SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 8, 1996
CPI CORP.
________________________________________________________________
(exact name of registrant as specified in its charter)
Delaware 0-11227 43-1256674
________________________________________________________________
(State or other jurisdiction (Commission file (IRS Employer
of incorporation) Number) Identification No.)
1706 Washington Avenue, St. Louis, Missouri 63103-1790
________________________________________________________________
(Address of principal executive offices) (Zip code)
Registrants's telephone number, including area code (314) 231-1575
________________________________________________________________
________________________________________________________________
(Former name or former address, if changes since last report.)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CPI CORP.
(Registrant)
/s/ Barry Arthur
-----------------------------
Barry Arthur
Authorized Officer and
Principal Financial Officer
Dated: August 22, 1996
<PAGE>
ITEM 5. OTHER EVENTS
(A) On August 8, 1996, the Company announced that it had
entered into a definitive agreement with Eastman Kodak
Company ("Kodak") to establish a joint venture with
Kodak to own and operate the Company's retail
photofinishing business. The retail photofinishing
business is currently conducted by the Company's Fox
Photo, Inc. ("Fox") and Proex Photo Systems, Inc.
("Proex") subsidiaries. Proex is a wholly owned
subsidiary of Fox.
Pursuant to a Subscription Agreement, dated August 8,
1996, by and among Kodak, the Company, Consumer Programs
Holding, Inc. (a wholly owned subsidiary of the Company)
("Holding") and Fox (the "Subscription Agreement"),Kodak
will purchase new shares of Fox constituting 51% of the
then outstanding common stock of Fox for a cash purchase
price of $56.1 million. The purchase price will be
subject to upward or downward adjustment to account for
changes in Fox's net worth between April 27, 1996 and
the date the transaction is consummated.
Pursuant to the terms of a Stockholders' Agreement (the
"Stockholders' Agreement") to be entered into by Kodak,
the Company, Holding and Fox upon consummation of the
joint venture transaction, at any time from and after
January 1, 1999 Kodak can require the Company to sell
its interest in Fox and the Company can require Kodak to
purchase the Company's interest in Fox for a price equal
to 49% of (A) Fox's "fair market value" (as determined
pursuant to the Stockholders' Agreement at the time such
"put" or "call" right is exercised) less (B) $30
million. In no event, however, will such purchase price
for the Company's remaining interest in Fox be less than
$53.9 million. Additionally, prior to January 1, 1999,
the Stockholders' Agreement will entitle Kodak to
require that the Company sell its remaining interest in
Fox to Kodak upon a "change in control" (as defined in
the Stockholders' Agreement) of the Company for a
purchase price of $53.9 million.
The Stockholders' Agreement provides that Kodak will
designate four members and the Company will designate
three members of Fox's seven-member Board of Directors.
Alyn V. Essman, the Company's Chairman and Chief
Executive Officer, will be the initial Chairman of Fox's
Board of Directors. Certain specified significant
actions will require the consent of both Kodak and the
Company.
<PAGE>
The consummation of the joint venture transaction is
subject to customary conditions including the expiration
or termination of applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the procurement of necessary third party
consents.
On August 19, 1996, the Company announced that the Board
of Directors had authorized the Company to purchase up
to $50,000,000 of the Company's common stock pursuant to
a "Dutch auction" tender offer. The Company will use
the proceeds from the sale of Fox's common stock
pursuant to the Subscription Agreement to finance the
tender offer.
(The Subscription Agreement, with relevant Schedules and
Exhibits, is being filed with this 8-K as a separate
document.)
(B) On August 8, 1996, CPI Corp. issued a press release on
"CPI Corp. Outlines New Strategy in Forming
Photofinishing Joint Venture With Kodak".
(The Press Release, in its entirety, is being filed with
this 8-K as a separate document.)
(C) On August 19, 1996, CPI Corp. issued a press release on
"CPI Corp. Plans Stock Repurchase With Cash From Kodak
Joint Venture; Expects Lower Second Quarter Earnings."
(The Press Release, in its entirety, is being filed with
this 8-K as a separate document.)
ITEM 5 (A)
SUBSCRIPTION AGREEMENT
AMONG
EASTMAN KODAK COMPANY
AND
CPI CORP. AND CONSUMER PROGRAMS HOLDING, INC.
AND
FOX PHOTO, INC.
DATED AUGUST 8, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions . . . . . . . . . . . . . . . . . . .1
1.2 Other Definitions . . . . . . . . . . . . . . . .5
ARTICLE II
INVESTMENT AND STOCK ISSUANCE . . . . . . . . . . . . . . . . . .7
2.1 Investment and Stock Issuance . . . . . . . . . .7
2.2 Payment of Consideration. . . . . . . . . . . . .7
2.3 Adjustments to Consideration. . . . . . . . . . .7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CPARENT AND HOLDING . . . . . .8
3.1 Organization, Power, Standing and Qualification .8
3.2 Power and Authority . . . . . . . . . . . . . . .8
3.3 Validity of Contemplated Transactions . . . . . .8
3.4 Consents. . . . . . . . . . . . . . . . . . . . .9
3.5 Purchased Stock . . . . . . . . . . . . . . . . 9
3.6 Capitalization of Fox . . . . . . . . . . . . . .9
3.7 Subsidiaries. . . . . . . . . . . . . . . . . . .9
3.8 Dividends and Extraordinary Distribution. . . . 10
3.9 Financial Statements. . . . . . . . . . . . . . 10
3.10 Undisclosed Liabilities. . . . . . . . . . . . 10
3.11 Absence of Certain Changes . . . . . . . . . . 10
3.12 Title and Related Matters. . . . . . . . . . . 11
3.13 Condition of Assets. . . . . . . . . . . . . . 12
3.14 Real Property. . . . . . . . . . . . . . . . . 12
3.15 Litigation . . . . . . . . . . . . . . . . . . 13
3.16 Taxes. . . . . . . . . . . . . . . . . . . . . 13
3.17 Compliance with Laws and Business Permits. . . 14
3.18 Insurance. . . . . . . . . . . . . . . . . . . 14
3.19 Employees and Labor Relations Matters. . . . . 15
3.20 Accounts Receivable; Warranties. . . . . . . . 16
3.21 Agreements . . . . . . . . . . . . . . . . . . 16
3.22 Patents, Trademarks, Trade Names, etc. . . . . 17
3.23 Leases, Licenses . . . . . . . . . . . . . . . 17
3.24 Employee Benefits. . . . . . . . . . . . . . . 18
3.25 Environmental Compliance . . . . . . . . . . . 20
3.26 Bank Accounts; Powers of Attorney. . . . . . . 22
3.27 Inventories. . . . . . . . . . . . . . . . . . 23
3.28 Suppliers and Customers. . . . . . . . . . . . 23
3.29 Conflicts of Interest. . . . . . . . . . . . . 23
3.30 Services Supplied by Affiliates. . . . . . . . 24
3.31 Disclosure . . . . . . . . . . . . . . . . . . 24
(Page numbers conform to paper copy)
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF KODAK . . . . . . . . . . . . 24
4.1 Organization, Power . . . . . . . . . . . . . . 24
4.2 Power and Authority . . . . . . . . . . . . . . 24
4.3 Validity of Contemplated Transactions . . . . . 25
4.4 Nature of Purchase. . . . . . . . . . . . . . . 25
4.5 Accredited Investor . . . . . . . . . . . . . . 25
4.6 Access to Information . . . . . . . . . . . . . 25
4.7 Consents. . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
PRECLOSING COVENANTS OF CPI AND FOX . . . . . . . . . . . . . . 26
5.1 Access. . . . . . . . . . . . . . . . . . . . . 26
5.2 Conduct of Business . . . . . . . . . . . . . . 26
5.3 Amendments to Certificate of Incorporation and
By-laws. . . . . . . . . . . . . . . . . . . . . . . 27
5.4 Working Capital . . . . . . . . . . . . . . . . 28
5.5 Indebtedness; Intercompany Accounts.. . . . . . 28
5.6 Certain Asset Sales . . . . . . . . . . . . . . 28
5.7 No Shopping . . . . . . . . . . . . . . . . . . 28
5.8 Consents. . . . . . . . . . . . . . . . . . . . 29
5.9 Pre-audit Inventory . . . . . . . . . . . . . . 29
5.10 Transfer and Lease of the Glendale Facility. . 29
5.11. Permit Transfer Requirements. . . . . . . . . 29
5.12 CPI Software License Agreement . . . . . . . . 29
ARTICLE VI
OTHER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 HSR Filing. . . . . . . . . . . . . . . . . . . 30
6.2 Real Estate Transfer and Environmental Transfer
Laws . . . . . . . . . . . . . . . . . . . . . . . . 30
6.3 Public Announcements. . . . . . . . . . . . . . 30
6.4 Taxes . . . . . . . . . . . . . . . . . . . . . 32
6.5 Confidentiality . . . . . . . . . . . . . . . . 33
6.6 Notification of Certain Matters . . . . . . . . 33
6.7 Good Faith Cooperation. . . . . . . . . . . . . 33
6.8 Insurance Proceeds. . . . . . . . . . . . . . . 34
6.9 Transferred Employees . . . . . . . . . . . . . 34
6.10 Replacement of Benefit Plans . . . . . . . . . 34
6.11 Guarantee of Affiliate Obligations . . . . . . 34
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . 34
7.1 Conditions to Obligation of Kodak to Close. . . 34
7.2 Conditions to Obligations of Fox and CPI to
Close. . . . . . . . . . . . . . . . . . . . . . . . 36
(Page numbers conform to paper copy)
<PAGE>
ARTICLE VIII
THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.1 Time and Place. . . . . . . . . . . . . . . . . 38
8.2 Conduct of Closing. . . . . . . . . . . . . . . 38
ARTICLE IX
SURVIVAL AND INDEMNIFICATION. . . . . . . . . . . . . . . . . . 40
9.1 Survival of Representations, Warranties and
Covenants. . . . . . . . . . . . . . . . . . . . . . 40
9.2 Indemnification by CParent. . . . . . . . . . . 40
9.4 Procedure . . . . . . . . . . . . . . . . . . . 41
9.5 No Subrogation. . . . . . . . . . . . . . . . . 42
9.6 No Consequential Damages. . . . . . . . . . . . 42
9.7 Limitations on Indemnification. . . . . . . . . 42
ARTICLE X
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.1 Events of Termination. . . . . . . . . . . . . 42
10.2 Consequences of Termination. . . . . . . . . . 43
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.1 Entire Agreement; Amendments . . . . . . . . . 43
11.2 Headings and References. . . . . . . . . . . . 43
11.3 Severability . . . . . . . . . . . . . . . . . 44
11.4 Expenses . . . . . . . . . . . . . . . . . . . 44
11.5 Notices. . . . . . . . . . . . . . . . . . . . 44
11.6 Waiver; Consents . . . . . . . . . . . . . . . 46
11.7 Assignment . . . . . . . . . . . . . . . . . . 46
11.8 Governing Law; Jurisdiction. . . . . . . . . . 46
11.9 Parties in Interest. . . . . . . . . . . . . . 47
11.10 Counterparts. . . . . . . . . . . . . . . . . 48
(Page numbers conform to paper copy)
<PAGE>
SCHEDULES
6.9 Transferred Employees
9.2 Indemnified Liabilities
11.4 Expenses
EXHIBITS
A. Amended and Restated By-laws of Fox
B. Amended and Restated Certification of
Incorporation of Fox
C. Consulting Agreement between Programs and Fox
D. Employment Agreement between Fox and deBuhr
E. Services Agreement between Programs and Fox
F. Services Agreement between Kodak and Fox
G. Stockholders' Agreement among Fox, CPI and Kodak
H. Trademark License Agreement from Kodak to Fox
I. CPI Trademark License Agreement from CPI
Affiliates to Fox
J. Kodak Patent License Agreement
K. CPI Software License Agreement
L. Working Capital Note
M. Opinion of Counsel to CPI, Fox and the
Subsidiaries
N. Opinion of Counsel of Kodak
<PAGE>
SUBSCRIPTION AGREEMENT
This Subscription Agreement is made this 8th day of
August, 1996 by and among Eastman Kodak Company ("Kodak"), a
New Jersey corporation, and CPI Corp. ("CParent"), a Delaware
corporation, and Consumer Programs Holding, Inc. ("Holding"), a
Delaware corporation (CParent and Holding are sometimes
collectively referred to herein as "CPI"), and Fox Photo, Inc.
("Fox"), a Delaware corporation.
CPI desires to consolidate its consumer
photofinishing business, directly and indirectly, in Fox and to
cause Fox to sell newly issued shares of the common stock of
Fox to Kodak and Kodak desires to acquire a majority interest
in Fox, all on the terms and conditions set forth in this
Agreement.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, terms
defined in the preamble of this Agreement shall have the
meanings set forth therein and the following terms shall have
the meanings set forth below.
"Affiliate" means, with respect to any Person,
any subsidiary, officer or director of such Person and any
other Person which directly or indirectly controls, is
controlled by or is under common control with such Person,
whether through the ownership of securities, by contract or
otherwise.
"Agreement" means this Agreement, the Disclosure
Letter, and all schedules and Exhibits hereto, as the same may
from time to time be amended as provided herein.
"Amended By-laws" means the amended and restated
by-laws of Fox, substantially in the form of Exhibit A.
"Amended Certificate of Incorporation" means the
amended and restated certificate of incorporation of Fox,
substantially in the form of Exhibit B.
"Balance Sheet Date" means April 27, 1996.
"Business" means the following, all of which
shall be conducted by Fox and the Subsidiaries: (a) retail
<PAGE>
photofinishing and related photoprocessing, photoimaging and
image transmission operations; (b) retail sales of photographic
and photoimaging products and services related to amateur
photography; (c) development of systems, software and
techniques to expand consumer participation in the
photofinishing process as conducted by CPI principally through
Fox and the Subsidiaries; and (d) sales of photographic and
photoimaging products by professional portrait studios and
other services related to professional photography as currently
conducted by Proex Photo Systems, Inc.
"Business Plan" means the Business Plan of Fox
agreed to by CParent, Holding, Fox and Kodak and dated the date
of this Agreement.
"Change of Control" means (a) the failure of
CParent, directly or indirectly, to own all of the issued and
outstanding shares of capital stock of Holding, (b)(i) any
consolidation or merger of CParent with any Person (other than
a merger or consolidation in which at least a majority of the
voting capital stock of CParent, or the surviving or resulting
entity, if other than CParent (determined on a fully diluted
basis), outstanding immediately after the effective date of
such merger or consolidation is owned of record or beneficially
by Persons who owned voting capital stock of CParent
immediately prior to such merger or consolidation and in
substantially the same proportions in which such stock was held
immediately prior to such merger or consolidation), provided
that the consolidation or merger is not with an entity which
was a wholly-owned subsidiary of CParent immediately before the
consolidation or merger; or (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of
CParent; or (c) the approval of any plan or proposal for the
liquidation or dissolution of CParent; or (d) any circumstance
which results in any person (as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended), directly or indirectly, becoming the beneficial
owner of 30% or more of CParent's then outstanding common stock
(determined on a fully diluted basis), provided that such
person is not a wholly-owned subsidiary of CParent immediately
before it becomes such 30% beneficial owner; or (e) individuals
who constitute CParent's board of directors on the date hereof
(the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election, or
nomination for election, by CParent's stockholders, was
approved by a vote of at least a majority of the directors
comprising the Incumbent Board (either by the specific vote or
by approval of the proxy statement of CParent in which such
person is named as a nominee for director, without objection to
<PAGE>
such nomination) shall be, for purposes of this clause (e),
considered as though such person were a member of the Incumbent
Board.
"Closing" means the closing of the transactions
contemplated by this Agreement on the Closing Date.
"Closing Date" means a date on or after the
conditions specified in Article VII hereof have been satisfied
or waived, but in no event later than December 31, 1996 or such
other date as may be agreed to by the parties to this
Agreement.
"Code" means the Internal Revenue Code of 1986
and all regulations promulgated thereunder, as the same have
from time to time been amended.
"Collateral Documents" means the Consulting
Agreement, the CPI Corp. Supply Agreement, the Employment
Agreement, the Fox Supply Agreement, the Services Agreement-
Kodak, the Services Agreement-Programs, the Stockholders'
Agreement, the CPI Trademark License Agreement, the Kodak
Trademark License Agreement, the Kodak Patent Agreement, the
CPI Software License Agreement, and the Working Capital Note.
"Common Stock" means the common stock, par value
$.01 per share, of Fox.
"Consideration" has the meaning set forth in
Section 2.1.
"Consulting Agreement" means the consulting
agreement between Fox and Programs, in the form of Exhibit C.
"CPI Corp. Supply Agreement" means the supply
agreement between Kodak and CParent dated the date of this
Agreement.
"CPI Software License Agreement " means the
software license agreement from CPI Research and Development
Inc. to Fox in the form of Exhibit K, to be executed from time
to time pursuant to Section 5.12.
"CPI Trademark License Agreement " means the
trademark license agreement from CPI Research and Development
Inc. and Programs to Fox granting to Fox a royalty free,
non-exclusive license to certain trademarks in the form of
Exhibit I.
"CPI's Knowledge" means the knowledge of only
those individuals listed on Schedule 1.1.
<PAGE>
"DGCL" means the Delaware General Corporation
Law.
"Disclosure Letter" means the letter from CPI to
Kodak dated the date of this Agreement and containing the
Schedules receipt of which is acknowledged by Kodak.
"Employment Agreement" means the assignment by
Programs to Fox of certain rights and obligations under the
employment agreement between Programs and Theodore J. deBuhr
II, substantially in the form of Exhibit D.
"ERISA" means the Employee Retirement Income
Security Act of 1974 and all regulations promulgated
thereunder, as the same have from time to time been amended.
"Extraordinary Distribution" means the
distribution from Fox payable to Holding in the amount of any
Adjustment in favor of Fox.
"Fox Supply Agreement" means the supply
agreement between Kodak and Fox dated the date of this
Agreement.
"GAAP" means generally accepted U.S. accounting
principles, as in effect from time to time.
"Income Tax" or "Income Taxes" means any Taxes
measured, in whole or in part, by net or gross income or
profits together with any interest, penalties or additions to
Tax.
"Indemnified Liability" means any liability or
obligation incurred with respect to the items described on
schedule 9.2.
"Kodak's Designated Representative" means David
Biehn and such other persons as Kodak may designate by notice
to CPI to give certain notices and consents under this
Agreement.
"Kodak Patent License Agreement" means the
patent license agreement from Kodak to Proex Photo Systems,
Inc. in the form of Exhibit J.
"Kodak Trademark License Agreement" means the
trademark license agreement from Kodak to Fox granting to Fox a
royalty free, non-exclusive license to certain Kodak trademarks
in the form of Exhibit H.
<PAGE>
"LIBOR" means the rate per annum (rounded to
the nearest 1/100 of 1%) quoted at approximately 11:00 a.m.
Greenwich mean time, or as soon thereafter as practicable on
the date two business days prior to the Closing Date to leading
banks in the London interbank market of dollar deposits having
a term of two months.
"Litigation Expense" means any expenses incurred
in connection with investigating, defending or asserting any
claim, action, suit or proceeding incident to any matter
indemnified against under this Agreement, including, without
limitation, court filing fees, court costs, arbitration fees or
costs, witness fees, and reasonable fees and disbursements of
legal counsel (whether incurred in any action or proceeding
between the parties to this Agreement or between any party to
this Agreement and any third party), investigators, expert
witnesses, accountants and other professionals.
"Loss" means any loss, obligation, claim,
liability, settlement payment, award, judgment, fine, penalty,
interest charge, expense, damage or deficiency or other charge,
measured on an after-tax basis and after accounting for any
insurance proceeds actually received with respect thereto,
other than Litigation Expense.
"Material Adverse Effect" means an effect which
is materially adverse to the value, or the results of
operations, financial condition or prospects, of the specified
Person or the Business, as applicable.
"Net Worth" means total assets minus current
liabilities, as those terms are determined under GAAP,
excluding any obligations of Fox or the Subsidiaries to CPI and
its Affiliates; provided, however, that any calculation of Net
Worth shall exclude the Consideration, the Working Capital
Loan, any Extraordinary Distribution and the assets and
liabilities attributable to (including, without limitation, any
proceeds from and any liabilities retained pursuant to the sale
thereof) any retail units sold pursuant to Section 5.6 between
the date hereof and the Closing Date.
"PBGC" means the Pension Benefit Guaranty
Corporation.
"Person" means and includes an individual, a
corporation, a partnership, a limited liability company, a
limited liability partnership, a joint venture, a trust, an
unincorporated association, a government or political
subdivision or agency thereof or any other entity.
<PAGE>
"Premises" means the facilities owned, leased or
licensed by Fox or the Subsidiaries, all of which are
identified on Schedule 3.14.
"Programs" means Consumer Programs Incorporated.
"Schedule" or "Schedules" means the appropriate
schedule of the Disclosure Letter delivered to Kodak by CPI
simultaneously with the execution of this Agreement.
"Services Agreement - Programs" means the
Services Agreement between Fox and Programs and CParent
pursuant to which CParent and its Affiliates will provide
certain services to Fox, in substantially the form annexed as
Exhibit E.
"Services Agreement - Kodak" means the Services
Agreement between Fox and Kodak pursuant to which Kodak will
provide certain services to Fox, in substantially the form
annexed as Exhibit F.
"Stockholders' Agreement" means the
Stockholders' Agreement among CParent, Holding, Kodak and Fox
with respect to Fox, in the form of Exhibit G.
"Subsidiaries" means those Persons listed on
Schedule 3.7.
"Tax Returns" means all returns, reports,
estimates, information returns and statements of any nature
with respect to Taxes.
"Transactions" means the transactions
contemplated by this Agreement, including the Exhibits hereto,
including, without limitation, the purchase by Kodak of the
Purchased Shares, the repayment of certain intercorporate
indebtedness from Fox to Holding with the Consideration, and
the Extraordinary Distribution.
"Working Capital Note" means the promissory note
in the form attached hereto as Exhibit L representing the
$4,000,000 working capital loan from Programs to Fox.
<PAGE>
1.2 Other Definitions. Each of the following terms
is defined in the Section referred to below:
"Adjusted Consideration" as defined in Section
2.1.
"Adjustment" as defined in Section 2.3.
"Antitrust Division" as defined in Section 6.1.
"Benefit Plans" as defined in Section 3.24.
"Business Financial Statements" as defined in
Section 3.9.
"CERCLA" as defined in Section 3.25.
"Claim" as defined in Section 9.4.
"Closing Proforma Balance Sheet" as defined in
Section 2.3.
"Confidential Information" as defined in Section
6.5.
"Contracts" as defined in Section 3.21.
"Dividend Note" as defined in Section 3.8.
"Environment" as defined in Section 3.25.
"Environmental Laws" as defined in Section 3.25.
"Environmental Permits" as defined in Section
3.25.
"Expiration Date" as defined in Section 9.1.
"FTC" as defined in Section 6.1
"Former Sites" as defined in Section 3.25.
"HSR Act" as defined in Section 6.1.
"Hazardous Materials" as defined in Section
3.25.
"Hazardous Substance" as defined in Section
3.25.
"Indemnitee" as defined in Section 9.4.
"Indemnitor" as defined in Section 9.4.
"Intellectual Property" as defined in
Section 3.22.
"Licenses" as defined in Section 3.23.
"OSHA" as defined in Section 3.19.
"Permits" as defined in Section 3.17.
"Permitted Encumbrances" as defined in
Section 3.12.
"Pro Forma Balance Sheet" as defined in
Section 3.9.
"Provider" as defined in Section 6.5.
"Purchased Shares as defined in Section 2.1.
"RCRA" as defined in Section 3.25.
"Real Estate Leases" as defined in Section 3.14.
"Recipient" as defined in Section 6.5.
"Release" as defined in Section 3.25.
"Taxes" as defined in Section 3.16.
<PAGE>
ARTICLE II
INVESTMENT AND STOCK ISSUANCE
2.1 Investment and Stock Issuance. On the terms and
subject to the conditions of this Agreement, Kodak hereby
subscribes to purchase from Fox 1,041 shares (the "Purchased
Shares") of the Common Stock, representing 51% of the issued
and outstanding shares of the Common Stock on the Closing Date,
for an aggregate purchase price of Fifty-Six Million One
Hundred Thousand Dollars ($56,100,000.00) (the
"Consideration"), adjusted as provided in Section 2.3 below
(the "Adjusted Consideration") and Fox hereby agrees to issue
the Purchased Shares to Kodak.
2.2 Payment of Consideration. The Consideration
shall be delivered by wire transfer in immediately available
funds on the Closing Date. Fox hereby directs Kodak to deliver
such Consideration to such account as Fox shall notify Kodak
not fewer than three business days prior to the Closing Date.
2.3 Adjustments to Consideration.
The Consideration shall be increased or decreased in
the event that the Net Worth of Fox and the Subsidiaries on the
Closing Date is more than or less than, as the case may be, the
Net Worth of Fox and the Subsidiaries shown on the Pro Forma
Balance Sheet. Within five business days after the parties
reach agreement on or resolution of any objections with respect
to audited consolidated balance sheet of Fox and the
Subsidiaries as of the Closing Date prepared as described below
(the "Closing Pro Forma Balance Sheet"), Kodak shall deliver
to Holding, in satisfaction of Fox's obligation to Holding
pursuant to the Extraordinary Dividend, an amount equal to 51%
of any increase in the Net Worth plus interest thereon at LIBOR
from the Closing Date through the date of payment to the order
of Fox or CPI shall contribute to Fox and Fox shall deliver to
Kodak an amount equal to 51% of any decrease in the Net Worth
plus interest thereon at LIBOR from the Closing Date through
the date of payment to the order of Kodak (the "Adjustment").
Within 45 days after the Closing Date, CPI shall deliver to
Kodak the Closing Pro Forma Balance Sheet prepared in
accordance with GAAP except as set forth in notes thereto which
shall be consistent with the notes to the Pro Forma Balance
Sheet, together with the report of KPMG Peat Marwick LLP
thereon. Kodak shall have 30 business days after receipt of
the Closing Pro Forma Balance Sheet to raise any objections to
the Closing Pro Forma Balance Sheet by notice to CParent.
CParent and Fox shall make available to Kodak all data and
financial information reasonably requested by Kodak in
connection with its review of the Closing Pro Forma Balance
<PAGE>
Sheet and full access to the books and records including the
work papers of the employees and accountants of CParent and
Fox, if necessary in connection with such review. Any
objections to the Closing Pro Forma Balance Sheet not resolved
within 10 days after notice of such objections is given by
Kodak may be referred by Kodak or CParent to Deloitte & Touche
LLP for resolution. The determination of such accounting firm
shall be given in writing within 10 days after such referral
and shall be binding on the parties.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF CPARENT AND HOLDING
CParent and Holding, jointly and severally,
represent and warrant, for themselves and on behalf of Fox and
the Subsidiaries, to Kodak as follows:
3.1 Organization, Power, Standing and Qualification.
Each of CParent, Holding and Fox is a corporation duly
organized, validly existing, and in good standing under the
laws of the State of Delaware, and has all requisite corporate
power and authority to carry on its business as it is now being
conducted and to own and operate the properties and assets now
owned and operated by it. CParent has delivered to Kodak
complete and correct copies of the Certificate of Incorporation
and any amendments thereto, and the By-laws as presently in
effect, of each of CParent, Holding and Fox. The Subsidiaries
have been duly organized and are validly existing and in good
standing in the jurisdiction of their organization. Each of
the Subsidiaries has all requisite corporate or partnership, as
the case may be, power and authority to carry on its business
as it is now being conducted and to own and operate the
properties and assets now owned and operated by it. CPI has
delivered to Kodak complete and correct copies of the
organizational documents of each of the Subsidiaries. Fox and
each of the Subsidiaries is duly qualified to do business and
in good standing in each jurisdiction where the conduct of its
business or the ownership or operation of its assets requires
such qualification except where failure to be so qualified or
in such good standing can be cured without material expense and
will not result in a Material Adverse Effect on Fox and the
Subsidiaries taken as a whole.
3.2 Power and Authority. Upon execution and
delivery as contemplated herein, this Agreement will be a valid
and binding obligation of each of CParent, Holding and Fox,
enforceable against each of them in accordance with its terms
<PAGE>
except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights
generally and to general equitable principles. Each of
CParent, Holding and Fox has all requisite corporate power and
authority to enter into this Agreement and to perform all of
its obligations hereunder. The Board of Directors of Fox,
Holding and CParent have each duly authorized the execution and
delivery of this Agreement and the performance of the
transactions contemplated hereby. No approval of the
stockholders of CParent or Holding is required with respect to
the consummation of the transactions contemplated by this
Agreement, either singly or in light of other transactions
undertaken or contemplated by CParent or Holding.
3.3 Validity of Contemplated Transactions. The
execution, delivery and performance of this Agreement by
CParent, Holding and Fox, the execution, delivery and
performance by CParent and Fox of the Collateral Documents to
which CParent or Fox is a party, and the consummation of the
transactions contemplated hereby and thereby, (a) do not and
will not contravene any provision of the Certificate of
Incorporation or By-laws of CParent, Holding or Fox or the
organizational documents of the Subsidiaries; or (b) constitute
a breach of or result in a default under, or cause the
acceleration of any payments pursuant to, any agreement,
contract, indenture, lease, or mortgage to which CParent,
Holding or Fox or the Subsidiaries is a party or by which
CParent, Holding, Fox or the Subsidiaries or any of their
assets is bound, or violate any provision of law, rule,
regulation, order, permit, or license to which CParent,
Holding, Fox or the Subsidiaries is subject, except for (i)
requirements for consents of Persons referred to in Section 3.4
of this Agreement and (ii) breaches, defaults or accelerations
of agreements, contracts, indentures, leases or mortgages
which, individually or in the aggregate, would not have a
Material Adverse Effect on the Business.
3.4 Consents. No permit, consent, approval, or
authorization of, or designation, declaration or filing with,
any governmental authority or any other Person on the part of
any of CParent, Holding, Fox or any of the Subsidiaries is
required in connection with the execution or delivery by
CParent, Holding and Fox of this Agreement or the consummation
of the transactions contemplated hereby other than those which
have previously been obtained and those specified in
Schedule 3.4 hereto and other than such permits, consents,
approvals, authorizations, designations, declarations or
filings the absence of which, individually or in the aggregate,
would not materially impair the ability of CPI and Fox to
<PAGE>
consummate the transactions contemplated hereby or have a
Material Adverse Effect on the Business as it will be conducted
immediately following the Closing Date .
3.5 Purchased Stock. The Purchased Stock is duly
authorized and, when issued and paid for as provided in this
Agreement, will be duly and validly issued, fully paid and
nonassessable. At the Closing, the Purchased Stock will be
free and clear of all liens and encumbrances and will not be
subject to any restrictions on transfer except as set forth in
this Agreement or the Stockholders' Agreement and as may be
imposed under applicable federal and state securities laws.
3.6 Capitalization of Fox. Fox's total authorized
capital stock consists of 1,000 shares of Common Stock, all of
which are currently outstanding and validly issued and are
owned beneficially and of record by Holding, free and clear of
all liens and encumbrances. There are no outstanding options,
warrants, conversion privileges, subscriptions, calls,
commitments or similar rights relating to the Common Stock.
There are no other classes or series of capital stock or other
equity interest of Fox authorized, issued or outstanding. All
of the issued and outstanding shares of Common Stock are
validly issued, fully paid and nonassessable.
3.7 Subsidiaries. Other than the Subsidiaries, all
of the equity interests of which are owned beneficially and of
record, directly or indirectly, by Fox, Fox has no subsidiaries
or equity ownership in any other Person other than equity
interests which have been received in bankruptcy proceedings
which are not subject to mandatory assessment or capital calls.
Except as listed on Schedule 3.7, there are no classes or
series of capital stock or other equity interest of any of the
Subsidiaries authorized, issued or outstanding. All of the
issued and outstanding shares of capital stock of each of the
Subsidiaries that is a corporation and all of the issued and
outstanding partnership or other equity interests of each of
the Subsidiaries that is not a corporation are validly issued,
fully paid and non-assessable (to the extent such concepts are
relevant). There are no outstanding rights of subscription,
warrants, calls, options, contracts or other similar
agreements, issued or granted by Fox or any of the Subsidiaries
to any third party, to purchase or otherwise acquire securities
of Fox or any of the Subsidiaries. Fox directly or indirectly
holds all of the equity interests in each of the Subsidiaries
free and clear of all liens and encumbrances.
3.8 Dividends and Extraordinary Distribution. The
Board of Directors of Fox has not declared or paid since
February 4, 1996 any dividend or other distribution, directly
or indirectly with respect to its capital stock other than (a)
<PAGE>
the $75 million dividend declared on January 31, 1996 and paid
by distribution of a promissory note (the "Dividend Note") in
the original principal amount of $75,000,000 of Fox payable to
Holding, dated as of January 31, 1996 and due and payable in
full on January 31, 2001 with interest at the prime rate of
Mercantile Bank, N.A., and (b) the Extraordinary Distribution.
Each of the dividends paid pursuant to the Dividend Note and
the Extraordinary Dividend were duly declared by the Board of
Directors of Fox in accordance with the provisions of the DGCL.
3.9 Financial Statements. Attached hereto as
Schedule 3.9 is an unaudited pro forma balance sheet as of the
Balance Sheet Date (the "Pro Forma Balance Sheet") and a
statement of earnings before interest, taxes, depreciation and
amortization for the 52 week period then ended (collectively,
the "Business Financial Statements"). The Pro Forma Balance
Sheet (including the related notes thereto), present fairly, in
all material respects, the respective financial position of the
Business as of its date, and the other statement included in
Schedule 3.9 (including the related notes thereto) presents
fairly, in all material respects, the earnings before interest,
taxes, depreciation and amortization of the Business for such
52 week period prepared in a manner consistent with the
presentation of segment information for the photofinishing
segment of CParent in its periodic reports filed with the
Securities and Exchange Commission.
3.10 Undisclosed Liabilities. Except (a)
as reflected or reserved against in the Business Financial
Statements, including the notes thereto, (b) for liabilities
incurred in the ordinary course of business of the Business
since the Balance Sheet Date and which will be reflected on the
Closing Pro Forma Balance Sheet, or (c) as disclosed in
Schedule 3.10, neither Fox nor any of the Subsidiaries has any
liabilities or any obligations of any nature whether or not
accrued, contingent or otherwise, that are material to the
Business.
3.11 Absence of Certain Changes. Except as
described in Schedule 3.11, since the Balance Sheet Date there
has not been:
3.11.1 Any change or event in or relating to
the Business which individually or in the aggregate,
has had or may reasonably be expected to have a
Material Adverse Effect on the Business;
3.11.2 Other than in the ordinary course of
business of the Business consistent with past
practice, any sale or transfer by CPI, Fox or any of
the Subsidiaries of any tangible or intangible asset
<PAGE>
used in the Business, or any mortgage or pledge or
the creation of any security interest, lien, or
encumbrance on any such asset, or any lease of
property of the Business, including equipment, or any
termination or surrender of any lease, right or
franchise used in the Business or any action to
windup or discontinue the Business or materially
reduce the business at any location where the
Business is conducted;
3.11.3 Any declaration, setting aside, or
payment of a distribution in respect of or the
redemption or other repurchase by Fox of any stock of
Fox or the Subsidiaries;
3.11.4 Other than in the ordinary course of
business of the Business consistent with past
practice, the grant of any increase in the
compensation of officers or employees of Fox or any
of the Subsidiaries (including any such increase
pursuant to any bonus, pension, profit-sharing, or
other plan) earning in excess of $50,000 except as
set forth on Schedule 3.19;
3.11.5 The discharge or satisfaction of any
material lien or encumbrance or the payment of any
material liability of Fox or the Subsidiaries other
than (a) as required by the terms thereof or (b) in
the ordinary course of business of the Business
consistent with past practice and not involving
payment of more than $100,000 in the aggregate;
3.11.6 The making of any loan, advance, or
guaranty to or for the benefit of any Person by Fox
or any of the Subsidiaries except the creation of
accounts receivable and the endorsement of customer
checks in the ordinary course of business;
3.11.7 Any capital expenditures in excess of
$100,000 individually or $500,000 in the aggregate;
3.11.8 Any transaction or conduct of the
Business not in the ordinary course of business of
the Business consistent with past practice or which
has caused or may reasonably be expected to cause a
decrease in the Net Worth of the Business of $100,000
or more; or
3.11.9 Any commitment or agreement by CPI, Fox
or any of the Subsidiaries to do any of the
foregoing.
