EXHIBIT 10.2
[LOGO XXXXXXX XXXXXXX MANAGEMENT & FINANCIAL CONSULTANTS]
March 30, 2009
Xx. Xxxxx X. Xxxxxxx
President and Chief Executive Officer
Ronson Corporation
Corporate Park III, Campus Drive
Somerset, NJ 08875
Dear Xx. Xxxxxxx:
Reference is made to the Engagement Letter dated January 6, 2009 (the
"Engagement Letter") between Xxxxxxx Xxxxxxx & Associates LLC ("Xxxxxxx
Xxxxxxx") and Xxxxxx Corporation (together with its subsidiaries, the
"Company"). Capitalized terms utilized herein and not otherwise defined herein
shall have the meanings set forth in the Engagement Letter.
Xxxxxxx Xxxxxxx and the Company have agreed to expand the scope of the services
provided by Xxxxxxx Xxxxxxx under the Engagement Letter, and are entering into
this new agreement (this "Agreement") to define the scope of the services to be
provided by Xxxxxxx Xxxxxxx and the fees to be paid with respect thereto.
Accordingly, Xxxxxxx Xxxxxxx shall provide, and the Company shall retain, the
services of Xxxx Xxxxxxx as Chief Restructuring Officer ("CRO") with
responsibility for operations, finance, accounting and related administrative
issues, subject to the terms hereof and to the authority of and reporting to the
Board of Directors of the Company (the "Board"). The CRO shall be authorized but
not required to make final and binding decisions with respect to operating,
finance and accounting matters in as he deems necessary or appropriate. The CRO
shall devote such time to the performance of his services hereunder, including
onsite involvement at the Company's offices, as he determines appropriate in his
sole discretion. The CRO is authorized to utilize the services of other
personnel of Xxxxxxx Xxxxxxx in performing the services hereunder, and it is
understood and agreed that Xxxxxx Xxxxx will have a substantial role in the
performance of the services hereunder.
In particular, but subject to the foregoing, the CRO shall:
o Manage the day-to-day operations of the Company;
o Supervise the banking relationships, cash management and
budgeting process of the Company;
o Supervise the management and employees of the Company;
o Monitor, and work to facilitate, the sale of Ronson Aviation,
Inc. ("RAI") and any other Transaction (as defined below)
including, but not limited to, the engagement of an investment
banker satisfactory to CRO and Xxxxx Fargo National
Association, acting through its Xxxxx Fargo Business Credit
operating division ("WF");
o Render advice to the Board with respect to, but not limited
to:
o The borrowing of money and creation of liens on the
assets of the Company;
o The sale of all or part of the assets of the Company;
o The termination of the Company's operations, and the
liquidation, surrender and/or abandonment of the
Company's assets;
o Any proceedings on behalf of or involving the
Company, including, without limitation, assigning the
Company's assets for the benefit of its creditors or
filing for bankruptcy or other protection from
creditors in state or federal courts (any of the
foregoing, an "Insolvency Proceeding"); and
o The development of restructuring plans for the
Company, including, without limitation, restructuring
plans involving the Company's existing secured debt,
a recapitalization of the Company, or asset sales,
divestitures, liquidations or other disposition of
assets of the Company, whether as part of or outside
of any Insolvency Proceeding (any of the foregoing,
including without limitation a sale or other
disposition in whole or in part of RAI or the assets
thereof, a "Transaction").
Xxxxxxx Xxxxxxx and the Company agree that:
o Xxxxxxx Xxxxxxx and the CRO shall, subject to the
Confidentiality Agreement, have open and unfettered access to
all information concerning but not limited to:
o The sale of RAI and any other potential Transaction;
o Efforts to obtain financing for the Company; and
o Any and all data relating to the Company.
o It is expressly agreed that any member of the Board, or the
existing CEO of the Company, having a request for an employee
of the Company will make such request through the CRO.
o The CRO will report to Xxxx Xxxx and Xxxxxx Xxxxxxx
(collectively, the "Report Person"), it being agreed that the
CRO can report to, and receive approval from, either Report
Person.
o Xxxxx X. Xxxxxxx XX, will have the following responsibilities
during the term of this Agreement: advise and consult with the
CRO from time to time at the reasonable request of the CRO, in
all matters relating to the business and affairs of the
Company. During the term of this Agreement, Xx. Xxxxxxx will
only be physically present at the Company's premises at the
discretion of the CRO.
