exv10w14



 



Exhibit 10.14


PMCM, LLC



110 Chadds Ford Commons

Chadds Ford, PA 19317

610-358-4700

Fax 610-358-9377

www.phoenixmanagement.com


Vincent J. Colistra

Managing Director



June 11, 2003



J.H. Campbell, Jr.

Chairman of the Board

Piccadilly Cafeterias, Inc.

3232 South Sherwood Forest Blvd.

Baton Rouge, LA 70816



Dear Mr. Campbell:


This letter amends and restates the letter agreement dated May 5, 2003 between
PMCM, LLC (“PMCM”) and Piccadilly Cafeterias, Inc. (the “Company”) for the
engagement of PMCM to provide crisis management services by making available
certain temporary employees to the Company for the purpose of assisting in its
restructuring as described below (the “Agreement”). You have requested that
PMCM modify its engagement a second time as set forth herein, and PMCM is
willing to do so. Generally, the engagement of PMCM, including any PMCM
employees who serve in Executive Officer positions, shall be under the approval
of the Board of Directors of the Company (the “Board of Directors”). (The
letter agreement in the form prior to this amendment and restatement shall
continue to govern for periods prior to the date hereof.)


Scope of Services.



Officers. In connection with this engagement, PMCM shall provide crisis
management and restructuring services to the Company through the individuals
set forth on Exhibit A, herein referred to as the “Temporary Staff Officers” or
“Officers,” subject to the terms and conditions of this letter, with the titles
and other descriptions set forth therein. PMCM will provide Vincent J. (Vince)
Colistra, who will be in charge of this engagement and shall act as Chief
Restructuring Advisor (“CRA”) of the Company and John G. (Jack) McGregor, who
will serve as the Company’s interim Chief Executive Officer (“Interim CEO”);
and Daphne Corry, who will serve as the Company’s interim Treasurer (“Interim
Treasurer”) and collectively with the CRA and the Interim CEO, the “Temporary
Staff Officers” or “Officers”) as well as, upon the mutual agreement of PMCM
and the Board of Directors, such additional personnel as are necessary to
assist in the performance of the tasks set forth in clause 1.b below (the
“Additional Temporary Staff Officers” or “Additional Officers”). Each of the
Officers and any Additional Officers shall be designated by the Company as
officers. Upon such designation for an Additional Officer, he or she shall
also be included with the defined term “Officers”; provided however, that in
the event that the Company files for protection under the bankruptcy code, that
the Company shall promptly file with the United States Bankruptcy Court having
jurisdiction over its chapter 11 case (the “Bankruptcy Court”), with notice to
the United States Trustee, the Creditors Committee appointed in the chapter 11
case of the Company and the Trustee for each of the outstanding series of
securities of the Company, properly certified resolutions demonstrating the
appointment or other certificate or attestation from a director or officer of
the Company stating that the appointment has occurred in compliance with the
requisite corporate formalities. Working collaboratively with the senior
management team, the Board of Directors and other Company professionals,
Messrs. Colistra, McGregor and Ms. Corry, and any other Additional
Officers will assist the Company in evaluating and implementing strategic and
tactical options through the restructuring process.


 






 


Tasks



It is anticipated that the Officers’ activities shall include the following:



		
	 	Analyze the Company’s business plan, financial projections, cash flows,
short-term liquidity projections and ongoing cash requirements and
projected store-by-store profitability prepared by Technomics and by
the management of the Company.




		
	 	Assess the Company’s plan for closure of underperforming cafeterias in
conjunction with the analysis developed by RCS and by the management of
the Company.




		
	 	Assist the Company’s management in its communications with the
Company’s lenders, including preparation of formal presentations to and
meetings with Foothill Capital Corporation (“Foothill”) and the
Bondholders with an objective of obtaining their support for an
out-of-court restructuring plan (the “Restructuring Plan”).




		
	 	Based on completing the tasks detailed in 1b. above, provide the Board
of Directors with a candid assessment (the “Assessment”) of the
Company’s financial and operational viability given the Company’s:




		
	 	Current and projected short and longer term cash requirements
to implement the Restructuring Plan;




		
	 	Ability to secure the continued support of Foothill and the
Bondholders in a probable “covenant default” situation;




		
	 	Projected pro forma EBITDA on a “Going Forward Scenario” based
on a core of restaurants, after considering the cost of
closing the unprofitable locations and terminating the leases
involved;




		
	 	Projected “footprint and model” for the remaining cafeteria
chain under the Restructuring Plan.