<PAGE>
3.12 Title and Related Matters. Except for certain
Premises as to which consents under Real Property Leases may
not have been obtained from the landlord thereof as described
in Section 7.1.4, the assets, properties and rights which are,
or as of the Closing Date will be, owned or leased by or
licensed to Fox and the Subsidiaries constitute all of the
tangible and intangible property used by or necessary to Fox
and the Subsidiaries in the conduct of the Business and
material to the Business as now conducted at any of the
Premises. Except as set forth in Schedule 3.12, Fox or one of
the Subsidiaries has good and marketable title to, or a valid
and binding leasehold interest in, all of the property, real
and personal, and other assets used in the Business, all of
which (other than properties and assets acquired since the
Balance Sheet Date) are included in the Pro Forma Balance Sheet
(except properties and assets sold or otherwise disposed of
subsequent to the Balance Sheet Date in the ordinary course of
business or as contemplated in this Agreement), free and clear
of all security interests, mortgages, liens, pledges, charges,
claims, or encumbrances of any kind or character, except
(a) statutory liens for property taxes not yet delinquent or
payable subsequent to the date on which this representation is
given and statutory or common law liens securing the payment or
performance of any obligation of Fox or one of the
Subsidiaries, the payment or performance of which is not
delinquent, or that is payable without interest or penalty
subsequent to the date on which this representation is given,
or the validity of which is being contested in good faith by
Fox or one of the Subsidiaries; (b) the rights of customers
of Fox or one of the Subsidiaries, with respect to inventory
under orders or contracts entered into by Fox and Subsidiaries
in the ordinary course of business; (c) claims, easements,
liens, and other encumbrances of record pursuant to filings
under real property recording statutes; (d) as reflected in the
Pro Forma Balance Sheet or the notes thereto; and (e) claims,
liens, easements and other encumbrances that individually or in
the aggregate do not exceed $10,000 and do not materially
detract from the value of the property or assets subject
thereof (such encumbrances being "Permitted Encumbrances").
3.13 Condition of Assets. All Premises occupied by
and equipment used by each of Fox and the Subsidiaries are in
good operating condition and repair, normal wear and tear
excepted, and to CPI's Knowledge, the aggregate repair and
refurbishment costs which would be incurred by Fox and the
Subsidiaries during the 12 months following the Closing Date to
maintain such facilities in their current condition will not
materially exceed historical repair costs.
<PAGE>
3.14 Real Property. Schedules 3.14 and 3.27 contain
a list of all real property currently owned or leased or
licensed by CParent or its Affiliates and used in the conduct
of the Business. CPI has delivered to Kodak true and complete
copies of all deeds to any real property owned by Fox or the
Subsidiaries and all title reports, title insurance policies,
surveys, drawings, declarations, restrictions and any leasing
or brokerage contracts relating to any real property owned or
leased in connection with the Business. CPI has delivered to
Kodak true and complete copies of all leases and licenses to
which Fox or the Subsidiaries are a party or which are for
locations used in the Business, each of which is listed in
Schedule 3.14 (including any and all amendments and other
modifications of such leases and licenses) (the "Real Estate
Leases"). Each Real Estate Lease is valid and binding and
enforceable except as enforceability may be limited by
bankruptcy, insolvency or other similar laws, has not been
modified or amended since the date of the last modification or
amendment disclosed in Schedule 3.14 and constitutes the
complete agreement with the landlord for the premises covered
thereby. The rent paid under each Real Estate Lease is set
forth in Schedule 3.14 and the amounts so stated are accurate
to CPI's Knowledge and will not change as a result of the
Transactions, except where such change will not have a Material
Adverse Effect on the Business and except for transaction fees
or charges of the landlords of the Premises imposed in
connection with any consent contemplated under this Agreement.
CPI, Fox and the Subsidiaries are not in default under any such
leases except for such defaults that would not individually or
in the aggregate have a Material Adverse Effect on the
Business. Except as reflected in the Pro Forma Balance Sheet
or as will be reflected in the Closing Pro Forma Balance Sheet,
neither Fox nor the Subsidiaries has any liability to the
landlords or other parties thereto pursuant to the Real Estate
Leases for any period prior to the Closing Date. All property
listed in Schedule 3.14 (including improvements thereon) is in
satisfactory condition and repair consistent with its present
use and is available for immediate use in the conduct of the
Business. To CPI's Knowledge, each landlord under the Real
Estate Leases has performed all construction, repairs,
alterations, decorating or other work due to be performed
thereunder. None of the Premises violates any applicable
building or zoning code or regulation of any governmental
authority having jurisdiction except for such violations that
would not individually or in the aggregate have a Material
Adverse Effect on the Business. The retail locations where the
Business is conducted consists exclusively of the Premises.
Each such location is fully operational and business is
conducted at each such location in the ordinary course. Except
as set forth on Schedule 3.11, no action has been commenced by
CPI, Fox or the Subsidiaries to wind-up, discontinue or
<PAGE>
materially reduce the business at any such location or to
surrender all or any substantial part of, or to notify the
landlord under any Real Estate Lease of nonrenewal, or failure
to exercise any option to renew, the Real Estate Lease in
respect of such location.
3.15 Litigation. Except as set forth in Schedule
3.15, there are no actions, suits, proceedings, orders,
grievance procedures, investigations or claims pending by or
against or, to CPI's Knowledge, threatened against Fox or the
Subsidiaries or the Business, or affecting any of their or its
property, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency, or
instrumentality where the amount claimed or in dispute is
greater than $5,000 individually or $50,000 in the aggregate;
and none of Fox, the Subsidiaries nor the Business are subject
to, or in default of, any outstanding order, writ, injunction,
judgment or decree of any court or governmental or regulatory
authority.
3.16 Taxes. Except as set forth in Schedule 3.16,
(a) CPI, Fox and the Subsidiaries have paid or adequately
reserved on the Pro Forma Balance Sheet for all material Taxes
(as defined below) required to be paid by Fox or the
Subsidiaries through the Balance Sheet Date including those
resulting from any completed audits, and have paid or shall
timely pay any material Taxes required to be paid by Fox or the
Subsidiaries after the Balance Sheet Date and on or before the
Closing Date (unless the payment of such Taxes is being
contested by CPI, Fox or the Subsidiaries in good faith),
(b) CPI, Fox and the Subsidiaries have filed all material Tax
Returns relating to Fox or the Subsidiaries that they are
required to file through the date hereof and shall, on or
before the Closing Date, prepare and file, consistent with
prior years in all material respects, all material Tax Returns
relating to Fox or the Subsidiaries that they are required to
file after the date hereof and on or before the Closing Date,
(c) no penalties or other charges are, or to CPI's Knowledge
will become, due with respect to the late filing of any Tax
Return relating to Fox or the Subsidiaries, (d) neither CPI,
Fox nor the Subsidiaries are currently being audited by any
taxing authority with respect to tax liabilities of Fox or the
Subsidiaries and, to CPI's Knowledge, no audit with respect to
tax liabilities of Fox or the Subsidiaries has been threatened,
(e) no extension of time with respect to any date on which any
Tax Return relating to Fox or the Subsidiaries was or is to be
filed by CPI, Fox or the Subsidiaries is in force as of the
date hereof, (f) no waiver or agreement by CPI, Fox or the
Subsidiaries is in force as of the date hereof for the
extension of time for the assessment or payment of any Tax
relating to Fox or the Subsidiaries, (g) CPI, Fox and the
<PAGE>
Subsidiaries have not agreed and are not required to make any
adjustment under section 481(a) of the Code by reason of a
change in accounting method or otherwise, (h) Fox is not a
party to any agreement that provides for the payment of any
amount that would constitute an "excess parachute payment"
within the meaning of section 280G of the Code, and (i) Fox is
not a party to nor bound by, nor has any obligation under, any
tax sharing or similar agreement. "Taxes" shall mean any
taxes, charges, fees, levies or other assessments, including,
without limitation, income, excise, property, sales, gross
receipts, employment and franchise taxes imposed by the United
States, or any state, county, local or foreign government, or
subdivision or agency thereof, any interest, penalties or
additions attributable thereto, and any obligation to pay a pro
rata portion of any real estate taxes or assessments under Real
Property Leases.
3.17 Compliance with Laws and Business Permits.
Each of CPI, Fox and the Subsidiaries is in substantial
compliance with all material laws, statutes, ordinances,
regulations, orders, judgments, or decrees applicable to it, in
the conduct of the Business or otherwise, the enforcement of
which, if such entity were not in compliance therewith, would
have a Material Adverse Effect on the Business. None of CPI,
Fox or the Subsidiaries has received any notice of any asserted
failure by such to comply with such laws, statutes, ordinances,
regulations, orders, judgments or decrees. Fox and the
Subsidiaries hold all business permits, certificates and other
licenses or authorizations ("Permits") necessary for the
ownership and conduct of the Business in each jurisdiction
where the Business is currently conducted and all such Permits
are in full force and effect except where the failure to hold
such Permits in full force and effect will not, individually or
collectively, have a Material Adverse Effect on the Business.
Except as set forth on Schedule 3.17, the consummation of the
Transactions will not result in the cancellation, termination
or revocation of any such Permits or require the issuance of
any new Permits.
3.18 Insurance. CPI, Fox or the Subsidiaries
maintains general liability, fire, theft, business
interruption, use and occupancy, employee fidelity, workers'
compensation, disability and other forms of insurance with
reputable and financially responsible insurers covering the
Business and its assets and employees with such coverages and
in such amounts as are (a) prudent and comparable to others in
similar businesses, (b) equal to or in excess of such coverages
or amounts required by law, and (c) in compliance with
applicable Real Estate Leases and other applicable agreements.
Schedule 3.18 contains a true and complete list of each
insurance policy currently involving the Business or its
<PAGE>
assets, each of which will be maintained by CPI, Fox and the
Subsidiaries to the Closing Date. Schedule 3.18 also contains
an accurate description of the status, as of the date
indicated, of pending claims thereunder involving the Business
or its assets. Neither CPI, Fox nor the Subsidiaries nor any
of their Affiliates has received any notice with respect to the
cancellation, revocation or limitation of any such policy.
3.19 Employees and Labor Relations Matters.
3.19.1 Schedule 3.19 contains: (a) a list of
all employees of the Business whose 1995 or expected
1996 annual compensation, together with any incentive
compensation, equals or exceeds or will equal or
exceed, as the case may be, $50,000; (b); the names,
title, and current salaries of all officers of Fox
and the Subsidiaries; (c) the names of all directors
of Fox and the Subsidiaries; (d) the wage rates (or
ranges, if applicable) for each class of exempt and
nonexempt, salaried and hourly employees of Fox and
the Subsidiaries, all of whom have worked for the
Business for at least 80% of their time during the
past six months; (e) all scheduled increases in
compensation or bonuses for all persons at a level
above the district manager level; (f) all scheduled
employee promotions for all persons at a level above
the district manager level;
3.19.2 Each of Fox and the Subsidiaries has
complied in all material respects with all labor and
employment laws, including, without limitation,
provisions thereof relating to wages, hours, equal
opportunity, collective bargaining, Americans With
Disabilities Act, the Family and Medical Leave Act
and the payment of social security and other taxes
and at the Closing Date none of the employees of Fox
will be receiving short-term disability, long-term
disability or retirement benefits from Fox;
3.19.3 There is no unfair labor practice
charge, grievance, complaint or other action against
Fox or the Subsidiaries pending or, to CPI's
Knowledge, threatened before the National Labor
Relations Board or otherwise, and neither Fox nor the
Subsidiaries is subject to any order to bargain by
the National Labor Relations Board and there is no
labor strike, slow down, work stoppage or lockout
with respect to any employee of the Business;
<PAGE>
3.19.4 To CPI's Knowledge, except as set forth
on Schedule 3.19, no employee of Fox or the
Subsidiaries is subject to any noncompetition,
nondisclosure, confidentiality, employment,
consulting, or similar agreements with persons other
than CPI or Fox or the Subsidiaries relating to the
Business.
3.19.5 None of Fox nor any of the Subsidiaries
is a party to any collective bargaining agreements
with any labor union or other representative of
employees, including local agreements, amendments,
supplements, letters and memoranda of understanding
of all kinds.
3.19.6 Except as set forth on Schedule 3.19, no
employee of the Business, Fox or the Subsidiaries has
filed any claim or notice of claim under the Equal
Employment Opportunity Act of 1972, as amended, or
comparable state laws which has not been finally
resolved.
3.19.7 Except as set forth on Schedule 3.19,
there are no pending claims by an employee of the
Business with respect to workers' compensation
matters.
3.19.8 There is no charge, complaint or other
action pending against Fox or the Subsidiaries, or to
CPI's Knowledge, any investigation commenced or
threatened against Fox or the Subsidiaries with
respect to the Occupational Safety and Health Act or
comparable state laws ("OSHA").
3.20 Accounts Receivable; Warranties. The Accounts
Receivable reflected on the Pro Forma Balance Sheet, and those
arising in the course of the Business since the Balance Sheet
Date, have arisen in the ordinary course of business and
represent sales actually made to non-Affiliates and are not
subject to returns, credits, allowances or adjustments, and Fox
and the Subsidiaries believe that such accounts receivable are
fully collectible net of reserves set forth on the Pro Forma
Balance Sheet in accordance with GAAP. Except as set forth in
Schedule 3.20, to CPI's knowledge no account receivable with a
value in excess of $5,000 that is being contested or disputed
by the obligor thereon. Except as set forth on Schedule 3.20,
the Business does not provide any written or implied warranties
on its goods or services and any such warranty obligation is
reflected on the Pro Forma Balance Sheet in accordance with
GAAP.
<PAGE>
3.21 Agreements. Set forth in Schedule 3.21 are complete
and accurate lists of the following documents (the
"Contracts"), true and complete copies of which CPI has
delivered to Kodak, in all cases other than contracts,
agreements or understandings to which Kodak is a party:
(a) all indentures, mortgages, agreements,
contracts, arrangements, commitments, instruments,
understandings or obligations, oral or written, of
each of Fox and the Subsidiaries, which are to be
performed by any party in whole or in part on or
after the Closing Date, which involve payments to or
from Fox and the Subsidiaries in amounts greater
than $50,000 annually or extending more than twelve
months after the date of this Agreement and in each
case which is not terminable without penalty within
30 days;
(b) all employee bonus, incentive,
compensation, profit sharing, retirement, pension,
group insurance, death benefit or other fringe
benefit plans, deferred compensation and
post-termination obligations or agreements of each of
Fox and the Subsidiaries in effect or under which any
amounts remain unpaid on the Closing Date or are to
become effective after the Closing Date;
(c) all employment and consulting contracts not
terminable at will without penalty to which any of
Fox and the Subsidiaries is a party;
(d) any agreement limiting the freedom of any of
Fox or the Subsidiaries to compete in any line of
business or with any Person, or limiting the freedom
of any other Person to compete with Fox or the
Subsidiaries;
(e) the amounts and terms of all loans or
advances, other than allowances for travel advanced
in the ordinary course of business, by any of Fox and
the Subsidiaries to any of Fox and the Subsidiaries
or their Affiliates or to any of the employees of any
of Fox and the Subsidiaries; and
(f) a summary of the anticipated terms and
conditions of any item currently being negotiated by
or on behalf of any of Fox and the Subsidiaries which
would upon completion be included within the scope of
paragraphs (a) through (e) of this Section 3.21.
<PAGE>
Except as set forth in Schedule 3.21, there is no
actual default or claimed or alleged default or state of facts
which with notice or lapse of time or both would constitute a
default on the part of Fox or any Subsidiary in the performance
of any obligation to be performed or paid by it under any
Contract listed in Schedule 3.21, except as would not result in
a Material Adverse Effect on the Business.
3.22 Patents, Trademarks, Trade Names, etc. Set forth
on Schedule 3.22 is a list of all patents and patent
applications and all registered trademarks, tradenames, service
marks and copyrights and all material unregistered trademarks,
tradenames, service marks and copyrights used by Fox or the
Subsidiaries in the Business and a description of all trade
secrets, software and other proprietary rights material to the
Business, whether owned or licensed (collectively,
"Intellectual Property"), indicating, with respect to each item
of Intellectual Property, the owner thereof as reflected in
CPI's records and, if applicable, the name of the licensor and
licensee thereof. Except as set forth on Schedule 3.22, the
Intellectual Property shown on Schedule 3.22 as owned by Fox or
the Subsidiaries is owned free and clear of any and all
security interests, liens, pledges, charges, claims or
encumbrances of any kind or character except for Permitted
Encumbrances. Except as set forth in Schedule 3.22, none of
Fox or the Subsidiaries has or uses any, and has not applied
for and is not licensed to use any, material intellectual
property right. The use of the Intellectual Property by the
Business does not infringe on any patents, registered
trademarks or registered copyrights or, to CPI's Knowledge, any
other rights of any Person, and no Person has notified CPI, Fox
or the Subsidiaries that it has any claim with respect thereto.
To CPI's Knowledge, no activity in which the Business is
engaged or product which the Business sells, or advertising
that it employs, or use of any of the Intellectual Property by
Fox or the Subsidiaries, breaches, violates, infringes or
interferes with any rights of any third party or, except for
the payment of computer software licensing fees, requires
payment for the use of any patent, tradename, trade secret,
trademark, copyright or other intellectual property right or
technology of another Person. The officers of CPI or Fox or
the Subsidiaries listed on Schedule 3.22 have entered into
valid and binding agreements assigning to CParent, Fox or one
of the Subsidiaries solely and exclusively all right, title and
interest in and to the Intellectual Property. Except as set
forth in Schedule 3.22, neither CPI nor any of its Affiliates
has granted rights to manufacture, produce, assemble, market,
license or sell any products invented, developed or designed by
CPI or its Affiliates which are used in the Business.
<PAGE>
3.23 Leases, Licenses. Schedule 3.23 contains a list and
brief description of all franchises, licensing agreements and
leases of (or other arrangements for the use of) any item of
personal or intangible property (including, without limitation,
the Intellectual Property) to which any of Fox and the
Subsidiaries is a party which involve payments to or from Fox
or the Subsidiaries (a) in amounts greater than $50,000
annually or (b) extending more than twelve months after the
date of this Agreement except for prepaid software license
agreements where Fox or the Subsidiaries is the licensee and
where the software is mass-marketed personal computer software
(collectively, the "Licenses"). Each of Fox and the
Subsidiaries enjoys peaceful and undisturbed possession under
all such leases under which it is now operating. All of the
Licenses are valid and subsisting, and there are no existing
defaults or events of default by Fox or its Subsidiaries or
events which with notice or lapse of time or both would
constitute defaults by Fox or its Subsidiaries, the
consequences of which would permit the acceleration of payments
due under or the termination of any of the Licenses, except for
such defaults or events of default that would not have a
Material Adverse Effect on the Business. None of Fox and the
Subsidiaries have given or received any notice of any claimed
default with respect to any of the Licenses.
3.24 Employee Benefits. Schedule 3.24 lists all deferred
compensation, pension, profit sharing, stock option, stock
purchase, savings, group insurance and retirement plans, and
all vacation pay, severance pay, incentive compensation,
consulting, bonus and other employee benefit or fringe benefit
plans or arrangements maintained by CPI, Fox or the
Subsidiaries (including health, life insurance and other
benefit plans maintained for retirees). Said plans, including
but not limited to all plans or arrangements that constitute
"employee benefit plans" as defined in Section 3(3) of the
ERISA, are sometimes collectively referred to in this section
as "Benefit Plans." Access to true and complete copies of all
Benefit Plans, including any insurance contracts under which
benefits are provided, as currently in effect, has been
provided to Kodak. Kodak has also been provided with access to
a true and complete copy of the summary plan description, if
any was required by ERISA to be prepared and distributed to
participants, for each Benefit Plan.
3.24.1 Except as set forth on Schedule 3.24, CPI,
Fox and the Subsidiaries (i) have no Affiliates that are
members of the same control group of companies or trade
and business or affiliated service groups or other
affiliated groups defined in Code Section 414 of which
CPI, Fox and the Subsidiaries are members and (ii) have
<PAGE>
not at any time been a party to any pension plan or
welfare benefit plan that is a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA;
3.24.2 Each Benefit Plan that provides medical
benefits has been operated in material compliance with all
requirements of Sections 601 through 609 of ERISA and
Section 4980B of the Code, relating to the continuation of
coverage under certain circumstances in which coverage
would otherwise cease;
3.24.3 Schedule 3.24 discloses, and separately
indicates, each Benefit Plan maintained by CPI, Fox and
the Subsidiaries that provides post-retirement medical
benefits, post retirement death benefits or other post-
retirement welfare benefits; access to a copy of any
written description of post-retirement welfare benefits
that has been provided to employees has been provided to
Kodak; and access to a copy of each plan document,
insurance contract or other written instrument providing
for post retirement welfare benefits has been provided to
Kodak, together with a description of any advance funding
arrangement that has been established to fund post
retirement welfare benefits;
3.24.4 All contributions to, and payments from, the
Benefit Plans which may have been required to be made in
accordance with the Benefit Plans and, when applicable,
Section 302 of ERISA or Section 412 of the Code, have been
timely made; all such contributions to the Benefit Plans,
and all payments under the Benefit Plans, except those to
form a trust qualified under Section 401(a) of the Code,
for any period ending before the Closing Date that are not
yet, but will be, required to be made with respect to the
employees of the Business will be properly accrued and
reflected on the Pro Forma Closing Balance Sheet or are
disclosed on Schedule 3.24; and, except as disclosed on
Schedule 3.24, CPI, Fox and the Subsidiaries have funded
or will fund each Benefit Plan in accordance with its
terms through the Closing, including the payment of
applicable premiums on any insurance contract funding a
Benefit Plan for coverage provided through the Closing;
3.24.5 Each Benefit Plan is in compliance in all
material respects with the presently applicable provisions
of ERISA and the Code, including but not limited to the
satisfaction of applicable reporting and disclosure
requirements under ERISA and the Code; CPI, Fox and the
Subsidiaries have filed or caused to be filed with the
Internal Revenue Service annual reports on the Form 5500
series of reports for each Benefit Plan for all years and
<PAGE>
periods for which such reports were required; and each of
the Benefit Plans has been administered, in all material
respects, in accordance with its terms except that in any
case in which any Benefit Plan is currently required to
comply with a provision of ERISA or the Code, but is not
yet required to be amended to reflect such provision, it
has been administered in substantial compliance with such
provision;
3.24.6 No "prohibited transaction," as defined in
Section 406 of ERISA and Section 4975 of the Code, has
occurred in respect of any Benefit Plan which could give
rise to any material liability or tax under ERISA or the
Code on the part of CPI, Fox and the Subsidiaries, and no
civil or criminal action brought pursuant to part 5 of
Title I of ERISA is pending or, to CPI's Knowledge, is
threatened in writing or orally against any fiduciary of
any such plan;
3.24.7 All of the Benefit Plans which are pension
benefit plans have received favorable determination
letters from the IRS to the effect that such plans are
qualified under Sections 401(a) of the Code; and no
determination letter with respect to any Benefit Plan has
been revoked nor, to CPI's Knowledge, has (a) revocation
been threatened, or (b) any Benefit Plan been amended
since the date of its most recent determination letter or
application therefor in any respect which would adversely
affect its qualification or materially increase its cost
and no Benefit Plan has been amended in a manner that
would require security to be provided in accordance with
Section 401(a)(29) of the Code;
3.24.8 To CPI's Knowledge, there have been no
statements or communications made or materials provided to
any employee or former employee of CPI, Fox and the
Subsidiaries by any person which provide for or could be
construed as a contract or promise by CPI, Fox and the
Subsidiaries to provide for any pension, welfare, or other
insurance-type benefits to any such employee or former
employee, whether before or after retirement, other than
benefits under the Benefit Plans;
3.24.9 With respect to any Benefit Plan, no actions,
suits or claims (other than routine claims for benefits in
the ordinary course) are pending or, to CPI's Knowledge,
threatened, and, to CPI's Knowledge, no facts or
circumstances exist which could give rise to any such
actions, suits or claims;
<PAGE>
3.24.10 (a) No Benefit Plan has incurred any
"accumulated funding deficiency" as such term is defined
in ERISA section 302 and Code section 412 (whether or not
waived); (b) no event or condition exists which would be
deemed a reportable event within the meaning of ERISA
section 4043(c) which could result in a material liability
to CPI, Fox or the Subsidiaries and no condition exists
which could subject CPI, Fox or the Subsidiaries to a
material fine under ERISA section 4071; (c) all premium
payments required to be made prior to the Closing Date to
the PBGC have been or will be made prior to the Closing
Date; and (d) neither CPI, Fox nor the Subsidiaries is
subject to any liability to the PBGC for any Benefit Plan
termination occurring on or prior to the Closing Date; and
3.24.11 The acquisition by Kodak of the Purchased
Shares will not constitute a termination of employment,
severance or similar action which triggers benefit
entitlement under any severance or Benefit Plan of CPI,
Fox or the Subsidiaries.
3.25 Environmental Compliance. The following terms shall
have the meanings set forth below:
"Environment" means any water, including groundwater
and surface water, any land, including land surface or
subsurface, air, fish, wildlife, biota and all other natural
resources.
"Environmental Laws" means all federal, state and
local environmental and health and safety laws, statutes,
ordinances, rules, regulations and codes relating to the
protection of the Environment, including, but not limited to
those laws governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of
Hazardous Substances, and those laws with regard to
recordkeeping, notification and reporting respecting Hazardous
Substances.
"Environmental Permits" means all permits,
certificates, licenses, approvals, authorizations, consents or
registrations required by any applicable Environmental Law in
connection with the ownership, use and/or operation of the
Premises or the conduct of the Business.
"Hazardous Substance" means any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum
products (including, without limitation, waste petroleum and
waste petroleum products), methane, hazardous materials,
hazardous wastes, pollutants, contaminants, and hazardous or
<PAGE>
toxic substances or related materials, or chemicals posing an
unreasonable risk of harm to health or the environment, as
regulated or defined under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
(42 U.S.C. Section 9601, et seq.)("CERCLA"), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Section
1801, et seq.), the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Section 6901, et seq.)("RCRA"), the Toxic
Substances Control Act, as amended (15 U.S.C. Section 2601, et
seq.), OSHA or any other applicable Environmental Law.
"Release" means any past or present spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping of a
Hazardous Substance into the Environment (including the
abandonment or discarding of barrels, containers, and other
closed receptacles containing any Hazardous Substance).
Except as set forth in Schedule 3.25 and as would not have a
Material Adverse Effect on the Business:
3.25.1(a) None of the Premises owned or any site
formerly owned by Fox or any present or former
subsidiary of Fox ("Former Sites") are being or have been
used by Fox or any Affiliate of Fox in violation of any
Environmental Law for the treatment, storage, generation,
transportation, processing, handling or production of any
Hazardous Substance, and none of such Premises or the
Former Sites are being or have been used by Fox or any
Affiliate of Fox for the disposal of any Hazardous
Substance, or as a landfill or other waste disposal site
or for military, manufacturing or industrial purposes.
(b) None of the Premises subject to any Real
Property Lease or any site formerly leased or licensed by
Fox or by any present or former subsidiary of Fox are
being used in violation of any Environmental Law for the
treatment, storage, generation, transportation,
processing, handling or production of any Hazardous
Substance by Fox or the Subsidiaries or have been so used
by Fox or any present Affiliate of Fox; and none of such
Premises or sites are being or have been used by Fox or
any present Affiliate of Fox for the disposal of any
Hazardous Substance, or as a landfill or other waste
disposal site or for military, manufacturing or industrial
purposes.
3.25.2 None of Fox or the Subsidiaries own or
operate, or have owned or operated, underground storage
tanks located at the Premises subject to the Real Estate
<PAGE>
Leases, and no underground storage tanks are located or to
CPI's knowledge have been located at the owned Premises or
the Former Sites.
3.25.3 CPI has not received any written notice from
any federal, state or local governmental agency or
authority, or any operator, licensee or occupant of
Premises alleging a Release or the threat of a Release of
any Hazardous Substance on, at or from any Premises.
3.25.4 All Environmental Permits have been obtained
and are in full force and effect.
3.25.5 To CPI's knowledge, there are no present
facts or circumstances that could reasonably be expected
to form the basis for the assertion of any claim against
any of Fox or the Subsidiaries under any Environmental
Law.
3.25.6 There are no actions, suits, claims or
proceedings pending, or to CPI's Knowledge, threatened
against CPI, Fox or the Subsidiaries, which could
reasonably be expected to cause the incurrence of expenses
or costs of any name or description or which seek money
damages, injunctive relief, remedial action or any other
remedy that arise out of, relate to or result from (a) a
violation or alleged violation of any applicable
Environmental Law or noncompliance or alleged
noncompliance with any Environmental Permit by Fox or the
Subsidiaries, (b) the presence of any Hazardous Substance
or a Release or the threat of a Release on, at or from the
Premises or (c) human exposure to any Hazardous Substance,
noises or related nuisances to the extent the same arise
from the condition of the Premises or the ownership, use
or operation thereof by Fox and the Subsidiaries.
3.25.7 Each of Fox and the Subsidiaries is in
compliance with all applicable Environmental Laws.
3.25.8 None of Fox or the Subsidiaries have
(a) received any notice of, or (b) been subject to, any
administrative or judicial proceeding relating to Fox or
the Subsidiaries pursuant to any applicable Environmental
Law, either now or at any time during the past three
years.
3.25.9 No notices or other filings are required
under any provisions of the Environmental Laws for the
consummation of the Transactions.
<PAGE>
3.26 Bank Accounts; Powers of Attorney. Schedule 3.26
lists the names and addresses of every bank and other financial
institution in which Fox or the Subsidiaries or CPI with
respect to the Business maintains an account (whether checking,
savings or otherwise), lock box or safe deposit box, and the
account numbers and names of persons having signing authority
or other access thereto. Except as set forth in Schedule 3.26,
none of Fox or the Subsidiaries has granted a power of attorney
or similar power to act on its behalf to any other Person.
3.27 Inventories. Schedule 3.27 contains a list of the
locations other than the Premises at which the inventories of
any of Fox, the Subsidiaries or the Business are located and
all of the inventory is located at such locations and the
Premises. The inventories of the Business (including that
reflected on the Pro Forma Balance Sheet): (a) consist solely
of tangible personal property of the kind regularly sold in the
Business, work-in-progress, chemicals, paper and other raw
materials and unused packaging and shipping supplies, is in
good condition and suitable and usable or saleable in the
ordinary course of business during the succeeding twelve months
at the aggregate amounts reflected on the Pro Forma Balance
Sheet; (b) are at a level consistent with the level of
inventories that has been maintained in the operation of the
Business prior to the date of this Agreement in accordance with
normal practice and reasonably anticipated requirements in
light of seasonal adjustments, market fluctuations in the
industry and the requirements of customers of the Business; and
(c) are owned by Fox or the Subsidiaries free and clear of any
liens or encumbrances or obligations to return. Such inventory
is in sufficient supply, consistent with past practice and
projected operations, to furnish the inventory requirements of
the Business in the ordinary course of business of the Business
and is not in excess of the normal purchasing patterns of the
Business.
3.28 Suppliers and Customers. Schedule 3.28 lists all
suppliers other than Kodak which account for 5% or more of the
purchases and all customers accounting for 5% or more of the
sales of the Business. No such supplier or customer accounting
for 5% or more of the purchases or sales of the Business,
respectively, has cancelled or otherwise terminated, or made
any written threat to any of CPI, Fox or the Subsidiaries to
cancel or otherwise terminate, for any reason, including the
contemplated consummation of the Transactions, its relationship
with the Business, or has at any time on or after February 4,
1996, decreased materially its services or supplies to the
Business (in the case of any such supplier), or its purchases
of the products of the Business, or made any written claim that
any product sold by the Business failed to meet any
specification with respect thereto or was otherwise defective
<PAGE>
(in the case of any such customer). None of CPI, Fox or the
Subsidiaries receives any rebate or other consideration from
any supplier to the Business other than Kodak which must be
repaid if certain conditions are not met, except as set forth
on Schedule 3.28. None of CPI, Fox or the Subsidiaries has
received notice that any such supplier or customer intends to
cancel or otherwise terminate its relationship with the
Business or to decrease materially its services or supplies to
the Business, or its purchases of the products of the Business,
as the case may be. Except as set forth in Schedule 3.28, none
of CPI, Fox or the Subsidiaries has established any customer
club or other arrangements with respect to the Business
whereby, the Business agreed to provide any goods or services
for free, at a discount, with a rebate or credit or at a cost
other than usual commercial terms.
3.29 Conflicts of Interest. Except as set forth in
Schedule 3.29, neither CPI nor any Affiliate of CPI, Fox or
the Subsidiaries (a) is an officer, director, employee or
consultant of, or owns or otherwise controls any Person which
is, or is engaged in business as, a competitor, material
customer or material supplier of any of Fox and the
Subsidiaries; (b) owns or leases, directly or indirectly, in
whole or in part, any tangible or intangible property which any
of Fox and the Subsidiaries is using in a material way; or
(c) has any cause of action or other claim whatsoever against,
or owes any amount to any of Fox and the Subsidiaries, except
for claims in the ordinary course of business, such as for
accrued vacation pay, accrued benefits under employee benefit
plans and similar matters and agreements existing on the date
hereof.
3.30 Services Supplied by Affiliates. Except for the
services listed on Schedule 3.30, the Business does not rely on
CPI or its Affiliates other than Fox and the Subsidiaries for
any services which (a) are material to the Business or (b) the
absence of which on the Closing Date could have a Material
Adverse Effect on the Business.
3.31 Disclosure. This Agreement and the certificates and
other instruments attached hereto or delivered pursuant to this
Agreement and, to the extent listed or described on the
Schedules, the documents and statements in writing which have
been supplied by or on behalf of CPI, Fox or any of the
Subsidiaries in connection with the transactions contemplated
by this Agreement, when considered in their entirety, do not
contain any untrue statement of a material fact, or omit a
material fact necessary to make the statements contained herein
or therein not misleading.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF KODAK
Kodak represents and warrants to CPI and Fox as follows:
4.1 Organization, Power. Kodak is a corporation duly
organized, validly existing, and in good standing under the
laws of the State of New Jersey, and has all requisite
corporate power and authority to carry on its business as it is
now being conducted, and to own and operate the properties and
assets now owned and operated by it.
4.2 Power and Authority. Upon execution and delivery as
contemplated herein, this Agreement will be a valid and binding
obligation of Kodak, enforceable against it in accordance with
its terms except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally and to general equitable
principles. Kodak has all requisite corporate power and
authority to enter into this Agreement and to perform all of
its obligations hereunder. The Board of Directors of Kodak
have duly authorized the execution and delivery of this
Agreement and the performance of the transactions contemplated
hereby. No approval of the stockholders of Kodak is required
with respect to the consummation of the transactions
contemplated by this Agreement, either singly or in light of
other transactions undertaken or contemplated by Kodak.
4.3 Validity of Contemplated Transactions. The
execution, delivery and performance of this Agreement, the
execution, delivery and performance of the Collateral
Agreements to which Kodak is a party, and the consummation of
the transactions contemplated hereby and thereby, (a) do not
and will not contravene any provision of the Certificate of
Incorporation or Bylaws of Kodak; or (b) constitute a breach of
or result in a default under, or cause the acceleration of any
payments pursuant to, any agreement, contract, indenture,
lease, or mortgage to which Kodak is a party, or by which Kodak
or its assets is bound, or violate any provision of law, rule,
regulation, order, permit, or license to Kodak is subject,
where any such breaches, defaults and violations would in the
aggregate have a Material Adverse Effect on Kodak.