o Payment of all salaries, fees, perks and expenses to all
members of the Board and the CEO are deferred during the term
of this Agreement until the CRO deems it appropriate to
reinstate them (the foregoing not to extend to any health
insurance
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premiums paid for any of such persons in a manner consistent
with the Company's past practices); provided, that no amounts
so deferred shall be paid unless the Deferred Amount and the
Existing Receivable have been paid in full.
o The go-forward salaries of X. Xxxxxxx, X. Xxxxx, X. Xxxxxxxx,
X. Xxxxx, and X. Xxxxxxxx will be returned to the salaries
being earned prior to December 16, 2008.
o The CRO can engage other third party professionals in order to
advise him and the Company, including, but not limited to, the
engagement of an investment banker satisfactory to CRO and WF.
The CRO shall report regularly to the Report Person and shall seek approval of
the Board for any Transactions of a type typically requiring such approval.
Without limiting the foregoing, the CRO shall not be authorized to terminate or
hire any officer of the Company without prior written approval of the Report
Person.
The CRO shall further, from time to time at the direction of the Report Person,
advise the Report Person with respect to the ongoing activities of the Company's
consumer products division.
Xxxxxxx Xxxxxxx shall be compensated during the term of this Agreement as
follows:
1. A flat fee of $15,000 per week for the services of Xxxx
Xxxxxxx as CRO;
2. Hourly charges of $475 for the services of Xxxxxx Xxxxx, as
needed;
3. Hourly charge of $335 for Xxxxx Xxxxx, as needed; and
4. Other charges as set forth below for other Xxxxxxx Xxxxxxx
staff.
All work performed (other than Xxxx Xxxxxxx) will be billed on an hourly basis.
The hourly rates (other than with respect to rates for Xxxx Xxxxxxx, Xxxxxx
Xxxxx and Xxxxx Xxxxx) are as follows:
Principal / Managing Director $405-550
Vice President / Director $335-485
Associate Professionals and Consultants $190-375
Note that Xxxxxxx Xxxxxxx does not provide assurance regarding the outcome of
its work and its fees will not be contingent on the results of such work.
Xxxxxxx Xxxxxxx will bill the Company weekly for fees and reasonable
out-of-pocket expenses incurred by Xxxxxxx Xxxxxxx in connection with the
services rendered herein. Such expenses include, but are not limited to,
out-of-town travel (meals, lodging, parking, etc.), telephone calls, general
office services, delivery services, and photocopying. All out-of-pocket expenses
in excess of One Thousand Dollars ($1,000) per week are subject to prior
approval by the Report Person. The Company acknowledges that Xxxxxxx Xxxxxxx
invoices are due and payable each week upon presentation. If an invoice is not
paid in accordance with this Agreement on a timely basis, Xxxxxxx Xxxxxxx and
the CRO reserve the right to cease work until the matter is settled.
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Fees in the aggregate to Xxxxxxx Xxxxxxx under items 1 through 4 above shall not
exceed $130,000 for the initial four-week term of this Agreement without the
prior written approval of the Report Person.
In addition, Xxxxxxx Xxxxxxx shall receive a signing bonus for agreeing to act
as CRO in the amount of $200,000 (the "Signing Bonus"). This Signing Bonus is
deemed earned in full upon execution and delivery hereof, and shall be payable
as provided below.
The Company acknowledges that it owes Xxxxxxx Xxxxxxx $190,000 in fees under the
Engagement Agreement for services rendered prior to the date hereof and for fees
and expenses in connection with creating and perfecting the security interest
referred to below (the "Existing Receivable"), which shall be payable as
provided below. The Company acknowledges and agrees that the Existing Receivable
is payable without offset or counterclaim, and the Company agrees that it has no
claim against Xxxxxxx Xxxxxxx or any of its personnel for services rendered
under the Engagement Letter and releases Xxxxxxx Xxxxxxx and all such persons
from any liability with respect thereto.
During the term of this Agreement, Xxxxxxx Xxxxxxx shall receive $10,000 (plus
any and all expenses payable as provided above) on a weekly basis. The balance
of the amounts payable under this Agreement, including, without limitation, the
Signing Bonus (such amounts, the "Deferred Amount") and the Existing Receivable
will be payable in full upon the first to occur (the "Deferred Payment Date") of
(i) the consummation of a Transaction; provided, that if both (x) such
Transaction has not resulted in proceeds sufficient to satisfy the Company's
indebtedness to WF and (y) the Company is not paying balances due to any other
professionals, the Deferred Amount and the Existing Receivable will not be paid
upon consummation of a Transaction unless such payment is consented to by WF, or
(ii) August 31, 2009.