		
	 	In conjunction with the Assessment, outline for the Board of Directors
the Company’s options for maximizing shareholder value, including the
likelihood of completing the Restructuring Plan within the framework of
an out-of-court restructuring or whether a bankruptcy filing will be
required to achieve the optimum results for the Company.




		
	 	Provide the Board of Directors with our assessment of the Company’s
current management team, and if requested, assist the Board in
identifying and screening potential candidates to fill the CEO position
on a permanent basis.




		
	 	If requested by the Board of Directors, assist the Company in a search
for new equity partners or any outright purchaser.




		
	 	Provide regular updates to the entire Board of Directors and/or the
Executive Committee and/or the Chairman.




		
	 	Take all actions customarily required of a chief executive officer of a
public company relative to the Company’s filings with the Securities
and Exchange Commission and the listing of its shares on the American
Stock Exchange.




		
	 	Preparing for and, if necessary, executing a bankruptcy filing,
including:




		
	 	Developing a Plan of Reorganization (a “Plan”) or an asset
sale pursuant to section 363 of the Bankruptcy Code (the “363
Auction Process”);




		
	 	If a Plan is pursued, assist the Company in preparing all the
necessary business plans, financial forecasts, and financing
requirements in order to assure that any Plan has the highest
likelihood of resulting in a successful business model;


Assist the Company in preparing for and making presentations
at meetings with representatives of its secured and unsecured
creditors so that the Plan can be openly



 






 







		
	 	discussed and
developed in a manner that can suit the needs of all of the
Company’s constituents;




		
	 	If a 363 Auction Process if pursued, develop an Informational
Memorandum, prepare a data room for due diligence, identify
potential interested parties, coordinate the due diligence
process and work as buffer between management and interested
parties during the due diligence process to minimize
disruptions to daily operations, assist in negotiating the
terms of a proposed asset purchase agreement prior to the
filing with the objective of maximizing value for all the
constituents in the case;




		
	 	Assist with the preparation of the various financial reporting
requirements that are typical in any bankruptcy proceeding.
In this capacity, the Temporary Staff Officers will assist in
the development of the analyses required by the U.S.
Bankruptcy Court, the Office of the U.S. Trustee, and any
reasonable requests made by the Company’s secured and
unsecured creditors. The Temporary Staff Officers will also
assist the Company with developing the appropriate level of
monthly reporting that will be necessary to satisfy the
requirements of the Office of U.S. Trustee;




		
	 	Develop a thirteen week cash flow forecast in anticipation of
negotiating either use of “Cash Collateral” or a “DIP”
facility with Foothill;




		
	 	Develop and maintain a “Scorecard” to monitor and report to
the various constituents the key value drivers of the thirteen
week cash flow;




		
	 	Work with restructuring counsel to prepare all necessary first
day motions, prepare Schedules and Statements of Financial
Affairs to accompany the first day filings, work with Claims
agent regarding pre-filing obligations, and assist management
in the preparation of the post filing Monthly Operating
Reports (MORs);




		
	 	Provide testimony in any Chapter 11 proceeding as needed.




		
	 	Jack McGregor will act as Interim CEO. The Temporary Staff Officers
expected to be provided as of the date of this letter along with the
nature of their commitment to the Company is set forth on Exhibit A,
unless PMCM and the Company agree to modify the terms of this
agreement. We will keep you informed as to our staffing and will not
add additional Temporary Staff Officers to the assignment without first
consulting with you to obtain your concurrence that such additional
resources are required and do not duplicate the activities of other
employees or professionals.



Fees for Services Rendered. PMCM shall charge the following fees for providing
crises management and restructuring services through the Temporary Staff
Officers to the Company. The fees shall be invoiced weekly and shall be
payable on receipt. The Temporary Staff Officers may be assisted by other
professionals at various levels, (Additional Temporary Staff Officers), as the
tasks require, who would also become Temporary Staff Officers.