4.4 Nature of Purchase. Kodak is purchasing the
Purchased Shares for its own account for investment, not as a
nominee or agent, and not with a view to the resale or
distribution of the Purchased Shares or any part thereof, and
Kodak has no present intention of selling, granting any
participation in, or otherwise distributing the same. There is
<PAGE>
no contract, undertaking, agreement or arrangement with any
Person for resale in connection with a distribution to any
Person with respect to any of the Purchased Shares. Kodak
acknowledges that the offering of the Purchased Shares pursuant
to this Agreement will not be registered under the Securities
Act of 1933, as amended, or any state securities or blue sky
law, on the grounds that the offering and sale of Purchased
Shares contemplated by this Agreement are exempt from
registration pursuant to exceptions available under such laws,
and that Fox's reliance upon such exemptions is predicated upon
Kodak's representations set forth in this Agreement. Kodak
acknowledges and understands that the Purchased Shares must be
held for an indefinite period of time unless the Purchased
Shares are subsequently registered under the Securities Act
and/or applicable state securities or blue sky laws or an
exemption from such registration is available or are
transferred as otherwise provided in this Agreement or the
Stockholders' Agreement.
4.5 Accredited Investor. Kodak is an "accredited
investor" within the meaning of Regulation D promulgated under
the Securities Act.
4.6 Access to Information. Kodak acknowledges that CPI
and Fox have made available to Kodak the opportunity to ask
questions of, and receive answers from, and conduct due
diligence meetings with management of CPI and Fox, and Kodak
has had the opportunity to obtain any additional information
necessary to verify the accuracy of the information provided by
CPI, Fox and the Subsidiaries.
4.7 Consents. No permit, consent, approval, or
authorization of, or designation, declaration or filing with,
any governmental authority or any other Person on the part of
Kodak is required in connection with the execution or delivery
by Kodak of this Agreement or the consummation of the
transactions contemplated hereby other than those which have
previously been obtained and the filing and consent under the
HSR Act described in Section 6.1 and other than such permits,
consents, approvals, authorizations, designations, declarations
or filings the absence of which, individually or in the
aggregate, would not materially impair the ability of Kodak to
consummate the transactions contemplated hereby or have a
Material Adverse Effect on the Business.
<PAGE>
ARTICLE V
PRECLOSING COVENANTS OF CPI AND FOX
5.1 Access. Prior to the Closing or earlier termination
of this Agreement, CPI, Fox and the Subsidiaries shall permit
Kodak and its representatives full access during normal
business hours, on reasonable prior notice, to the Premises and
all of the books, records, tax returns, contracts, Intellectual
Property and records of the Business, whether held or
maintained by CPI, Fox or the Subsidiaries and shall furnish
Kodak with copies or the opportunity to make copies of such
documents or with respect to the Business as Kodak may
reasonably request.
5.2 Conduct of Business. From the date of this Agreement
through the Closing Date, except as otherwise specifically set
forth in this Agreement or as Kodak may otherwise approve in
writing in advance, CPI, Fox and the Subsidiaries shall conduct
the Business in the ordinary and usual course, consistent with
past practice, and use its reasonable business efforts to
preserve intact the Business and its relationships with
customers, suppliers and other third parties and to assure that
the representations and warranties of CPI and Fox in this
Agreement are true, correct and complete at and as of the
Closing Date. Except as otherwise specifically set forth in
this Agreement, or with the prior written consent of a
Designated Representative of Kodak, CPI and Fox covenant that
they shall not nor shall they agree to:
5.2.1 Sell, lease or transfer any asset of the
Business without replacement thereof with an asset of
equivalent or better kind, condition or value other
than inventory sold in the ordinary course of
business of the Business and as set forth on Schedule
5.2;
5.2.2 Enter into or amend any contract of employment
with any employee of the Business or change the
benefits or the compensation of any employee of the
Business whose annual compensation, together with any
incentive compensation, equals or exceeds, $50,000
except as described on Schedule 3.19;
5.2.3 Diminish insurance coverages for the Business
from existing levels;
5.2.4 Incur any indebtedness other than trade debt
in the ordinary course of business of the Business or
encumbrance on any asset of the Business other than
Permitted Encumbrances;
<PAGE>
5.2.5 Enter into, amend, renew or amend any material
provision of any Real Estate Lease, including without
limitation, any provision related to rent or term, or
other contract or agreement set forth on
Schedules 3.21 or 3.23 or which would be required to
be set forth on Schedules 3.21 or 3.23, except in the
ordinary course of business of the Business and which
has a term of not more than three years and an annual
rent of not more than $60,000, or give any notice of
cancellation or nonrenewal or fail to exercise any
renewal right or option with respect thereto except
as disclosed on Schedule 5.2;
5.2.6 Maintain its books and accounts other than in
material compliance with all applicable laws and in a
manner consistent with the Business Financial
Statements or make any change in its accounting
principles except as required by GAAP.
5.2.7 Amend the certificate of incorporation or
by-laws by Fox, other than the Amended Certificate of
Incorporation and the Amended By-laws as provided in
Section 5.3 hereof, or the organizational documents
of the Subsidiaries;
5.2.8 Make any capital expenditures with respect to
the Business in excess of $10,000 individually or
$100,000 in the aggregate except as disclosed on
Schedule 3.11;
5.2.9 Take any actions which, individually or in the
aggregate, could reasonably be expected to cause a
decrease in the net worth (as such cash term is
defined in accordance with GAAP) of the Business of
$100,000 or more;
5.2.10 Enter into any agreement or commitment
for the purchase of photographic chemicals, paper or
film with any person other than Kodak; or
5.2.11 Take any action which could be
reasonably expected to prevent or materially delay
the transactions contemplated by this Agreement.
5.3 Amendments to Certificate of Incorporation and
By-laws. On or before the Closing Date, CPI and Fox will cause
the Amended Certificate of Incorporation, substantially in the
form of Exhibit B attached hereto, to be filed with the
Secretary of State of the State of Delaware, and the Board of
Directors of Fox, and Holding as the sole stockholder of Fox,
will cause the amendments to the by-laws of Fox set forth in
<PAGE>
the Amended By-laws, substantially in the form of Exhibit A
attached hereto to be authorized and adopted. Each of CPI and
Fox covenant and agree that, on or before the Closing Date, it
shall not cause any amendment to be made to the certificate of
incorporation of Fox other than the amendments set forth in the
Amended Certificate of Incorporation and the Board of Directors
and stockholder of Fox shall not cause any amendments to be
made to the by-laws of Fox other than the Amended By-laws.
5.4 Working Capital. Programs shall make a one-year
working capital loan to Fox on the Closing Date in the amount
of $4,000,000 which shall be due and payable in full with
interest at 7% per annum on the first anniversary of the
Closing Date and shall be represented by the Working Capital
Note.
5.5 Indebtedness; Intercompany Accounts. The Closing
Date Pro Forma Balance Sheet shall not show any indebtedness of
Fox and the Subsidiaries except trade debt incurred in the
ordinary course of business of the Business, $56,100,000 in
indebtedness to Holding and the Extraordinary Distribution.
All amounts due from Fox or the Subsidiaries to CPI or their
Affiliates, as of the Closing shall be settled at fair value
(irrespective of the terms of payment) in the manner provided
in this Section. At least seven days prior to the Closing
Date, CPI shall prepare and deliver to Kodak a statement
setting out in reasonable detail the calculation of all such
amounts due based upon the latest available financial
information as of such date and, to the extent reasonably
requested by Kodak, provide Kodak with supporting documentation
to verify the underlying charges and transactions.
5.6 Certain Asset Sales. Kodak acknowledges that certain
assets of the Business listed on Schedule 5.2 are intended to
be sold by CPI and Fox prior to the Closing Date. CPI shall
deliver to Kodak copies of the proposed agreements of sale on
such terms and conditions as are acceptable to CPI for consent
by Kodak, which consent shall not be unreasonably withheld in
the event the consideration for such sale equals or exceeds the
liabilities retained with respect thereto. All net proceeds of
such sales shall become assets of Fox.
5.7 No Shopping. From the date of this Agreement until
the Closing Date or the earlier termination of this Agreement,
neither CPI nor Fox shall, and CPI and Fox shall direct and use
their best efforts to cause their Affiliates, employees, agents
and representatives (including, without limitation, any
investment banker, attorney or accountant retained by CPI or
Fox) not to, initiate, solicit or knowingly encourage, directly
or indirectly, any inquiries in respect of or the making of,
any Acquisition Offer (as defined below) or engage in any
<PAGE>
negotiations concerning or provide any confidential information
or data to, or have any discussions with, any Person relating
to an Acquisition Offer, or otherwise knowingly facilitate any
effort or attempt to make or implement an Acquisition Offer.
CParent will notify Kodak promptly, but in no event more than
forty eight hours thereafter, if any such inquiries or
proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be
initiated or continued with, CParent, Fox and the Subsidiaries.
The term "Acquisition Offer" means any offer or proposal for
the sale or exchange of any stock of Fox or any Subsidiary with
or to any third party, the merger or amalgamation of any of Fox
and the Subsidiaries with, or the direct or indirect
disposition of a significant amount of the assets comprising
the Business to any Person other than Kodak; provided, that the
parties acknowledge and agree that an Acquisition Offer shall
not be deemed to include any of the actions described in this
sentence to the extent that they relate to CParent itself or
Affiliates of CParent, in each case other than Fox and the
Subsidiaries.
5.8 Consents. CPI shall use its commercially reasonable
efforts to obtain, where required by the terms of the relevant
Real Estate Lease, Contract or License, consents of all
requisite parties to the consummation of the Transactions so as
to vest all of the benefits of the Real Estates Leases,
Contracts and Licenses in Fox or the Subsidiaries as of the
Closing Date. Kodak shall have the right to participate,
directly or through its representatives, in the process of
obtaining such consents; provided, that, except as otherwise
specifically required by this Agreement, no party hereto shall
be required to make any cash payment or relinquish any property
or contractual rights to obtain any such consent, approval or
authorization except for filing fees and fees and expenses of
attorneys, accountants and other professional advisors and
payments in accordance with the terms of contracts in existence
as of the date hereof. The forms of consent to be obtained
from landlords shall be subject to the prior approval of Kodak.
5.9 Pre-audit Inventory. On the Sunday immediately
preceding the Closing Date, CPI and Fox shall cause a physical
inventory to be conducted of the inventory of the Business in
connection with the preparation of the Closing Pro Forma
Balance Sheet. Such inventory shall be planned and conducted
in accordance with generally accepted auditing standards and
shall be valued as provided in Section 3.27, provided that no
value shall be attributed to any inventory with an expiration
date less than six months after the Closing Date.
<PAGE>
5.10 Transfer and Lease of the Glendale Facility. Prior
to the Closing Date, Fox shall transfer and assign to an
Affiliate other than the Subsidiaries all of its right, title
and interest in and to the real property and facility owned by
Fox and located at 9900 Manchester Road, Glendale, Missouri.
At Closing, CParent shall cause such Affiliate to enter into a
lease with Fox pursuant to which Fox shall lease the facility
at a nominal rent and on other terms and conditions acceptable
to CPI, Fox and Kodak.
5.11. Permit Transfer Requirements. Within thirty
(30) days after the date of this Agreement, CPI shall deliver
to Kodak a list of all notifications and filings required to
prevent the cancellation, termination or revocation of any of
the Permits and Environmental Permits as a result of the
consummation of the Transactions.
5.12 CPI Software License Agreement. At such time as
each of the products or systems currently under development by
CParent and its Affiliates and referred to as CPI Store
Automation System (SAS), Photo Preview (Smart Color Choice) and
Photo Proof, and CPI Photo ATM are utilized by CParent or any
of its Affiliates in a commercial or production environment
(i.e., other than solely for testing or evaluation purposes),
(a) CParent shall grant or shall cause CPI Research and
Development, Inc. to grant to Fox and the Subsidiaries a
license to use such product or system pursuant to the terms of
the CPI Software License Agreement, (b) CParent shall grant or
shall cause CPI Research and Development, Inc. to grant to
Kodak a license to use such product or system on commercially
reasonable terms and conditions, and (c) the parties shall
negotiate in good faith to agree upon and add to the CPI
Software License Agreement a royalty rate to be paid by Fox to
CPI (i) if CParent or any of its Affiliates no longer own
shares of Common Stock and (ii) if Fox sublicenses the
software, provided, however, if the parties cannot agree upon
either royalty rate, CParent shall remain obligated to grant or
cause to be granted a license to Fox and the Subsidiaries
pursuant to subsection (a) of this Section 5.12 for so long as
CParent or any of its Affiliates own any shares of Common
Stock.
ARTICLE VI
OTHER COVENANTS
6.1 HSR Filing. Kodak and CParent will promptly file, or
cause to be filed, with the United States Federal Trade
Commission ("FTC") and the Antitrust Division of the United
States Department of Justice ("Antitrust Division") pursuant to
<PAGE>
the Hart-Scott-Rodino Act ("HSR Act") the Notification and
Report required by the HSR Act, including all requisite
documents, materials and information therefor, required by the
HSR Act. Kodak, Fox and CParent shall furnish to each other
such necessary information and reasonable assistance as the
other may reasonably request in connection with its preparation
of any filing or submission as is necessary under the HSR Act,
and shall keep each other apprised of the status of any
inquiries or requests for additional information made by any
governmental authority, and shall promptly respond to any such
inquiry or request. If the FTC or the Antitrust Division
raises any objections to the Transactions under the antitrust
laws or institutes any action or proceeding seeking to prohibit
the Transactions, (a) Kodak shall cooperate and use reasonable
business efforts to satisfy the objections but Kodak shall not
be required to take any action which would materially diminish
the ongoing benefits to Kodak of the Transactions and as
contemplated in the Business Plan, in Kodak's sole judgment, or
would require Kodak to effect any divestiture of assets and may
terminate this Agreement as provided in Section 10.1 and (b)
CParent shall cooperate and use reasonable business efforts to
satisfy the objections but CParent shall not be required to
take any action which would materially diminish the ongoing
benefits to CPI of the Transactions and as contemplated in the
Business Plan, in CParent's sole judgment, or would require CPI
to effect any divestiture of assets and may terminate this
Agreement as provided in Section 10.1.
6.2 Real Estate Transfer and Environmental Transfer Laws.
CPI and Fox and, if required, Kodak shall make any necessary
filings with the appropriate governmental agencies required
under the real estate transfer and environmental transfer laws
or regulations of the jurisdictions where the Business is
conducted.
6.3 Public Announcements.
6.3.1 Prior to the Closing, Kodak and CParent shall
not (nor shall they permit any of their respective
Affiliates to), without prior consultation with, review of
and consent to any public announcement by the other
parties to this Agreement, issue any press release or make
any public announcement with respect to the transactions
contemplated in this Agreement or publicly file all or any
part of this Agreement or any Collateral Document or any
description thereof except as may be required by any
applicable law or governmental rule or regulation
(including, for this purpose, any rules of any securities
exchange on which any securities of Kodak or CPI are
traded), in which case such party shall (or shall cause
the party required to make such disclosure to), to the
<PAGE>
extent possible, allow such other party reasonable time to
review and comment on such release or announcement in
advance of its issuance and use reasonable efforts in good
faith to accept the reasonable and good faith comments of
such other party. The parties intend that the initial
announcement of the transactions contemplated by this
Agreement shall be made by joint press release of Kodak
and CParent.
6.3.2 At or following the Closing, none of Kodak,
Fox or CParent shall (and none of them shall permit any of
their Affiliates to):
(a) issue any public release or announcement
concerning the operations of Fox without
first allowing Kodak, Fox and CParent
reasonable time to review and comment on such
release or announcement and using reasonable
efforts in good faith to accept the
reasonable and good faith comments of such
other person except as may be required by any
applicable law or governmental rule or
regulation (including, for this purpose, any
rules of any securities exchange on which any
securities of Kodak or CParent are traded),
in which case such party shall (or shall
cause the party required to make such
disclosure to) allow such other party
reasonable time to review and comment on such
release or announcement in advance of its
issuance and use reasonable efforts in good
faith to accept the reasonable and good faith
comments of such other party;
(b) issue any public release or announcement or
issue or distribute any document to be used
in connection with the private or public sale
of debt or equity securities without the
prior consent of the other party if such
release, announcement or document refers to
such other party (or any of its Affiliates)
in connection with Fox, except as may be
required by any applicable law or
governmental rule or regulation (including,
for this purpose, any rules of any securities
exchange on which any securities of Kodak or
CParent are traded), in which case such party
shall (or shall cause the party required to
make such disclosure to), to the extent
possible, allow such other party reasonable
<PAGE>
time to review and comment on such release or
announcement in advance of its issuance and
use reasonable efforts in good faith to
accept the reasonable and good faith comments
of such other party; or
(c) publicly file all or any part of this
Agreement or any Collateral Document or any
description thereof, except as may be
required by any applicable law or
governmental rule or regulation (including,
for this purpose, any rules of any securities
exchange on which any securities of Kodak or
CParent are traded), in which case such party
shall (or shall cause the party required to
make such disclosure to), cooperate with the
other party to the extent reasonable and
practicable in obtaining confidential
treatment for such filing.
6.4 Taxes.
6.4.1 CPI shall cause each of Fox and the
Subsidiaries to be included in the consolidated federal Income
Tax Returns that include CPI for all periods for which they
are required to be so included, including but not limited to
the period from and including February 4, 1996 to the Closing
Date, and in any other required state, local and foreign
consolidated, affiliated, combined, unitary or other similar
group Income Tax Returns that include CParent or any Affiliate
of CParent, for all periods prior to the Closing Date for which
any member of Fox and the Subsidiaries is required to be so
included. CPI shall prepare information (including schedules,
worksheets and other data) necessary, in CPI's judgment, to
include Fox or the Subsidiaries in the Income Tax Returns for
such period. CParent shall timely prepare and file, or cause
to be prepared and filed, all Income Tax Returns of or
including Fox and its Subsidiaries for all taxable periods of
Fox and the Subsidiaries ending on or before the Closing Date
and pay, or cause to be paid, when due all Income Taxes
relating to such Tax Returns to the extent that such Taxes have
not been provided for on the Pro Forma Balance Sheet or Closing
Pro Forma Balance Sheet. CPI shall be entitled to all refunds
(including but not limited to interest with respect thereto) of
Income Taxes received by or on behalf of Fox and the
Subsidiaries relating to any period prior to the Closing Date,
and Kodak shall cause Fox or the Subsidiaries to pay, to CPI
any such refund (net of any Taxes attributable to the receipt
of such refund) promptly after receipt thereof.
<PAGE>
6.4.2 CPI shall have the right and obligation to
represent the interests of Fox or the Subsidiaries in any Tax
audit or administrative or court proceeding relating to Tax
Returns for any periods or portions thereof prior to the
Closing Date. CPI shall not agree to a settlement or
compromise of any such audit or proceeding without the prior
written consent of Kodak (which consent shall not be
unreasonably withheld).
6.4.3 Kodak shall promptly notify CPI in writing
upon receipt by Kodak or any Affiliate of Kodak of notice of
any pending or threatened Tax audits or assessments of Fox or
the Subsidiaries so long as any period or portion thereof prior
to the Closing Date remains open to the knowledge of Kodak.
CPI shall promptly notify Kodak in writing upon receipt by CPI
or any Affiliate of CPI of notice of any pending or threatened
Tax audits or assessments relating, in whole or in part, to the
income, properties or operations of Fox or the Subsidiaries.
6.4.4 After the Closing Date, Kodak and CPI shall
provide each other, and Fox shall provide CPI, with such
cooperation and information relating to Fox or the Subsidiaries
as either party reasonably may request in filing any Tax Return
(or amended Tax Return) or refund claim, determining any Tax
liability or a right to a refund, conducting or defending any
audit or other proceeding in respect of Taxes or effectuating
the terms of this Agreement. The parties shall retain, all Tax
Returns, schedules, work papers and other material documents
relating thereto, until the seventh anniversary of the Closing
Date or, if later, the expiration of any relevant statute of
limitations (and, to the extent notified by any party, any
extensions thereof) and, unless such Tax Returns and other
documents are offered and delivered to CPI or Kodak, as
applicable, until the final determination of any Tax in respect
of such years. Any information obtained under this Section 6.4
shall be kept confidential, except as may be otherwise
necessary in connection with filing any Tax Return (or amended
Tax Return) or refund claim, determining any Tax liability or a
right to a refund, conducting or defending any audit or other
proceeding in respect of Taxes or otherwise effectuating the
terms of this Agreement. Notwithstanding the foregoing,
neither CPI nor Kodak, nor any of their Affiliates, shall be
required unreasonably to prepare any document, or determine any
information not then in its possession, in response to a
request under this Section 6.4.4; provided, however, no request
shall be deemed unreasonable if made in response to the request
of a taxing authority for information on documents not in the
possession of the party receiving the request nor otherwise
reasonably available to it.
<PAGE>
6.5 Confidentiality. The letter agreement with respect
to confidentiality between CParent and Kodak, dated January 10,
1996, as amended, shall continue in effect pursuant to the
terms thereof; provided, however, that (a) the obligations
under paragraph 7 thereof shall not apply to individuals
solicited by Fox for employment after the Closing Date, (b)
from and after the Closing Date, "Material" (as defined
therein) relating solely to Fox and the Subsidiaries or the
Business shall not be subject thereto, and (c) the first
sentence of paragraph 1 thereof shall be superseded in its
entirety by the provisions of Section 6.3 of this Agreement.
6.6 Notification of Certain Matters. CPI shall give
prompt notice to Kodak, and Kodak shall give prompt notice to
CParent, of any event, occurrence or circumstance which causes
or is reasonably likely to cause: (i) any representation of
CPI or Kodak, as the case may be, contained in this Agreement
to be untrue or inaccurate in any material respect (provided,
however, if such representation or warranty is qualified by a
materiality standard such notice will be given if the
representation or warranty would be violated as written) at or
prior to the Closing, or (ii) CPI or Kodak, as the case may
be, to fail to comply with or satisfy any covenant, condition
or agreement to be satisfied or complied with by it; provided,
however, the delivery of any notice under this Section 6.6
shall not constitute a waiver by the giver or recipient of any
obligation or right or otherwise limit its remedies.
6.7 Good Faith Cooperation. Kodak, Fox and CPI will
cooperate and use reasonable business efforts to fulfill the
conditions precedent to the Closing over which they,
respectively, have control, including but not limited to
securing as promptly as possible all consents, approvals,
waivers and authorizations contemplated by this Agreement.
6.8 Insurance Proceeds. CPI will promptly pay to Fox or
the Subsidiaries any insurance proceeds received by CParent or
its Affiliates with respect to any claims made with respect to
the Business and arising after the Balance Sheet Date and prior
to the Closing Date.
6.9 Transferred Employees. Prior to the Closing, CParent
and its Affiliates shall take such steps as are necessary to
transfer, effective on the Closing Date, the employment of
those individuals listed in schedule 6.9.
6.10 Replacement of Benefit Plans. Prior to the Closing
Date, CPI and Kodak shall use reasonable business efforts to
assist Fox to establish employee benefit plans to take effect
on the Closing Date covering all employees of Fox and the
Subsidiaries (other than those employees of Proex Photo
<PAGE>
Systems, Inc. covered by existing Proex Benefit Plans)
(the "Fox Benefit Plans"), to enroll all such employees and to
have systems in place to administer such plans. The Fox Benefit
Plans shall be developed in consultation with a consultant
mutually agreed upon by Kodak and CParent and shall be
consistent with the Business Plan. On the Closing Date all
such employees shall cease to be covered by CParent Benefit
Plans and shall be covered by the Fox Benefit Plans. Fox shall
also review the Proex Benefit Plans in consultation with a
consultant mutually agreed upon by Kodak and CParent and shall
make any changes thereto deemed necessary or desireable to be
consistent with the Fox Benefits Plans and the Business Plan.
6.11 Guarantee of Affiliate Obligations. CParent
guarantees to Fox and to Kodak the performance of the
obligations of each of CParent's Affiliates under the
Collateral Documents.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions to Obligation of Kodak to Close. The
obligation of Kodak to consummate the transactions contemplated
by this Agreement on the Closing Date shall be subject to the
satisfaction or the waiver by Kodak of the following conditions
on or prior to the Closing Date:
7.1.1 Representations and Warranties; Compliance
with Agreement. The representations and warranties of CPI
set forth in this Agreement shall be true and correct in
all material respects (except to the extent that such
representation is qualified by its terms with reference to
materiality, in which case such representation shall be
true and correct as written) as of the date of this
Agreement and, except for any changes contemplated by this
Agreement, as of the Closing Date as though made on and as
of the Closing Date, CPI and Fox shall have performed all
covenants and agreements to be performed by them under
this Agreement in all material respects (except to the
extent that such covenants are qualified by its terms with
reference to materiality, in which case such covenant
shall have been performed as written) on or prior to the
Closing Date, and CPI shall have delivered to Kodak a
certificate of CParent's chief executive officer to such
effect, dated the Closing Date, in form and substance
reasonably satisfactory to Kodak and its counsel;
7.1.2 HSR Waiting Period. All applicable waiting
periods with respect to the HSR Act shall have expired or
been terminated;
<PAGE>
7.1.3 Litigation Affecting Closing. On the Closing
Date, no proceeding shall be pending or threatened before
any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief
in connection with this Agreement or the consummation of
the transactions contemplated hereby, and no investigation
that might result in any such suit, action or proceeding
shall be pending or threatened;
7.1.4 Required Consents. Any party (other than CPI,
Fox and the Subsidiaries) to any Contract, Real Estate
Lease or License whose consent is required to the sale of
the Purchased Shares to Kodak or to the operation of the
Business after Closing as contemplated by this Agreement
and the Stockholders' Agreement, shall have granted such
consent; provided, that, notwithstanding the foregoing,
this condition shall be deemed to have been satisfied
despite CPI's inability to obtain up to 10% of the
required consents with respect to the Real Estate Leases;
7.1.5 No Material Damage to Business. The Business
shall not have suffered a Material Adverse Effect and CPI
shall have delivered to Kodak a certificate of its chief
executive officer to such effect, dated the Closing Date,
in form and substance reasonably satisfactory to Kodak and
its counsel;
7.1.6 Employment Agreement. Consumer Programs
Incorporated, Fox and Theodore J. deBuhr II shall have
executed and delivered the Employment Agreement;
7.1.7 Consulting Agreement. Fox and Programs shall
have executed and delivered the Consulting Agreement;
7.1.8 CPI Trademark and Software License Agreements.
Fox, CPI Research and Development, Inc. and Programs, as
applicable, shall have executed and delivered the CPI
Trademark License Agreement and CPI Software License
Agreement;
7.1.9 Fox Supply Agreement. The Fox Supply
Agreement shall not have been terminated;
7.1.10 CPI Corp. Supply Agreement. The CPI Corp.
Supply Agreement shall not have been terminated;
7.1.11 Stockholders' Agreement. CPI and Fox shall
have executed and delivered the Stockholders' Agreement;
<PAGE>
7.1.12 Services Agreements. Programs and Fox shall
have executed and delivered the Services Agreement -
Programs and Fox shall have executed and delivered the
Services Agreement - Kodak.
7.1.13 Amended Certificate of Incorporation and
Amended By-laws. Fox shall have duly authorized, filed
and adopted the Amended Certificate of Incorporation and
Amended By-laws;
7.1.14 Termination of Guarantees of CParent
Indebtedness. All obligations of Fox and the Subsidiaries
as guarantors or otherwise with respect to indebtedness of
CParent or any of its Affiliates shall be terminated to
the satisfaction of Kodak;
7.1.15 Resignation of Officers and Directors. All
officers and directors of Fox and the Subsidiaries shall
have tendered their resignations;
7.1.16 Opinion of Counsel for CPI, Fox and the
Subsidiaries. Counsel for CPI, Fox and the Subsidiaries
shall have delivered to Kodak their opinion, dated the
Closing Date, in the form set forth in Exhibit M;
7.1.17 Replacement of Benefit Plans. Fox shall
have adopted Benefit Plans and any amendments to the Proex
Benefit Plans as provided in Section 6.10, each to be
effective as of the Closing Date;
7.1.18 Working Capital Loan. Programs shall have made
the loan to Fox represented by the Working Capital Note;
7.1.19 Pre-audit Inventory. The pre-audit inventory
described in Section 5.9 shall have been completed and
Kodak shall have received the results thereof;
7.1.20 Transfer and Lease of Glendale Facility. The
transfer of title of the Glendale, Missouri facility
described in Section 5.10 shall have been made and Fox
shall have entered into a lease acceptable to it, Kodak
and CPI for use of such facility; and
7.1.21 Other Documents. CPI or Fox shall have
delivered to Kodak such other documents and instruments as
Kodak or its counsel may reasonable request in connection
with the consummation of the transactions contemplated by
this Agreement.
7.2 Conditions to Obligations of Fox and CPI to Close.
The obligation of Fox and CPI to consummate the transactions
<PAGE>
contemplated by this Agreement on the Closing Date shall be
subject to the satisfaction or the waiver by CPI of the
following conditions on or prior to the Closing Date:
7.2.1 Representations and Warranties; Compliance
with Agreement. The representations and warranties of
Kodak set forth in this Agreement shall be true and
correct (except to the extent that such representation is
qualified by its terms with reference to materiality, in
which case such representation shall be true and correct
as written) as of the date of this Agreement and, except
for any changes contemplated by this Agreement, as of the
Closing Date as though made on and as of the Closing Date,
Kodak shall have performed all covenants and agreements to
be performed by it under this Agreement in all material
respects (except to the extent that such covenants are
qualified by its terms with reference to materiality, in
which case such covenant shall have been performed as
written) on or prior to the Closing Date, and Kodak shall
have delivered to CPI and Fox a certificate of a Vice
President of Kodak to such effect, dated the Closing Date,
which certificate shall be in form and substance
reasonably satisfactory to CPI and Fox and their counsel;
7.2.2 HSR Waiting Period. All applicable waiting
periods with respect to the HSR Act shall have expired or
been terminated;
7.2.3 Litigation Affecting Closing. On the Closing
Date, no proceeding shall be pending or threatened before
any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief
in connection with this Agreement or the consummation of
the transactions contemplated hereby, and no investigation
that might result in any such suit, action or proceeding
shall be pending or threatened;
7.2.4 Kodak Trademark and Patent License Agreements.
Kodak shall have executed and delivered the Kodak
Trademark License Agreement and the Kodak Patent License
Agreement;
7.2.5 Fox Supply Agreement . The Fox Supply
Agreement shall not have been terminated;
7.2.6 CPI Corp. Supply Agreement. The CPI Corp.
Supply Agreement shall not have been terminated;
7.2.7 Stockholders' Agreement. Kodak shall have
executed and delivered the Stockholders' Agreement;
<PAGE>
7.2.8 Services Agreements. Fox and Kodak shall have
executed and delivered the Services Agreement - Kodak;
7.2.9 Opinion of Counsel for Kodak. Counsel for
Kodak shall have delivered to CPI his opinion, dated the
Closing Date, substantially in the form set forth in
Exhibit N; and
7.2.10 Other Documents. Kodak shall have delivered
to CPI or Fox such other documents and instruments as CPI
or Fox or their counsel may reasonable request in
connection with the consummation of the transactions
contemplated by this Agreement.
ARTICLE VIII
THE CLOSING
8.1 Time and Place. The closing (the "Closing") of the
transactions contemplated hereby shall be held at 10:00 a.m.,
at the offices of White & Case, 1155 Avenue of the Americas,
New York, New York, within five (5) days after all conditions
specified in Article VII have been satisfied, or at such other
time and at such other place, as shall be mutually agreed to by
Kodak and CPI (the "Closing Date").
8.2 Conduct of Closing.
8.2.1 As to Kodak. At the Closing, Kodak shall, in
exchange for the certificates for the Purchased Shares,
deliver to CPI and its Affiliates or Fox as appropriate:
(a) The Consideration in the amount set forth in
Section 2.1 hereof;
(b) The certificate required by Section 7.2.1;
(c) A certificate dated the Closing Date and signed
on behalf of Kodak by its Secretary attaching (i) a
copy of the resolutions of the Board of Directors of
Kodak authorizing and approving this Agreement, the
Supply Agreements and the Collateral Documents and
the consummation of the Transactions and authorizing
the officers of Kodak to take any actions and to
execute all documents and instruments to be executed,
delivered or filed by it pursuant to or in connection
with this Agreement, (ii) certificates of good
standing for Kodak, certified by the Secretary of
State of New Jersey in which it was incorporated as
<PAGE>
of a date within 15 business days of the Closing
Date, and (iii) specimen signatures of the incumbent
officers of Kodak executing this Agreement and the
documents executed and delivered pursuant to or in
connection with this Agreement;
(d) The Kodak Trademark License Agreement;
(e) The Kodak Patent License Agreement;
(f) The CPI Corp. Supply Agreement;
(g) The Services Agreement - Kodak;
(h) The Stockholders' Agreement;
(i) The opinion of counsel specified in
Section 7.2.9; and
(j) Such other documents and instruments as CPI or
Fox or their counsel may reasonable request pursuant
to Section 7.2.10.
8.2.2 As to Fox and CPI. Fox and CPI or its
Affiliates, as appropriate shall deliver to Kodak or Fox,
as appropriate:
(a) The stock certificates for the Purchased Shares;
(b) The certificate required by Section 7.1.1;
(c) The certificate required by Section 7.1.5;
(d) Certificates dated the Closing Date and signed
on behalf of each of CPI, Fox and the Subsidiaries by
its Secretary or Assistant Secretary, attaching, as
appropriate, (i) a true and correct copy of Fox's
Amended Certificate of Incorporation and the
organizational documents of the Subsidiaries, (ii) a
true and correct copy of the Amended By-laws of Fox,
(iii) a certificate of good standing for CParent,
Holding, Fox and the Subsidiaries certified by the
Secretary of State of the jurisdictions of their
formation as of a date within 15 business days of the
Closing Date, (iv) a copy of the resolutions of the
Board of Directors of CParent, Holding and Fox
authorizing and approving this Agreement, the Supply
Agreements and the Collateral Documents and the
consummation of the Transactions and authorizing the
officers of CParent, Holding and Fox to take any
actions and to execute all documents and instruments
<PAGE>
to be executed, delivered or filed by it pursuant to
or in connection with this Agreement, and
(v) specimen signatures of the incumbent officers of
CPI or its Affiliates executing any documents
executed and delivered pursuant to or in connection
with this Agreement;
(e) The CPI Trademark License Agreement and the CPI
Software License Agreement;
(f) The Fox Supply Agreement;
(g) The CPI Corp. Supply Agreement;
(h) The Services Agreement - CPI Corp.;
(i) The Employment Agreement;
(j) The Consulting Agreement;
(k) The Stockholders' Agreement; and
(l) The opinion of counsel specified in
Section 7.1.16.
(m) Such other documents and instruments as Kodak or
its counsel may reasonable request pursuant to
Section 7.1.21.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival of Representations, Warranties and
Covenants. The representations and warranties of the parties
contained in this Agreement shall, notwithstanding any
investigation by or notice by or to any party prior to the
Closing Date, survive the Closing for the period set forth in
this Section 9.1. The representations and warranties of CPI
set forth in Sections 3.1, 3.2, 3.3(a), 3.5, and 3.6, shall
have no expiration date; the representations and warranties in
Section 3.25 shall survive until the end of the 90th month
following the Closing Date, the representations and warranties
in Section 3.16 shall survive until 60 days after the statute
of limitations has run for any Taxes due for periods prior to
the Closing Date; the representations and warranties in Section
3.12 shall survive until the end of the 36th month following
the Closing Date; the representations and warranties in
Section 3.24 shall survive, with respect to any transaction
that could subject Fox or Kodak to any tax or penalty under
<PAGE>
ERISA, until 60 days after the applicable statute of
limitations has run for such transaction; and the remaining
representations and warranties of CPI in this Agreement shall
survive for a period of eighteen months after the Closing Date.