The payment of the Deferred Amount and the Existing Receivable shall be a
condition to the consummation of any such Transaction, and Xxxxxxx Xxxxxxx shall
have the right to inform the other party(ies) to any such Transaction that
payment of the Deferred Amount and the Existing Receivable is a condition to the
consummation of a Transaction; provided, that except as otherwise agreed by the
Company, Xxxxxxx Xxxxxxx and WF, if the Company and WF consent to a Transaction,
the failure to fully pay the amounts set forth above shall not result in the
Company not being able to consummate such Transaction.
The term of Xxxxxxx Henrich's engagement hereunder shall commence when (i) this
letter is signed and delivered by the parties hereto and (ii) Xxxxxxx Henrich's
personnel are added to the Company's Directors & Officers insurance policy ("D&O
Policy") as required below pursuant to an endorsement in form and substance
acceptable to Xxxxxxx Xxxxxxx. The initial term of the engagement under this
Agreement is four (4) weeks, or such longer period during which WF shall
continue to make revolving advances under its credit arrangements with the
Company in an amount sufficient to fund the Company's cash flow needs (including
payments required under this Agreement) (but no later than the Deferred Payment
Date), unless sooner terminated by either party thereto as provided below, and
shall automatically terminate at such time without notice or action by any party
unless extended in a writing signed by the parties hereto. This engagement may
be terminated by the Board, at any time, upon providing two (2) business days
written notice thereof to Xxxxxxx Xxxxxxx. This Agreement may be terminated by
Xxxxxxx Xxxxxxx (w) if its invoices are not paid when rendered in accordance
with the terms of this Agreement, upon two (2) business days prior written
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notice to the Board and failure of the Company to pay such invoice within such
period; (x) any other material breach hereof by the Company, upon two (2)
business days prior written notice to the Board and failure to cure such breach
within such period, (y) Xxxxxxx Xxxxxxx or the CRO shall not be receiving the
cooperation of the Company and its personnel (including the Report Person)
necessary, in the judgment of Xxxxxxx Xxxxxxx and the CRO, to perform their
duties hereunder, upon two (2) business days prior written notice to the Board
and failure to cure such lack of cooperation within such period or (z) if either
(I) a definitive agreement with respect to the sale of RAI has not been signed
by April 30, 2009, or (II) if in the judgment of the CRO such sale is not
anticipated to be consummated on or before June 30, 2009 (or, if the SEC has
indicated it will review the Company's proxy statement in connection therewith,
August 31, 2009). This Agreement, and the services of Xxxxxxx Xxxxxxx and the
CRO, shall be terminated without notice or action by any party if at any time
Xxxxxxx Henrich's personnel cease to be covered under the D&O Policy as required
hereunder, or such D&O Policy is terminated or the coverage thereunder is
reduced or limited. In addition, Xxxxxxx Xxxxxxx can terminate this Agreement at
any time upon two (2) days notice to the Company for any reason not set forth
above, provided, that in such case the Signing Bonus, if not yet paid, shall not
thereafter be payable to Xxxxxxx Xxxxxxx. No termination of this Agreement shall
affect the Company's obligation to pay Xxxxxxx Xxxxxxx any and all accrued fees
and expenses through the date of termination, including without limitation the
Deferred Amount and the Existing Receivable. Upon termination of this Agreement
(whether at the end of the foregoing period or otherwise), this Agreement and
the Engagement Letter shall automatically terminate (except for those provisions
which survive such termination, including without limitation the provisions for
payment of accrued fees and expenses and the indemnification, exculpation and
insurance provisions thereof).
