant to and in accordance with this engagement and
shall not, without the prior written consent of the Company, disclose any
Confidential Information to any person, other than its officers, directors,
employees and outside advisors with a need to know; provided, however, that the
foregoing shall not apply to any information which becomes publicly available
other than as a result of the breach of IC's undertakings hereunder, or that
which IC is required to disclose by judicial or administrative process in
connection with any action, suit, proceeding or claim.
Section 6. Conflicts. The Company acknowledges that IC and its
affiliates may have and may continue to have investment banking and other
relationships with parties other than the Company pursuant to which IC may
acquire information of interest to the Company. IC shall have no obligation to
disclose such information to the Company, or to use such information in
connection with any contemplated financing. The Company recognizes that IC is
being engaged hereunder to provide the services described above only to the
Company and is not acting as an agent or a fiduciary of, and shall have no
duties or liability to, the equity holders of the Company or any third party in
connection with its engagement hereunder, all of which are hereby expressly
waived. No one other than the Company is authorized to rely upon the engagement
of IC hereunder or any statements, advice, opinions or conduct by IC.
Section 7. Exclusivity. The Company agrees that no other financial
advisor is or will be authorized by it during the term of this Agreement to
perform services on its behalf of the type which IC is authorized to perform
hereunder. Except as otherwise provided in Section 2, no fee payable to any
other financial advisor either by the Company or any other entity shall reduce
or otherwise affect the fees payable hereunder to IC.
Section 8. Public Announcements. IC shall have the right to place
announcements and advertisements in financial and other newspapers and journals,
at its own expense, describing their services in connection with the Financing
and/or Transaction, provided that IC obtain the Company's written consent, which
consent will not be unreasonably withheld.
Xx. Xxxxxxx X. Xxxx
PURADYN FILTER TECHNOLOGIES, INC.
October 26, 2004
Section 9. Complete Agreement; Severability; Amendments; Assignment.
This Agreement embodies the entire agreement and understanding between the
parties hereto and supersedes any prior agreements and understandings relating
to the subject matter hereof. If any provision of this Agreement is determined
to be invalid or unenforceable in any respect, such determination will not
affect such provision in any other respect or any other provision of this
Agreement, which will remain in full force and effect. This Agreement may not be
amended or otherwise modified or waived except by an instrument in writing
signed by both IC and the Company. This Agreement may not be assigned by either
party without the prior written consent of the other party.
This Agreement shall be binding upon and inure to the benefit of the Company,
IC, each Indemnified Person (as defined in Schedule I hereto) and their
respective successors and assigns.
Section 10. Right of Notification. The Company agrees that it shall
notify IC of any plans it may have to pursue any private placement or public
offering of securities for the Company and shall offer IC the right to
participate in such private placement or equity offering, on terms and for fees
which are mutually acceptable to the Company and IC. The foregoing
notwithstanding, under no circumstances shall IC be obligated to accept any
offer to act as the Company's placement agent or underwriter in any such private
placement or equity offering.
Section 11. Governing Law; Forum. This Agreement will be governed by,
and construed in accordance with, the laws of the state of New York applicable
to agreements made and to be performed entirely in such state. Each of the
Company and IC agree that IC shall be entitled to reimbursement of reasonable
attorneys fees and other costs in any action or proceeding based hereon, or
arising out of IC's engagement hereunder. Any controversy, claim or dispute
relating to this letter agreement shall be resolved by binding arbitration in
accordance with the rules of the American Arbitration Association pursuant to an
arbitration conducted in New York. Judgment upon such arbitration may be entered
in any court having jurisdiction thereof. This letter agreement shall be
interpreted and enforced in accordance with the substantive laws of the State of
New York applicable to contracts made and to be performed therein.
Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to IC the enclosed original copy of this Agreement.
Very truly yours,
IMPERIAL CAPITAL, LLC
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
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Xxxxxxxxxxx X. Xxxxxxx
Executive Vice President
Accepted as of the date written above,
Puradyn Filter Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxx
-----------------------
Xxxxxxx X. Xxxx
Chief Executive Officer