The representations and warranties of Kodak set forth in
Sections 4.1, 4.2 and 4.3(a) shall have no expiration date; and
the remaining representations and warranties of Kodak shall
survive for a period of eighteen months after the Closing Date.
In the event notice of any claim for indemnification under
Section 9.4 shall have been given prior to midnight on the last
day of the applicable survival period (the "Expiration Date"),
the representations and warranties that are the subject of such
indemnification claim shall survive until the claim is finally
resolved. The covenants and agreements of the parties
contained in this Agreement shall survive until fully
performed.
9.2 Indemnification by CParent. To the extent and in the
manner herein provided, CParent shall indemnify and hold
harmless Kodak, its Affiliates (including Fox), and their
respective employees, directors, agents and representatives
(collectively, the "Kodak Indemnified Parties"), on an after-
tax basis, from and against any and all Loss and Litigation
Expense, which they or any of them may suffer or incur as a
result of or arising from any of the following: (a) any
misrepresentation or breach of warranty (determined without
regard to any materiality qualification contained in any
representation or warranty), (b) the failure of CPI or its
Affiliates to obtain all required consents with respect to the
Real Estate Leases, (c) the failure of CPI or its Affiliates
to pay any transfer taxes or costs or expenses which, pursuant
to Section 11.4, are the responsibility of CPI or Fox arising
in connection with the transactions contemplated by this
Agreement, or (d) any Indemnified Liability.
9.3 Indemnification by Kodak. From and after the Closing
Date, Kodak shall indemnify and hold harmless CPI, its
Affiliates (including Fox) and their respective employees,
directors, agents and representatives (collectively, the "CPI
Indemnified Parties"), on an after-tax basis, from and against
any and all Loss and Litigation Expense which they, or any of
them, may suffer or incur as a result of any misrepresentation
or breach of warranty of Kodak in this Agreement or the failure
of Kodak to pay any transfer taxes, costs or expenses which
pursuant to Section 11.4, are the responsibility of Kodak
arising in connection with the transactions contemplated by
this Agreement.
9.4 Procedure. Promptly after acquiring knowledge of any
Loss, or any action, suit, investigation, proceeding, demand,
assessment, audit, judgment, or claim ("Claim") which may
<PAGE>
result in a Loss, and prior to the Expiration Date, the Person
seeking indemnity under this Article IX (the "Indemnitee")
shall give written notice thereof to the party from whom
indemnity is sought (the "Indemnitor"). The Indemnitor shall
have the right, at its expense, to defend, contest or
compromise such Claim through counsel of its choice (unless
such Indemnitor is relieved of its liability hereunder with
respect to such Claim and Loss and Litigation Expense by the
Indemnitee) and shall not then be liable for fees or expenses
of the Indemnitee's attorneys (unless the Indemnitor and
Indemnitee are parties to the action and there exists a
conflict of interest between the Indemnitor and the Indemnitee,
in which event the Indemnitor will be responsible for the
reasonable fees and expenses of one firm), and the Indemnitee
and the Indemnitor shall provide to each other all necessary
and reasonable cooperation in said defense including, but not
limited to, the services of employees who are familiar with the
transactions out of which such Claim or Loss may have arisen.
In the event that the Indemnitor shall undertake to compromise
or defend any Claim, it shall promptly notify the Indemnitee of
its intention to do so. In the event that the Indemnitor,
after written notice from Indemnitee, fails to take timely
action to defend the same, the Indemnitee shall have the right
to defend the same by counsel of its own choosing, but at the
cost and expense of the Indemnitor. No settlement of a Claim
by Indemnitee shall be effected without the consent of the
Indemnitor, which shall not be unreasonably withheld or
delayed, unless Indemnitee waives any right to indemnification
therefor. The Indemnitor may, with the consent of the
Indemnitee, which shall not be unreasonably withheld, settle or
compromise any action or consent to the entry of any judgment
(i) which includes, without limitation the unconditional
release by the Person asserting the Claim and any related
claimants of Indemnitee from all liability with respect to
such Claim in form and substance reasonably satisfactory to
Indemnitee, and (ii) which would not adversely affect the right
of Indemnitee and its Affiliates to own, hold use and operate
their respective assets and businesses. CPI and Kodak shall
treat any payment under this Article IX for all Tax purposes as
an adjustment of the Consideration, except to the extent such
treatment is not permitted under applicable law.
9.5 No Subrogation. If any payment is made by or Claim
asserted against CParent or Kodak under the terms of this
Article IX, neither CParent nor Kodak shall have any rights
against Fox or any officer or employee of Fox thereof, whether
by reason of contribution, indemnification or otherwise and
neither shall take any action against Fox or any officer or
employee of Fox with respect thereto. Any rights which CParent
may have, by operation of law or otherwise against Fox are,
effective on the Closing Date, hereby expressly and knowingly
waived.
<PAGE>
9.6 No Consequential Damages. NEITHER ANY PARTY TO THIS
AGREEMENT NOR THEIR AFFILIATES SHALL BE LIABLE FOR INCIDENTAL
OR CONSEQUENTIAL DAMAGES SUFFERED BY A PARTY OR ITS AFFILIATES
WITH RESPECT TO ANY TERM OR THE SUBJECT MATTER OF THIS
AGREEMENT.
9.7 Limitations on Indemnification. Notwithstanding
anything herein to the contrary, each of the CPI Indemnified
Parties', on the one hand, and the Kodak Indemnified Parties'
on the other hand, right to indemnification shall be subject to
a limit equal to $40,000,000 (the "Cap") and shall only be
applicable with respect to Loss and Litigation Expense in
excess of $500,000 in the aggregate (the "Threshold");
provided, however, that neither the Threshold nor the Cap shall
be applicable to reduce, restrict or limit any obligation of
CParent to indemnify the Kodak Indemnified Parties from and
against any Loss or Litigation Expense which in any manner
arises out or relates to Sections 3.16 or 6.4 or any
Indemnified Liability.
ARTICLE X
TERMINATION
10.1 Events of Termination. This Agreement may be
terminated by written notice of termination at any time before
the Closing Date only as follows:
10.1.1 Mutual Consent. By mutual consent of CParent
and Kodak;
10.1.2 Breach. By CPI or Kodak if the other shall
have (a) materially misstated any representation or is in
material breach of any warranty contained herein, or (b)
materially breached any covenant, undertaking or
restriction contained herein, and such misstatement or
breach is not capable of being cured or has not been cured
by the earlier of (y) thirty (30) days after the giving of
notice to such party of such misstatement or breach or (z)
the Closing Date, and the terminating party is not in
breach of its material obligations hereunder;
10.1.3 HSR Act. By Kodak if the FTC or the
Antitrust Division require Kodak to take any actions
described in Section 6.1 (a) or by CPI if the FTC or the
Antitrust Division require CParent to take any actions
described in Section 6.1(b);
<PAGE>
10.1.4 By Either Party. Provided that the
terminating party is not in material default of any of its
agreements hereunder, by either party if the Closing does
not occur on or before December 31, 1996;or
10.1.5 Change of Control. By Kodak, if CParent has
executed an agreement with respect to or its Board of
Directors has taken action to authorize, approve or
recommend a Change of Control or a Change of Control has
been publicly announced or has occurred;
10.2 Consequences of Termination. In the event of
termination of this Agreement pursuant to the provisions of
Section 10.1, this Agreement shall have no further effect,
except for the provisions of this Section 10.2 and Sections
6.5, 11.4, 11.8, and such termination shall be without any
liability on the part of any of the parties, their Affiliates
and their respective directors, officers or stockholders in
respect of this Agreement, except for any breach of the
Agreement by such party, and termination by the other party
shall be without prejudice to its rights to recover damages for
any such breach by the breaching party; provided, however, in
the event of termination of this Agreement pursuant to the
provisions of Section 10.1.5, CPI shall, within ten days after
such termination, pay all reasonable fees and expenses incurred
by Kodak in connection with the Transactions.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement; Amendments. This Agreement and
the agreement described in Section 6.5 constitute the entire
understanding among the parties hereto with respect to the
subject matter contained herein and supersedes any prior
understandings and agreements among them respecting such
subject matter. This Agreement may be amended, supplemented,
and terminated only by a written instrument duly executed by
CPI, Fox and Kodak. Each of Kodak, Fox and CPI recognizes
that the liability and remedy provisions of this Agreement are
material to the Agreement and have been bargained for and are
reflected in the mutual promises and agreements set forth in
the Agreement.
11.2 Headings and References. The headings in this
Agreement are for convenience of reference only and shall not
affect its interpretation. Any reference in this Agreement to
an Article, Section, Schedule, schedule or Exhibit, unless it
clearly refers to another instrument, means the specified
Article, Section, Schedule, schedule or Exhibit of this
Agreement.
<PAGE>
11.3 Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity
or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any
person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid
or unenforceable provision and (b) the remainder of this
Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by
such invalidity or unenforceability.
11.4 Expenses. Except for CParent's obligation to CS
First Boston Corporation and Kodak's obligation to Lehman
Brothers Inc., neither CPI, Fox and the Subsidiaries nor Kodak
has employed any broker, finder or agent in connection with the
transactions contemplated hereby. The fees of CS First Boston
Corporations shall be paid by CPI and the fees of Lehman
Brothers Inc. shall be paid by Kodak. Certain expenses of the
parties incurred in connection with the Transactions are listed
on schedule 11.4, together with a designation of the share of
such expenses to be borne by CParent and Kodak. CParent and
Kodak will promptly provide each other with statements of
amounts paid for items listed on schedule 11.4 and any
reimbursements for shared costs as provided in schedule 11.4
shall be made within 10 days thereafter. Except as otherwise
expressly provided herein, each of CPI and Kodak shall be
responsible for its own expenses whether or not the
Transactions are consummated and Fox will not be liable for any
of CPI's or Kodak's expenses.
11.5 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given to the
person if delivered personally or upon sending a copy thereof
by first class or express mail, postage prepaid, or by telegram
(with messenger service specified), or reputable courier
services, charges prepaid, or by telecopier, to such party's
address (or to such party's telecopier):
If to Kodak, to:
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0508
Attention: David Monderer
Director, Strategic Business Investments
Telecopier: (716) 724-9023
<PAGE>
With a copy to:
General Counsel
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0208
Telecopier: (716) 724-9448
and to:
Nixon, Hargrave, Devans & Doyle llp courier:
Clinton Square 1300 Clinton Square
P.O. Box 1051 Rochester, NY 14604
Rochester, New York 14603
Attention: Deborah McLean Quinn, Esq.
Telecopier: (716) 263-1600
If to CPI, or to Fox prior to the Closing Date, to:
CPI Corp.
1706 Washington Avenue
St. Louis, Missouri 63103
Attention: Chief Executive Officer
Telecopier: (314) 231-8150
With a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
Telephone: (212) 819-8200
Telecopier: (212) 354-8113
If to Fox after the Closing Date, to:
Fox Photo, Inc.
1706 Washington Avenue
St. Louis, Missouri 63103
Attention: President
Telecopier: (314) 231-6546
With a copy to:
CPI Corp.
1706 Washington Avenue
St. Louis, Missouri 63103
Attention: Chief Executive Officer
Telecopier: (314) 231-8150
<PAGE>
and to:
General Counsel
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0208
Telecopier: (716) 724-9448
or to such other person, address or telecopy number as any of
the foregoing may have designated for that purpose by notice to
the others.
11.6 Waiver; Consents. The failure by any party to
exercise any right under, or to object to the breach by any
other party of any term, provision or condition of, this
Agreement shall not constitute a waiver thereof and shall not
preclude such party from thereafter exercising that or any
other right, or from thereafter objecting to that or any prior
or subsequent breach of the same or any other term, provision
or condition of the Agreement. Any consent granted pursuant to
this Agreement shall be in writing, executed by the person
authorized by the consenting party to receive notices, and
shall be a consent only to the transaction, act or agreement
specifically referred to in the consent and not to other
similar transactions, acts or agreements.
11.7 Assignment. This Agreement shall not be assigned by
any party without the prior written consent of the other party,
and any attempted assignment without such consent shall be
void. This Agreement shall be binding on and inure to the
benefit of the parties hereto, their successors and any
permitted assigns.
11.8 Governing Law; Jurisdiction.
11.8.1 This Agreement, including any dispute or
controversy arising out of or related to this Agreement or
the breach thereof, shall be subject to, governed by, and
construed in accordance with, the substantive and
procedural laws of the State of New York, without
reference to its principles of conflict of laws, except to
the extent the DGCL applies to Fox and CPI as
corporations formed under the laws of the State of
Delaware. Each of the parties hereto irrevocably consents
to the exclusive jurisdiction and venue of the U.S.
District Court for the Southern District of New York in
connection with any action or proceeding arising out of or
related to this Agreement, unconditionally agrees that all
claims in respect of any such suit, action or proceeding
may be heard and determined in such federal court.
<PAGE>
11.8.3 Each party hereby irrevocably and
unconditionally waives, to the fullest extent it may
legally and effectively do so, (a) any objection which it
may nor or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to
this Agreement in any federal court sitting in the
Southern District of New York, (b) the defense of an
inconvenient forum to the maintenance of such suit, action
or proceeding any such court and (c) the right to object,
with respect to such suit, action or proceeding, that such
court does not have jurisdiction over such party.
11.8.4 Each party irrevocably consents to service of
process in the manner provided for the giving of notices
pursuant to Section 11.5. Nothing in this Agreement shall
affect the right of any party to serve process in any
other manner permitted by law.
11.9 Parties in Interest. This Agreement is binding upon
and shall inure to the benefit of the parties hereto and their
successors and permitted assigns. Nothing contained in this
Agreement, express or implied, shall give any other Person any
legal or equitable right, remedy or claim under or with respect
to this Agreement or the transactions contemplated by this
Agreement except as expressly provided in Article IX.
<PAGE>
11.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute one
and the same Agreement.
IN WITNESS WHEREOF, CParent, Holding, Fox and Kodak have
caused this Agreement to be executed by their duly authorized
officers on the date first above written.
CPI Corp.
By: /s/ Alyn V. Essman
---------------------------
Name: Alyn V. Essman
Title: Chairman of the Board
Consumer Programs Holding, Inc.
By: /s/ Jane E. Nelson
---------------------------
Name: Jane E. Nelson
Title: Secretary
Fox Photo, Inc.
By: /s/ Ted de Buhr
---------------------------
Name: Ted de Buhr
Title: President
Eastman Kodak Company
By: /s/ David Biehn
---------------------------
David Biehn
Senior Vice President
<PAGE>
SCHEDULE 6.9
TRANSFERRED EMPLOYEES
1. Theodore deBuhr II
2. Such other employees of CParent and its Affiliates as may be
mutually agreed upon prior to Closing.
<PAGE>
SCHEDULE 9.2
INDEMNIFIED LIABILITIES
1. The business conducted by CPI and its Affiliates other
than the Business, including all activities relating to the
headquarters operation or corporate staff of CPI and its
Affiliates as they relate to business other than the Business.
2. The Benefit Plans for periods prior to the Closing Date,
to the extent such obligations have not been accrued for or
reserved on the Closing Pro Forma Balance Sheet.
3. The Unassumed Sections as defined in the Employment
Agreement.
4. The Asset Purchase Agreement between Fox and Wolf Camera,
Inc., dated April 15, 1996, as amended (other than the
noncompetition covenants contained therein) and the documents
and agreements executed in connection therewith.
5. Any liabilities, including for remediation, relating to
any Release or violation of Environmental Laws or Environmental
Permits related to the real property and facility in Glendale,
Missouri described in Section 5.11, other than those which
arise from contractual obligations of Kodak to Persons (other
than the parties hereto) resulting from Kodak's sale of Fox in
1987.
6 Any liabilities related to the dividend declared and paid
by Fox as of January 31, 1996 and represented by the Dividend
Note and any payments, cancellations or other transactions with
respect thereto.
7. Any liabilities related to the "Main Streets Portraits"
experimental portrait studios which were owned by Proex Photo
Systems, Inc. prior to the date of this Agreement.
8. Any liabilities, including for remediation, relating to
any Release or violation of Environmental Laws or Environmental
Permits arising out of the matters referred to on Schedule 3.25
to the extent not reserved on the Closing Pro Forma Balance
Sheet.
9. Any liabilities with respect to Proex's termination of or
failure to comply with rights of first refusal under the
agreement between Proex and PRS, Inc./Trebla for periods after
June 30, 1997.
<PAGE>
SCHEDULE 11.4
<TABLE>
EXPENSES
<CAPTION>
Estimated
Description Amount Kodak Share CPI Share
<S> <C> <C> <C>
1. Environmental Audit $50,000 Balance $25,000
2. Coopers Lybrand review $25,000 50% 50%
of Store Automation
System
3. Payments to Landlord 50% 50%
to obtain consents
4. Payments to governmental 50% 50%
agencies to transfer
Business Licenses and
Permits (including
environmental)
5. Fees for preparation of 0 100%
Closing Pro Forma
Balance Sheet
6. Fees for review of 100% 0
Closing Pro Forma
Balance Sheet
7. Fees to Deloitte & 50% 50%
Touche to resolve
objection to Closing
Pro Forma Sheet
8. UCC Searches $20,000 50% 50%
9. HSR $45,000 50% 50%
10. Payments to licensors 0 100%
to obtain consents to
assignment of Software
Licenses on Schedule
3.22 or for new
licenses or permission
to run software for
the Business
</TABLE>
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
BY-LAWS
OF
FOX PHOTO, INC.
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meetings. The annual meeting of
the stockholders for the election of directors and the
transaction of other business as may come before the meeting
shall be held each year on such day and at such hour in the
month of March, as shall be fixed by the Board of Directors.
Section 2. Special Meetings. A special meeting of
the stockholders may be called at any time by any stockholder
or by the Board of Directors or President and shall be held on
such day and at such hour as is fixed in the call of the
meeting.
Section 3. Place of Meetings. Meetings of
stockholders shall be held at the principal office of the
Corporation or at such other place, within or without the State
of Delaware, as may be fixed by the Board of Directors.
Section 4. Notice of Meetings. Whenever
stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which
shall state the place, date, and hour of the meeting and the
purpose or purposes for which the meeting is called and shall
indicate who called the meeting. A copy of the notice of any
meeting shall be given, personally or by mail, not less than
ten (10) nor more than sixty (60) days before the date of the
meeting, to each stockholder entitled to vote at the meeting.
Any meeting may be held without notice if all stockholders
entitled to vote are present in person or by proxy, or if
notice is waived in writing by all such stockholders either
before or after the meeting.
Section 5. Quorum. At each meeting of stockholders,
the holders of a majority of the shares entitled to vote
thereat, present in person or by proxy, shall constitute a
quorum for the transaction of business, provided, however, at
any time during the effectiveness of the Stockholders'
Agreement ("Stockholders' Agreement") among Eastman Kodak
Company ("Kodak"), CPI Corp.("CPI"), Consumer Programs Holding,
Inc. ("Holding") and the Corporation, dated the Closing Date
(as such term is defined in the Subscription Agreement among
<PAGE>
the same parties, dated August __, 1996) when a special meeting
is held at which action specified in Section 5.2 of the
Stockholders' Agreement will be considered, quorum shall mean
2/3 of the shares entitled to vote thereat.
Section 6. Voting. At each meeting of stockholders,
every stockholder of record shall be entitled to cast one vote
for every share of stock standing in her or his name on the
books of the Corporation on the record date. All matters shall
be determined by a majority of the votes cast, except as
otherwise provided by law, these By-Laws or the Certificate of
Incorporation, provided, however, at any time during the
effectiveness of the Stockholders' Agreement when an action
specified in Section 5.2 thereof will be considered, such
matter shall be decided by the vote of all of the shares
entitled to vote thereat.
Section 7. Action Without a Meeting. Any action
required or permitted to be taken at any annual or special
meeting of stockholders may be taken without a meeting, without
prior notice, and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the
holders of outstanding stock having not fewer than the minimum
number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote
thereon were present and voted, and except as otherwise
provided by the By-laws or the Certificate of Incorporation;
provided, however, at any time during the effectiveness of the
Stockholders' Agreement when an action specified in Section 5.2
thereof is being acted upon the consent shall be signed by the
holders of outstanding stock holding all of the shares entitled
to vote thereat and provided further, however, that nothing in
this Section 7 shall authorize the nomination, election or
removal of directors other than in accordance with the
provisions of Section 4 of the Stockholders' Agreement. Prompt
notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 8. Organization of Meetings. Meetings of
the stockholders shall be presided over by the Chairman of the
Board, if there be one, or if the Chairman of the Board is not
present, by a chairman to be chosen at the meeting. The
Secretary of the Corporation, or in the Secretary's absence, an
Assistant Secretary, if present, shall act as Secretary of the
meeting.
Section 9. Certain Approvals. At any time during
the effectiveness of the Stockholders' Agreement, the approval
of the matters set forth in Section 5.2 thereof shall be
subject to the approval requirements set forth in such
Section 5.2.
<PAGE>
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Power. The property, business
and affairs of the Corporation shall be managed under the
direction of its Board of Directors; provided, that at all
times during the effectiveness of the Stockholders' Agreement,
the authority of the Board of Directors shall be subject to
Section 4.9 and 5.2 of the Stockholders' Agreement.
Section 2. Number. The Board of Directors shall
consist of one or more members, the exact number to be fixed
from time to time by the Board of Directors, provided, however,
that at all times during the effectiveness of the
Stockholders' Agreement the full Board of Directors shall
consist of seven persons.
Section 3. Election and Term of Directors.
Directors shall be elected at the annual meeting of
stockholders and shall hold office until the next annual
meeting and until their respective successors have been elected
and qualified. At all times during the effectiveness of the
Stockholders' Agreement, Kodak shall nominate four persons to
serve as members of the Board and Holding shall nominate three
persons to serve as members of the Board. The Board of
Directors may elect a Chairman from among its number.
Section 4. Chairman of the Board. The Chairman of
the Board of Directors, if one is to be elected, shall preside
at all meetings of the Board of Directors and of the
Stockholders, and the Chairman shall have and perform such
other duties as from time to time may be assigned to the
Chairman by the Board of Directors.
Section 5. Regular Meetings. As soon as practicable
after each annual election of directors, the Board of Directors
shall meet for the purposes of organization, the election of
officers, and the transaction of other business. Other regular
meetings of the Board shall be held at such places, dates, and
hours as may be fixed from time to time by the Board of
Directors. Notice of regular meetings need not be given. At
all times during the effectiveness of the Stockholders'
Agreement, (a) there will be at least four regularly scheduled
meetings of the Board annually, at dates and places to be
agreed upon by CPI and Kodak, one of which shall be in
conjunction with the annual meeting of the Company, (b) the
annual meeting shall be held within 120 days following the end
of the Company's fiscal year, or as otherwise agreed by CPI and
Kodak, and (c) management of the Corporation shall submit, no
later than ten Business Days prior to each meeting, a proposed
<PAGE>
agenda to the Board for such meeting. Any director shall be
permitted to add items to the agenda upon notice to the
President of the Corporation and the other directors, provided
that such notice is given at least three Business Days prior to
the relevant meeting.
Section 6. Special Meetings. A special meeting of
the Board of Directors may be called by the President or by any
two directors, and shall be held at such time and place as are
fixed in the call of the meeting. Notice of each special
meeting shall be mailed to each director, addressed to the
address last given by each director to the Secretary or, if
none has been given, at the director's residence or usual place
of business, at least three days before the day on which the
meeting is to be held, or shall be sent to the director by
telegraph, cable, wireless, or similar means so addressed or
shall be delivered personally or by telephone, at least
twenty-four (24) hours before the time the meeting is to be
held. Each notice shall state the time and place of the
meeting but need not state the purposes thereof. Notices of
any such meeting need not be given to any director if waived by
him in writing or by telegraph, cable, wireless, or other form
of recorded communication or if otherwise waived as provided by
law.
Section 7. Quorum and Manner of Acting. At each
meeting of the Board of Directors the presence of a majority of
the total Board of Directors shall be required to constitute a
quorum for the transaction of business, and the vote of a
majority of the directors present at the time of the vote, if a
quorum is present at the time, shall be the act of the Board,
provided, however, that at all times during the effectiveness
of the Stockholders' Agreement, a quorum for the transaction of
business shall require the presence of at least 3 directors
nominated to the Board by Kodak and at least one director
nominated by Holding, except as otherwise provided in Section
4.5 of the Stockholders' Agreement. Members of the Board of
Directors or any committee designated by the Board may
participate in meetings by means of conference telephone or
similar communications equipment.
Section 8. Written Consent. Any action required or
permitted to be taken by the Board of Directors or any
committee of the Board may be taken without a meeting if all
members of the Board or committee consent thereto in writing
and the writing or writings are filed with the minutes of
proceedings of the Board.
Section 9. Executive and Other Committees of
Directors. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate an Executive Committee
<PAGE>
and one or more other committees, each consisting of three or
more directors of the Corporation and each having such power
and authority as the Board of Directors may by resolution
provide (except as limited by the laws of the State of
Delaware) provided, however, at any time during the
effectiveness of the Stockholders' Agreement, each committee
shall consist of either three members, two of which are
directors nominated by Kodak and one of which is a director
nominated by Holding, or five members, three of which are
directors nominated by Kodak and two of which is a director
nominated by Holding, except as otherwise provided in Section
4.8 of the Stockholders' Agreement. The Board of Directors may
authorize any such committee to exercise all or some of the
powers and authority of the Board of Directors in the
management of the property, business and affairs of the
Corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; provided,
however, that no such committee shall have the power or
authority in reference to:
(a) Amending the Certificate of Incorporation,
(b) Adopting an agreement of merger or
consolidation,
(c) Recommending to the stockholders the sale, lease
or exchange of all or substantially all of the
Corporation's property and assets,
(d) Recommending to the stockholders a dissolution
of the Corporation or a revocation of a
dissolution,
(e) Amending the By-laws of the Corporation,
(f) Declaring dividends, or
(g) Authorizing the issuance of stock.
Subject to any requirements of law, each committee shall take
action in accordance with such rules as are provided by
resolution of the Board of Directors or as the committee
members shall unanimously agree upon, provided, however, the
quorum and other provisions of the Stockholders' Agreement
shall govern at all times during the effectiveness of the
Stockholders Agreement.
Section 10. Removal. Any director may be removed,
at any time, with or without cause, by the affirmative vote of
the holders of record of a majority of outstanding shares of
stock entitled to vote at a meeting of stockholders, and any
<PAGE>
vacancy in the Board of Directors caused by any such removal
may be filled by the stockholders at said meeting in which the
vacancy is created or, if not so filled, by the Board of
Directors, provided, however, that at all times during the
effectiveness of the Stockholders' Agreement, any action to
remove a director shall be governed by Section 4.3 of the
Stockholders' Agreement.
Section 11. Vacancies. Whenever any vacancy shall
have occurred in the Board of Directors, by reason of death,
resignation or otherwise, other than removal of a director with
or without cause by a vote of the stockholders, it shall be
filled by a majority of the remaining directors, though less
than a quorum (except as otherwise provided by law), or by the
stockholders, and the person so chosen shall hold office until
the next annual election and until a successor is duly elected
and has qualified; provided, however, that at all times during
the effectiveness of the Stockholders' Agreement, any action to
fill a vacancy in the Board of Directors shall be governed by
Section 4.4 thereof.
ARTICLE III
OFFICERS
Section 1. Officers Enumerated. The officers of the
Corporation shall be a President, one or more Vice Presidents,
a Secretary, and a Treasurer, and such other officers as the
Board of Directors may in its discretion elect. Any two or
more offices may be held by the same person.
Section 2. Election, Removal and Term of Office.
All officers shall be elected by the Board of Directors at its
first meeting held after the annual meeting of stockholders.
Unless elected for a lesser term, each officer shall hold
office until the first meeting of the Board of Directors held
after the next annual meeting of the stockholders and until his
successor has been elected and qualified. Any officer may be
removed, at any time, with or without cause, by action of the
Board of Directors or by the affirmative vote of the holders of
record of a majority of outstanding stock entitled to vote at a
meeting of stockholders, and any vacancy so created shall be
filled by action of the Board of Directors or by the
stockholders at said meeting in which the vacancy is created,
provided, however, that at all times during the effectiveness
of the Stockholders' Agreement, any action to remove the
President of the Corporation without "Cause" (as defined
therein) shall be governed by Section 5.2 of the Stockholders'
Agreement.
<PAGE>
Section 3. The President. The President may be the
chief executive officer of the Corporation and shall have
general supervision of the property, business and affairs of
the Corporation, subject only to the supervision of the Board
of Directors. He shall, in the absence of the Chairman of the
Board of Directors preside at all meetings of stockholders and
of the Board of Directors. In the absence or disability of any
other officer of the Corporation, he may perform the duties of
that officer. He shall perform other such duties as the Board
of Directors may prescribe.
Section 4. The Vice Presidents. Each Vice
President, if any, shall, in the absence or incapacity of the
President and in order of seniority as fixed by the Board,
possess the powers and perform the duties of the President, and
each shall possess such other powers and perform such other
duties as the Board of Directors may prescribe.
Section 5. The Secretary. The Secretary shall issue
notice of all meetings of stockholders and of the directors
whenever notice is required. He shall keep the minutes of all
meetings of stockholders and of the Board of Directors in a
book to be kept for that purpose. He shall sign such
instruments as require his signature and shall possess such
other powers and perform such other duties as usually pertain
to his office or as the Board of Directors may prescribe.
Section 6. The Treasurer. The Treasurer shall have
the care and custody of all the moneys and securities of the
Corporation. He shall keep or cause to be kept complete and
accurate books of account of all moneys received and paid on
account of the Corporation. He shall sign such instruments as
require his signature and shall possess such other powers and
perform such other duties as usually pertain to his office or
as the Board of Directors may prescribe.
Section 7. Assistant Officers. If the Board of
Directors shall elect any Assistant Vice President, Assistant
Secretary, or Assistant Treasurer, such assistant office shall
assist the officer to whom he is assistant, shall possess that
officer's powers and perform that officer's duties in his
absence or incapacity, and shall possess such other powers and
perform such other duties as the Board of Directors may
prescribe.
<PAGE>
ARTICLE IV
GENERAL
Section 1. Seal. The seal of the Corporation shall
be in the form of a circle and shall bear the name of the
Corporation, the year of incorporation and any other matters
deemed appropriate by the Board of Directors.
Section 2. Indemnification.
(a)(1) To the full extent authorized or permitted by
law, the Corporation shall indemnify any person ("Indemnified
Person") made, or threatened to be made, a party to any
threatened, pending or completed action or proceeding, whether
civil, criminal, administrative, investigative or otherwise,
other than an action by or in the right of the Corporation, by
reason of the fact that he, his testator or intestate
("Responsible Person"), (A) is or was a director, officer,
employee or agent of the Corporation, or (B) is serving or
served, in any capacity, at the request of the Corporation,
another corporation or any partnership, joint venture, trust,
or other enterprise, against all judgments, fines, penalties,
amounts paid in settlement (provided the Corporation shall have
consented to such settlement, which consent shall not be
unreasonably withheld by it) and reasonable expenses, including
attorneys' fees and costs of investigation, incurred by such
Indemnified Person with respect to any such threatened, pending
or completed action or proceeding, and any appeal therein,
provided only that such Indemnified Person shall have acted in
good faith and in a manner the Indemnified Person reasonably
believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or
proceeding, had no reason to believe his conduct was unlawful.
(2) To the full extent authorized or permitted by
law, the Corporation shall indemnify any person ("Indemnified
Person") made, or threatened to be made, a party to any
threatened, pending or completed action or proceeding, whether
civil, criminal, administrative, investigative or otherwise, by
or in the right of the Corporation, by reason of the fact that
he, his testator or intestate ("Responsible Person"), (A) is or
was a director, officer, employee or agent of the Corporation,
or (B) is serving or served, in any capacity, at the request of
the Corporation, another corporation or any partnership, joint
venture, trust, or other enterprise, against all amounts paid
in settlement (provided the Corporation shall have consented to
such settlement, which consent shall not be unreasonably
withheld by it) and reasonable expenses, including attorneys'
fees and costs of investigation, incurred by such Indemnified
Person with respect to any such threatened, pending or
<PAGE>
completed action or proceeding, and any appeal therein,
provided only that such Indemnified Person shall have acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reason to
believe his conduct was unlawful.
(b) All expenses reasonably incurred by an
Indemnified Person in connection with a threatened, pending or
completed action or proceeding with respect to which such
person is or may be entitled to indemnification under this
Section shall be advanced or promptly reimbursed by the
Corporation to him in advance of the final disposition of such
action or proceeding, upon receipt of an undertaking by him or
on his behalf to repay the amount of such advances, if any, as
to which he is ultimately found not to be entitled to
indemnification or, where indemnification is granted, to the
extent such advances exceed the indemnification to which he is
entitled. Such person shall, however, cooperate in good faith
with any request by the Corporation that common counsel be used
by parties to such action or proceeding who are similarly
situated unless it would be inappropriate to do so because of
actual or potential conflicts between the interests of such
parties.
(c)(1) Not later than thirty (30) days following
final disposition of an action or proceeding with respect to
which the Corporation has received written request by an
Indemnified Person for indemnification pursuant to this
Section, if such indemnification has not been ordered by a
court, the Board of Directors shall meet and find whether the
Responsible Person met the standard of conduct set forth in
Section 1 of this Section, and, if it finds that he did, or to
the extent it so finds, shall authorize such indemnification.
(2) Such standard shall be found to have been met
unless (A) a judgment or other final adjudication adverse to
the Indemnified person establishes that (i) acts of the
Responsible Person were committed in bad faith or were the
result of active and deliberate dishonesty and were material to
the cause of action so adjudicated, or (ii) the Responsible
Person personally gained in fact a financial profit or other
advantage to which he was not legally entitled; or (B) if the
action or proceeding was disposed of other than by judgment or
other final adjudication, the Board finds in good faith that,
if it had been disposed of by judgment or other final
adjudication, such judgment or other final adjudication would
have been adverse to the Indemnified Person and would have
established (i) or (ii) above.
<PAGE>
(3) If indemnification is denied, in whole or part,
because of such a finding by the Board in the absence of a
judgment or other final adjudication, or because the Board
believes the expenses for which indemnification is requested to
be unreasonable, such action by the Board shall in no way
affect the right of the Indemnified Person to make application
therefor in any court having jurisdiction thereof, and in such
action or proceeding the issue shall be whether the Responsible
Person met the standard of conduct set forth in Section 2(a),
or whether the expenses were reasonable, as the case may be;
not whether the finding of the Board with respect thereto was
correct; and the determination of such issue shall not be
affected by the Board's finding. If the judgment or other
final adjudication in such action or proceeding establishes
that the Responsible Person met the standard of conduct set
forth in Section 2(a), or that the disallowed expenses were
reasonable, or to the extent that it does, the Board shall then
find such standard to have been met if it has not done so, and
shall grant such indemnification, and shall also grant to the
Indemnified Person indemnification of the expenses incurred by
him in connection with the action or proceeding resulting in
the judgment or other final adjudication that such standard of
conduct was met, or if pursuant to such court determination
such person is entitled to less than the full amount of
indemnification denied by the Corporation, the portion of such
expenses proportionate to the amount of such indemnification so
awarded.
(4) A finding by the Board that the standard of
conduct set forth in Section 2(a) has been met shall mean a
finding (A) by a majority vote of the directors who are not
parties to such action, suit or proceeding even though less
than a quorum, or, (B) if there are no such directors, or if
such directors so direct, by independent legal counsel in a
written opinion, or (C) by the stockholders.
(d) This Section shall be deemed to constitute a
contract between the Corporation and each person who serves as
a Responsible Person at any time while this Section is in
effect. No repeal or amendment of this Section, insofar as it
reduces the extent of the indemnification of any person who
could be a Responsible person, shall without his written
consent be effective as to such person with respect to any
event, act or omission occurring or allegedly occurring prior
to (1) the date of such repeal or amendment if on that date he
is not serving in any capacity for which he could be a
Responsible Person, or (2) the later of the thirtieth (30th)
day following delivery to him of such notice or the end of the
term (for whatever reason) he is serving as director, officer,
employee or agent of the Corporation or, at the request of the
Corporation, another corporation or any partnership, joint
<PAGE>
venture, trust, or other enterprise on the date of such repeal
or amendment, with respect to being a Responsible Person in
that capacity. This Section shall be binding on any successor
to the Corporation, including any corporation or other entity
which acquires all or substantially all of the Corporation's
assets.
