EXHIBIT 10.5
June 21, 1996
THE ITALIAN OVEN, Inc.
c/o Mr. Michael Weiss
Doepken Keevican & Weiss
USX Tower - 600 Grant Street
Pittsburgh, PA 15219
Dear Mr. Weiss:
This letter will confirm the understanding and agreement between Cornerstone
Capital Advisors, Ltd. ("CCA") and THE ITALIAN OVEN, Inc. (the "Client") with
respect to the matters set forth below.
1. The Client hereby engages CCA for the purposes of:
A. Providing independent advice, including services as interim Chief
Executive Officer, to the Client regarding the management and
financial strategies pertinent to the Client's business, related
organizational matters, and negotiations with creditors;
B. As appropriate, participating in negotiations with current or
prospective lenders, creditors, franchisees, landlords, or
sources of capital to maintain adequate liquidity and financial
capacity in the Client's operations; and;
C. Participating in the execution of the orderly expansion,
downsizing, sale or liquidation of assets or sale of the business
in whole or part in order to preserve and protect shareholder
values.
These services described in paragraphs 1.A, 1.B and 1.C are identified herein as
the "Advisory Services".
2. CCA hereby accepts the engagement and agrees to dedicate its reasonable and
best efforts in rendering the Advisory Services in a proper and timely manner.
3. Subject to the provisions of paragraph 4, either party may terminate CCA's
engagement hereunder at any time with or without cause by giving the other at
least seven days' prior written notice of termination. Absent such notice of
termination this Agreement shall remain in full force and effect until December
31, 1996 (the "Expiration Date").
4. In consideration for the Advisory Services of CCA to be performed under this
Agreement, the Client agrees to pay CCA the following compensation:
(A) A monthly fee of $33,000, payable in advance.
(B) In addition, the Client will reimburse CCA for all reasonable
out-of-pocket expenses incurred by CCA in connection with the
performance of the Advisory Services:
(C) In the event of termination in accordance with paragraph 3 hereof, CCA
will submit an invoice to the Client indicating the total of unpaid
fees for Advisory Services rendered and unreimbursed expenses incurred
less any unused retainer which invoice the Client shall promptly pay
or Cornerstone shall promptly refund.
5. The Client agrees that it will provide CCA with all documents and information
relating to its business which CCA reasonably considers necessary to perform the
Advisory Services. It is understood that all factual information provided to CCA
by officers of the Client may be used and relied upon by CCA without the need
for independent verification. CCA will treat all non-public information
furnished to it by the Client and the Company as confidential so long as such
information continues to be non-public.
6. The advice to be provided by CCA under this Agreement shall not be disclosed
publicly without CCA's prior approval.
7. The Client agrees to indemnify and hold CCA and its directors, officers,
shareholders, agents and employees harmless from and against any expenses
(including attorney's fees) actually and reasonably incurred by any such person
in connection with the defense or settlement of any action (other than an action
by or in the right of the Client) resulting or arising from the engagement
contemplated by this Agreement or CCA's rendering of services pursuant hereto,
provided that each such person to be indemnified shall have acted in good faith
and in a manner reasonably believed by such person to be in, or not opposed to,
the best interests of the Client.
8. This Agreement may not be amended or modified except in writing. This
Agreement represents the entire understanding between the parties, and all prior
discussions and negotiations are merged in it. This Agreement shall be governed
by and construed in accordance with the laws of the Commonwealth of
Pennsylvania.
9. This Agreement cannot be assigned by either party to any other person, firm
or corporation without the prior written consent of the other party.
If the foregoing correctly sets forth the understanding and agreement between
CCA and the Client, please so indicate by signing and dating the enclosed
duplicate of this letter and returning it with your check for the retainer,
whereupon this letter shall constitute a binding agreement.
Very truly yours,
s/ J. Garvin Warden
J. Garvin Warden
Managing Director
ACCEPTED AND AGREED for the Client this 24 day of June , 1996:
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By: s/ Michael B. Understein
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