Concurrently with the execution of this letter, the Company is adding the CRO
and Xxxxxx Xxxxx and Xxxxx Xxxxx, and will subsequently add such other persons
performing services hereunder as may be requested by Xxxxxxx Xxxxxxx (Xxxxxxx
Xxxxxxx and each such person, a "Covered Person") to its existing D&O policy and
will notify its insurance carrier for such policy to send copies of all
documentation and other communications regarding the Company's D&O policy,
including without limitation any renewal or cancellation thereof, to the
attention of Xxxxxxx Xxxxxxx. Upon any cancellation or nonrenewal of the D&O
policy, the Company shall exercise its rights (and hereby irrevocably authorizes
Xxxxxxx Xxxxxxx to exercise such right on the Company's behalf) to extend the
claim period for a one-year "discovery period" and the Company shall pay such
premiums required thereunder. Neither Xxxxxxx Xxxxxxx nor any other Covered
Person shall have any liability to the Company or any of the officers,
directors, shareholders, employees or agents of the Company or any other party
to whom Xxxxxxx Xxxxxxx or any Covered Person might be liable in connection with
the Company or services under this Agreement or the Engagement Letter except for
liability finally determined by a court to have resulted from gross negligence
or willful misconduct of Xxxxxxx Xxxxxxx or any such Covered Person.
The Company hereby agrees that each Covered Person shall be a Corporate Agent of
the Company for purposes of the indemnification provisions of the Company's
Certificate of Incorporation and By-laws and as such shall be entitled to
indemnification under such provisions, such indemnification to be in addition
to, and not in lieu of, the indemnification provided for in the Engagement
Letter and the D&O Policy coverage. In addition, the Company agrees that if,
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during or following the completion of the service of any Covered Person, the
Company modifies its By-laws or Certificate of Incorporation or institutes
additional or alternative arrangements with respect to the rights of directors,
officers or Corporate Agents regarding indemnification, including as a result of
changes in applicable law (i) that are less favorable than those in existence on
the date hereof, each Covered Person shall be entitled to the protection
afforded by the By-laws and/or Certificate of Incorporation as in effect before
such modification or arrangements, or (ii) that are more favorable than those
afforded by the Certificate of Incorporation or By-laws as of the date hereof,
proper provision shall be made so that each Covered Person shall be entitled to
such more favorable terms (and such more favorable terms are, without action on
the part of any party, deemed applicable to each Covered Person.
Each Covered Person is an express third party beneficiary of the
indemnification, insurance and exculpation provisions of this Agreement and the
Engagement Letter.
The indemnification sections of the Engagement Letter (including without
limitation those dealing with appearance at legal proceedings) are incorporated
by reference herein as if set forth in full herein. In the event of any
inconsistencies between this Agreement and the Engagement Letter (including,
without limitation, services to be performed hereunder, the fee and termination
provisions and the insurance, indemnification and exculpation provisions), the
provisions hereof shall govern and supersede the Engagement Letter.
Each of Ronson Consumer Products Corporation, a New Jersey corporation ("RCPC")
and Ronson Aviation, Inc., a New Jersey corporation ("RAI") is benefiting from
the services provided by Xxxxxxx Xxxxxxx and the CRO hereunder. Each of RCPC and
RAI shall be jointly and severally liable with Ronson Corporation for the
payment of all amounts due Xxxxxxx Xxxxxxx hereunder, including without
limitation the payment of the Deferred Amount and the Existing Receivable.
To secure payment of all obligations to Xxxxxxx Xxxxxxx hereunder, including
without limitation the Deferred Amount and the Existing Receivable, each of the
undersigned grants Xxxxxxx Xxxxxxx a security interest in the same assets in
which it has granted a security interest to WF (other than RAI's Lease in Xxxxxx
County, New Jersey), such security interest to be subordinated to the security
interest granted to WF pursuant to an intercreditor agreement to be entered into
with WF and the undersigned. The Company will not be required to obtain the
consent of any third party in connection with the grant of such security
interest. The parties agree to enter into security agreements and an
intercreditor agreement to further document such security interest and
subordination on or before April 3, 2009; provided, that until such agreements
are executed and delivered this Agreement shall suffice to effect the grant of
such security interest and the subordination thereof to WF. The proceeds
realized from such security interest shall first be applied to the Deferred
Amount, and then to the Existing Receivable. In addition, if requested by
Xxxxxxx Xxxxxxx, the Company and its Canadian subsidiary will, in agreement with
Xxxxxxx Xxxxxxx, allocate the benefits under this Agreement between the
undersigned and such Canadian subsidiary, and provide for such Canadian
subsidiary to be liable for a commensurate portion of the amounts payable
hereunder, such liability to be secured by the same assets of such Canadian
subsidiary in which WF has a security interest; provided, that this will not
reduce the liability of the undersigned hereunder.
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If the foregoing is acceptable to you, please so indicate by signing below and
returning one copy of this letter.