(e) The Corporation may, but need not, maintain
insurance insuring the Corporation or Responsible Persons for
liabilities against which they are entitled to indemnification
under this Section or insuring Responsible Persons for
liabilities against which they are not entitled to
indemnification under this Section.
(f) The indemnification provided by this Section
shall not be deemed exclusive of any other rights to which any
person covered hereby may be entitled other than pursuant to
this Section. The Corporation is authorized to enter into
agreements with any such person or persons providing them
rights to indemnification or advancement of expenses in
addition to the provisions therefor in this Section to the full
extent permitted by law.
Section 3. Fiscal Year. The fiscal year of the
Corporation shall end at the close of business on December 31
of each calendar year.
ARTICLE V
AMENDMENTS
Section 1. By-Law Amendments. The By-laws of the
Corporation may be made, altered, or repealed by vote of the
stockholders at any annual meeting or at any special meeting
called for the purpose or, except as otherwise provided in
these By-laws or by law, by vote of a majority of the
authorized number of directors at any regular or special
meeting, provided, however, at any time during the
effectiveness of the Stockholders' Agreement, the amendment of
these By-laws shall be subject to Section 5.2 of the
Stockholders' Agreement.
<PAGE>
EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
FOX PHOTO, INC.
FOX PHOTO, INC., a corporation duly organized and
existing under the General Corporation Law of the State of
Delaware (the "Corporation"), was incorporated under the name
"D.Q. Holding, Inc." Its original certificate of incorporation
was filed with the Secretary of State of the State of Delaware
on March 20, 1984.
This Amended and Restated Certificate of
Incorporation was duly adopted by action of the Board of
Directors and the sole shareholder of the Corporation.
FIRST: The name of the Corporation is Fox Photo,
Inc.
SECOND: The address of the Corporation's registered
office in the State of Delaware is The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, County
of New Castle, Wilmington, Delaware 19801.
THIRD: The nature of the business or purposes to be
conducted or promoted by the Corporation is to engage in any
lawful act or activity for which a corporation may be organized
under the General Corporation Law of Delaware and to possess
and exercise all of the powers and privileges granted by such
law and any other law of the State of Delaware.
FOURTH: The total number of shares of stock which
the Corporation shall have authority to issue is Two Thousand
Forty-One (2,041), which shares shall be of one class, shall be
designated Common Stock and shall have a par value of $.01 per
share.
FIFTH: For the management of the business and for
the conduct of the affairs of the Corporation, and in further
definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders, it is
further provided that:
1. The election of the directors of the Corporation
need not be by written ballot unless the By-laws
so require; and
2. In furtherance and not in limitation of the
powers conferred by statute, the Board of
Directors is expressly authorized to make, alter
or repeal the By-laws of the Corporation unless
the By-laws otherwise require.
SIXTH: No director of the Corporation shall be held
personally liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty in his
capacity as a director, provided that liability shall not be
<PAGE>
eliminated or limited (1) for a breach of the director's duty
of loyalty to the Corporation or its stockholders, or (2) for
acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, or (3) for any
transaction from which the director derived an improper
personal benefit, or (4) for acts in violation of Section 174
of the General Corporation Law. Any repeal or amendment of
this Article, insofar as it would in any way enlarge the
liability of any director of the Corporation, shall be
ineffective with respect to any acts or omissions occurring
prior to the date of such repeal or amendment.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Incorporation on __________, 1996.
_________________________________
, President
Attest:
_____________________
, Secretary
<PAGE>
EXHIBIT C
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made as
of the ___th day of _____________, 1996 between FOX PHOTO, INC.
(the "Company") and CONSUMER PROGRAMS INCORPORATED (the
"Consultant") in connection with the Subscription Agreement
(the "Subscription Agreement"), dated August 8, 1996 among
Eastman Kodak Company, CPI Corp., the Company and Consumer
Programs Holding, Inc. and the Stockholders Agreement (the
"Stockholders' Agreement), dated ____, 1996, among those
parties. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the
Stockholders' Agreement.
WHEREAS, the Company desires to continue to have
available the experience and abilities of the Consultant in
connection with the operations of its business; and
WHEREAS, the Consultant desires to provide such
services on the terms and conditions set forth herein;
NOW, THEREFORE, the Company and the Consultant agree
as follows:
1. Services.
1.1 The Company hereby engages the Consultant
to provide executive management and operations
consulting, business development planning and review and new
marketing program research and development by key executives of
the Consultant and to take all other steps reasonably requested
to promote the Business and the Company. Such services shall
be consistent with the Business Plan of the Company (the
initial version of which is dated August 8, 1996) (the
"Business Plan") and performed under the supervision of the
President or Chief Executive Officer of the Company and subject
to the policies set by the Board of Directors of the Company.
In connection with these services, the Consultant will provide
the services of the following executives of the Consultant for
the stated portion of their full working time:
1.1.1 Alyn V. Essman, Chairman and
Chief Executive Officer -
2/3 time;
1.1.2 Russell Isaak, President -
1/3 time;
1.1.3 Patrick J. Morris, Senior
Executive Vice President -
1/3 time;
1.1.4 Edward Chase, Executive Vice
President Strategic Development - 1/3 time;
1.1.5 Barry Arthur, Executive Vice
President, Finance and Chief Financial Officer -
1/5 time;
<PAGE>
1.1.6 Fran Scheper, Executive Vice
President, Human Resources - 1/5 time; and
1.1.7 Bill Cronin, Executive Vice
President, Marketing - 1/5 time.
1.2 During the term of this Agreement, the
Consultant agrees to perform and discharge in good faith the
duties and responsibilities assigned to it and not to take any
actions contrary to the best interests of the Business and the
Company in connection with such duties and responsibilities.
The Consultant represents and warrants to the Company that
neither the Consultant nor its executives listed in Section 1.1
of this Agreement is subject to or bound by any contractual
obligation or other commitment which prohibits or limits the
ability of the Consultant or any such officer to perform the
duties under this Agreement or which is inconsistent with the
Consultant's obligations set forth in this Agreement.
2. Term. This Agreement commences on the date
hereof and ends on the date, not earlier than December 31,
1998, which is 90 days after written notice of termination
given by either party ("Expiration Date"), unless earlier
terminated as provided herein (the "Term").
3. Compensation.
3.1 The Company shall pay the Consultant $1,000,000
for each full calendar year, and a pro rata portion of that
amount for any partial calendar year (calculated by multiplying
$1,000,000 by a fraction, the numerator of which is the number
of full months in the calendar year prior to the Termination
Date as defined in Section 4.1 and the denominator of which is
12), during the Term in the event the Board of Directors of the
Company determines that the Company has substantially achieved
the strategic business steps set forth in the Business Plan for
the year in question (the "Strategic Steps Consideration").
3.2 In the event the performance goals set forth
below are achieved, the Company shall pay the Consultant
incentive compensation ("Incentive Compensation") as follows:
3.2.1 For 1996 actual performance
as compared with the Business Plan
Incentive Compensation payable in 1997 shall be:
the lesser of $2,000,000 x (Months in 1996 / 12)
or
$2,000,000 x (Months in 1996 / 12) x ((33% x (1996
AR/ 1996 BPR)) + (67% x (1996 ANI / 1996 BPNI)))
No Incentive Compensation shall be payable for 1996 in the
event actual Net Income is less than 30% of the BPNI.
3.2.2 For 1997 actual performance
as compared with the Business Plan
Incentive Compensation payable in 1998 shall be:
the lesser of $2,000,000 or
$2,000,000 x ((33% x (1997 AR /1997 BPR )) + (67% x
(1997 ANI / 1997 BPNI))).
<PAGE>
No Incentive Compensation shall be payable for 1997 in the
event Actual Net Income is less than 30% of the BPNI.
3.2.3 For 1998 actual performance
as compared with the Business Plan Incentive
Compensation for 1998 payable in 1999 shall be:
the lesser of $2,000,000 or
$2,000,000 x ((33% x (1998 AR / 1998 BPR )) + (67% x
(1998 ANI / 1998 BPNI))).
No Incentive Compensation shall be payable for 1998 in the
event actual Net Income is less than 65% of the BPNI.
3.2.4 For any years subsequent to
1998, Incentive Compensation payable shall be determined by
applying the formula set forth in Section 3.2.3 and
substituting for the 1998 information the AR and ANI from the
applicable year and the BPR and BPNI from the Business Plan for
the applicable year.
3.3 For purposes of this Section 3, "Net Income"
for any period means net income after all expenses (including
interest, depreciation and taxes) except the fees based on this
Agreement, "ANI" means actual Net Income, "BPNI" means Net
Income set forth in the Business Plan (which for 1996 is
$2,682,000, for 1997 is $10,954,000, for 1998 is $15,356,000),
"Revenue" means sales or revenues net of any sales or similar
taxes payable to governmental authorities and all returns and
credits for the period, "AR" means actual Revenues and "BPR"
means Revenues set forth in the Business Plan as "net sales"
(which for 1996 are $45,019,000, for 1997 are $177,819,000, for
1998 are $196,565,000) and the symbol "/" means divided by.
Months in 1996 means the number of full calendar months in
1996 after the Closing Date.
3.4 The Strategic Steps Compensation
earned shall be paid to the Consultant in
quarterly installments of $250,000 within 5 days after the
first meeting of the Board of Directors after delivery of
quarterly or, for the fourth quarter, annual financial
statements to the Board as provided in the Stockholders'
Agreement. The Incentive Compensation earned as a result of
the performance of the Company in the preceding calendar year,
as set forth in this Section 3, shall be paid to the Consultant
within 5 days after the first meeting of the Board of Directors
after each delivery of audited financial statements to the
Board as provided in the Stockholders' Agreement which shall be
no later than 30 days after such delivery.
4. Termination.
4.1 This Agreement shall terminate at the earlier of
the Expiration Date or, (a) upon written notice by the
Company, in the event of an occurrence described in 4.1.1,
<PAGE>
4.1.2 (provided such termination follows a Call upon a Change
of Control), 4.1.3, 4.1.4 or 4.1.5; (b) the earlier of (i) 90
days after written notice or (ii) the closing of a Put or Call
transaction in the event of an occurrence set described in
Section 4.1.2 (other than following a Change of Control); or
(c) upon written notice by the Consultant in the event of an
occurrence described in Section 4.1.6:
4.1.1 Alyn Essman, the Chief
Executive Officer of Consultant, ceases to be the
Chief Executive Officer of CPI Corp. or dies, suffers
complete disability or, because of physical or mental
illness or incapacity or otherwise, is unable for
three consecutive months to perform such duties for
an indefinite period of time;
4.1.2 a "Put Notice" or "Call
Notice" is given under the Stockholders' Agreement;
4.1.3 the Consultant commits a
material breach of this Agreement, as determined by
the Board of Directors of the Company;
4.1.4 in connection with its
duties under this Agreement, the Consultant
commits (i) any violation of law (other than a
minor infraction), (ii) a material breach of
fiduciary duty to the Company, or (iii) an act
of dishonesty, fraud or misrepresentation;
4.1.5 A "Bankruptcy Event" or
"Change of Control", as such terms are defined in the
Stockholders' Agreement, occurs with respect to the
Consultant; or
4.1.6 the Company commits a
material breach of this Agreement, as determined by
the Board of Directors of CPI Corp.
4.2 The consultancy provided for in this Agreement
shall terminate immediately upon the date set forth in Section
2 or 4.1 (the "Termination Date") without any further action
by the parties except to the extent specifically provided
herein.
4.3 Upon termination:
4.3.1 the Consultant shall return
all property of the Company as provided in Section 5
of this Agreement;
4.3.2 any unpaid compensation
which would be earned under Section 3 (without giving
effect to the limitation on the ability to earn
Incentive Compensation if Actual Net Income does not
achieve certain percentages of BPNI) shall be
calculated based on the AR and ANI for the full
months of the calendar year prior to the Termination
Date in which such termination has occurred compared
to the BPR and BPNI for the year in which termination
occurred.
<PAGE>
5. Return of Company's Property.
Immediately upon termination of this Agreement, the
Consultant shall deliver to the Company all copies of data,
information and knowledge, documents, correspondence,
notebooks, reports, computer programs owned by the Company, and
all other materials and copies thereof (including computer
discs and other electronic media) relating in any way to the
business of the Company obtained by the Consultant from the
Company solely in connection with this Agreement (and not as a
stockholder or pursuant to the Services Agreement of even date
herewith between the Company and the Consultant).
6. Miscellaneous.
6.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given to the
person if delivered personally or upon sending a copy thereof
by first class or express mail, postage prepaid, or by telegram
(with messenger service specified), or reputable courier
services, charges prepaid, or by telecopier, to such party's
address (or to such party's telecopier):
If to the Consultant:
CPI Corp.
1706 Washington Avenue
St. Louis, MO 63103
Attn. Chairman and Chief Executive Officer
Telecopier: (314) 231-8150
With a copy to:
CPI Corp.
1706 Washington Avenue
St. Louis, MO 63103
Attn. General Counsel
Telecopier (314) 231-4233
If to the Company:
Fox Photo, Inc.
1706 Washington Avenue
St. Louis, MO 63103
Attn. Chief Executive Officer
Telecopier:
With a copy to:
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0208
Attn. General Counsel
Telecopier: (716) 724-9448
<PAGE>
or to such other person, address or telecopy number as any of
the parties may designate for that purpose by notice to the
other parties.
9.2 Governing Law; Jurisdiction.
9.2.1 This Agreement, including any dispute or
controversy arising out of or related to this Agreement or the
breach thereof, shall be subject to, governed by, and construed
in accordance with, the substantive and procedural laws of the
State of New York, without reference to its principles of
conflict of laws. Each of the parties hereto irrevocably
consents to the exclusive jurisdiction and venue of the U.S.
District Court for the Southern District of New York in
connection with any action or proceeding arising out of or
related to this Agreement, unconditionally agrees that all
claims in respect of any such suit, action or proceeding may be
heard and determined in such federal court and further agrees
to be bound by and subject to the provisions of the
Stockholders' Agreement with respect to jurisdiction,venue,
service and related matters as fully as if such provisions were
set forth herein.
9.3 Entire Agreement; Amendment or Modification.
This Agreement constitutes the entire agreement of the parties
hereto with respect to the matters contained herein. No
modification or amendment of any of the provisions of this
Agreement shall be effective unless in writing and signed by
the Consultant and the Company. No failure to exercise any
right or remedy hereunder shall operate as a waiver thereof.
No term or condition of this Agreement shall be deemed to have
been waived, nor shall a party be estopped from enforcing any
provision of this Agreement, except by a statement in writing
signed by the Consultant or the Company , whichever party
against whom such waiver or estoppel is sought. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors
and assigns.
9.4 Survival. The Consultant's obligations under
Sections 4.3 and 5, and the Company's obligations under Section
4.3 will survive the termination or expiration of this
Agreement until performed or paid in full.
9.5 Headings. The paragraph and subparagraph
headings contained in this Agreement are for reference purposes
only and shall not affect the construction or interpretation of
this Agreement.
9.6 Counterparts. This Agreement may be executed in
several counterparts, and all counterparts so executed shall
constitute one agreement, binding on the parties hereto,
notwithstanding that both parties are not signatory to the
original or the same counterpart.
<PAGE>
9.7 Relationship of Parties. This Agreement or the
relationship between the parties hereunder shall not be
considered that of a joint venture or partnership under any
applicable laws, rules or regulations. Neither party shall
hold itself out as a representative or agent of the other party
nor shall either party have any right or authority to bind the
other party to any contract, or to assume or create any
obligations or responsibility, express or implied, on behalf of
or in the name of the other party.
9.8 Indemnification.
9.8.1 Except for Consultant's gross negligence,
willful misconduct, or violation of law, rule or regulation,
the Company hereby agrees to indemnify, defend and hold
Consultant harmless from and against any and all losses,
damages, suits, claims, demands, actions, fees and expenses
(including reasonable attorneys fees in any investigation,
defense or action to enforce this Agreement) that arise out of
third party claims against Consultant which relate to the
services performed by Consultant under this Agreement
(collectively, "Losses"); provided, however, the Company's
liability hereunder shall be limited to actual damages and
shall not include consequential or special damages.
9.8.2 Consultant hereby agrees to indemnify, defend
and hold the Company harmless from and against any and all
Losses that arise out of Consultant's gross negligence, willful
misconduct, or violation of law, rule or regulation.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the date first above written.
FOX PHOTO, INC.
By:
Title: _________________________
CONSUMER PROGRAMS INCORPORATED
By:____________________________
Title:___________________________
<PAGE>
EXHIBIT D
ASSIGNMENT AND AMENDMENT
OF
EMPLOYMENT AGREEMENT
This Assignment and Amendment of Employment Agreement
("Amendment") is made this __ day of ______, 1996 by and among
Consumer Programs Incorporated ("Consumer Programs"), Theodore
J. deBuhr II ("Executive") and Fox Photo, Inc. ("Fox"). This
Amendment assigns certain rights and obligations from Consumer
Programs to Fox under the Employment Agreement ("Employment
Agreement"), dated May 22, 1995, between Consumer Programs and
Executive.
WHEREAS, CPI Corp. ("CParent"), Consumer Programs
Holding, Inc. (Holding"), Fox and Eastman Kodak Company
("Kodak") have entered into a Subscription Agreement
("Subscription Agreement"), dated August 7, 1996, pursuant to
which Kodak has purchased 51% of the shares of Fox; and
WHEREAS, CParent, Holding, Fox and Kodak have entered
into a Stockholders' Agreement dated today which provides
certain agreements with respect to the ownership and governance
of Fox; and
WHEREAS, it is the contemplation of the parties that
upon consummation of the Subscription Agreement, Executive will
become an employee of Fox; and
WHEREAS, Executive is no longer a key executive of
CParent and is no longer the President of Photo Finish/Copy
Services Division;
NOW, THEREFORE, in consideration of the mutual
covenants and agreement set forth herein, the parties agree as
follows:
1. As amended by this Amendment, the Employment
Agreement is hereby assigned by Consumer Programs to Fox and
assumed by Fox except as otherwise expressly provided in this
Amendment. Executive consents to such assignment and agrees
that this assignment does not constitute a "Change of Control"
as defined in the Employment Agreement. From and after the
date hereof, all references in the Employment Agreement to
"Consumer Programs Incorporated" or "the Corporation" shall
mean Fox and all references to "CPI Corp" or "CPI" shall mean
Fox.
<PAGE>
2. Subparagraph 1(d) of the Employment Agreement is
hereby amended to read in its entirety as follows:
(c) A"Change of Control" shall mean (a) the failure
of Kodak to own, directly or indirectly, 50% or more
of the issued and outstanding shares of capital stock
of the Corporation; or (b) the consummation of
(i) any consolidation or merger of the Corporation
with any Person (other than a merger or consolidation
in which at least a majority of the voting capital
stock of the Corporation, or the surviving or
resulting entity, if other than the Corporation
(determined on a fully diluted basis), outstanding
immediately after the effective date of such merger
or consolidation is owned of record or beneficially,
directly or indirectly by Persons other than Kodak,
provided that the consolidation or merger is not with
an entity which was a wholly-owned subsidiary of
Kodak immediately before the consolidation or merger;
or (ii) any sale, lease, exchange or other transfer
(in one transaction or a series of related
transactions) of all, or substantially all, of the
assets of the Corporation; or (c) the approval of any
plan or proposal for the liquidation or dissolution
of the Corporation; or (d) any person (as such term
is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), directly or
indirectly, becoming the beneficial owner of 30% or
more of the Corporation's then outstanding common
stock (determined on a fully diluted basis), provided
that such person is not a wholly-owned subsidiary of
Kodak immediately before it becomes such 30%
beneficial owner.
3. Subparagraphs 5(c) and 5(d) of the Employment
Agreement are hereby amended to delete the clause "and its
Affiliated Companies" in each case where it appears.
4. Consumer Programs and Fox agree that Fox is not
assuming any obligation to pay the benefits which may accrue to
Executive under the terms of Sections 5(g), 5(h), 5(i), 6(d),
7 and 12 of the Employment Agreement (the "Unassumed Sections")
and Executive agrees to look solely to Consumer Programs for
payment of any amounts which may come due to him pursuant to
the Unassumed Sections. Consumer Programs agrees to indemnify
Fox against and hold harmless Fox from any loss, obligation,
claim, liability, settlement payment, award, judgment, fine,
penalty, interest charge, expense, damage or deficiency or
other charge arising out of the failure by Consumer Programs to
pay any amounts under the Unassumed Sections or as a result of
a breach thereof, measured after accounting for any insurance
<PAGE>
proceeds or other indemnification payments actually received
with respect thereto and any expenses incurred in connection
with investigating, defending or asserting any claim, action,
suit or proceeding in connection therewith, including, without
limitation, court filing fees, court costs, witness fees, and
reasonable fees and disbursements of legal counsel (including
those incurred in any action or proceeding between the parties
to this Amendment), investigators, expert witnesses,
accountants and other professionals and any taxes payable with
respect to such indemnification payments.
5. Subparagraph 13(a)(1) is hereby amended to add
the clause "and its Affiliated Companies" after the term "the
Corporation" in each place where it appears.
6. Subparagraph 13(b)(1) is hereby amended to add
the clause "and its Affiliated Companies" after the term "the
Corporation" in the eighth line thereof.
7. The address for the notices to the Corporation
in subparagraph 18(c) shall be amended to add the following:
with copies to:
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0208
Attn. General Counsel
Telecopier: (716) 724-9448
8. In each instance that Executive is described as
President, Photo Finish/Fox Division and Copy Services
Division, he shall instead be described as President, Photo
Finish/Fox Division.
<PAGE>
9. Except as expressly amended hereby, the
Employment Agreement remains in full force and effect and
Consumer Programs and Executive each certify to Fox that they
are not aware of any default thereunder.
CONSUMER PROGRAMS INCORPORATED
By: _____________________
Title:____________________
EXECUTIVE
____________________________
Theodore J. deBuhr II
FOX PHOTO, INC.
By: _____________________
Title: ____________________
<PAGE>
EXHIBIT E
SERVICES AGREEMENT
This Services Agreement is made this ______day of _______,
1996, by and between Fox Photo, Inc., a Delaware corporation,
("Fox") and Consumer Programs Incorporated, a Delaware
corporation, ("Programs").
Programs currently provides certain support and administrative
services to Fox and the Subsidiaries, and Fox desires to
continue to obtain certain of such services.
In consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1.0 Definitions
1.1 "Party" means Programs or Fox. "Parties" means
Programs and Fox.
1.2 "Subscription Agreement" means the Subscription
Agreement dated August 7, 1996 by and among CParent, Fox,
Holding and Kodak.
1.3 "Support and Administrative Services" means the
aggregate of all services set forth and described in the
Appendix hereto.
1.4 Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Subscription Agreement.
2.0 Provision of Services and Term of Agreement
2.1 Subject to Article 8.0 hereof, Programs will provide
to Fox and the Subsidiaries each of the Support and
Administrative Services from the Closing Date until
December 31, 1998.
2.2 Programs will prepare quarterly and monthly financial
statements so as to enable Fox to meet all of the requirements
of Sections 7.6(b) and (c) of the Stockholders' Agreement.
3.0 Pricing, Billing and Payment
3.1 Charges for Support and Administrative Services shall
be billed monthly by Programs at the rates set forth in the
Appendix, on the fifteenth day of the month following the month
in which such services are rendered.
<PAGE>
4.0 Warranty
4.1 Programs warrants that (i) the provision of the
Support and Administrative Services will not violate any
contractual obligation to or infringe any proprietary right of
any third party, including, without limitation, pursuant to any
software licenses, and (ii) the Support and Administrative
Services will be delivered in a manner which is consistent with
the manner they have heretofore been delivered, except as
otherwise set forth in the Appendix. Programs makes no other
warranties, express or implied, with respect to the Support and
Administrative Services, except as set forth in the Appendix.
4.2 In no event will either Party or its Affiliates be
liable to the other Party or its Affiliates for any indirect,
consequential, incidental or special damages suffered by the
other Party or its Affiliates arising out of this Agreement,
except in the event of gross negligence or willful misconduct.
5.0 Force Majeure
5.1 Programs shall not be responsible for failure or
delay in delivery of any Support and Administrative Service if
caused by an act of God or public enemy, war, government acts
or regulations, fire, flood, embargo, quarantine, epidemic,
labor stoppages beyond its reasonable control, accident,
unusually severe weather or other cause similar or dissimilar
to the foregoing beyond its reasonable control; provided,
however, that Programs shall restore such services to Fox with
the same priority as it restores comparable services for its
own operations or those of its Affiliates.
6.0 Proprietary Information and Rights
6.1 Programs and Fox each acknowledges that the other
possesses and will continue to possess information that has
been created, discovered or developed by it and/or in which
property rights have been assigned or otherwise conveyed to it,
which information has commercial value and is not in the public
domain. The proprietary information of each Party will be and
remain the sole property of such Party and its assigns. Each
Party will use the same degree of care which it normally uses
to protect its own proprietary information to prevent
disclosing to third parties the proprietary information of the
other. Neither Party will make any use of the proprietary
information of the other except as contemplated or required by
the terms of this Agreement or the Stockholders' Agreement.
Notwithstanding the foregoing, this Article will not apply to
any information which a Party can demonstrate was, at the time
of disclosure to it, in the public domain through no fault of
<PAGE>
such Party; was received after disclosure to it from a third
party who had a lawful right to disclose such information to
it; or was independently developed by the receiving Party.
7.0 Audit
7.1 Fox shall have the right, at Fox's expense, to have
an auditor, designated by Fox or Kodak, examine Programs' books
and records relating to the performance of and the charges for
the services provided hereunder, and to enable the preparation
of the Audited Financial Statements.
8.0 Termination
8.1 This is a master agreement and shall be construed as
a separate and independent agreement for each and every service
provided under this Agreement. Any termination of this
Agreement with respect to any service shall not terminate this
Agreement with respect to any other service then being provided
under this Agreement.
8.2 Any one or more of the Support and Administrative
Services may be terminated (i) upon mutual agreement of
Programs and Fox, or (ii) except as expressly provided
otherwise in any Appendix, upon ninety (90) days' advance
notice from one Party to the other Party. Notwithstanding each
party's right to terminate any one or more of the Support and
Administrative Services pursuant to Section 8.2(ii) hereof, the
parties acknowledge the importance of continuity and an orderly
transition in the delivery of such services and agree to
attempt, during the period after the giving of notice, to
renegotiate the terms of any service to satisfy the needs of
the party desiring to terminate.
8.3 Following any termination of this Agreement pursuant
to Section 8.2, Programs will cooperate in good faith with Fox
to transfer and/or retain all records, prepare and file tax
returns and take all other actions necessary to provide Fox
with sufficient information in the form requested by Fox to
make alternative service arrangements substantially consistent
with those contemplated by this Agreement; provided that any
reasonable out-of-pocket expense incurred by Programs in
connection with the Support and Administrative Services shall
be promptly billed by Programs to Fox and reimbursed by Fox to
Programs.
9.0 Precedence and Updating of Agreement
9.1 To the extent that Articles 1-19 of this Agreement
are in conflict with the Appendix, this Agreement will take
precedence.
<PAGE>
9.2 Notwithstanding the due diligence exercised by the
Parties in preparing this Agreement and the Appendices, the
complexity of the transactions related to this Agreement may
result in omissions from or inaccuracies in Appendices. Each
Party will promptly notify the other if it becomes aware of
items that were inadvertently omitted, or additional
information which, if known at the time the Appendix was
originally prepared, would have caused the Parties to have
prepared the Appendix in a different manner. The Parties will
cooperate in good faith promptly to update the Appendix as
necessary and appropriate to reflect any additional items or
information which is discovered after the execution of this
Agreement.
10.0 Relationship of Parties
10.1 The Parties are independent contractors under this
Agreement. Except as expressly set forth herein, neither Party
has the authority to, and each Party shall not, directly or
indirectly, contract any obligations of any kind in the name of
or chargeable against the other Party without such Party's
express written consent.
11.0 Assignment and Delegation
11.1 Neither Party may assign any of its rights or
obligations under this Agreement without the prior written
consent of the other Party.
12.0 Indemnification
12.1 Except for Programs' gross negligence, willful
misconduct, or violation of law, rule or regulation, Fox hereby
agrees to indemnify, defend and hold Programs harmless from and
against any and all losses, damages, suits, claims, demands,
actions, fees and expenses (including reasonable attorneys fees
in any investigation, defense or action to enforce this
Agreement) that arise out of third party claims against
Programs which are related to the services performed by Program
(collectively, "Losses") under this Agreement; provided,
however, Program's liability hereunder shall be limited to
actual damages and shall not include consequential or special
damages.
12.2 Program hereby agrees to indemnify, defend and hold
Fox harmless from and against any and all Losses that arise out
of Program's gross negligence, willful misconduct, or violation
of law, rule or regulation.
<PAGE>
13.0 Notices
13.1 All notices or other communications hereunder shall
be deemed to have been duly given and made if in writing and
(i) if served by personal delivery upon the Party for whom it
is intended, on the day so delivered, (ii) if mailed by
registered or certified mail, return receipt requested, on the
third business day following such mailing, (iii) if deposited
for delivery by a reputable courier service, on the business
day following deposit with such courier, or (iv) if sent by
electronic facsimile transmission, on the day the facsimile is
transmitted electronically, or if not a business day, the
succeeding business day, to the attention of the person at the
address set forth below, or such other address or person as may
be designated in writing hereafter, in the same manner, by such
Party:
To Programs: Consumer Programs Incorporated
1706 Washington Avenue
St. Louis, MO 63103
Facsimile:___________________________
Attention:___________________________
To Fox: Fox Photo, Inc.
1706 Washington Avenue
St. Louis, MO 63103
Facsimile:___________________________
Attention:___________________________
14.0 Entire Agreement
14.1 This Agreement, including the Appendices, contains
the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
15.0 Parties in Interest
15.1 Subject to Article 11.0 hereof, this Agreement shall
inure to the benefit of and be binding upon the Parties and
their respective successors and permitted assigns. Nothing in
this Agreement, express or implied, is intended to confer upon
any person not a Party or a party to the Stockholders'
Agreement any rights or remedies under or by reason of this
Agreement.
16.0 Governing Law
16.1 This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
<PAGE>
17.0 Headings
17.1 The heading references herein and the Schedule of
Appendices are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
18.0 Severability
18.1 The provisions of this Agreement shall be deemed
severable and the validity or enforceability of any provision
shall not affect the validity or enforceability of any other
provision hereof. If any provision of this Agreement, or the
application thereof to any person or entity or any
circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to
carry out, so far as may be valid and enforceable, the intent
and purpose of such invalid or unenforceable provision, and
(b) the remainder of this Agreement and the application of such
provision to the other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability in any jurisdiction
affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
19.0 Amendment; Waiver
19.1 Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Programs and Fox,
or in the case of a waiver, by the Party against whom the
waiver is to be effective, in each case, with respect to Fox,
subject to such approvals as are required under the
Stockholders' Agreement. No failure or delay by any Party in
exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and,
unless explicitly limited herein, not exclusive of any rights
or remedies provided by law.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be exercised and delivered by their duly authorized officers as
of the date first above written.
CONSUMER PROGRAMS INCORPORATED FOX PHOTO, INC.
By:_____________________ By:_____________________
Title: Title:
<PAGE>
Appendix to Services Agreement
SERVICES PROVIDED BY CPI CORP. FOR THE JOINT VENTURE
To be completed prior to Closing
<PAGE>
EXHIBIT F
KODAK SERVICES AGREEMENT
This Services Agreement is made this ______day of _______,
1996, by and between Fox Photo, Inc., a Delaware corporation,
("Fox") and Eastman Kodak Company, a Delaware corporation,
("Kodak").
Kodak desires to provide certain support and administrative
services to Fox and the Subsidiaries, and Fox desires to obtain
such services.
In consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1.0 Definitions
1.1 "Party" means Kodak or Fox. "Parties" means Kodak
and Fox.
1.2 "Subscription Agreement" means the Subscription
Agreement dated August 7, 1996 by and among CParent, Fox,
Holding and Kodak.
1.3 "Support and Administrative Services" means the
aggregate of all services set forth and described in the
Appendix hereto.
1.4 Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Subscription Agreement.
2.0 Provision of Services
2.1 Subject to Article 7.0 hereof, Kodak will provide to
Fox and the Subsidiaries each of the Support and Administrative
Services from and after the Closing Date.
3.0 Pricing, Billing and Payment
3.1 Charges for Support and Administrative Services shall
be billed monthly by Kodak at the rates set forth in the
Appendix, on the fifteenth day of the month following the month
in which such services are rendered.
4.0 Warranty
4.1 Kodak warrants that (i) the provision of the Support
and Administrative Services will not violate any contractual
<PAGE>
obligation to or infringe any proprietary right of any third
party, and (ii) the Support and Administrative Services will be
delivered in a workmanlike manner which is consistent with the
manner they have heretofore been delivered. Kodak makes no
other warranties, express or implied, with respect to the
Support and Administrative Services, except as set forth in the
Appendix.
4.2 In no event will either Party or its Affiliates be
liable to the other Party or its Affiliates for any indirect,
consequential, incidental or special damages suffered by the
other Party or its Affiliates arising out of this Agreement,
except in the event of gross negligence or willful misconduct.
5.0 Force Majeure
5.1 Kodak shall not be responsible for failure or delay
in delivery of any Support and Administrative Service if caused
by an act of God or public enemy, war, government acts or
regulations, fire, flood, embargo, quarantine, epidemic, labor
stoppages beyond its reasonable control, accident, unusually
severe weather or other cause similar or dissimilar to the
foregoing beyond its reasonable control; provided, however,
that Kodak shall restore such services to Fox with the same
priority as it restores comparable services for its own
operations or those of its Affiliates other than Fox.
6.0 Proprietary Information and Rights
6.1 Kodak and Fox each acknowledges that the other
possesses and will continue to possess information that has
been created, discovered or developed by it and/or in which
property rights have been assigned or otherwise conveyed to it,
which information has commercial value and is not in the public
domain. The proprietary information of each Party will be and
remain the sole property of such Party and its assigns. Each
Party will use the same degree of care which it normally uses
to protect its own proprietary information to prevent
disclosing to third parties the proprietary information of the
other. Neither Party will make any use of the proprietary
information of the other except as contemplated or required by
the terms of this Agreement or the Stockholders' Agreement.
Notwithstanding the foregoing, this Article will not apply to
any information which a Party can demonstrate was, at the time
of disclosure to it, in the public domain through no fault of
such Party; was received after disclosure to it from a third
party who had a lawful right to disclose such information to
it; or was independently developed by the receiving Party.
<PAGE>
7.0 Termination
7.1 This is a master agreement and shall be construed as
a separate and independent agreement for each and every service
provided under this Agreement. Any termination of this
Agreement with respect to any service shall not terminate this
Agreement with respect to any other service then being provided
under this Agreement.
7.2 Any one or more of the Support and Administrative
Services may be terminated upon mutual agreement of Kodak and
Fox.
7.3 Following any termination of this Agreement pursuant
to Section 7.2, Kodak will cooperate in good faith with Fox to
transfer and/or retain all records and take all other actions
necessary to provide Fox with sufficient information in the
form requested by Fox to make alternative service arrangements
substantially consistent with those contemplated by this
Agreement; provided that any reasonable out-of-pocket expense
incurred by Kodak in connection with the Support and
Administrative Services shall be promptly billed by Kodak to
Fox and reimbursed by Fox to Kodak.
8.0 Precedence and Updating of Agreement
8.1 To the extent that Articles 1-18 of this Agreement
are in conflict with the Appendix, this Agreement will take
precedence.