With regard to the Interim CEO position to the filled by Jack McGregor, and as
per your request, we would charge a flat weekly fee of $15,000. If you assume
an average workweek of fifty hours for Mr. McGregor, this represents a discount
of approximately 20% from Jack’s normal hourly rate. The flat fee amount will
be inclusive of travel time, representing a further discount from our normal
pricing. With regard to the Chief Restructuring Advisor position to the filled
by Mr. Colistra, and as per your request, we would charge a flat weekly fee of
$2,500 for up to eight billable hours. This represents a discount of
approximately 20% from Vince’s already discounted hourly rate. Any billable
hours above the initial eight hours will be billed at Vince’s normal rate of
$395/hour. With regard to the Interim Treasurer function which was filled
effective June 4, 2003 by Daphne Corry, and again, as per your request, we
would charge a flat weekly fee of $10,000, which represents a 20% discount from
Daphne’s already discounted hourly rate if you assume an average workweek of
fifty hours. At any time, the Chairman of the Board can notify PMCM that the
services of Ms. Corry are no longer required, following which no further
compensation for her services will be due.


With regard to Additional Temporary Staff Officers who may be required to
support Jack’s efforts, we have discounted our standard hourly fees by
approximately 7-10% as follows:



	 	 	 	 	 
	Senior Managing Director
	 	$425/hour
	Managing Director
	 	$395/hour
	Director
	 	$340/hour
	Associates
	 	$250/hour
	Analysts
	 	$220/hour




 






 



The Company shall pay all expenses incurred in connection with services related
to the engagement (e.g. actual out-of-pocket expenses such as travel, meals and
living expenses incurred in connection with the engagement). In addition, as
compensation for the administrative and support time and expenses typically
incurred (e.g. fax, computer, e-mail, administrative staff time, liability
insurance, etc.) we will bill a weekly fee of $500. The weekly invoices
referred to above will include such reimbursable expenses.


The temporary Staff Officers shall bill the Company for one-half of the travel
time spent by PMCM personnel provided to the Company pursuant to this Agreement
(other than Jack McGregor, Vince Colistra and Daphne Corry) while traveling to
or from the Company’s headquarters or any other Company location (“Travel
Time”). Travel Time will be (i) commuting time measured from the time PMCM
personnel leave the location from which he or she departs until arrival at the
Company designated location, (ii) billed at one-half the rate charged by PMCM
for each specified personnel as referenced above, (iii) payable at the same
time other fees and expenses are payable to PMCM pursuant to this Agreement.
PMCM shall notify the Company prior to adding Additional Temporary Staff
Officers other than Messrs. Colistra, McGregor and Ms. Corry.


Failure of the Company to promptly pay amounts due for services rendered or for
reimbursement of expenses shall constitute justification for PMCM to terminate
this Agreement upon five days’ written notice.


The Company has already provided PMCM with Seventy-Five Thousand Dollars
($75,000) as a retainer. The retainer is not to be applied or credited to
amounts due from the Company but will be returned to the Company once all
amounts due hereunder are paid in full. The Company hereby grants a security
interest in the retainer to PMCM to secure payment of all amounts due hereunder
and expressly authorizes PMCM to pay itself any amounts past due from the
retainer. The Company acknowledges and agrees that this security interest is
perfected by virtue of PMCM’s possession of the retainer.


Contingent Fees: The Company agrees and acknowledges that in addition to the
compensation set forth above, it is both standard and reasonable for PMCM to be
entitled to earn a contingent fee given the expanded scope of the engagement as
described herein. Accordingly, the Company agrees to pay PMCM a contingent fee
(the “Contingent Fee”) of either: (i) $1 million if the Company completes an
out-of-court restructuring or sale of a majority of the assets; (ii) $750,000
if PMCM is successful in arranging the sale of a majority of the Company’s
assets pursuant to Section 363 of the Bankruptcy Code or pursuant to a court
approved Plan of Reorganization; (iii) $250,000 if the Company executes a
bankruptcy filing and a Plan of Reorganization is confirmed that does not
include the sale of the majority of the Company’s assets. In determining the
amount of the Contingent Fee payable to PMCM, 20% of the billable fees over and
above the aforementioned eight hours paid to Mr. Colistra post filing will be
credited against the applicable Contingent Fee. In addition, the Company may
offset any portion of the retainer payment discussed above that has not been
applied to other charges and expenses of the assignment.