Very truly yours,
XXXXXXX XXXXXXX & ASSOCIATES LLC
By: s/XXXX XXXXXXX
-----------------------------------
Xxxx Xxxxxxx
Vice Chairman
Agreed to and accepted:
----------------------------------------
RONSON CORPORATION
By: s/XXXXX X. XXXXXXX XX
----------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President
----------------------------------------
RONSON CONSUMER PRODUCTS CORPORATION
By: s/XXXXX X. XXXXXXX XX
----------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President
----------------------------------------
RONSON AVIATION, INC.
By: s/XXXXX X. XXXXXXX XX
----------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President
----------------------------------------
RONSON CORPORATION OF CANADA LTD.
By: s/XXXXX X. XXXXXXX XX
----------------------------------
Name: Xxxxx X. Xxxxxxx XX
Title: President
----------------------------------------
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[LOGO XXXXXXX XXXXXXX MANAGEMENT & FINANCIAL CONSULTANTS]
January 6, 2009
Xx. Xxxxxx X. Xxxxxxx
Vice President, Chief Financial Officer
Ronson Corporation
Corporate Park III, Campus Drive
Somerset, NJ 08875
Dear Xx. Xxxxxxx:
I enjoyed our brief discussion yesterday. As requested, below is our proposal
for Ronson Corporation ("RC"). We welcome the opportunity to work with you.
We believe it is important for you to have confidence in our firm and the
ability of our professionals to deliver the services you require. Accordingly,
this proposal has been structured to explain our qualifications and resources,
followed by the terms of our agreement.
OUR FIRM
Xxxxxxx Xxxxxxx & Associates LLC ("Xxxxxxx Xxxxxxx") was founded in 1968 by our
Chairman, Xxx Xxxxxxx. We are one of the nation's oldest corporate turnaround
and restructuring firms, having successfully restructured hundreds of companies
throughout the U.S., Latin America and Asia. In addition to our operational
restructuring focus, we have in-depth financial restructuring, lender/creditor
relationship management and financing experience. Engagements have spanned more
than fifty industries, in diverse product areas. Our extensive experience in
advising middle market companies enables us to adapt our approach to the precise
needs of each individual client and make practical proposals to address issues.
OUR PEOPLE
Assignments are always managed with a proactive, results-oriented approach. We
believe that in order to provide valuable guidance and advice to our clients,
our staff must have first-hand experience at running a business. Therefore,
prior to joining the firm, each team leader at Xxxxxxx Xxxxxxx gained valuable
experience in managing companies. Experiences range from top executive positions
at middle market companies to senior management positions at major divisions of
multinationals.
The management team for this project will include:
Xxxx Xxxxxxx
Xxxx joined Xxxxxxx Xxxxxxx & Associates in 1990. Prior to joining the firm he
was with Midland Montagu Ventures as part of a two-person team that invested
more than $250 million in middle market manufacturing and media companies over a
four year time span.
Xxxx served on the boards of several companies, advising the firms on strategic
financial and operational issues. At Xxxxxxx Xxxxxxx, Xxxx has served as interim
chief executive for several clients and his areas of expertise include corporate
M&A, financing, and deal negotiation. He has a B.A. from Queens College.
Xxxxxx Xxxxx
Xxxxxx Xxxxx, as Senior Director, brings 20 years of client-centric focus to
business strategy and operations through his work in corporate turnarounds,
process design and improvement, corporate mergers and acquisitions, and
management consulting. Prior to joining Xxxxxxx Xxxxxxx, as President and
General Manager of Camlog Biotechnologies, a dental industry supplier, Xxxxxx
established a U.S. presence and led an aggressive international growth program
by re-aligning distribution channels and organizational design to achieve 30%
annual growth. Xxxxxx was also President and Chief Operating Officer of EGC,
Inc., a consumer goods wholesaler, distributor and importer. Earlier in his
career, Xxxxxx served in multiple leadership roles with Chase Manhattan Bank and
held senior roles with two major consulting firms, ensuring that his clients
developed effective strategies and reaped value from their infrastructure
investments. Xxxxxx holds both undergraduate and graduate degrees from The
Xxxxxxx School.
Xxxx Xxxxxx
Xxxx Xxxxxx, Managing Director, is a more than 25-year veteran working with U.S.
and foreign retail, distribution and manufacturing companies. Leveraging
expertise in both crisis management and operations for healthy companies, Xxxx
led the successful turnaround of a New York retail chain, founded a
vertically-integrated specialty retailer that became the largest in the
industry, and currently serves on an ASE public company board. From 1984 to
2000, Xxxx served as Executive Chairman and CEO of Debjon and Sidcor Group, and
as Co-President of MQM. Xxxx has also served on the board of a joint venture
between an emerging market government, private enterprise, and the World Bank.