8.2 Notwithstanding the due diligence exercised by the
Parties in preparing this Agreement and the Appendices, the
complexity of the transactions related to this Agreement may
result in omissions from or inaccuracies in Appendices. Each
Party will promptly notify the other if it becomes aware of
items that were inadvertently omitted, or additional
information which, if known at the time the Appendix was
originally prepared, would have caused the Parties to have
prepared the Appendix in a different manner. The Parties will
cooperate in good faith promptly to update the Appendix as
necessary and appropriate to reflect any additional items or
information which is discovered after the execution of this
Agreement.
9.0 Relationship of Parties
9.1 The Parties are independent contractors under this
Agreement. Except as expressly set forth herein, neither Party
has the authority to, and each Party shall not, directly or
indirectly, contract any obligations of any kind in the name of
or chargeable against the other Party without such Party's
express written consent.
<PAGE>
10.0 Assignment and Delegation
10.1 Neither Party may assign any of its rights or
obligations under this Agreement without the prior written
consent of the other Party.
11.0 Indemnification
11.1 Except for Kodak's gross negligence, willful
misconduct, or violation of law, rule or regulation, Fox hereby
agrees to indemnify, defend and hold Kodak harmless from and
against any and all losses, damages, suits, claims, demands,
actions, fees and expenses (including reasonable attorneys fees
in any investigation, defense or action to enforce this
Agreement) (collectively, "Losses") that arise out of third
party claims against Kodak which are directly attributable to
the services performed by Kodak under this Agreement;
provided, however, Kodak's liability hereunder shall be limited
to actual damages and shall not include consequential or
special damages.
11.2 Kodak hereby agrees to indemnify, defend and hold
Fox harmless from and against any and all Losses that arise out
of Kodak's gross negligence, willful misconduct, or violation
of law, rule or regulation.
12.0 Notices
12.1 All notices or other communications hereunder shall
be deemed to have been duly given and made if in writing and
(i) if served by personal delivery upon the Party for whom it
is intended, on the day so delivered, (ii) if mailed by
registered or certified mail, return receipt requested, on the
third business day following such mailing, (iii) if deposited
for delivery by a reputable courier service, on the business
day following deposit with such courier, or (iv) if sent by
electronic facsimile transmission, on the day the facsimile is
transmitted electronically, or if not a business day, the
succeeding business day, to the attention of the person at the
address set forth below, or such other address or person as may
be designated in writing hereafter, in the same manner, by such
Party:
To Kodak: Eastman Kodak Company
343 State Street
Rochester, New York 14650
Facsimile:___________________________
Attention:___________________________
<PAGE>
To Fox: Fox Photo, Inc.
1706 Washington Avenue
St. Louis, MO 63101
Facsimile:___________________________
Attention:___________________________
13.0 Entire Agreement
13.1 This Agreement, including the Appendices, contains
the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
14.0 Parties in Interest
14.1 Subject to Article 10.0 hereof, this Agreement shall
inure to the benefit of and be binding upon the Parties and
their respective successors and permitted assigns. Nothing in
this Agreement, express or implied, is intended to confer upon
any person not a Party or a party to the Stockholders'
Agreement any rights or remedies under or by reason of this
Agreement.
15.0 Governing Law
15.1 This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
16.0 Headings
16.1 The heading references herein and the Schedule of
Appendices are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
17.0 Severability
17.1 The provisions of this Agreement shall be deemed
severable and the validity or enforceability of any provision
shall not affect the validity or enforceability of any other
provision hereof. If any provision of this Agreement, or the
application thereof to any person or entity or any
circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to
carry out, so far as may be valid and enforceable, the intent
and purpose of such invalid or unenforceable provision, and
(b) the remainder of this Agreement and the application of such
provision to the other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability in any jurisdiction
affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
<PAGE>
18.0 Amendment; Waiver
18.1 Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Kodak and Fox, or
in the case of a waiver, by the Party against whom the waiver
is to be effective, in each case, with respect to Fox, subject
to such approvals as are required under the Stockholders'
Agreement. No failure or delay by any Party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and, unless
explicitly limited herein, not exclusive of any rights or
remedies provided by law.
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be exercised and delivered by their duly authorized officers as
of the date first above written.
EASTMAN KODAK COMPANY FOX PHOTO, INC.
By:_____________________ By:_____________________
Title: Title:
<PAGE>
Appendix to Kodak Services Agreement
Appendix
1. Income Taxes
Preparation of federal and state income taxes and
tax provisions
$9,000 per month
2. Independent Accounting Audits
Estimated Cost = $7,000 per month
(Actual cost to be billed and paid directly by Fox)
3. Kodak Internal Audits
Process audits for compliance to policies and procedures.
$7,000 per month
4. Environmental Audits
Audits to check environmental and health and safety
conditions and compliance.
$5,000 per month
<PAGE>
EXHIBIT G
____________________________________
STOCKHOLDERS' AGREEMENT
AMONG
EASTMAN KODAK COMPANY
AND
CPI CORP.
AND
CONSUMER PROGRAMS HOLDING, INC.
AND
FOX PHOTO, INC.
_____________, 1996
_____________________________________
<PAGE>
TABLE OF CONTENTS
Section Page
1. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
2. Representations and Warranties. . . . . . . . . . . . . 5
2.1 Representation and Warranties of Kodak . . . . . . 5
2.2 Representations and Warranties of CPI. . . . . . . 6
3. Restrictions on Transfer of Securities. . . . . . . . . 7
4. Board . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Number; Nominations. . . . . . . . . . . . . . . . 7
4.2 Voting for Directors . . . . . . . . . . . . . . . 8
4.3 Removal of Directors . . . . . . . . . . . . . . . 8
4.4 Vacancies. . . . . . . . . . . . . . . . . . . . . 8
4.5 Action . . . . . . . . . . . . . . . . . . . . . . 8
4.6 Written Consent. . . . . . . . . . . . . . . . . . 8
4.7 Meetings . . . . . . . . . . . . . . . . . . . . . 8
4.8 Committees . . . . . . . . . . . . . . . . . . . . 9
4.9 Authority. . . . . . . . . . . . . . . . . . . . . 9
4.10 Chairman . . . . . . . . . . . . . . . . . . . . . 10
4.11 Fees and Expenses. . . . . . . . . . . . . . . . . 10
5. Stockholder Representatives and Special Stockholder Voting
Requirements . . . . . . . . . . . . . . . . . . . . . 11
5.1 Stockholder Representatives. . . . . . . . . . . . 11
5.2 Special Stockholder Voting Requirements. . . . . . 11
5.3 Written Consent. . . . . . . . . . . . . . . . . . 13
6. Officers. . . . . . . . . . . . . . . . . . . . . . . . 13
7. Financing of the Company and Financial Matters. . . . . 13
7.1 Additional Funds . . . . . . . . . . . . . . . . . 13
7.2 Access . . . . . . . . . . . . . . . . . . . . . . 14
7.3 Fiscal Year. . . . . . . . . . . . . . . . . . . . 14
7.4 Auditor. . . . . . . . . . . . . . . . . . . . . . 14
7.5 Business Plans . . . . . . . . . . . . . . . . . . 14
7.6 Financial Statements . . . . . . . . . . . . . . . 15
8. Put Rights. . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Put Notice . . . . . . . . . . . . . . . . . . . . 16
8.2 Payment Options. . . . . . . . . . . . . . . . . . 17
8.3 Closing. . . . . . . . . . . . . . . . . . . . . . 17
8.4 Other Deliveries at Closing and Further Assurances 17
(Page numbers conform to paper copy)
<PAGE>
9. Call Rights . . . . . . . . . . . . . . . . . . . . . . 17
9.1 Call Notice. . . . . . . . . . . . . . . . . . . . 17
9.2 Closing. . . . . . . . . . . . . . . . . . . . . . 18
9.3 Other Deliveries at Closing and Further Assurances 18
10. Fair Market Value . . . . . . . . . . . . . . . . . . . 19
11. Share Certificates. . . . . . . . . . . . . . . . . . . 19
11.1 Restrictive Endorsement. . . . . . . . . . . . . . 19
11.2 Replacement Certificates . . . . . . . . . . . . . 19
12. Competing Interests . . . . . . . . . . . . . . . . . . 20
12.1 Generally. . . . . . . . . . . . . . . . . . . . . 20
12.2 Specific Opportunities . . . . . . . . . . . . . . 20
13. Nonsolicitation of Employees. . . . . . . . . . . . . . 21
14. Termination . . . . . . . . . . . . . . . . . . . . . . 21
15. Indemnification . . . . . . . . . . . . . . . . . . . . 21
16. Miscellaneous . . . . . . . . . . . . . . . . . . . . . 22
16.1 Entire Agreement; Amendments . . . . . . . . . . . 22
16.2 Headings and References. . . . . . . . . . . . . . 22
16.3 Severability . . . . . . . . . . . . . . . . . . . 22
16.4 Notices. . . . . . . . . . . . . . . . . . . . . . 22
16.5 Waiver; Consents . . . . . . . . . . . . . . . . . 23
16.6 Assignment . . . . . . . . . . . . . . . . . . . . 23
16.7 Governing Law; Jurisdiction. . . . . . . . . . . . 24
16.8 Parties in Interest. . . . . . . . . . . . . . . . 24
16.9 Counterparts . . . . . . . . . . . . . . . . . . . 24
16.10 Specific Performance. . . . . . . . . . . . . . . 24
Schedules
Schedule 4.7 Meetings of the Board
Schedule 5.1 Initial Stockholder Representatives
Schedule 5.2 Permitted Stockholder Transactions
Schedule 6 Officers
Schedule 10 Valuation Procedure and Methodology
Exhibits
Exhibit A By-laws
Exhibit B Certificate of Incorporation
Exhibit C Promissory Note
(Page numbers conform to paper copy)
<PAGE>
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT, dated as of __________, 1996,
by and among Eastman Kodak Company ("Kodak"), a New Jersey
corporation, and CPI Inc. ("CParent"), a Delaware corporation,
and Consumer Programs Holding, Inc. ("Holding"), a Delaware
corporation, (CParent and Holding are sometimes collectively
herein referred to as "CPI"), and Fox Photo, Inc. (the
"Company"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, Kodak, CParent, Holding and the Company are parties
to a Subscription Agreement, dated as of August __, 1996 (the
"Subscription Agreement"); and
WHEREAS, simultaneously with the execution and delivery of
this Agreement, Kodak, CParent, Holding and the Company have
consummated the transactions contemplated by the Subscription
Agreement (the "Closing");
WHEREAS, as a result of the Closing, the Company is
authorized to issue an aggregate of 2,041 shares of Common Stock
(the "Shares"), all of which are currently issued and
outstanding;
WHEREAS, as a result of the foregoing transactions, Kodak is
the record and beneficial owner of 1,041 Shares (constituting 51%
of the issued and outstanding Shares) (the "Kodak Shares") and
Holding is the record and beneficial owner of 1,000 Shares
(constituting 49% of the issued and outstanding Shares) (the
"Holding Shares"), in each case free and clear of all options,
liens, encumbrances or charges of any kind, except this
Agreement; and
WHEREAS, CParent owns all of the issued and outstanding
shares of Holding Common Stock.
NOW, THEREFORE, in consideration of the agreements and
mutual covenants contained herein, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, terms
defined in the preamble and recitals hereto shall have the
respective meanings specified therein, and the following terms
shall have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means, with respect to any Person, any
subsidiary, officer or director of such Person and any other
<PAGE>
Person which directly or indirectly controls, is controlled by or
is under common control with such Person, whether through the
ownership of securities, by contract or otherwise.
"Audited Financial Statements" shall have the meaning
set forth in Section 7.6(a).
"Banker" shall have the meaning set forth in Section
10.1.
"Bankruptcy Event" means an event in which: (a) CParent
or Holding admits that it generally cannot pay its debts as they
become due; (b) CParent or Holding pursuant to or within the
meaning of any Bankruptcy Law (i) commences a voluntary case or
proceeding, (ii) consents to the entry of an order for relief
against it in an involuntary case or proceeding, (iii) consents
to the appointment of a Custodian of it or for all or
substantially all of its property or (iv) makes a general
assignment for the benefit of its creditors; or (c) any Person
pursuant to or within the meaning of any Bankruptcy Law
(i) commences a case or proceeding against CParent or Holding
which is not dismissed within 180 days of such commencement, or
(ii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law (A) for relief against CParent or
Holding in an involuntary case or proceeding, (B) appointing a
Custodian of CParent or Holding for all or substantially all of
its property, or (C) ordering the liquidation of CParent or
Holding, and the order or decree remains unstayed and in effect
for 90 days (the term "Bankruptcy Law" for purposes of this
definition means Title 11 U.S. Code or similar non-U.S. national,
provincial or local law for the relief of debtors and the term
"Custodian" means any receiver, trustee, liquidator or similar
official under any Bankruptcy Law).
"Board" means the Board of Directors of the Company.
"Business" means the business of the Company and its
subsidiaries as contemplated in the Business Plan, consisting of
(a) retail photofinishing and related photoprocessing,
photoimaging and image transmission operations; (b) retail sales
of photographic and photoimaging products and services related to
amateur photography; (c) development of systems, software and
techniques to expand consumer participation in the photofinishing
process; and (d) sales of photographic and photoimaging products
by professional portrait studios and other services related to
professional photography to the extent conducted by the Company
and its subsidiaries on the date hereof.
"Business Day" means any day other than a Saturday or
a Sunday or a day on which commercial banking institutions in the
City of New York are authorized to close.
<PAGE>
"Business Plan" means each three year operating plan
for the Company and its subsidiaries adopted by the Board from
time to time as described in Section 7.5 including pro forma
financial statements and funding requirements for the period
covered by such plan and a detailed operating budget for the
first year under each such plan updated on a quarterly basis as
provided in Section 7.5.
"By-laws" means the Company's Amended and Restated By-
laws attached hereto as Exhibit A.
"Call" shall have the meaning set forth in Section 9.1.
"Call Notice" shall have the meaning set forth in
Section 9.1.
"Call Shares" shall have the meaning set forth in
Section 9.1.
"Cause" means Cause as defined in the Employment
Agreement between the Company and the president of the Company or
with respect to periods from and after January 1, 1999, the
failure of the Company to meet in any material respect the
financial or strategic goals set forth in any Business Plan.
"Certificate of Incorporation" means the Company's
Amended and Restated Certificate of Incorporation attached hereto
as Exhibit B.
"Change of Control" means (a) the failure of CParent to
own, directly or indirectly, all of the issued and outstanding
shares of capital stock of Holding; or (b) the consummation of
(i) any consolidation or merger of CParent with any Person (other
than a merger or consolidation in which at least a majority of
the voting capital stock of CParent, or the surviving or
resulting entity, if other than CParent (determined on a fully
diluted basis), outstanding immediately after the effective date
of such merger or consolidation is owned of record or
beneficially by Persons who owned voting capital stock of CParent
immediately prior to such merger or consolidation and in
substantially the same proportions in which such stock was held
immediately prior to such merger or consolidation), provided that
the consolidation or merger is not with an entity which was a
wholly-owned subsidiary of CParent immediately before the
consolidation or merger; or (ii) any sale, lease, exchange or
other Transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of
CParent; or (c) the approval of any plan or proposal for the
liquidation or dissolution of CParent; or (d) any person (as such
term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), directly or indirectly,
<PAGE>
becoming the beneficial owner of 30% or more of CParent's then
outstanding common stock (determined on a fully diluted basis),
provided that such person is not a wholly-owned subsidiary of
CParent immediately before it becomes such 30% beneficial owner;
or (e) individuals who constitute CParent's board of directors on
the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election,
or nomination for election, by CParent's stockholders, was
approved by a vote of at least a majority of the directors
comprising the Incumbent Board (either by the specific vote or by
approval of the proxy statement of CParent in which such person
is named as a nominee for director, without objection to such
nomination) shall be, for purposes of this clause (d), considered
as if such person were a member of the Incumbent Board.
"Collateral Documents" means the CPI Corp. Supply
Agreement, dated August 7, 1996, between Kodak and CParent and
the Fox Supply Agreement, dated August 7, 1996, between Kodak and
the Company; and the Consulting Agreement, the Services
Agreement-Kodak, the Services Agreement-Programs, the CPI
Trademark License Agreement, the Kodak Trademark License
Agreement, the Kodak Patent License Agreement, and the CPI
Software License Agreement, each of which are exhibits to the
Subscription Agreement.
"Common Stock" means the common stock, par value $.01
per share, of the Company.
"CPI Directors" shall have the meaning set forth in
Section 4.1.
"Excess Cash Flow" means the amount by which the cash
and marketable securities of the Company reflected on the most
recent balance sheet exceeds the amount determined as follows:
(a) forecasted cash generated (used) by operations for the
succeeding twelve months as shown on the Business Plan minus (b)
forecasted capital expenditures for the succeeding twelve months
as shown on the Business Plan minus (c) $4,000,000.
"Fair Market Value" means the fair market value of the
Company as described in Section 10.
"GAAP" means generally accepted U.S. accounting
principles, as in effect from time to time.
"Holding Common Stock" means the common stock, no par
value, of Holding.
"Initial Business Plan" means the Business Plan, dated
August __, 1996, for the period from the Closing through December
31, 1999.
<PAGE>
"Kodak Directors" shall have the meaning set forth in
Section 4.1.
"Person" means and includes an individual, a
corporation, a partnership, a limited liability company, a
limited liability partnership, a joint venture, a trust, an
unincorporated association, a government or political subdivision
or agency thereof or any other entity.
"Programs" means Consumer Programs Incorporated.
"Promissory Note" shall have the meaning set forth in
Section 8.2.
"Put" shall have the meaning set forth in Section 8.1.
"Put Shares" shall have the meaning set forth in
Section 8.1.
"Put Notice" shall have the meaning set forth in
Section 8.1.
"Securities" means and includes (a) all Shares owned,
of record or beneficially, by any Stockholder, (b) all Shares
hereafter acquired, directly or indirectly, by any Stockholder
and (c) all other securities of the Company acquired by any
Stockholder by way of dividend or upon an increase, reduction,
substitution or reclassification of stock of the Company or upon
any reorganization of the Company or in any other manner.
"Securities Acts" means any applicable statute, rule,
regulation or administrative or regulatory requirement applicable
to the Transfer of securities of the Company, including the Act,
and the rules and regulations promulgated thereunder, and all
applicable state securities or "blue sky" laws.
"Stockholder" means Holding or Kodak initially and any
other Person to whom Shares are transferred in accordance with,
and who becomes a party to, this Agreement, all of whom
collectively are referred to as the "Stockholders".
"Stockholder Representatives" shall have the meaning
set forth in Section 5.1.
"Transfer" means any sale, assignment, transfer,
pledge, hypothecation, mortgage, charge, lien, encumbrance, gift,
bequest, transmission or other disposition.
2. Representations and Warranties.
2.1 Representation and Warranties of Kodak. Kodak
represents and warrants to the Company and to CPI as follows:
<PAGE>
(a) Kodak is a corporation duly organized, validly
existing and in good standing under the laws of the State of
New Jersey, and has all corporate power and authority to
carry on its business as now conducted and to execute,
deliver and perform its obligations under this Agreement in
accordance with its terms;
(b) this Agreement constitutes the valid and legally
binding obligation of Kodak, enforceable against Kodak in
accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency, and the
relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief or other equitable remedies;
(c) the execution, delivery and performance of this
Agreement by Kodak has been duly authorized by all necessary
corporate action and does not and will not (i) violate or
result in a breach of or constitute a default under any of
the organizational or constituent documents of Kodak, or any
contract, agreement, indenture, mortgage, pledge, note,
bond, license, permit or other instrument or obligation to
which Kodak is a party or by which it or any of its assets
are bound or affected or (ii) require any permit, consent,
approval or authorization of, or designation, declaration or
filing with, any governmental authority or any other person
or entity, except for those which have already been
obtained; and
(d) Kodak owns the Kodak Shares, beneficially and of
record, free and clear of all liens and encumbrances.
2.2 Representations and Warranties of CPI. CParent
and Holding, jointly and severally, represent and warrant to the
Company and to Kodak as follows:
(a) each of CParent and Holding is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate power
and authority to carry on its business as now conducted and
to execute, deliver and perform its obligations under this
Agreement in accordance with its terms;
(b) this Agreement constitutes the valid and legally
binding obligation of CPI, enforceable against CPI in
accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency, and the
relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief or other equitable remedies;
<PAGE>
(c) the execution, delivery and performance of this
Agreement by CParent and Holding has been duly authorized by
all necessary corporate action and does not and will not (i)
violate or result in a breach of or constitute a default
under any of the organizational or constituent documents of
either of them, or any contract, agreement, indenture,
mortgage, pledge, note, bond, license, permit or other
instrument or obligation to which either of them is a party
or by which either of them or any of their respective assets
are bound or affected or (ii) require any permit, consent,
approval or authorization of, or designation, declaration or
filing with, any governmental authority or any other person
or entity, except for those which have already been
obtained;
(d) Holding owns the Holding Shares, beneficially and
of record, free and clear of all liens and encumbrances; and
(e) Holding's total authorized capital stock consists
of 1,000 shares of Holding Common Stock of which 100 shares are
currently outstanding and validly issued and all of which are
owned beneficially and of record by CParent, free and clear of
all liens and encumbrances. There are no outstanding options,
warrants, conversion privileges, subscriptions, calls,
commitments or similar rights relating to the Holding Common
Stock. There are no other classes or series of capital stock or
other equity interests of Holding authorized, issued or
outstanding. All of the issued and outstanding shares of Holding
Common Stock are validly issued, fully paid and non-assessable.
3. Restrictions on Transfer of Securities. Neither
Holding nor Kodak shall Transfer any Securities other than (a) by
Holding to CParent or to a wholly owned direct or indirect
subsidiary of such Stockholder or CParent, as the case may be, so
long as such subsidiary remains a wholly owned subsidiary of such
Stockholder or CParent, as the case may be, and provided that (i)
it agrees to be bound by all of the provisions in this Agreement
to the same extent that the transferor is bound by executing and
delivering to the other Stockholder a counterpart hereto (but
such Transfer to a subsidiary shall not relieve the Stockholder
so transferring from responsibility for the performance by such
subsidiary of its obligations hereunder), (ii) if such transferee
subsidiary ceases to be a wholly owned subsidiary of such
Stockholder or CParent as the case may be, or enters into
liquidation, whether compulsorily or voluntarily, it shall prior
to doing so retransfer such Securities to such Stockholder, and
(iii) such transferee shall designate its transferor as its proxy
and agent so that Holding and Kodak shall retain the right to
vote all Securities and receive all notices given to Stockholders
under this Agreement; or (b) pursuant to the Put or the Call.
<PAGE>
4. Board. In addition to the provisions of the
Certificate of Incorporation and the By-laws, the following
provisions shall apply with respect to the Board:
4.1 Number; Nominations. The Board shall consist of
seven (7) individuals. Kodak shall nominate four (4) persons to
serve as members of the Board (the "Kodak Directors") and Holding
shall nominate three (3) persons to serve as members of the Board
(the "CPI Directors").
4.2 Voting for Directors. At each meeting of the
Stockholders for the election of directors, each Stockholder
shall vote all Securities held by such Stockholder for the
election of the seven (7) persons nominated pursuant to Section
4.1.
4.3 Removal of Directors. A Kodak Director may only
be removed by a vote of at least three (3) of the Kodak Directors
and a CPI Director may only be removed by a vote of at least two
(2) of the CPI Directors. If at any time any Stockholder
proposes to remove any director who was nominated by such
Stockholder as provided in Section 4.1, each Stockholder shall
vote all of the Securities owned by such Stockholder for such
removal if removal has been approved by the Stockholder who would
be entitled to fill a vacancy pursuant to Section 4.4.
4.4 Vacancies. If a vacancy in the Board is caused by
death, resignation, removal or any other reason, the Stockholder
who had nominated such removed director shall be entitled to
nominate a candidate to fill such vacancy and each Stockholder
shall vote all of the Securities owned by such Stockholder for
the nominee selected by Holding or Kodak, as the case may be, so
that the number of CPI Directors and Kodak Directors shall be as
provided in Section 4.1.
4.5 Action. A quorum for the taking of any action by
the Board shall require the presence when the action is taken of
at least three (3) Kodak Directors and at least one (1) CPI
Director; provided, however, if at two (2) successive Board
meetings none of the CPI Directors are present for the taking of
any action proposed by Kodak, then at the next Board meeting a
quorum for the taking of any action by the Board shall require
the presence when the action is taken of all four (4) Kodak
Directors and the presence of none of the CPI Directors shall be
required.
4.6 Written Consent. Any action by the Board may be
taken by written consent without a meeting to the extent
permitted by law, the Certificate of Incorporation and the By-
laws.
<PAGE>
4.7 Meetings. There will be at least four (4)
regularly scheduled meetings of the Board annually, at dates and
places to be agreed upon by CPI and Kodak, one of which shall be
in conjunction with the annual meeting of the Company. The
annual meeting shall be held within 120 days following the end of
the Company's fiscal year, or as otherwise agreed by CPI and
Kodak. Management of the Company shall submit, no later than ten
(10) Business Days prior to each meeting, a proposed agenda to
the Board for such meeting. Any director shall be permitted to
add items to the agenda upon notice to the President of the
Company and the other directors, provided that such notice is
given at least three (3) Business Days prior to the relevant
meeting. The first four (4) regularly scheduled meetings of the
Board immediately succeeding the date hereof shall be held on the
dates and at the times and places set forth on Schedule 4.7.
4.8 Committees. Each committee of the Board shall
consist of either (a) three (3) members, with two (2) designated
by Kodak and one (1) designated by Holding or (b) five (5)
members, with three (3) designated by Kodak and two (2)
designated by Holding. A quorum for the taking of any action by
any committee of the Board shall require the presence when the
action is taken of at least a majority of Kodak Directors and at
least one (1) CPI Director; provided, however, if at two (2)
successive committee meetings none of the CPI Directors are
present for the taking of any action proposed by Kodak, then at
the next committee meeting a quorum for the taking of any action
by the committee shall require the presence when the action is
taken of all Kodak Directors on such committee and the presence
of none of the CPI Directors on such committee shall be required.
4.9 Authority. The Board shall have such authority as
is not reserved to the Stockholders by law or by this Agreement.
In addition to any matters required by the Certificate of
Incorporation or By-laws or by law, no action may be taken by or
on behalf of the Company in connection with any of the following
matters without the prior approval of the Board:
(a) the adoption of, or any material amendment to, a
Business Plan;
(b) the establishment of any Committee of the Board or
the delegation of authority to any Person or Persons
(including a Committee of the Board) to approve the taking
of any action by the Company other than a delegation of
authority within the delegated authority of the officer or
Committee so delegating such authority and other than
matters reserved to the Board under this Section 4.9;
(c) any purchase or sale of real property by the
Company or any of its subsidiaries;
<PAGE>
(d) any lease of real property by the Company or any
of its subsidiaries (including, without limitation, any
renewal leases) with an annual base rent in excess of
$60,000 and a term exceeding three (3) years;
(e) the hiring and firing of, or entering into and
amending of, any employment contract with any officer of the
Company set forth on Schedule 6 or their successors or
entering into of any collective bargaining agreement;
(f) the compensation of executive officers of the
Company, including benefits under any incentive compensation
plan of the Company and any other benefits;
(g) the adoption of, or amendment, modification or
change in, any employee compensation or benefit plan or
incentive compensation plan of the Company, or the grant of
any rights in or benefits under any such incentive
compensation plan of the Company;
(h) the acquisition by the Company of any securities
of, or other ownership interest in, any Person, excluding
short-term investments in obligations of the United States
of America;
(i) the commencement (including by filing any
counterclaim) or settlement by the Company of any material
claim or litigation, regulatory proceeding or other dispute
in any jurisdiction;
(j) the Transfer of any proprietary information or
rights, other than nonexclusive licenses of any such rights
in the ordinary course of business to end-users without the
right to assign, relicense or sublicense;
(k) the appointment, removal or change of the
accountants or any auditors for the Company; and
(l) the adoption of, or any change in, the policies,
procedures and principles of the Company with respect to
accounting and taxation matters.
4.10 Chairman. The Chairman of the Board initially
shall be Alyn Essman, who shall be one of the initial CPI
Directors, and such Chairman shall serve until the first to occur
of (a) the next annual meeting of the Stockholders; (b) his
removal as a director as provided in the By-laws or in this
Agreement; and (c) his resignation. Thereafter, the Chairman
shall be designated by the Board. The Chairman shall have such
duties as are specified in the By-laws or specifically delegated
to him by resolution of the Board.
<PAGE>
4.11 Fees and Expenses. Directors shall not receive
any compensation from the Company for serving as directors.
Expenses of directors for attendance at Board meetings or any
committees thereof shall be the responsibility of the Stockholder
which appointed them.
5. Stockholder Representatives and Special
Stockholder Voting Requirements.
5.1 Stockholder Representatives. Holding and Kodak
shall each designate and notify the other in writing of at least
one (1), and not more than two (2), representative(s) of such
Stockholder ("Stockholder Representative(s)") (either or both of
whom may be, but neither of whom need be, a director of the
Company nominated by such Stockholder) to represent such
Stockholder in connection with the Company, and to whom
communications to such Stockholder are to be directed, and who is
or are authorized to act for such Stockholder with respect to any
matters pursuant to this Agreement (each being authorized to act
without the other unless the Stockholder designating such
Stockholder Representative specifies by written notice to the
other Stockholder that such Stockholder Representatives may only
act jointly). Any Stockholder Representative may be changed at
any time by the Stockholder who appointed him by written
notification to the other Stockholder, but such change shall not
affect the effectiveness of any action taken or approval given by
such Stockholder Representative prior to receipt by the other
Stockholder of such notification of such change. The initial
Stockholder Representatives shall be as set forth on
Schedule 5.1.
5.2 Special Stockholder Voting Requirements. At any
time during the term of this Agreement, the approval by the
affirmative vote or written consent of Holding and Kodak, acting
through their respective Stockholder Representatives, shall be
required to authorize any of the following:
(a) except as provided in Section 7.8, the payment or
declaration of any dividend on the Shares or any other
equity securities (including options or warrants) of the
Company or the redemption, purchase or other acquisition for
value (or the payment into or setting aside for a sinking
fund for such purpose) of any of the Shares or any other
equity securities of the Company, or the application of any
of the Company's assets to the redemption, retirement,
purchase or acquisition, directly or indirectly, through
subsidiaries or otherwise, of any of the Shares or other
equity securities of the Company;
<PAGE>
(b) any incurrence or assumption or permitting to
exist of or permitting or causing any subsidiary of the
Company to incur or assume or permit to exist any
indebtedness for borrowed money (including capitalized
leases) in excess of $2,500,000 in the aggregate, other than
as contemplated by the Initial Business Plan, or the
issuance or redemption of any debt securities or the
assumption, guarantee or endorsement of liabilities of any
other Person, other than such issuances, redemptions,
guarantees or endorsements which individually or in the
aggregate are not material;
(c) permitting or causing the Company, or any
subsidiary of the Company, to engage in any line of business
outside of the Business;
(d) any authorization or issuance of any equity
securities of the Company, or any of its subsidiaries,
including any preferred stock or, options, warrants or other
securities convertible into or exchangeable or exercisable
for such equity securities;
(e) any amendment or repeal of any provision of, the
addition of any provision to, or the waiver of any provision
of the Company's Certificate of Incorporation or By-laws, or
causing or permitting any subsidiary of the Company to do
the same;
(f) the entering into of any transaction by the
Company or any of its subsidiaries with any Stockholder or
Affiliate of any Stockholder, whether pursuant to a written
contract or otherwise, other than the transactions provided
for under the Collateral Documents or as permitted pursuant
to Schedule 5.2 or amending any of the Collateral Documents
or causing or permitting any subsidiary of the Company to do
any of the foregoing;
(g) the Transfer of any assets of the Company or of
any of its subsidiaries with an aggregate original cost in
respect of any one transaction or series of related
transactions in excess of $2,500,000 other than as
contemplated by the Initial Business Plan;
(h) the purchase, lease or hire of any asset
(including real property) by the Company or any of its
subsidiaries with an aggregate cost in respect of any one
transaction or series of related transactions in excess of
$2,500,000, other than as contemplated by the Initial
Business Plan;
<PAGE>
(i) any acquisition of the Company by means of a
merger or consolidation of the Company or any of its
subsidiaries with or into any other Person or the
consolidation or merger of any other Person with or into the
Company or any of its subsidiaries (other than a mere
reincorporation transaction or a transaction between the
Company and any of its subsidiaries which does not
materially adversely affect the rights and obligations of
the parties hereto);
(j) (A) the Company or any of its subsidiaries lending
money, extending credit or making advances to any Person
(other than a wholly owned subsidiary of the Company) in
excess of $2,500,000 or not in the ordinary course of
business, or (B) the Company or any of its subsidiaries
purchasing or acquiring any securities of, or any other
interest in, or making any capital contribution to, any
other Person (other than a wholly owned subsidiary) in
respect of any one transaction or series of related
transactions in excess of $2,500,000;
(k) the removal of the president of the Company other
than for Cause;
(l) the dissolution or the adoption of a plan of
liquidation of the Company or any of its subsidiaries having
net assets in excess of $2,500,000;
(m) any action by the Company or any of its
subsidiaries, or by CParent, Holding or Kodak with respect
to the Company or any of its subsidiaries, to commence any
case, proceeding or other action (A) under any Bankruptcy
Law, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement,
adjustment, winding up, liquidation, dissolution,
composition or other relief with respect to it or its debts,
or (B) seeking appointment of a Custodian for it or for all
or any substantial part of its assets, or making a general
assignment for the benefit of its creditors; or
(n) any public offering of securities of the Company
or any of its subsidiaries.
5.3 Written Consent. Any action by the Stockholders
may be taken by written consent without a meeting to the extent
permitted by law, the Certificate of Incorporation and By-laws;
provided, however, that nothing in this Section 5.3 shall
authorize the nomination, election or removal of directors other
than in accordance with the provisions of Section 4.
<PAGE>
6. Officers. All officers of the Company shall be
employees of the Company and shall not be employees of or
independent contractors to CParent, Holding, Kodak or any of
their respective Affiliates. Immediately following the execution
of this Agreement, CPI shall cause the CPI Directors and Kodak
shall cause the Kodak Directors to elect the individuals set
forth on Schedule 6 to the office set forth opposite their names
on such Schedule, commencing on the date hereof and continuing
until the first to occur of the next annual meeting of the
Stockholders of the Company or their removal, except as otherwise
provided in Section 5.2(k), by a majority vote of the Board or
their resignation or their ceasing to be employed by the Company
for any reason whatsoever.
7. Financing of the Company and Financial Matters.
7.1 Additional Funds. Neither CParent, Holding nor
Kodak shall be required to provide any equity or debt capital to
the Company or any of its subsidiaries.
7.2 Access. CPI and Kodak and their respective
representatives and advisors shall have access to, and the right
to review, records of the Company at all times. Such right shall
be exercised so as not to unreasonably interfere with the conduct
of the Company's business. CPI and Kodak shall have no right of
access to, or right to review, the records of the other, except
as provided under the Subscription Agreement or the Collateral
Documents.
7.3 Fiscal Year. The fiscal year of the Company shall
be the calendar year.
7.4 Auditor. The accounting firm auditing the
Company's financial statements shall be appointed annually by the
Board, and shall be the firm which is designated by Kodak.
7.5 Business Plans.
(a) Immediately following the execution of this
Agreement, CPI shall cause the CPI Directors and Kodak shall
cause the Kodak Directors to adopt the Initial Business
Plan.
(b) During September 1997 and each September
thereafter, management of the Company shall propose a
Business Plan to the Board for its consideration and
approval. Each proposed Business Plan shall be in the
format of the Initial Business Plan and shall include (i)
the categories of information reflected therein for the
period covered by the Business Plan and (ii) an annual
operating plan setting forth a monthly forecast for next
<PAGE>
calendar year. At least 15 days prior to the commencement
of each calendar quarter, the annual operating plan shall be
updated to add monthly forecasts for an additional calendar
quarter so that the plan covers a rolling 12-month period.