Notwithstanding the foregoing, in the event a Bankruptcy Restructuring is
consummated pursuant to (i) a pre-packaged Plan of Reorganization, the
Contingent Fee payable to PMCM shall be deemed earned in full upon the receipt
by the Company of the votes necessary to confirm the Plan of Reorganization
(whether through cram down or otherwise) prior to the filing of the Chapter 11
case; or (ii) a Plan of Reorganization other than a pre-packaged, pre-arranged
or pre-negotiated plan, the Contingent Fee payable to PMCM shall be deemed
earned in full upon the entry of a Final Order by the Bankruptcy Court awarding
and authorizing the payment of all or any portion of the Contingent Fee to PMCM
to the extent approved by the Bankruptcy Court. In the event of any Bankruptcy
Restructuring, the Contingent Fee must be approved by the Bankruptcy Court and
the Contingent Fee shall be paid only after the entry of a Final Order by the
Bankruptcy Court awarding and authorizing the payment of all or any portion of
the Contingent Fee to PMCM to the extent approved by the Bankruptcy Court. The
Company shall use its best efforts to provide for the payment of any Contingent
Fee in full in any Plan submitted by the Company for confirmation in a
Bankruptcy Proceeding.


Independent Contractor. The parties intend that an independent contractor
relationship will be created by this agreement. As an independent contractor,
PMCM will have complete and exclusive charge of the management and operation of
its business, including hiring and paying the wages and other compensation of
all its employees and


 






 


agents, and paying all bills, expenses and other charges
incurred or payable with respect to the operation of its business. Of course,
as an independent contractor, neither the Temporary Staff Officers nor PMCM
will be entitled to receive from the Company any vacation pay, sick leave,
retirement, pension, or social security benefits, workers’ compensation,
disability, unemployment insurance benefits, or any other employee benefits.
PMCM will be responsible for all employment, withholding, income and other
taxes incurred in connection with the operation and conduct of its business.
Temporary Staff Officers will not be considered employees of the Company except
for purposes of this agreement. While rendering services to the Company, the
Temporary Staff Officers may continue to work with other personnel at PMCM in
connection with unrelated matters, which will not unduly interfere with
services pursuant to this engagement. With respect to the Company, however,
the Temporary Staff Officers shall operate under the direction of the Board.


PMCM is not to be considered an employee or agent of the Company and the
employees of PMCM are not entitled to any of the benefits that the Company
provides for the Company’s employees. The Company also agrees not to solicit,
recruit or hire any employees or agents of PMCM for a period of two years
subsequent to the completion and/or termination of this Agreement.


Work Performed. The Temporary Staff Officers’ work for the Company will be
performed on a “level-of-effort” basis, that is, the depth of our analyses and
extent of our authentication of the information on which our advice to the
Company and the Board will be predicated, may be limited in some respects due
to the extent and sufficiency of available information, time constraints
dictated by the circumstances of our engagement, and other factors. Moreover,
we do not contemplate examining any such information in accordance with
generally accepted auditing or attestation standards. Rather, it is understood
that, in general, we are to rely upon information disclosed or supplied to us
by employees and representatives of the Company without audit or other detailed
verification of its accuracy and validity. The Company acknowledges that it is
hiring the Temporary Staff Officers purely to assist the Company and its Board
of Directors in the management and restructuring of the Company. This
engagement shall not constitute an audit, review or compilation, or any other
type of financial statement reporting or consulting engagement that is subject
to the rules of the AICPA, the SSCS, or other such state and national
professional bodies.


Reports. PMCM will submit oral and/or written reports at the request of the
Board, summarizing our evaluations and analyses based on our work pursuant to
this Agreement. Our reports will encompass only matters that come to our
attention in the course of our work and are significant in relation to the
objective of our engagement. However, because of the time and scope
limitations implicit in our engagement and the related limitations on the depth
of our analyses and the extent of our verification of information, we may not
discover all such matters or perceive their significance. Accordingly, we will
be unable to and will not provide assurances in our reports concerning the
integrity of the information used in our analyses and on which our findings and
advice to the Company and the Board may be based. In addition, we have no
obligation to and will not update our reports or extend our activities beyond
the scope set forth herein unless the Board requests and we agree to do so.


