Engagement Letter - Waverly Inc. and David J. Callard


November 4, 1997David J. CallardPresidentWand Partners, Inc.630 Fifth AvenueSuite 2435New York, NY 10112Dear David:         As you know, in connection  with your service as a director of Waverly,Inc.  ('Waverly'  or the  'Company'),  you and  Waverly  have  entered  into theagreement  attached as Exhibit A. Pursuant to that Agreement and further to yourservice as a director of Waverly,  Waverly hereby confirms that is has requestedyou to  undertake  an active  role on  behalf of the  Company  in  advising  andassisting  in the  possible  sale of Waverly,  including  by acting as a liaisonbetween the Company and Morgan Stanley & Co.  Incorporated.  In this connection,Waverly  has agreed to pay you a  contingent  fee of  $400,000 if (a) control ofmore than 55% of the  Company's  common stock  changes  hands or (b) the Companysells a substantial  amount of its assets.  In addition,  Waverly will reimbursereasonable out-of-pocket expenses. Any contingent fee will be in addition to theretainer payments provided for in Exhibit A.         As you are aware as director of Waverly you are entitled  under certaincircumstances to indemnification from the Company. Without limiting such rights,this will confirm that if those rights do not fully  indemnify  you from loss inconnection with your advisory  services as described  above, in consideration ofyour agreement to act on Waverly's  behalf in connection with your engagement asdescribed above (the 'Engagement'),  we agree to indemnify and hold you harmlessfrom and against any losses,  claims, damages or liabilities related to, arisingout of or in  connection  with the  Engagement  and will  reimburse  you for allexpenses  (including  fees and  expenses  of  counsel)  as they are  incurred inconnection  with  investigating,  preparing,  pursuing or defending  any action,claim,  suit,  investigation  or  proceeding  related  to,  arising out of or inconnection with the Engagement, Whether or not pending or threatened and whetheror not you are a party.  Waverly  will  not,  however,  be  responsible  for anylosses,  claims,  damages or liabilities (or expenses relating thereto) that arefinally  judicially  determined  to have  resulted  from your bad faith or grossnegligence.  The Company also agrees that you shall have no  liability  (whetherdirect or indirect, in contract or tort or otherwise) to us for or in connectionwith the Engagement except for any such liability for losses, claims, damages orliabilities  incurred  by us that  are  finally  judicially  determined  to haveresulted from your bad faith or gross negligence.         We will not,  without your prior written consent,  settle,  compromise,consent to the entry of any  judgment  in or  otherwise  seek to  terminate  anyaction,  claims,  suit or proceeding in respect of which  indemnification may besought  hereunder  (whether  or  not  you  are  a  party  thereto)  unless  suchsettlement,  compromise,  consent or termination  includes a release of you fromany  liabilities  arising out of such  action,  claim,  suit or  proceeding.  Inseeking indemnification,  reimbursement or contribution under this agreement youwill not, without our prior written consent, settle, compromise,  consent to theentry of any judgment in or otherwise seek to terminate any action, claims, suitinvestigation or proceeding referred to in the preceding paragraph.                                                    If the  indemnification  provided  for in the first  paragraph  of thisagreement is judicially  determined to be unavailable  (other than in accordancewith the terms  hereof)  to you in  respect of any  losses,  claims,  damages orliabilities  referred to herein,  then,  in lieu of  indemnifying  you, we shallcontribute  to the amount  paid or  payable  by you as a result of such  losses,claims,  damages or  liabilities  (and  expenses  relating  thereto) (i) in suchproportion as is appropriate to reflect the relative benefits to you, on the onehand,  and us, on the other hand, of the  Engagement  or (ii) if the  allocationprovided  by  clause  (i)  above  is not  available,  in such  proportion  as isappropriate to reflect not only the relative benefits referred to in such clause(i) but also the  relative  fault  of each of you and us,  as well as any  otherrelevant equitable  considerations;  provided,  however,  in no event shall youraggregate contribution to the amount paid or payable exceed the aggregate amountof fees actually  received by you under the terms of this agreement as describedabove. For the purposes of this agreement,  the relative  benefits to us and youof the Engagement  shall be deemed to be in the same proportion as (a) the totalvalue paid or contemplated to be paid or received or contemplated to be receivedby us  or  our  stockholders,  as  the  case  may  be,  in  the  transaction  ortransactions  that are the  subject of the  Engagement,  whether or not any suchtransaction is  consummated,  bears to (b) the fees paid or to be paid to you asdescribed above.         The provisions of this agreement  shall apply to the Engagement and anymodification thereof and shall remain in full force and effect regardless of anytermination by you or us or the completion of your services.         This  agreement  shall be governed by and construed in accordance  withthe laws of the State of New York applicable to contracts  executed in and to beperformed in that state.                                Very truly yours,                                WAVERLY, INC.                                By:  /s/Edward B. Hutton Jr.                                -----------------------------                                Edward B. Hutton, Jr.Accepted:By:  /s/David J. Callard     -------------------     David J. CallardDate:  November 14, 1997