(c) When a Business Plan is approved as provided in
Section 4.9(a), the Company shall thereafter implement such
Business Plan in the operation of the Business. The Company
shall not operate under any Business Plan not so approved,
and if the Business Plan for any period is not approved by
the beginning of a fiscal year, or calendar quarter, as the
case may be, the Company shall continue to operate under the
latest approved Business Plan until a new Business Plan is
approved. The Company shall not take any action that
conflicts with or departs from the Business Plan then in
effect without the prior approval of the Board and, to the
extent required by Section 5.2, the Stockholders.
7.6 Financial Statements.
(a) Annual Statements. As soon as practicable
following the end of each fiscal year (and in any event not
later than sixty (60) days after the end of such fiscal
year), the Company shall prepare and deliver to each member
of the Board and to each Stockholder audited consolidated
and consolidating balance sheets of the Company as of the
end of such fiscal year and the related audited consolidated
and consolidating statements of operations and stockholders'
equity for such fiscal year (or similar statements if such
statements change as the result of changes in GAAP),
together with appropriate notes to such consolidated
financial statements, and in each case setting forth in
comparative form the corresponding figures for the preceding
fiscal year and for the budget for the fiscal year just
completed ("collectively, the "Audited Financial
Statements"). The Audited Financial Statements shall be
accompanied by the report of the Company's accountants to
the effect that the Audited Financial Statements (except for
the comparison to the budget) have been prepared in
conformity with GAAP applied on a basis consistent with
prior years (except for the comparison to the budget) have
been prepared in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise specified
in such report) and that the audit of the Audited Financial
Statements has been performed in accordance with GAAP. The
Company shall conduct its business so that such report of
its accountants shall not contain any qualifications as to
the scope of the audit or with respect to the Company's
compliance with GAAP consistently applied, except for
changes in methods of accounting in which such accountants
concur.
<PAGE>
(b) Quarterly Statements. As soon as practicable
following the end of each fiscal quarter (and in any event
not later than three (3) Business Days after the end of such
fiscal quarter), the Company shall prepare and deliver to
each member of the Board and to each Stockholder
consolidated and consolidating balance sheets of the Company
as of the end of such fiscal quarter and the related
consolidated and consolidating statements of operations,
stockholders' equity and cash flows of the Company for such
fiscal quarter and for the fiscal year to date in each case
setting forth in comparative form the corresponding figures
for the preceding fiscal quarter, for the fiscal quarter of
the prior fiscal year corresponding to the fiscal quarter
just completed and for the budget for such fiscal quarter
and for the fiscal year to date. Such consolidated
financial statements shall be accompanied by a certificate
of the principal accounting or financial officer of the
Company to the effect that such consolidated financial
statements have been prepared under such officer's
supervision and that, although such financial statements do
not contain the footnotes and other disclosures required to
be presented in interim financial statements by GAAP, such
financial statements, in such officer's judgment, fairly
present the financial condition and results of operations of
the Company as of the date and for the periods indicated,
subject to normal recurring year-end audit adjustments.
(c) Monthly Statements. As soon as practicable
following the end of each calendar month (and in any event
not later than three (3) Business Days after the end of such
month), the Company shall prepare and deliver to each member
of the Board consolidated and consolidating balance sheets
of the Company as of the end of such month and the related
consolidated and consolidating statements of operations,
stockholders equity and cash flows of the Company for such
month and for the fiscal year to date (or similar statements
if such statements change as a result of changes in GAAP)
together with a revised estimate of the results of
operations for such fiscal year, in each case setting forth
in comparative form the corresponding figures for the budget
for the fiscal year to date.
7.7 Other Reports and Inspection. The Company shall
furnish promptly to any Stockholder such documents, reports,
financial data and information as such Stockholder may reasonably
request.
7.8 Excess Cash Flow. At the first Board meeting
after each delivery of Audited Financial Statements to the Board,
the Board shall declare and, within five (5) days thereafter, the
Company shall pay a dividend on the Shares in an aggregate amount
<PAGE>
equal to the Excess Cash Flow. Commencing with the first fiscal
quarter of 1998, at the first Board meeting following delivery of
the quarterly financial statements required by Section 7.6(b) for
the first three quarters of each year, the Board shall declare
and, within five (5) days thereafter, the Company shall pay a
dividend on the Shares in an aggregate amount equal to the Excess
Cash Flow.
8. Put Rights.
8.1 Put Notice. CPI may, by notice to Kodak and the
Company (a "Put Notice"), irrevocably elect to require Kodak to
purchase (a "Put") all (but not less than all) of the Securities
owned by Holding, CParent or a wholly owned direct or indirect
subsidiary of Holding or CParent (the "Put Shares") at any time
from and after January 1, 1999: for the greater of (i)
$53,900,000 and (ii) forty nine percent (49%) of (A) the Fair
Market Value minus (B) $30,000,000; provided, however, if the
Final Equity Valuation determined as provided in Schedule 10
("Final Equity Valuation") is an amount that is higher than the
Fair Market Value proposed by CPI in the Put Notice, the Fair
Market Value for purposes of this Section 8.1 shall be the Fair
Market Value proposed by CPI in the Put Notice and if the Final
Equity Valuation is lower than the Fair Market Value contained in
Kodak's Counteroffer (as defined in Schedule 10), the Fair Market
Value for purposes of this Section 8.1 shall be the Fair Market
Value proposed in Kodak's Counteroffer.
8.2 Payment Options. Kodak shall have the option to
pay that portion, if any, of the purchase price of the Put Shares
which exceeds $53,900,000 (the "Excess Amount") either in cash,
by delivery of a promissory note to Holding in the original
principal amount equal to that portion of the purchase price of
the Put Shares which exceeds $53,900,000, or part in cash and the
balance by delivery of a promissory note to Holding. The
promissory note shall be substantially in the form of Exhibit C
(the "Promissory Note").
8.3 Closing. The closing of any Put transaction shall
take place at a place and on a date mutually agreed upon by CPI
and Kodak which shall not be later than the latest to occur of
(a) January 1, 1999, (b) sixty (60) days after Kodak has received
the Put Notice and (c) fifteen (15) days after CPI and Kodak
shall have agreed upon the Fair Market Value or received the
Final Equity Valuation, as the case may be. On the closing date,
Kodak will pay for the Put Shares by wire transfer to Holding of
all cash portions of the purchase price, including any Excess
Amount, to the extent Kodak elects, in accordance with
Section 8.2, to pay such Excess Amount in cash, and by delivery
of a Promissory Note duly executed by Kodak in the required
principal amount to the extent Kodak elects, in accordance with
<PAGE>
Section 8.2, not to pay the Excess Amount in cash. Kodak will be
entitled to receive representations and warranties from CPI
regarding the sale of the Put Shares customary in similar
transactions, including but not limited to, a representation that
Holding has good and marketable title to the Put Shares, free and
clear of all liens, claims and other encumbrances.
8.4 Other Deliveries at Closing and Further
Assurances. At or prior to the closing of a Put transaction and
as a condition to Kodak's obligation to close a Put transaction,
CPI shall deliver to Kodak resignations of the CPI Directors, in
each case without any claim for damages or compensation with
respect to any CPI Director's service or resignation as a
director of the Company and CPI shall cause CPI Research and
Development, Inc. to deliver to Kodak the source code and system
documentation referred to in Section 3.4 of each CPI Software
License Agreement in effect at such time. CPI and Kodak shall do
all or procure to be done all such acts and things as may be
necessary to give full effect to the Transfer of the Put Shares
and the registration thereof in the name of Kodak. If, in
respect of any sale of the Put Shares, Kodak tenders payment in
full for said Put Shares and CPI fails to deliver to Kodak all
appropriate forms of Transfer within the time provided for
closing, CPI irrevocably appoints Kodak as its attorney with full
power to execute, complete and deliver in the name of and on
behalf of CPI the Transfer of all of the Put Shares and, upon
execution and registration of such Transfer, Kodak shall make
payment in full in respect thereof to Holding.
9. Call Rights.
9.1 Call Notice. Kodak may, by notice to CPI and the
Company (a "Call Notice"), elect to purchase (a "Call") all (but
not less than all) of the Securities owned by Holding, CParent or
a wholly owned direct or indirect subsidiary of Holding or
CParent (the "Call Shares") (a) at any time after the date hereof
and prior to January 1, 1999 upon the occurrence of a Change of
Control after the date hereof or if a Change of Control has
occurred after the date of the Subscription Agreement and prior
to the date hereof or a Bankruptcy Event for $53,900,000, or
(b) at any time from and after January 1, 1999, for the greater
of (i) $53,900,000 and (ii) forty nine percent (49%) of (A) the
Fair Market Value minus (B) $30,000,000; provided, however, the
parties agree that if the Final Equity Valuation determined as
provided in Schedule 10 ("Final Equity Valuation") is an amount
that is lower than the Fair Market Value proposed by Kodak in the
Call Notice, the Fair Market Value for purposes of this
Section 9.1 shall be the Fair Market Value proposed by Kodak in
the Call Notice and if the Final Equity Valuation is higher than
the Fair Market Value contained in CPI's Counteroffer, the Fair
Market Value for purposes of this Section 9.1 shall be the Fair
Market Value proposed in CPI's Counteroffer.
<PAGE>
9.2 Closing. The closing of any Call transaction shall
take place at a place and on a date mutually agreed upon by CPI
and Kodak which shall not be later than fifteen (15) days after
CPI and Kodak have agreed upon the Fair Market Value or received
the Final Equity Valuation, as the case may be; provided,
however, in the event of a Call Notice pursuant to
Section 9.1(b), the Closing shall be no earlier than
January 1, 1999. On the closing date, Kodak will pay for the
Call Shares by wire transfer of the purchase price to Holding.
Kodak will be entitled to receive representations and warranties
from CPI regarding the sale of the Call Shares customary in
similar transactions, including but not limited to a
representation that Holding has good and marketable title to the
Call Shares to be transferred, free and clear of all liens,
claims and other encumbrances.
9.3 Other Deliveries at Closing and Further
Assurances. At or prior to the closing of a Call transaction and
as a condition to Kodak's obligation to close a Call transaction,
CPI shall deliver to Kodak resignations of the CPI Directors, in
each case without any claim for damages or compensation with
respect to any CPI Director's service or resignation as a
director of the Company and CPI shall cause CPI Research and
Development, Inc. to deliver to Kodak the source code and system
documentation referred to in Section 3.4 of each CPI Software
License Agreement in effect at such time. CPI and Kodak shall do
all or procure to be done all such acts and things as may be
necessary to give full effect to the Transfer of the Call Shares
and the registration thereof in the name of Kodak. If, in
respect of any sale of the Call Shares, Kodak tenders payment in
full for said Call Shares and CPI shall have failed to deliver to
Kodak all appropriate forms of Transfer within the time provided
for closing, CPI hereby irrevocably appoints Kodak as its
attorney with full power to execute, complete and deliver in the
name of and on behalf of CPI the Transfer of all of the Call
Shares and, upon execution and registration of such Transfer,
Kodak shall make payment in full in respect thereof to CPI.
10. Fair Market Value.
The Fair Market Value shall be determined as of the
date of the Put Notice or Call Notice, as the case may be, by the
procedure and methodology set forth on Schedule 10.
11. Share Certificates.
11.1 Restrictive Endorsement. Each certificate
representing Securities shall be stamped with legends in
substantially the following form:
<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMENT, DATED AS OF ____________, 1996, COPIES
OF WHICH ARE AVAILABLE AT THE OFFICE OF THE COMPANY AND MAY BE
INSPECTED BY ANY PROSPECTIVE TRANSFEREE OF THE SHARES REPRESENTED
HEREBY ON REQUEST. SUCH STOCKHOLDERS' AGREEMENT PROVIDES, AMONG
OTHER THINGS, FOR CERTAIN RESTRICTIONS ON THE SALE, ASSIGNMENT,
TRANSFER, PLEDGE, HYPOTHECATION, MORTGAGE, CHARGE, LIEN,
ENCUMBRANCE, GIFT, BEQUEST, TRANSMISSION OR OTHER DISPOSITION OF
THE SHARES REPRESENTED BY THIS CERTIFICATE."
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAW OF ANY
STATE OR OTHER JURISDICTION. THESE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER
THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER, SALE,
PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES
LAW OF ANY STATE OR OTHER JURISDICTION OR (II) THERE IS AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE
CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE AND THAT
SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH
APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.
Each Stockholder will deliver all certificates for Securities
owned by it to the Company for the purpose of affixing such legend
thereto.
11.2 Replacement Certificates. Upon presentation of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any certificate representing
Securities and indemnity agreement reasonably satisfactory to the
Company, and upon reimbursement to the Company of all its
reasonable expenses incident thereto, and upon surrender of such
certificate or instrument, if mutilated, to the Company, each
Stockholder agrees to use his or its best efforts to cause the
Company to deliver a new certificate of like tenor in lieu of such
lost, stolen, destroyed or mutilated certificate.
12. Competing Interests.
12.1 Generally. The Company, CPI and Kodak acknowledge
that each of CPI and Kodak has or may develop interests or
businesses which may compete, directly or indirectly, with the
Business as now conducted or which in the future may be conducted
by the Company and that each member of the Board will likely be an
employee of CParent or one of its Affiliates or Kodak or one of its
Affiliates with duties and obligations to his employer.
Accordingly, except as expressly provided in any of the
<PAGE>
Subscription Agreement, this Agreement, the Collateral Documents or
any other written agreement between or among CParent, Holding,
Kodak, their Affiliates and the Company:
(a) none of CPI, Kodak or their respective designated
members of the Board shall be obligated to reveal to the other or
the Company any confidential, proprietary or other business
information belonging or relating to the business, finances or
prospects of the Stockholder and its Affiliates (other than the
Company) or, except as expressly provided in Section 12.2, to offer
any business opportunity to the Company;
(b) none of CPI, Kodak or their respective designated
members of the Board shall be obligated to take, except as
expressly provided in Section 12.2, or approve any action which
prefers the interest of the Company over that of the Stockholder or
its Affiliates (other than the Company) or to act other than in the
best interests of the Stockholder and its Affiliates (other than
the Company); and
(c) each of CPI, Kodak and the Company waives any claim
or cause of action against each other and each member of the Board
that may arise in respect of a breach of duty to the Company by
such Person as a result of a conflict of interest between the
Company and the Stockholder or its Affiliates.
12.2 Specific Opportunities. If (a) any CPI Director or
CPI Stockholder Representative becomes aware of any bona fide
opportunity presented to CParent, Holding or any of their
Affiliates or (b) any Kodak Director, any Kodak Stockholder
Representative, the Vice President, Corporate Business Development
of Kodak or the President, Consumer Imaging of Kodak becomes aware
of any bona fide opportunity presented to Kodak, for the
acquisition of control and a controlling interest (by purchase of
more than fifty percent (50%) of the voting capital stock or other
voting equity interest, asset purchase, merger, consolidation,
exchange or otherwise) of any business located in the United States
engaged primarily in retail photofinishing operations (but not
including operations primarily engaged in professional portraiture
operations) which are not operated as a department of or within a
larger retail operation, e.g., a mass merchant, drug store,
department store, appliance store, supermarket or other multiple
category retailer (an "Opportunity"), CPI or Kodak, as the case
may be, shall provide notice of the Opportunity (the "Notice") to
the Stockholder Representative(s) as soon as practicable after the
CPI Director or CPI Stockholder Representative or the Kodak
Director, Kodak Stockholder Representative, Vice President,
Corporate Business Development of Kodak, or President, Consumer
Imaging of Kodak as the case may be, becomes aware of the
Opportunity, subject to any restrictions imposed on CParent,
Holding, Kodak or any of their respective Affiliates to maintain
<PAGE>
confidential information regarding the Opportunity. If the
Opportunity has been disclosed subject to a confidentiality
agreement, the Stockholder receiving the Opportunity shall use its
good faith reasonable efforts to secure the right to disclose the
Opportunity to the Company and the other Stockholder. If the
Stockholder Representative(s) for the Stockholder who did not
receive the Opportunity (the "Non-Presenting Stockholder") believes
the Opportunity is one which the Company should pursue, within five
(5) days after he receives the Notice, he shall call a Board
meeting to consider the Opportunity, which shall be held within ten
(10) days after the date he receives the Notice. If the Non-
Presenting Stockholder does not call a Board meeting within such
time, or if, within thirty (30) days after presentation of the
Opportunity to the Board, the Board determines in good faith not to
pursue the Opportunity for any reason whatsoever, or if the Board
authorizes pursuit of the Opportunity within such time period and
at any time thereafter determines in good faith to terminate such
authorization, the other Stockholder or any of its Affiliates shall
be entitled to pursue the Opportunity on any terms and conditions
and without any time limitations, even if such terms and conditions
are different from those, if any, presented in the Notice.
13. Nonsolicitation of Employees. So long as either
CParent, Holding or a wholly owned direct or indirect subsidiary of
Holding or CParent on the one hand and Kodak or a wholly owned
direct or indirect subsidiary of Kodak on the other hand are
Stockholders, neither CParent, Holding nor Kodak shall, without the
Company's prior written consent, directly or indirectly, solicit,
induce, recruit or encourage any employee or officer of the Company
or its subsidiaries to leave his employment.
14. Termination. This Agreement automatically shall
terminate upon the closing of a Put transaction pursuant to Section
8.3 or Call transaction pursuant to Section 9.2.
15. Indemnification. Each of CPI and Kodak shall
indemnify and hold harmless the other and their respective
employees, Affiliates (other than the Company) and agents from and
against any and all damages, losses, costs and expenses (including
reasonable attorneys' and other professional fees and expenses
incurred in connection with third party claims or enforcing this
Agreement) which any of them may incur by reason of the failure of
CParent or Holding on the one hand and Kodak on the other hand to
fulfill any of the terms or conditions of this Agreement, or by
reason of any breach of the representations and warranties made by
CParent or Holding on the one hand and Kodak on the other hand in
this Agreement. NEITHER ANY PARTY TO THIS AGREEMENT NOR THEIR
AFFILIATES SHALL BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES
SUFFERED BY A PARTY OR ITS AFFILIATES WITH RESPECT TO ANY TERM OR
THE SUBJECT MATTER OF THIS AGREEMENT.
16. Miscellaneous.
<PAGE>
16.1 Entire Agreement; Amendments. This Agreement and
the Subscription Agreement and the exhibits and schedules hereto
and thereto constitute the entire understanding among the parties
hereto with respect to the subject matter contained herein and
supersedes any prior understanding and agreements among them
respecting such subject matter. This Agreement may be amended,
supplemented, and terminated only by a written instrument duly
executed by CPI, Kodak and the Company. In the event of any
inconsistency between the provisions of this Agreement and the
terms of any Business Plan, the provisions of this Agreement, as
amended from time to time, shall govern.
16.2 Headings and References. The headings in this
Agreement are for convenience of reference only and shall not
affect its interpretation. Any reference in this Agreement to an
Article, Section, Schedule or Exhibit, unless it clearly refers to
another instrument, means the specified Article, Section, Schedule
or Exhibit of this Agreement.
16.3 Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of
any provision shall not affect the validity or enforceability of
the other provisions hereof. If any provision of this Agreement,
or the application thereof to any person or entity or any
circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose
of such invalid or unenforceable provision and (b) the remainder of
this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such
invalidity or unenforceability.
16.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given to the
person if delivered personally or upon sending a copy thereof by
first class or express mail, postage prepaid, or by telegram (with
messenger service specified), or reputable courier services,
charges prepaid, or by telecopier, to such party's address (or to
such party's telecopier):
If to Kodak, to its Stockholder Representative(s) at the
address or telecopier specified in Schedule 5.1;
With a copy to:
General Counsel
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0208
Telecopier: (716) 724-9448
<PAGE>
and to
Deborah McLean Quinn, Esq.
Nixon, Hargrave, Devans & Doyle llp
Clinton Square courier:
P.O. Box 1053 1300 Clinton Square
Rochester, New York 14603 Rochester, NY 14604
Telecopier: (716) 263-1600
If to CParent or Holding, to CPI's Stockholder
Representative(s) at the address or telecopier specified in
Schedule 5.1;
With a copy to:
William F. Wynne, Jr., Esq.
White & Case
1155 Avenue of the Americas
New York, New York 10036-2787
Telecopier: (212) 354-8113
If to the Company:
Fox Photo, Inc.
1706 Washington Avenue
St. Louis, Missouri 63103
Attn: President
Telecopier: (314) 231-6546
or to such other person, address or telecopy number as any of the
parties may designate for that purpose by notice to the other
parties.
16.5 Waiver; Consents. The failure by any party to
exercise any right under, or to object to the breach by any other
party of any term, provision or condition of, this Agreement shall
not constitute a waiver thereof and shall not preclude such party
from thereafter exercising that or any other right, or from
thereafter objecting to that or any prior or subsequent breach of
the same or any other term, provision or condition of the
Agreement. Any consent granted pursuant to this Agreement shall be
in writing, executed by the person authorized by the consenting
party to receive notices, and shall be a consent only to the
transaction, act or agreement specifically referred to in the
consent and not to other similar transactions, acts or agreements.
16.6 Assignment. This Agreement shall not be assigned by
any party without the prior written consent of the other parties,
and any attempted assignment without such consent shall be void.
This Agreement shall be binding on and inure to the benefit of the
parties hereto, their successors and any permitted assigns.
<PAGE>
16.7 Governing Law; Jurisdiction.
16.7.1 This Agreement, including any dispute or
controversy arising out of or related to this Agreement or the
breach thereof, shall be subject to, governed by, and
construed in accordance with, the substantive and procedural
laws of the State of New York, without reference to its
principles of conflict of laws, except to the extent the
Delaware General Corporation Law applies to the Company and
CPI as corporations formed under the laws of the State of
Delaware. Each of the parties hereto irrevocably consents to
the exclusive jurisdiction and venue of the U.S. District
Court for the Southern District of New York in connection with
any action or proceeding arising out of or related to this
Agreement, unconditionally agrees that all claims in respect
of any such suit, action or proceeding may be heard and
determined in such federal courts.
16.7.3 Each party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally
and effectively do so, (a) any objection which it may now or
hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any
federal court sitting in the Southern District of New York,
(b) the defense of an inconvenient forum to the maintenance of
such suit, action or proceeding any such court and (c) the
right to object, with respect to such suit, action or
proceeding, that such court does not have jurisdiction over
such party.
16.7.4 Each party irrevocably consents to service
of process in the manner provided for the giving of notices
pursuant to Section 16.4. Nothing in this Agreement shall
affect the right of any party to serve process in any other
manner permitted by law.
16.8 Parties in Interest. This Agreement is binding upon
and shall inure to the benefit of the parties hereto and their
successors and permitted assigns. Nothing contained in this
Agreement, express or implied, shall give any other Person any
legal or equitable right, remedy or claim under or with respect to
this Agreement or the transactions contemplated by this Agreement,
except as expressly provided in Sections 12.1 and 15.
16.9 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but such counterparts shall together constitute one and the same
Agreement.
16.10 Specific Performance. Due to the fact that the
Securities cannot be readily purchased or sold in the open market,
<PAGE>
and that legal remedies may be inadequate to enforce this
Agreement, the parties will be irreparably damaged in the event
that this Agreement is not specifically enforced. In the event of
a breach or threatened breach of the terms, covenants and/or
conditions of this Agreement by any of the parties hereto, the
other parties shall, in addition to all other remedies, be entitled
to a temporary or permanent mandatory injunction, or any
appropriate decree of specific performance, without any bond or
security being required and without being required to show any
actual damage or that monetary damages would not provide an
adequate remedy.
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written.
CPI Corp.
By: ___________________________
Name:
Title:
Consumer Programs Holding, Inc.
By: ___________________________
Name:
Title:
Eastman Kodak Company
By: ____________________________
Name:
Title:
Fox Photo, Inc.
By: ____________________________
Name:
Title:
<PAGE>
Schedule 4.7 to Stockholders' Agreement
MEETINGS OF THE BOARD
To be completed prior to Closing
<PAGE>
Schedule 5.1 to Stockholders' Agreement
STOCKHOLDER REPRESENTATIVES
To be completed prior to Closing
<PAGE>
Schedule 5.2 to Stockholders' Agreement
PERMITTED STOCKHOLDER TRANSACTIONS
1. Nonexclusive licenses to use and sublicense intellectual
property rights with respect to technology developed by the
Company on terms and conditions that are substantially
equivalent to those which could be achieved in an arms' length
transaction with an unrelated third party and no less
favorable than those offered to any such party.
2. Transactions which do not involve payments by the Company or
to the Company which individually or in the aggregate exceed
$100,000 during any calendar year, all of which shall be
reported to the Board on an annual basis.
3. Kodak PhotoFile License Agreement from Kodak to Programs.
<PAGE>
Schedule 6 to Stockholders' Agreement
OFFICERS
To be completed prior to Closing
<PAGE>
Schedule 10 to Stockholders' Agreement
FAIR MARKET VALUE - Procedures and Methodology
All references to sections are to Sections of the
Stockholders' Agreement and all capitalized terms used herein and
not otherwise defined shall have the meaning ascribed thereto in
the Stockholders' Agreement.
1. Any Put Notice shall be accompanied by Holding's proposal
as to Fair Market Value and an offer to sell the Put Shares at a
specified price for either cash or a combination of cash and
Promissory Note, as determined by Kodak in accordance with Section
8.2, at closing as provided in Section 8.3.
2. Any Call Notice shall be accompanied by Kodak's proposal
as to Fair Market Value and an offer to purchase the Call Shares
for cash at closing as provided in Section 9.2.
3. Within 30 days after any Put Notice or Call Notice is
given, the recipient shall give a notice either (a) accepting the
offer, which shall constitute an agreement as to the Fair Market
Value, in which case the parties shall proceed to closing as
provided in Section 8.3 or 9.2, as applicable, or (b) presenting a
counteroffer ("Counteroffer").
4. Within 10 days after the giving of a Counteroffer, the
party initiating the Put or Call ("Initiating Party") shall either
(a) accept the Counteroffer, (b) reach agreement as to Fair Market
Value with the other party, or (c) request in writing, with a copy
to the other party, that the Company engage an independent third
party appraiser ("Appraiser")(an "Appraisal Notice"), selected as
provided below, to determine the "Final Equity Valuation" (as such
term is defined below). The Final Equity Valuation shall be the
final and binding basis on which the Fair Market Value is
determined. In the case of agreement as to Fair Market Value under
subparagraph (a) or (b), the parties shall proceed to closing as
provided in Section 8.3 or 9.2, as applicable.
5. The Appraiser shall be selected from among Morgan
Stanley, Goldman Sachs and Dillon Reed according to the following
procedures: (a) the Initiating Party shall, with the giving of the
Appraisal Notice, notify the Company and the other party of the
firm it does not wish to have the Company retain, (b) within three
days after receipt of such Notice the other party shall choose
among the remaining two firms and notify the Company and the other
party of its choice, and (c) within three days of the notice of
selection, the Company shall engage the Appraiser to prepare a
determination of the Company's Final Equity Valuation in accordance
with this Schedule 10.
<PAGE>
6. The Company shall enter into an agreement on commercially
reasonable terms with the Appraiser which shall include an
agreement by the Appraiser to maintain the confidentiality of the
Company's proprietary and confidential information and thereafter
shall provide the Appraiser with full access to the Company's
management, books and records as may be reasonably requested by
Appraiser. The Appraiser shall be obligated to provide a Final
Equity Valuation based on the methodology prescribed below within
60 days after entering into the Agreement with the Company.
7. For purposes of determining the Company's Final Equity
Valuation, the Appraiser shall utilize the following Valuation
Methodology:
(a) Enterprise valuation to be based on: analysis of
comparable companies, analysis of comparable acquisitions,
leveraged acquisition analysis, and discounted cash flow based on
a ten-year time horizon, a terminal value based on customary
methods (e.g., Perpetuity Growth Model) and discount rate based on
customary methodology (e.g., CAPM).
(b) Future valuation to be based on historical performance
with reference to the Business Plan and a reasonable extrapolation
out ten years, with initial value not considered in determining
future valuation and an assumption of a 100% stock (not asset)
acquisition. Projections shall be determined in the sole
discretion of the Appraiser after consultation with the parties.
(c) The Company shall be assessed as a stand alone entity:
(i) any below market terms for goods or services provided by either
party shall be restated to "at market" terms (including, without
limitation, royalties for intellectual property) with the
assumption that goods and services provided by either party to the
Company pursuant to agreements entered into in connection with the
Subscription Agreement (including the Supply Agreement between the
Company and Kodak) are not deemed "below market" and that only
goods or services which are subject to arms-length benchmarks to
determine "market value" shall be restated, and (ii) a reasonable
and customary (based on comparable precedent transactions) control
premium for the range of prospective acquirors may be considered,
but the full integration or defensive synergies (e.g., maintaining
supply arrangements, incremental revenues, etc.) of Kodak which
could be achieved as a result of the Put or Call transaction shall
not be included in the valuation.
(d) The enterprise valuation shall be reduced by the "Net
Debt" of the Company to arrive at the Final Equity Valuation. "Net
Debt" means (i) all third party debt or debt to either of the
parties or their affiliates, including working capital facilitates
or other short term debt in excess of net working capital (current
assets less current liabilities, not including cash or short term
<PAGE>
debt), less all cash in excess of $500,000 (any amount less than
$500,000 is deemed a shortfall) and (ii) any contingent liabilities
and unfunded obligations (none of which the Company believes exist
on the Closing Date).
(e) If the Final Equity Valuation determined by the Appraiser
is a range rather than a single number, the mid-point of the range
shall be the Final Equity Valuation for purposes of calculating the
Fair Market Value.
<PAGE>
Exhibit A to Stockholders' Agreement
AMENDED AND RESTATED
BY-LAWS
OF
FOX PHOTO, INC.
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meetings. The annual meeting of
the stockholders for the election of directors and the
transaction of other business as may come before the meeting
shall be held each year on such day and at such hour in the
month of March, as shall be fixed by the Board of Directors.
Section 2. Special Meetings. A special meeting of
the stockholders may be called at any time by any stockholder
or by the Board of Directors or President and shall be held on
such day and at such hour as is fixed in the call of the
meeting.
Section 3. Place of Meetings. Meetings of
stockholders shall be held at the principal office of the
Corporation or at such other place, within or without the State
of Delaware, as may be fixed by the Board of Directors.
Section 4. Notice of Meetings. Whenever
stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which
shall state the place, date, and hour of the meeting and the
purpose or purposes for which the meeting is called and shall
indicate who called the meeting. A copy of the notice of any
meeting shall be given, personally or by mail, not less than
ten (10) nor more than sixty (60) days before the date of the
meeting, to each stockholder entitled to vote at the meeting.
Any meeting may be held without notice if all stockholders
entitled to vote are present in person or by proxy, or if
notice is waived in writing by all such stockholders either
before or after the meeting.
Section 5. Quorum. At each meeting of stockholders,
the holders of a majority of the shares entitled to vote
thereat, present in person or by proxy, shall constitute a
quorum for the transaction of business, provided, however, at
any time during the effectiveness of the Stockholders'
Agreement ("Stockholders' Agreement") among Eastman Kodak
Company ("Kodak"), CPI Corp.("CPI"), Consumer Programs Holding,
Inc. ("Holding") and the Corporation, dated the Closing Date
(as such term is defined in the Subscription Agreement among
the same parties, dated August __, 1996) when a special meeting
<PAGE>
is held at which action specified in Section 5.2 of the
Stockholders' Agreement will be considered, quorum shall mean
2/3 of the shares entitled to vote thereat.
Section 6. Voting. At each meeting of stockholders,
every stockholder of record shall be entitled to cast one vote
for every share of stock standing in her or his name on the
books of the Corporation on the record date. All matters shall
be determined by a majority of the votes cast, except as
otherwise provided by law, these By-Laws or the Certificate of
Incorporation, provided, however, at any time during the
effectiveness of the Stockholders' Agreement when an action
specified in Section 5.2 thereof will be considered, such
matter shall be decided by the vote of all of the shares
entitled to vote thereat.
Section 7. Action Without a Meeting. Any action
required or permitted to be taken at any annual or special
meeting of stockholders may be taken without a meeting, without
prior notice, and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the
holders of outstanding stock having not fewer than the minimum
number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote
thereon were present and voted, and except as otherwise
provided by the By-laws or the Certificate of Incorporation;
provided, however, at any time during the effectiveness of the
Stockholders' Agreement when an action specified in Section 5.2
thereof is being acted upon the consent shall be signed by the
holders of outstanding stock holding all of the shares entitled
to vote thereat and provided further, however, that nothing in
this Section 7 shall authorize the nomination, election or
removal of directors other than in accordance with the
provisions of Section 4 of the Stockholders' Agreement. Prompt
notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 8. Organization of Meetings. Meetings of
the stockholders shall be presided over by the Chairman of the
Board, if there be one, or if the Chairman of the Board is not
present, by a chairman to be chosen at the meeting. The
Secretary of the Corporation, or in the Secretary's absence, an
Assistant Secretary, if present, shall act as Secretary of the
meeting.
Section 9. Certain Approvals. At any time during
the effectiveness of the Stockholders' Agreement, the approval
of the matters set forth in Section 5.2 thereof shall be
subject to the approval requirements set forth in such
Section 5.2.
<PAGE>
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Power. The property, business
and affairs of the Corporation shall be managed under the
direction of its Board of Directors; provided, that at all
times during the effectiveness of the Stockholders' Agreement,
the authority of the Board of Directors shall be subject to
Section 4.9 and 5.2 of the Stockholders' Agreement.
Section 2. Number. The Board of Directors shall
consist of one or more members, the exact number to be fixed
from time to time by the Board of Directors, provided, however,
that at all times during the effectiveness of the
Stockholders' Agreement the full Board of Directors shall
consist of seven persons.
Section 3. Election and Term of Directors.
Directors shall be elected at the annual meeting of
stockholders and shall hold office until the next annual
meeting and until their respective successors have been elected
and qualified. At all times during the effectiveness of the
Stockholders' Agreement, Kodak shall nominate four persons to
serve as members of the Board and Holding shall nominate three
persons to serve as members of the Board. The Board of
Directors may elect a Chairman from among its number.
Section 4. Chairman of the Board. The Chairman of
the Board of Directors, if one is to be elected, shall preside
at all meetings of the Board of Directors and of the
Stockholders, and the Chairman shall have and perform such
other duties as from time to time may be assigned to the
Chairman by the Board of Directors.
Section 5. Regular Meetings. As soon as practicable
after each annual election of directors, the Board of Directors
shall meet for the purposes of organization, the election of
officers, and the transaction of other business. Other regular
meetings of the Board shall be held at such places, dates, and
hours as may be fixed from time to time by the Board of
Directors. Notice of regular meetings need not be given. At
all times during the effectiveness of the Stockholders'
Agreement, (a) there will be at least four regularly scheduled
meetings of the Board annually, at dates and places to be
agreed upon by CPI and Kodak, one of which shall be in
conjunction with the annual meeting of the Company, (b) the
annual meeting shall be held within 120 days following the end
of the Company's fiscal year, or as otherwise agreed by CPI and
Kodak, and (c) management of the Corporation shall submit, no
later than ten Business Days prior to each meeting, a proposed
<PAGE>
agenda to the Board for such meeting. Any director shall be
permitted to add items to the agenda upon notice to the
President of the Corporation and the other directors, provided
that such notice is given at least three Business Days prior to
the relevant meeting.
Section 6. Special Meetings. A special meeting of
the Board of Directors may be called by the President or by any
two directors, and shall be held at such time and place as are
fixed in the call of the meeting. Notice of each special
meeting shall be mailed to each director, addressed to the
address last given by each director to the Secretary or, if
none has been given, at the director's residence or usual place
of business, at least three days before the day on which the
meeting is to be held, or shall be sent to the director by
telegraph, cable, wireless, or similar means so addressed or
shall be delivered personally or by telephone, at least
twenty-four (24) hours before the time the meeting is to be
held. Each notice shall state the time and place of the
meeting but need not state the purposes thereof. Notices of
any such meeting need not be given to any director if waived by
him in writing or by telegraph, cable, wireless, or other form
of recorded communication or if otherwise waived as provided by
law.