Disclosures. PMCM is a newly formed Delaware limited liability Company that
provides crises management and restructuring services and temporary employees
to staff crisis management and restructuring engagements. Its affiliate,
Phoenix Management Services, Inc. (“Phoenix”) performs various functions,
including, inter alia, financial advisory and consulting services. Phoenix has
represented, and will in the future represent, many different clients with
various business interests in numerous industries. These clients are often
referred to or are likely to be referred to PMCM and/or Phoenix by
intermediaries such as lawyers, investment bankers, lenders and accountants
(“Referral Sources”). In undertaking the engagement on behalf of the Board,
PMCM’s objective is to provide services for the Company and the Board to the
best of its ability, but without precluding PMCM or Phoenix from representation
of other clients or from accepting referrals from or making referrals to
Referral Sources. Since PMCM wants the Board to be comfortable with the
retention of PMCM in light of other client and Referral Sources relationships,
PMCM makes the following disclosures, based on the information provided by the
Company, of parties with an interest in the engagement:


Foothill Capital Corporation (“Foothill”) is or likely will be a referral
source to Phoenix and/or PMCM and Phoenix and/or PMCM have or will refer
business to Foothill. Currently, Foothill is not a lender to any Phoenix or
PMCM client.


Wells Fargo Business Credit (“Wells Fargo”), an affiliate of Foothill, has been
or may in the future be a referral source to Phoenix and/or PMCM and Phoenix
and/or PMCM have or may refer business to Wells Fargo. Currently, Wells Fargo
is not a lender to any Phoenix or PMCM client.


 






 


PMCM agrees to update the disclosure information from time to time if and when
additional parties with an interest in or a relationship with the Company come
to the attention of PMCM. The Company reserves the right to voice an objection
to any proposed engagement by PMCM that would unreasonably interfere with
PMCM’s ability to discharge its responsibilities hereunder, or present a
material conflict of interest. As a specific condition to PMCM’s undertaking
this engagement, the Board acknowledges the potential conflicts of interest
inherent in the above disclosures and waives any breach of fiduciary duty or
similar claim related to such disclosures.


Legal Proceedings. If after the termination of the engagement PMCM is
requested and agrees or is required to participate in any manner in legal or
administrative proceedings regarding the Company, compensation shall be paid to
PMCM for its time at the then current hourly rates. For individuals no longer
employed by PMCM at the time of such participation, payment shall be made to
such individuals directly or to their employers, as applicable.


Confidentiality. During the term of the engagement and for a period of twelve
months thereafter, PMCM shall keep secret and retain in strictest confidence,
any and all confidential information relating to the Company or which PMCM
shall obtain knowledge of by reason of the engagement, including, without
limitation, trade secrets, customer lists, financial plans or projections,
pricing policies, marketing plans or strategies, business acquisition or
divestiture plans, new personnel acquisition plan or strategies, technical
processes and other research projects. PMCM shall not, except in connection
with the performance of its duties hereunder, disclose any such information to
anyone outside the Company, other than to PMCM’s legal counsel, as required by
applicable law (provided prior written notice thereof is given by PMCM to the
Company) or with the Company’s prior written consent, which shall not be
unreasonably withheld or delayed, nor shall PMCM purchase or sell any
securities of the Company at any time. The obligations of PMCM in this
paragraph shall not apply to information which is (i) known generally to the
public; (ii) known to PMCM prior to the date of this Agreement; (iii) lawfully
disclosed to PMCM by a third party; (iv) generally known in the industry in
which the Company is engaged; or (v) required by law to be disclosed by PMCM,
in which event PMCM shall provide the Company with prompt notice thereof.


The Company shall not, except as required in the conduct of its business,
disclose any work product to any third party other than the Company’s lenders,
attorneys and advisors or as otherwise required by law, without the prior
written consent of PMCM, which consent shall not be unreasonably withheld or
delayed.


Indemnification. The Company shall indemnify PMCM, its principals, employees
and agents, and the Temporary Staff Officers to the same extent as the most
favorable indemnification it extends to its officers or directors, whether
under the Company’s bylaws, its certificate of incorporation, by contract or
otherwise, and no reduction or termination in any of the benefits provided
under any such indemnities shall affect the benefits provided to the Temporary
Staff Officers. Attached hereto for execution is a Consent, Release, and
Indemnification. The Company agrees to execute such Consent, Release, and
Indemnification contemporaneous with executing the Agreement, and warrants that
the most favorable indemnification the Company extends to its officers or
directors provides indemnification as or greater than the indemnification
provision in the Consent, Release, and Indemnification.