He holds a B.B.A. in Economics and Marketing from the University of South
Africa. Xxxx is a member of the Turnaround Management Association.
OUR SERVICES
Consulting Services
o Financial
As financial difficulties are frequently the most urgent issue
confronting companies in distress, Xxxxxxx Henrich's financial
consulting services are focused on the priorities of ensuring
financing, establishing controls, and improving overall financial
management. Specifically, Xxxxxxx Xxxxxxx will facilitate relationships
with companies' lending institutions and investors; help restructure
company debt and other obligations; assist with valuations and due
diligence if a sale or purchase of a company or specific division is
required; work to optimize cash flow and cash management; assemble
projections of financial performance; and, monitor ongoing performance.
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o Operations
Building on Xxxxxxx Henrich's successful turnaround and crisis
management track record, the firm has built deep operational consulting
capabilities to also help healthy and underperforming organizations
leverage Lean Manufacturing and Six Sigma techniques to achieve
operational excellence.
Our methodology focuses on systematically eliminating or minimizing
waste, maximizing productivity and efficiency from existing processes,
people and systems, and optimizing manual systems. We do all this
before recommending a company to automate or make substantial
investments in technology solutions...creativity before capital. This
means a company has a strategic roadmap before any capital investments
are even considered.
Globally our executives have led Six Sigma and Lean Management
projects. From the assessment phase through execution, this group
brings a distinct hands-on approach to drive operational and
performance improvements.
o Rapid Return on Investment - with a tailored, rapid
methodology, we bring a pragmatic approach to achieve
quick gains while building a longer-term culture
focused on operational improvement.
o Sustainable Results - we understand that
sustainability will only be achieved if necessary
organizational and process changes are facilitated -
not dictated. That is why we have created a
results-oriented, team-driven approach.
o Effective Implementation - our approach begins with
an operational assessment that establishes a credible
fact-base and leads to a series of kaizen events
focused on areas where the biggest gains can be
achieved.
The operations consulting services that Xxxxxxx Xxxxxxx provides focus
on managing a company's operations to maximize cash flow, improve
efficiency and help alleviate the strain on a company's financial
situation. Our staff is experienced in strategic operational
improvement by focusing on such factors as personnel utilization,
organizational structure, product portfolios and overhead. We also
devote particular attention to improving tactical operational issues
such as, improving service performance, responsiveness to customer
requirements/disputes, company position with respect to industry
standards and requirements, and IT systems and reporting effectiveness.
o Strategy
Our professionals have extensive experience working with clients to
develop and refine their corporate strategy by assessing their business
units, the resources allocated to each and the competitive dynamics of
the marketplace. We conduct a comprehensive analysis to determine how
to bolster high performers, minimize the impact of underperformers (or
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those misaligned with the overall strategy) while improving
organizational structure to support these efforts. Consistent with our
straightforward approach and focus on results, we work with executives
to develop strategic plans with a clear path to improve operations and
increase shareholder value.
Typically, our framework for strategic planning involves:
o Mission & Objectives - we work with leadership to
articulate the company's mission that defines its
broader purpose and goals, reflects core values,
galvanizes employees to achieve the defined
objectives, and provides a vision of success for
organization.
o Market Analysis - we examine the company's internal
and external environments, as it is and how it may
develop in the future. The internal analysis serves
to identify the company's unique strengths and
weaknesses while the external analysis reveals
opportunities and threats. The analysis will include
evaluation of pricing, distribution and production
trends, as well as traditional five-forces analysis:
entry barriers, suppliers, customers, substitute
products and major competitors.
o Strategy Formulation - our approach combines any
market insights gained with a rigorous operational
assessment that establishes a credible fact-base for
applying its strengths to opportunities that are
identified and create competitive advantages to
maximize value. In the meantime, the company must
address any significant weaknesses and external
threats.
o Strategy Implementation - we understand that
sustainability will only be achieved if necessary
organizational and process changes are facilitated -
not dictated. That is why we have created a
results-oriented, team-driven approach to implement
the defined strategy by organizing the necessary
resources, leading the required programs, budgets and
initiatives, and achieving the desired results in
cooperation with leadership.