Prior to commencing this engagement, the Company will confirm that its existing
insurance policy adequately covers each of the Temporary Staff Officers as an
officer under the Company’s existing director and officer liability insurance
policy in order to insure that the Interim CEO will be able to perform and
execute those actions customarily required of a chief executive officer of a
public company relative to the Company’s filings with the Securities and
Exchange Commission and the listing of its shares on the American Stock
Exchange. In the event any of the Temporary Staff Officers shall have the
right to assert a claim for indemnification for which they are also direct
insured parties under the Company’s director and officer liability insurance
policy, if and for so long as the Company is a debtor-in-possession in its
chapter l1 case, and provided that a final, nonappealable order of the
Bankruptcy Court shall have been entered permitting payment from the insurance
providers to the Temporary Staff Officers, the Temporary Staff Officers will
not make a demand for payment from the Company if and to the extent they are
able to obtain payment in cash in full from the insurance provider promptly
upon making a request for payment; provided that the foregoing is intended
solely as an agreement as to the sequence by which the Temporary Staff Officers
make demand for payment for their indemnification claims and shall not limit or
affect any of the Company’s indemnity obligations to the Temporary Staff
Officers or require the Temporary Staff Officers to collect payment by legal or
equitable process from the insurance provider or be construed to affect the
Temporary Staff Officer’s rights or the Company’s obligations in any manner
which may adversely affect either the Company’s or
the Temporary Staff Officer’s rights under the insurance policy, nor shall it
affect the Temporary Staff Officer’s right to assert an administrative expense
claim for the indemnity obligations. To the extent available at a commercially
reasonable cost, the Company shall also maintain any such insurance coverage
for each of the


 






 


Temporary Staff Officers for a period of not less than two
years following the date of the termination of such Temporary Staff Officer’s
services hereunder, through the purchase of a “tail” policy or otherwise. The
provisions in this section 9 are in the nature of contractual obligations and
no change in applicable law or the Company’s charter, bylaws or other
organizational documents or policies shall affect any of the Temporary Staff
Officer’s rights hereunder. Neither termination of this Agreement nor the
engagement shall affect the obligations in this paragraph, all of which shall
survive termination.


Use of Name. The Company agrees that following completion of PMCM’s
engagement, PMCM and/or its affiliates shall have the right to use the
Company’s name and logo in a description of the services provided by PMCM under
the Agreement after obtaining written consent from the Company.


Applicable Law. The Agreement shall be governed in accordance with the laws of
the Commonwealth of Pennsylvania, without giving effect to the principles of
conflicts of laws.


Termination. The Company and/or PMCM, upon ten (10) days prior written notice,
may terminate this Agreement, with or without cause. In the event of such
termination, the Company shall pay to PMCM all amounts accrued or due under
this Agreement through the date of termination that - have not been previously
paid. For purposes of this Agreement, the Contingent Fee referenced in Section
2 shall be deemed to have accrued and due prior to termination of this
Agreement if the Company has entered into a definitive agreement to sell its
assets, or a definitive merger agreement, prior to the date this agreement is
terminated.


Entire Agreement, Waiver, Modifications and Notices. This Agreement, including
any Exhibits, constitutes the final and complete expression of the parties with
respect to its subject matter and supersedes and replaces any other written or
oral agreement or understanding between the parties. This Agreement may be
amended, modified, supplemented or waived only by a written instrument signed
by both parties. No waiver of a breach hereof shall be deemed to constitute a
waiver of a future breach, whether of a similar or a dissimilar nature. All
notices, demands or other communications which are required or are permitted to
be given in this Agreement shall be in writing and shall be deemed to have been
sufficiently given (i) upon personal delivery, (ii) the third business day
following due deposit in the United States mail, postage prepaid, and sent
certified mail, return receipt requested, correctly addressed or (iii) when
receipt is acknowledged if sent via facsimile transmission. Notices to you
shall be sent to the address set forth on page one of this Agreement. Notices
to PMCM shall be sent to the address set forth below:



		
	 	PMCM, LLC
	 
	 	Attention: Officer Manager
	 
	 	110 Chadds Ford Commons
	 
	 	Chadds Ford, PA 19317
	 
	 	Phone (610) 358-4700
	 
	 	Fax (610) 358-9377



Either party may give written notice of a change of address by certified mail,
return receipt requested, and after notice of such change has been received,
any notice shall be given to such party in the manner above described at such
new address.


Bankruptcy. In the event the Company seeks protection under the U.S.
Bankruptcy Code, the Company agrees that it will promptly apply to the
Bankruptcy Court to obtain approval of our retention and retainer nunc pro tunc
to the date of filing.


Expiration of Offer. If this Agreement is not executed within seven days from
its issue date, PMCM reserves the right to amend or revoke the terms after such
date.


If you agree to the terms and conditions set forth above, please indicate your
acceptance and approval by signing this letter and our standard Indemnification
Agreement in the appropriate spaces and on the duplicate copy attached. Please
return one fully executed original to the undersigned for our files.


PMCM looks forward to serving you in this important matter.


 






 


Yours very truly,



PMCM, LLC



Vincent J. Colistra

Managing Director



Agreed and Accepted on behalf of:



Piccadilly Cafeterias, Inc.


	 	 	 
	By:	 	 
	 	 	


	 	 	
J.H. Campbell, Jr.

Chairman of the Board of Directors




Date: June _____, 2003



 






 





CONSENT, RELEASE, AND INDEMNIFICATION



Whereas, Piccadilly Cafeterias, Inc, (“Piccadilly” or the “Company”) has agreed
to utilize the services of PMCM, LLC (“PMCM”) pursuant to the terms of that
engagement letter dated June 11, 2003, whereby PMCM will provide crisis
management and restructuring services through certain temporary employees
(“Temporary Employees”) of the Company to assist in its restructuring, and PMCM
has agreed to accept such engagement in consideration of, among other things,
the covenants and commitments of Piccadilly set forth below.


Piccadilly acknowledges that the services provided by PMCM are not an exact
science and that the amelioration of the Company’s business and financial
condition are subject to many factors beyond the control of PMCM and that
without the following commitments and agreements by Piccadilly, PMCM would not
enter into this agreement.


In consideration of PMCM’s agreement to perform crisis management and
restructuring services through the Temporary Employees under the Agreement, who
will work diligently and in good faith, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Piccadilly hereby (a) releases and waives any and all claims which it may now
or in the future have against PMCM, its principals, employees, officers,
directors, agents or representatives, and the Temporary Employees (the
“Indemnified Parties”) arising under the Agreement and (b) agrees to indemnify,
hold harmless and defend the Indemnified Parties from and against any and all
liabilities, costs, expenses, damages, claims, demands, suits or actions or
causes of action brought by any director, officer, employee, shareholder,
customer, representative or vendor of Piccadilly or any of its affiliates and
shall reimburse the Indemnified Parties for all costs, expenses and damages
(including attorney’s fees) incurred by the Indemnified Party to investigate,
defend, prepare for, or contest any such claim, liability, demand or action.
The foregoing release and indemnity shall not apply if it is judicially
determined that such claims, damages, liabilities and expenses resulted from
the willful misconduct or gross negligence of the Indemnified Party.


This instrument, and Piccadilly’s obligations hereunder, shall survive the
termination of the Agreement until all of Piccadilly’s obligations have been
satisfied or discharged in full. Any trustee, individual or entity who
succeeds to the assets, properties, liabilities, shares or business of
Piccadilly shall be deemed to have assumed the legal commitment to satisfy,
perform and discharge all of the Company’s obligations hereunder.


Intending to be legally bound hereby, the undersigned, having been duly
authorized by the Board of Piccadilly, have set their hands and seal this      
day of June 2003.



	 	 	 	 	 
	WITNESSES:	 	PICCADILLY CAFETERIAS, INC.
	 	 	 	 	 
	 	 	
By:	 	 
	
	 	 	 	

	 	 	 	 	J. H. Campbell, Jr.
	 	 	 	 	Chairman of the Board of Directors
	 	 	
Date:
	 	June 11, 2003
	
	 	 	 	 



 






 


EXHIBIT A



Temporary Employees




	 	 	 	 	 
	 	 	 	 	Commitment
	Name	 	Description	 	Full1 or Part Time
	
	 	
	 	

	Vincent J. Colistra

John G. McGregor

Daphne Corry	 	
Chief Restructuring Advisor

Interim CEO

Interim Treasurer
	 	Part Time

Full Time

Full Time








	(1)	 	Full time is defined as substantially full time.