o Evaluation & Control - our approach insures that the
implementation of the strategy is effectively
monitored and any adjustments made as needed. In this
way, we define which parameters are to be measured,
establish target values, and provide for measurement
systems to monitor and get feedback from implemented
processes to fully control the operation.
o Sales and Marketing
The sales and marketing consulting services that Xxxxxxx Xxxxxxx
provides focus on assisting or managing a company to position it for
growth, improve profitability, and maximize cash flow. Our staff is
experienced in enhancing sales and improving marketing effectiveness
by focusing on such factors as competitive positioning, strategic
marketing plan development, growth opportunity exploitation,
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control/expansion of margins, product/service offerings and life cycle
management, personnel utilization, sales management, organizational
structure and overhead.
Management Services
o Crisis Management
Professionals from Xxxxxxx Xxxxxxx are often requested to function as
corporate management, for a period, during times of extreme crisis.
Xxxxxxx Xxxxxxx staff may assume senior management functions until the
crisis is successfully managed or until longer-term management is in
place.
o Interim Management
Xxxxxxx Xxxxxxx professionals are sometimes asked to serve as CEO,
CFO, CRO, or COO of client companies for a longer time period to help
ensure the success of a turnaround situation.
Investment Banking Services
Xxxxxxx Xxxxxxx provides a broad range of investment banking services
including valuations, refinancing (senior debt, mezzanine debt and new
equity) and the purchase and sale of companies, divisions or specific
assets. Xxxxxxx Xxxxxxx has excellent research and target
identification capabilities to enhance management's knowledge of
potential acquirers or targets. Xxxxxxx Xxxxxxx also has strong
relationships with relevant financial institutions to execute
transactions in a timely and efficient fashion.
The terms of our agreement with you will be as follows:
SCOPE & TERMS OF ENGAGEMENT
Xxxxxxx Xxxxxxx shall, during the term of its engagement hereunder:
o For each of RC's subsidiaries as well as the consolidated organization:
o Review the business plan and underlying assumptions;
o Review rolling thirteen-week cash flow model with detailed cash
inflows and outflows as well as the underlying assumptions;
o Recommend operational and cash flow improvement alternatives;
o Determine and understand management's performance improvement/cost
reduction plan and operating goals;
o Review inventory levels;
o Work in dealing with trade payables;
o Work with RC regarding the sales process for Xxxxxx Xxxxxx, Inc.;
and
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o Assist RC and its subsidiaries in their negotiation with Xxxxx Fargo
Bank, N.A., and its affiliates (collectively, "WF") in connection
with the administration, modification and/or restructuring of any
and all credit arrangements with WF.
CONDITIONS OF ENGAGEMENT
RC agrees (i) to make available to Xxxxxxx Xxxxxxx all of RC's financial and
operational information and data as requested by Xxxxxxx Xxxxxxx (all such
information so furnished being the "Information"), and (ii) to permit
discussions with RC personnel, in each case under clauses (i) and (ii), that
Xxxxxxx Xxxxxxx might reasonably require in connection with this engagement. All
such Information and discussions shall be subject to the terms and conditions of
the Confidentiality Agreement which we have executed to RC. Notwithstanding the
foregoing, RC agrees that WF shall have unfettered access to Xxxxxxx Xxxxxxx and
Xxxxxxx Xxxxxxx shall be free to discuss with and disclose to WF all such
Information and discussions. Xxxxxxx Xxxxxxx will keep RC generally apprised,
and at the request of RC will keep it apprised, on the status of its discussions
with WF, and will provide copies to RC of all formal and detailed written
reports prepared by Xxxxxxx Xxxxxxx and delivered to WF. RC recognizes and
confirms that Xxxxxxx Xxxxxxx (a) will use and rely primarily on the Information
and on information available from generally recognized public sources in
performing the services contemplated hereby without having independently
verified any of the same and (b) does not assume responsibility for accurateness
or completeness of the Information and such other information and (c) will not
make an appraisal of any of the assets or liabilities of RC.
FEES
All work performed will be billed on an hourly basis. Our hourly rates are as
follows:
Principal / Managing Director $405-550
Vice President / Director $335-485
Associate Professionals and Consultants $190-375
Hourly rates are revised periodically. We will notify you of any such changes to
our rates. Note that we do not provide assurance regarding the outcome of our
work and our fees will not be contingent on the results of such work.
Xxxxxxx Xxxxxxx will bill RC weekly for fees and reasonable out-of-pocket
expenses incurred by Xxxxxxx Xxxxxxx in connection with the services rendered
herein. Such expenses include, but are not limited to, out-of-town travel
(meals, lodging, parking, etc.), telephone calls, general office services,
delivery services, and photocopying. All out-of-pocket expenses in excess of
Five Hundred Dollars ($500) per week are subject to prior approval by RC. RC
acknowledges that Xxxxxxx Xxxxxxx invoices are due and payable each week within
three (3) business days of presentation. If an invoice is not paid on a timely
basis, we reserve the right to cease work until the matter is settled.
To the extent that any services outside the scope of this engagement are
required or requested, the extent of these services, and the additional
compensation to be paid to Xxxxxxx Xxxxxxx for such services, shall be agreed
upon prior to Xxxxxxx Xxxxxxx beginning to perform such services. These services
will be entered into under a separate engagement letter.
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A retainer of $25,000 will be required and will be applied to the final bill.
Any unearned portion will be refunded promptly upon termination of this
engagement.
Except for the services to be provided by Xxxxxxx Xxxxxxx, during the term of
this engagement and for a period of two (2) years thereafter, RC and its
subsidiaries shall not utilize, whether as employee or independent consultant,
and whether directly, or indirectly, the services of any person who is, was, or
had been employed by Xxxxxxx Xxxxxxx during the term of this engagement and with
whom RC or its subsidiaries comes into contact.
RC will indemnify, defend and hold harmless Xxxxxxx Xxxxxxx and its affiliates
and their respective shareholders, directors, officers, employees, and agents,
(each an "Indemnified Party"), from and against any and all claims, liability,
loss, cost, damage, or expense (including reasonable attorneys' fees) asserted
against or incurred by any indemnified Party, by reason of, or arising out of or
in connection with, this agreement or performance under this agreement, whether
such claim, liability, loss, cost, damage, or expense is asserted by RC or any
other person or entity, except in a case of gross negligence or willful
misconduct by an Indemnified Party.
No Indemnified Party may settle or compromise or consent to the entry of
judgment in any pending or threatened action without the prior written consent
of RC. In the event of the assertion against any Indemnified Party of any claim
or the commencement of any action or proceeding, RC shall be entitled to
participate in such action or proceeding, and in the investigation of such
claim, and after written notice from RC to assume the investigation or defense
of such claim, action or proceeding with counsel reasonably satisfactory to the
Indemnified Party unless such Indemnified Party is advised by its counsel that
such representation would be a conflict or that there are defenses available to
the Indemnified Party which are not available to RC.
If Xxxxxxx Xxxxxxx is requested or required to appear and/or testify before any
tribunal by RC, whether or not pursuant to lawful process, all time spent and
reasonable out-of-pocket expenditures by Xxxxxxx Xxxxxxx, including reasonable
fees for legal counsel, shall be considered to have been performed under the
terms of this engagement, and Xxxxxxx Xxxxxxx shall be entitled to receive
payment of fees and reimbursement of expenses therefore.
Either RC or Xxxxxxx Xxxxxxx can terminate this agreement upon one week's prior
written notice, except for the indemnification paragraph and payment provisions
above, and the provisions of our Confidentiality Agreement, which shall survive
any termination. Outstanding amounts due Xxxxxxx Xxxxxxx, if any, will be paid
promptly upon receipt of a final invoice that will be provided immediately upon
notice of termination by RC.
This Engagement Letter, and the Confidentiality Agreement executed by RC and
Xxxxxxx Xxxxxxx contains the entire agreement among the parties relating to the
subject herein except. Any modification or other changes to this Engagement
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Letter must be in writing and signed by the parties hereto to be enforceable.
Please confirm your acceptance of the terms of our agreement by signing and
returning one copy of this letter.
The retainer should be wired to Xxxxxxx Xxxxxxx & Associates LLC c/o XX Xxxxxx
Xxxxx Bank, account # 621505952665, routing/ABA # 021 0000 21. Future payments
should be wired to that account as well.
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We look forward to working with you. Please feel free to contact me for any
additional information or clarification.
Sincerely,
s/XXXX XXXXXXX
--------------------------------------------
Xxxx Xxxxxxx
Vice Chairman
Ronson Corporation
Agreed to and Accepted:
By: s/XXXXX X. XXXXXXX XX
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Print Name: Xxxxx X. Xxxxxxx XX
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Title: President and C.E.O.
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Date: January 12, 2009
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