Section 7. Quorum and Manner of Acting. At each
meeting of the Board of Directors the presence of a majority of
the total Board of Directors shall be required to constitute a
quorum for the transaction of business, and the vote of a
majority of the directors present at the time of the vote, if a
quorum is present at the time, shall be the act of the Board,
provided, however, that at all times during the effectiveness
of the Stockholders' Agreement, a quorum for the transaction of
business shall require the presence of at least 3 directors
nominated to the Board by Kodak and at least one director
nominated by Holding, except as otherwise provided in Section
4.5 of the Stockholders' Agreement. Members of the Board of
Directors or any committee designated by the Board may
participate in meetings by means of conference telephone or
similar communications equipment.
Section 8. Written Consent. Any action required or
permitted to be taken by the Board of Directors or any
committee of the Board may be taken without a meeting if all
members of the Board or committee consent thereto in writing
and the writing or writings are filed with the minutes of
proceedings of the Board.
Section 9. Executive and Other Committees of
Directors. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate an Executive Committee
<PAGE>
and one or more other committees, each consisting of three or
more directors of the Corporation and each having such power
and authority as the Board of Directors may by resolution
provide (except as limited by the laws of the State of
Delaware) provided, however, at any time during the
effectiveness of the Stockholders' Agreement, each committee
shall consist of either three members, two of which are
directors nominated by Kodak and one of which is a director
nominated by Holding, or five members, three of which are
directors nominated by Kodak and two of which is a director
nominated by Holding, except as otherwise provided in Section
4.8 of the Stockholders' Agreement. The Board of Directors may
authorize any such committee to exercise all or some of the
powers and authority of the Board of Directors in the
management of the property, business and affairs of the
Corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; provided,
however, that no such committee shall have the power or
authority in reference to:
(a) Amending the Certificate of Incorporation,
(b) Adopting an agreement of merger or
consolidation,
(c) Recommending to the stockholders the sale, lease
or exchange of all or substantially all of the
Corporation's property and assets,
(d) Recommending to the stockholders a dissolution
of the Corporation or a revocation of a
dissolution,
(e) Amending the By-laws of the Corporation,
(f) Declaring dividends, or
(g) Authorizing the issuance of stock.
Subject to any requirements of law, each committee shall take
action in accordance with such rules as are provided by
resolution of the Board of Directors or as the committee
members shall unanimously agree upon, provided, however, the
quorum and other provisions of the Stockholders' Agreement
shall govern at all times during the effectiveness of the
Stockholders Agreement.
Section 10. Removal. Any director may be removed,
at any time, with or without cause, by the affirmative vote of
the holders of record of a majority of outstanding shares of
stock entitled to vote at a meeting of stockholders, and any
<PAGE>
vacancy in the Board of Directors caused by any such removal
may be filled by the stockholders at said meeting in which the
vacancy is created or, if not so filled, by the Board of
Directors, provided, however, that at all times during the
effectiveness of the Stockholders' Agreement, any action to
remove a director shall be governed by Section 4.3 of the
Stockholders' Agreement.
Section 11. Vacancies. Whenever any vacancy shall
have occurred in the Board of Directors, by reason of death,
resignation or otherwise, other than removal of a director with
or without cause by a vote of the stockholders, it shall be
filled by a majority of the remaining directors, though less
than a quorum (except as otherwise provided by law), or by the
stockholders, and the person so chosen shall hold office until
the next annual election and until a successor is duly elected
and has qualified; provided, however, that at all times during
the effectiveness of the Stockholders' Agreement, any action to
fill a vacancy in the Board of Directors shall be governed by
Section 4.4 thereof.
ARTICLE III
OFFICERS
Section 1. Officers Enumerated. The officers of the
Corporation shall be a President, one or more Vice Presidents,
a Secretary, and a Treasurer, and such other officers as the
Board of Directors may in its discretion elect. Any two or
more offices may be held by the same person.
Section 2. Election, Removal and Term of Office.
All officers shall be elected by the Board of Directors at its
first meeting held after the annual meeting of stockholders.
Unless elected for a lesser term, each officer shall hold
office until the first meeting of the Board of Directors held
after the next annual meeting of the stockholders and until his
successor has been elected and qualified. Any officer may be
removed, at any time, with or without cause, by action of the
Board of Directors or by the affirmative vote of the holders of
record of a majority of outstanding stock entitled to vote at a
meeting of stockholders, and any vacancy so created shall be
filled by action of the Board of Directors or by the
stockholders at said meeting in which the vacancy is created,
provided, however, that at all times during the effectiveness
of the Stockholders' Agreement, any action to remove the
President of the Corporation without "Cause" (as defined
therein) shall be governed by Section 5.2 of the Stockholders'
Agreement.
<PAGE>
Section 3. The President. The President may be the
chief executive officer of the Corporation and shall have
general supervision of the property, business and affairs of
the Corporation, subject only to the supervision of the Board
of Directors. He shall, in the absence of the Chairman of the
Board of Directors preside at all meetings of stockholders and
of the Board of Directors. In the absence or disability of any
other officer of the Corporation, he may perform the duties of
that officer. He shall perform other such duties as the Board
of Directors may prescribe.
Section 4. The Vice Presidents. Each Vice
President, if any, shall, in the absence or incapacity of the
President and in order of seniority as fixed by the Board,
possess the powers and perform the duties of the President, and
each shall possess such other powers and perform such other
duties as the Board of Directors may prescribe.
Section 5. The Secretary. The Secretary shall issue
notice of all meetings of stockholders and of the directors
whenever notice is required. He shall keep the minutes of all
meetings of stockholders and of the Board of Directors in a
book to be kept for that purpose. He shall sign such
instruments as require his signature and shall possess such
other powers and perform such other duties as usually pertain
to his office or as the Board of Directors may prescribe.
Section 6. The Treasurer. The Treasurer shall have
the care and custody of all the moneys and securities of the
Corporation. He shall keep or cause to be kept complete and
accurate books of account of all moneys received and paid on
account of the Corporation. He shall sign such instruments as
require his signature and shall possess such other powers and
perform such other duties as usually pertain to his office or
as the Board of Directors may prescribe.
Section 7. Assistant Officers. If the Board of
Directors shall elect any Assistant Vice President, Assistant
Secretary, or Assistant Treasurer, such assistant office shall
assist the officer to whom he is assistant, shall possess that
officer's powers and perform that officer's duties in his
absence or incapacity, and shall possess such other powers and
perform such other duties as the Board of Directors may
prescribe.
ARTICLE IV
GENERAL
Section 1. Seal. The seal of the Corporation shall
be in the form of a circle and shall bear the name of the
Corporation, the year of incorporation and any other matters
deemed appropriate by the Board of Directors.
<PAGE>
Section 2. Indemnification.
(a)(1) To the full extent authorized or permitted by
law, the Corporation shall indemnify any person ("Indemnified
Person") made, or threatened to be made, a party to any
threatened, pending or completed action or proceeding, whether
civil, criminal, administrative, investigative or otherwise,
other than an action by or in the right of the Corporation, by
reason of the fact that he, his testator or intestate
("Responsible Person"), (A) is or was a director, officer,
employee or agent of the Corporation, or (B) is serving or
served, in any capacity, at the request of the Corporation,
another corporation or any partnership, joint venture, trust,
or other enterprise, against all judgments, fines, penalties,
amounts paid in settlement (provided the Corporation shall have
consented to such settlement, which consent shall not be
unreasonably withheld by it) and reasonable expenses, including
attorneys' fees and costs of investigation, incurred by such
Indemnified Person with respect to any such threatened, pending
or completed action or proceeding, and any appeal therein,
provided only that such Indemnified Person shall have acted in
good faith and in a manner the Indemnified Person reasonably
believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or
proceeding, had no reason to believe his conduct was unlawful.
(2) To the full extent authorized or permitted by
law, the Corporation shall indemnify any person ("Indemnified
Person") made, or threatened to be made, a party to any
threatened, pending or completed action or proceeding, whether
civil, criminal, administrative, investigative or otherwise, by
or in the right of the Corporation, by reason of the fact that
he, his testator or intestate ("Responsible Person"), (A) is or
was a director, officer, employee or agent of the Corporation,
or (B) is serving or served, in any capacity, at the request of
the Corporation, another corporation or any partnership, joint
venture, trust, or other enterprise, against all amounts paid
in settlement (provided the Corporation shall have consented to
such settlement, which consent shall not be unreasonably
withheld by it) and reasonable expenses, including attorneys'
fees and costs of investigation, incurred by such Indemnified
Person with respect to any such threatened, pending or
completed action or proceeding, and any appeal therein,
provided only that such Indemnified Person shall have acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reason to
believe his conduct was unlawful.
(b) All expenses reasonably incurred by an
Indemnified Person in connection with a threatened, pending or
<PAGE>
completed action or proceeding with respect to which such
person is or may be entitled to indemnification under this
Section shall be advanced or promptly reimbursed by the
Corporation to him in advance of the final disposition of such
action or proceeding, upon receipt of an undertaking by him or
on his behalf to repay the amount of such advances, if any, as
to which he is ultimately found not to be entitled to
indemnification or, where indemnification is granted, to the
extent such advances exceed the indemnification to which he is
entitled. Such person shall, however, cooperate in good faith
with any request by the Corporation that common counsel be used
by parties to such action or proceeding who are similarly
situated unless it would be inappropriate to do so because of
actual or potential conflicts between the interests of such
parties.
(c)(1) Not later than thirty (30) days following
final disposition of an action or proceeding with respect to
which the Corporation has received written request by an
Indemnified Person for indemnification pursuant to this
Section, if such indemnification has not been ordered by a
court, the Board of Directors shall meet and find whether the
Responsible Person met the standard of conduct set forth in
Section 1 of this Section, and, if it finds that he did, or to
the extent it so finds, shall authorize such indemnification.
(2) Such standard shall be found to have been met
unless (A) a judgment or other final adjudication adverse to
the Indemnified person establishes that (i) acts of the
Responsible Person were committed in bad faith or were the
result of active and deliberate dishonesty and were material to
the cause of action so adjudicated, or (ii) the Responsible
Person personally gained in fact a financial profit or other
advantage to which he was not legally entitled; or (B) if the
action or proceeding was disposed of other than by judgment or
other final adjudication, the Board finds in good faith that,
if it had been disposed of by judgment or other final
adjudication, such judgment or other final adjudication would
have been adverse to the Indemnified Person and would have
established (i) or (ii) above.
(3) If indemnification is denied, in whole or part,
because of such a finding by the Board in the absence of a
judgment or other final adjudication, or because the Board
believes the expenses for which indemnification is requested to
be unreasonable, such action by the Board shall in no way
affect the right of the Indemnified Person to make application
therefor in any court having jurisdiction thereof, and in such
action or proceeding the issue shall be whether the Responsible
Person met the standard of conduct set forth in Section 2(a),
or whether the expenses were reasonable, as the case may be;
<PAGE>
not whether the finding of the Board with respect thereto was
correct; and the determination of such issue shall not be
affected by the Board's finding. If the judgment or other
final adjudication in such action or proceeding establishes
that the Responsible Person met the standard of conduct set
forth in Section 2(a), or that the disallowed expenses were
reasonable, or to the extent that it does, the Board shall then
find such standard to have been met if it has not done so, and
shall grant such indemnification, and shall also grant to the
Indemnified Person indemnification of the expenses incurred by
him in connection with the action or proceeding resulting in
the judgment or other final adjudication that such standard of
conduct was met, or if pursuant to such court determination
such person is entitled to less than the full amount of
indemnification denied by the Corporation, the portion of such
expenses proportionate to the amount of such indemnification so
awarded.
(4) A finding by the Board that the standard of
conduct set forth in Section 2(a) has been met shall mean a
finding (A) by a majority vote of the directors who are not
parties to such action, suit or proceeding even though less
than a quorum, or, (B) if there are no such directors, or if
such directors so direct, by independent legal counsel in a
written opinion, or (C) by the stockholders.
(d) This Section shall be deemed to constitute a
contract between the Corporation and each person who serves as
a Responsible Person at any time while this Section is in
effect. No repeal or amendment of this Section, insofar as it
reduces the extent of the indemnification of any person who
could be a Responsible person, shall without his written
consent be effective as to such person with respect to any
event, act or omission occurring or allegedly occurring prior
to (1) the date of such repeal or amendment if on that date he
is not serving in any capacity for which he could be a
Responsible Person, or (2) the later of the thirtieth (30th)
day following delivery to him of such notice or the end of the
term (for whatever reason) he is serving as director, officer,
employee or agent of the Corporation or, at the request of the
Corporation, another corporation or any partnership, joint
venture, trust, or other enterprise on the date of such repeal
or amendment, with respect to being a Responsible Person in
that capacity. This Section shall be binding on any successor
to the Corporation, including any corporation or other entity
which acquires all or substantially all of the Corporation's
assets.
(e) The Corporation may, but need not, maintain
insurance insuring the Corporation or Responsible Persons for
liabilities against which they are entitled to indemnification
<PAGE>
under this Section or insuring Responsible Persons for
liabilities against which they are not entitled to
indemnification under this Section.
(f) The indemnification provided by this Section
shall not be deemed exclusive of any other rights to which any
person covered hereby may be entitled other than pursuant to
this Section. The Corporation is authorized to enter into
agreements with any such person or persons providing them
rights to indemnification or advancement of expenses in
addition to the provisions therefor in this Section to the full
extent permitted by law.
Section 3. Fiscal Year. The fiscal year of the
Corporation shall end at the close of business on December 31
of each calendar year.
ARTICLE V
AMENDMENTS
Section 1. By-Law Amendments. The By-laws of the
Corporation may be made, altered, or repealed by vote of the
stockholders at any annual meeting or at any special meeting
called for the purpose or, except as otherwise provided in
these By-laws or by law, by vote of a majority of the
authorized number of directors at any regular or special
meeting, provided, however, at any time during the
effectiveness of the Stockholders' Agreement, the amendment of
these By-laws shall be subject to Section 5.2 of the
Stockholders' Agreement.
<PAGE>
Exhibit B to Stockholders' Agreement
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
FOX PHOTO, INC.
FOX PHOTO, INC., a corporation duly organized and
existing under the General Corporation Law of the State of
Delaware (the "Corporation"), was incorporated under the name
"D.Q. Holding, Inc." Its original certificate of incorporation
was filed with the Secretary of State of the State of Delaware
on March 20, 1984.
This Amended and Restated Certificate of
Incorporation was duly adopted by action of the Board of
Directors and the sole shareholder of the Corporation.
FIRST: The name of the Corporation is Fox Photo,
Inc.
SECOND: The address of the Corporation's registered
office in the State of Delaware is The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, County
of New Castle, Wilmington, Delaware 19801.
THIRD: The nature of the business or purposes to be
conducted or promoted by the Corporation is to engage in any
lawful act or activity for which a corporation may be organized
under the General Corporation Law of Delaware and to possess
and exercise all of the powers and privileges granted by such
law and any other law of the State of Delaware.
FOURTH: The total number of shares of stock which
the Corporation shall have authority to issue is Two Thousand
Forty-One (2,041), which shares shall be of one class, shall be
designated Common Stock and shall have a par value of $.01 per
share.
FIFTH: For the management of the business and for
the conduct of the affairs of the Corporation, and in further
definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders, it is
further provided that:
1. The election of the directors of the Corporation
need not be by written ballot unless the By-laws
so require; and
2. In furtherance and not in limitation of the
powers conferred by statute, the Board of
Directors is expressly authorized to make, alter
or repeal the By-laws of the Corporation unless
the By-laws otherwise require.
SIXTH: No director of the Corporation shall be held
personally liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty in his
capacity as a director, provided that liability shall not be
eliminated or limited (1) for a breach of the director's duty
<PAGE>
of loyalty to the Corporation or its stockholders, or (2) for
acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, or (3) for any
transaction from which the director derived an improper
personal benefit, or (4) for acts in violation of Section 174
of the General Corporation Law. Any repeal or amendment of
this Article, insofar as it would in any way enlarge the
liability of any director of the Corporation, shall be
ineffective with respect to any acts or omissions occurring
prior to the date of such repeal or amendment.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Incorporation on __________, 1996.
___________________________
, President
Attest:
_____________________
, Secretary
<PAGE>
Exhibit C to Stockholders' Agreement
PROMISSORY NOTE
$ ___________.00 _________, 199____
FOR VALUE RECEIVED, Eastman Kodak Company ("Kodak"), a
New Jersey corporation, with its principal office at 343 State
Street, Rochester, New York 14650, hereby promises to pay to
Consumer Programs Holding, Inc. ("Holding"), a Delaware
corporation, with its principal office at 1706 Washington
Avenue, St. Louis, Missouri 63103, the principal sum of [the
Excess Amount] _____________ Dollars ($_________.00) in lawful
money of the United States in three equal installments of
principal payable on the first, second and third anniversaries
of the date of this Note in immediately available funds,
together with interest on any unpaid principal from the date
hereof at the rate of % per annum [fixed rate equal to 30-yr US
Treasury Bond yield at most recent auction prior to the Put
Notice date plus 200 basis points]. (Capitalized terms used
herein shall have the meaning ascribed thereto under the
Stockholders' Agreement (the "Stockholders' Agreement") among
CPI Corp., Holding and Fox Photo, Inc.).
Events of Default.
(a) The following events shall constitute events of
default under this Note:
(i) Kodak fails to make any payment of principal
when due or interest within fifteen days of the date when due;
(ii) Kodak makes an assignment for the benefit of
creditors, commences (as the debtor) any case in bankruptcy
under Title 1 1 of the United States Code ("Bankruptcy"),
commences (as the debtor) any proceeding under any other
insolvency or receivership law or files a petition or answer
seeking reorganization or an arrangement with creditors or to
take advantage.of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute
or files an answer admitting the material allegations of a
petition filed against Kodak in any proceeding under any such
law or any corporate action is taken for the purpose of
effecting any of the foregoing;
(iii) A case in Bankruptcy or any proceeding under
any insolvency or receivership law is commenced against Kodak
(as the debtor in such case or proceeding) and a court having
jurisdiction in the premises enters an order for relief against
such debtor in such case or proceeding, or such case or
<PAGE>
proceeding is consented to by Kodak or remains undismissed for
90 days, or Kodak consents to or admits the material
allegations against it in any case or proceeding; or
(iv) A trustee, receiver, agent or custodian
(however named) is appointed or authorized to take charge of
substantially all of the property of Kodak for the purpose of
enforcing a lien against such property for the benefit of
creditors.
(b) Upon the occurrence of any event of default
specified in subsection (i) above, all amounts owing hereunder
shall at Holding's option become due and payable without
notice, presentation or demand of any kind, all of which are
hereby waived. Upon the occurrence of any of the events of
default specified in subsections (ii), (iii) or (iv) above, all
amounts owing hereunder shall immediately and without further
action by Holding become due and payable without notice,
presentation or demand of any kind, all of which are hereby
waived.
(c) No failure or delay on the part of Holding in
the exercise of any power or right in this Note and no course
of dealing between Kodak and Holding shall operate as a waiver
thereof, and no exercise or waiver of any single power or
right, or the partial exercise thereof, shall affect Holding's
rights with respect to any and all other rights and powers.
(d) The rights, powers and remedies expressly
provided in this Note are cumulative and not exclusive of any
rights, powers or remedies which Holdings may otherwise have.
No notice to or demand on Kodak in any circumstance shall
entitle Kodak to a notice or demand in similar or other
circumstances or constitute a waiver of Holdings rights in any
circumstances without notice or demand.
Miscellaneous.
(a) This Note may be prepaid, in whole or in part, at
any time without penalty. Each prepayment of principal shall
be accompanied by accrued and unpaid interest to the date of
prepayment on the principal amount of this Note being prepaid.
(b) Kodak waives presentment and demand for payment,
notice of dishonor, protest and notice of protest of this Note.
(c) The provisions of this Note shall inure to the
benefit of and extend to Holding or any holder hereof or any
assigns of Holding and be binding upon any successors of Kodak.
<PAGE>
(d) Any notice given pursuant to this Note shall be
in writing and shall be deemed to have been given when
delivered by hand or deposited for certified mail delivery in
the United States mail with postage prepaid or recognized
overnight delivery service and addressed to the party for whom
it is intended at the address for such party set forth above or
at such other address as to which the parties may from time to
time notify each other in like mariner.
(e) This Note shall be governed by and construed
under the laws of the State of New York, without reference to
and regardless of the application of any of its principles of
conflicts of laws.
(f) In the event this Note is placed in the hands of
an attorney for the collection hereof as a result of an event
of default hereunder, Kodak agrees to pay all reasonable costs
of collection, including reasonable attorneys' fees.
(g) Neither this Note nor any terms hereof may be
changed or waived unless such change or waiver is in a writing
signed by Kodak and Holdings.
IN WITNESS WHEREOF, Kodak has caused this Note to be
issued as of the date first above written.
EASTMAN KODAK COMPANY
By: ______________________
Name: ____________________
Title: ___________________
<PAGE>
EXHIBIT H
KODAK TRADEMARK LICENSE AGREEMENT
Agreement dated _____________, 1996 by and between Eastman
Kodak Company of 343 State Street, Rochester, New York, 14650
("Kodak") and Fox Photo, Inc. of 1706 Washington Avenue, St.
Louis, Missouri 63103 ("Licensee").
This Agreement provides the terms by which Kodak grants
Licensee, a 51 per cent-owned subsidiary of Kodak, in
consideration of a royalty-free license to use certain
intellectual property (including certain trademarks and service
marks) granted to Licensee by Licensee's minority stockholder and
other good and valuable consideration, the receipt of which is
hereby acknowledged, the rights to use certain Kodak trademarks
and trade dress in connection with certain photographic retail
operations.
1. LICENSE. Kodak grants Licensee on the terms and
conditions of this Agreement a royalty-free, nonexclusive,
nontransferable license to use in the United States (including
the District of Columbia) the trademarks, service marks, trade
names or trade dress listed on Exhibit A hereto (hereinafter
"licensed Kodak trademarks") during the term of this Agreement on
such photographic retail operations as may be specified in
writing by Kodak from time to time. Such retail services offered
by Licensee and using any of the licensed Kodak trademarks are
hereinafter called "Services".
Licensee agrees to use the licensed Kodak trademarks only in
connection with the Services and not in any other manner.
Licensee shall use the licensed Kodak trademarks precisely as
approved by Kodak and shall observe all directions given by Kodak
as to the colors, nature and size of the representations of the
licensed Kodak trademarks and the manner and disposition thereof.
Licensee shall not register the licensed Kodak trademarks or any
designation similar thereto as a trademark or service mark.
2. INFORMATION AND SPECIFICATIONS. Kodak will from time
to time provide to Licensee information and specifications that
Kodak in its sole discretion deems necessary to offer Services
according to quality control standards established by Kodak.
3. OBSERVANCE OF KODAK'S REQUIREMENTS. Licensee will not
combine Services with any other service, product, package design,
name, symbol or trademark without the prior written approval of
Kodak, provided however, that, with the prior written approval of
Kodak, Licensee may combine Services with any marks to which
Licensee acquired rights under a Trademark License Agreement, of
<PAGE>
even date hereto, with CPI Research and Development Inc. and
Consumer Programs Incorporated. Licensee agrees to submit to
Kodak for its approval prior to use proofs and samples of all new
signage, packaging materials, promotional materials and
advertising prepared by or for Licensee for Services.
4. QUALITY CONTROL. Licensee will carry out all quality
control tests designated by Kodak to determine that the Services
offered by Licensee conform to the quality control specifications
supplied by Kodak under paragraph 2. Licensee will keep full and
complete testing records open to inspection by Kodak. Licensee
will permit authorized representatives of Kodak to inspect
relevant operations and make any tests deemed necessary by Kodak
to ensure that the quality standards established by Kodak are
being maintained.
5. NON-CONFORMING SERVICES. Licensee agrees that Services
not meeting the quality standards of Kodak will not be labeled
with or used or offered under any trademark or trade dress of
Kodak or any other trade dress, trade name or trademark which is
in any way similar to, or may be deemed to be similar to, the
trade dress, trade name or trademark of Kodak.
6. RECORDS. During the term of this Agreement and for at
least three years after termination Licensee will (a) keep full
and accurate records, including samples of all advertising and
promotional materials, covering its operations under this
Agreement and (b) allow Kodak on reasonable notice to examine
Licensee's records through an authorized representative.
Licensee agrees that Kodak's representative shall be given full
access to all records of Licensee for the purpose of verifying
the completeness and accuracy of the records of Licensee.
7. LIMITATIONS. No power to sublicense any rights to
others or to allow companies affiliated with or doing business
with Licensee to use the licensed Kodak trademarks is granted.
Except as authorized in writing by Kodak, Licensee agrees not to
use or permit use on product or services other than Services any
other trade dress or trademarks which are likely to be
confusingly similar to Kodak's trade dress or trademarks.
Licensee will promptly notify Kodak of any conflicting use of or
acts of infringement concerning Services or the licensed Kodak
trademarks and will cooperate as Kodak may deem advisable in such
legal proceedings and other actions which Kodak, in its sole
discretion and at its cost and expense, deems appropriate to
protect the rights of Kodak. No legal action may be commenced by
or in the name of Licensee relating to any unauthorized use of
the licensed Kodak trademarks. No license or right under any
other trademark, including the licensed Kodak trademarks, apart
from use on Services is granted by this Agreement. Licensee will
<PAGE>
comply with Kodak's requirements for proper use of the licensed
Kodak trademarks as will be provided by Kodak to Licensee from
time to time.
8. OWNERSHIP OF TRADEMARKS. Licensee acknowledges Kodak's
ownership of the licensed Kodak trademarks. Licensee will (a)
execute any other written documents required by Kodak to confirm
ownership by Kodak or the grant of this license to or registered
user status of Licensee and (b) assign at Kodak's request such
rights to Kodak or Kodak's designee at no cost to Kodak along
with any associated goodwill if Licensee acquires by operation of
law or otherwise any rights in any such trademarks.
9. CLAIMS; RESPONSIBILITY. Licensee agrees not to make
any claims for or about Services that have not been approved by
Kodak. Kodak assumes no liability to Licensee or to third
parties with respect to the performance of any Services.
Licensee agrees to be fully responsible and hold Kodak and its
subsidiary companies harmless from all actions or lawsuits
(whether or not groundless) which may arise out of use or
offering of Services.
10. DESIGNATION. Kodak may designate any one or more of
its subsidiary companies to act in its stead under all or any
part of this Agreement.
11. TERM AND TERMINATION. This Agreement is effective as
of the date of signing by both parties. Unless sooner terminated
pursuant to its provisions, this Agreement shall expire three (3)
years after the effective date of this Agreement. This Agreement
is renewable upon the mutual agreement of the parties.
Kodak may terminate this Agreement (a) immediately upon
notice to Licensee in the event that Kodak no longer holds at
least 51% of the equity ownership of Licensee or (b) upon at
least thirty (30) days written notice to Licensee in the event of
a material breach of this Agreement by Licensee that is not cured
during such notice period.
Upon expiration or termination, all rights granted to
Licensee by this Agreement will cease. All artwork, plates and
other manufacturing aids used by Licensee which include the
licensed Kodak trademarks are to become Kodak's property upon
expiration or termination of the Agreement and are to be disposed
of by Licensee according to instructions from Kodak.
The obligations of Licensee under paragraphs 6, 8, 9, 11 and
12 shall survive expiration or termination of this Agreement and
Licensee shall not be relieved of any continuing obligations
thereunder.
<PAGE>
12. MISCELLANEOUS. This Agreement will be governed by and
construed according to the substantive law of the State of New
York. The federal and state courts within the State of New York
shall have exclusive jurisdiction to adjudicate any dispute
arising out of this Agreement. Each party hereto expressly
consents to the personal jurisdiction of the federal and state
courts within the State of New York, and to service of process
being effected upon it by registered or certified mail sent to it
at the Address for Notice.
Nothing in this Agreement is to be construed as an
assignment or grant of any right, title or interest in or under
the licensed Kodak trademarks or any other trademark, copyright,
design, trade dress or patent right beyond the limited
nonexclusive trademark license expressly granted.
The parties intend by this Agreement to enter into a
trademark license agreement only and this Agreement shall not in
any way be deemed of itself to establish or affect any other
relation between the parties whether by way of agency,
partnership, joint venture or otherwise. Licensee agrees that it
does not have the authority under this Agreement and will not
directly or indirectly contract any obligations of any kind in
the name of or chargeable against Kodak or its subsidiary
companies (other than Licensee) or its or their employees.
This Agreement supersedes all prior agreements or
understandings between the parties in connection with the
Services covered by this Agreement.
This Agreement may be amended in writing signed by both
parties.
Neither party shall assign, transfer or otherwise pass the
benefit of this Agreement in whole or in part to any third party
without the prior consent in writing of the other party to this
Agreement.
All notices and other communications required or permitted
under this Agreement must be in writing. They may be delivered
personally or sent by telex, commercial courier, postage prepaid
mail or facsimile, at the option of the sending party. All
communications must be sent to, and shall be effective on the
date of delivery at, the receiving party's Address for Notice.
The initial Address for Notice set forth below and any subsequent
Address for Notice may be changed by a communication as provided
herein.
<PAGE>
Address for Notice to Kodak:
Eastman Kodak Company
Attention: __________________________________
343 State Street
Rochester, New York 14650-____
Fax: (716) ___-____ Tel: (716) ___-____
Copy to:
Director, Trademark, Advertising and Copyright Legal Staff
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0205
Fax: (716) 724-9657
Address for Notice to Licensee:
Fox Photo, Inc.
Attention: _________________________________
1706 Washington Avenue
St. Louis, Missouri 63103
Fax: Tel:
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly appointed representatives.
Eastman Kodak Company Fox Photo, Inc.
By: ____________________ By: _____________________
Name: Name:
Title: Title:
<PAGE>
Exhibit A to Kodak Trademark License Agreement
LICENSED KODAK TRADEMARKS
[To be specified by Kodak]
<PAGE>
EXHIBIT I
TRADEMARK LICENSE AGREEMENT
Agreement dated _____________, 1996 by and among CPI
Research and Development Inc., a Delaware corporation ("R&D"),
and Consumer Programs Incorporated, a Missouri corporation
("Programs"), both of 1706 Washington Avenue, St. Louis, MO 63103
(together, "Licensors") and Fox Photo, Inc., a Delaware
corporation, of 1706 Washington Avenue, St. Louis, MO 63103
("Licensee").
This Agreement provides the terms by which Licensors grant
to Licensee, a 49 per cent-owned affiliate of the parent of
Licensors, in consideration of a royalty-free license to use
certain intellectual property (including certain trademarks and
service marks) granted to Licensee by Licensee's majority
stockholder and other good and valuable consideration, the
receipt of which is hereby acknowledged, the rights to use
certain trademarks and trade dress in connection with certain
photographic retail operations.
1. LICENSE. Each of the Licensors hereby grants to
Licensee on the terms and conditions of this Agreement a
royalty-free, nonexclusive, nontransferable license to use in the
United States (including the District of Columbia) the respective
trademarks and service marks owned by said Licensor that are
listed on Exhibit A hereto, as same may be amended pursuant to
the terms of this Agreement (such marks, the "Marks"), during the
term of this Agreement in connection with such photographic
retail operations as may be agreed by the parties in writing from
time to time. Such retail products and services offered by
Licensee and using any of the Marks are hereinafter called,
respectively, "Products" and "Services".
Licensee agrees to use the Marks only in connection with the
Products and Services. Licensee shall use each Mark precisely as
approved by its Licensor and shall observe all directions given
by such Licensor as to the colors, nature and size of the
representations of the Marks and the manner and disposition
thereof. Licensee shall not register the Marks or any
designation similar thereto as a trademark or service mark.
2. INFORMATION AND SPECIFICATIONS. Each Licensor will
from time to time provide to Licensee information and
specifications that such Licensor in its sole discretion deems
necessary to offer Products and Services according to quality
control standards established by it.
3. OBSERVANCE OF LICENSORS' REQUIREMENTS. Except for
combinations presently in use by Licensee, Licensee will not
<PAGE>
combine Products and Services with any other service, product,
package design, name, symbol or trademark without the prior
written approval of the applicable Licensor, provided, however,
that Licensee may combine Products and Services with any marks
under which Licensee acquired rights under an agreement, of even
date hereto, with Eastman Kodak Company. Licensee agrees to
submit to the applicable Licensor for its approval prior to use
proofs and samples of all new signage, packaging materials,
promotional materials and advertising prepared by or for Licensee
for Products and Services, and the applicable Licensor shall
respond with ten (10) days.
4. QUALITY CONTROL. Licensee will carry out all quality
control tests designated by Licensors to determine that the
Products and Services offered by Licensee conform to the quality
control specifications supplied by Licensors under paragraph 2.
Licensee will keep full and complete testing records open to
inspection by Licensors. Licensee will permit authorized
representatives of Licensors to inspect relevant operations and
make any tests deemed necessary by Licensors to ensure that its
quality standards are being maintained.
5. NON-CONFORMING SERVICES. Licensee agrees that Products
and Services not meeting the quality standards of Licensors will
not be labeled with or used or offered under any of the Marks or
any other trade dress, trade name or trademark which is in any
way similar to, or may be deemed to be similar to, the trade
dress, trade name or trademark of Licensors.
6. RECORDS. During the term of this Agreement and for at
least three years after termination Licensee will (a) keep full
and accurate records, including samples of all advertising and
promotional materials, covering its operations under this
Agreement and (b) allow Licensors on reasonable notice to examine
Licensee's records through an authorized representative.
Licensee agrees that Licensors' representatives shall be given
full access to all records of Licensee for the purpose of
verifying the completeness and accuracy of the records of
Licensee.
7. LIMITATIONS. No power to sublicense any rights to
others or to allow companies affiliated with or doing business
with Licensee to use the Marks is granted. Except as authorized
in writing by the applicable Licensor, Licensee agrees not to use
or permit use on products or services other than Products and
Services any other trade dress or trademarks which are likely to
be confusingly similar to such Licensor's trade dress or
trademarks. Licensee will promptly notify the applicable
Licensor of any conflicting use of or acts of infringement
concerning Products or Services or the Marks and will cooperate
as said Licensor may deem advisable in such legal proceedings and
<PAGE>
other actions which said Licensor, in its sole discretion and at
its cost and expense, deems appropriate to protect its rights.
No legal action may be commenced by or in the name of Licensee
relating to any unauthorized use of the Marks. No license or
right under any other trademark, including the Marks, apart from
use on Products and Services is granted by this Agreement.
Licensee will comply with Licensors' requirements for proper use
of the Marks which shall be provided by Licensors to Licensee
from time to time.
8. OWNERSHIP OF TRADEMARKS. Licensee acknowledges
Licensors' ownership of the Marks. Licensee will (a) execute any
other written documents required by Licensors to confirm
ownership by Licensors or the grant of this license to or
registered user status of Licensee and (b) assign at Licensors'
request such rights to Licensors or Licensors' designee at no
cost to Licensors along with any associated goodwill if Licensee
acquires by operation of law or otherwise any rights in any such
trademarks.
9. CLAIMS; RESPONSIBILITY. Licensee agrees not to make
any claims for or about Products or Services that have not been
approved by Licensors. Licensors assumes no liability to
Licensee or to third parties with respect to the performance of
any Services. Licensee agrees to be fully responsible and hold
Licensors and its subsidiary companies harmless from all actions
or lawsuits (whether or not groundless) which may arise out of
use or offering of Products or Services.
10. DESIGNATION. Licensors may designate any one or more
of its present or future subsidiary companies to act in its stead
under all or any part of this Agreement.
11. TERM AND TERMINATION. This Agreement is effective as
of the date of signing by both parties. Unless sooner terminated
pursuant to its provisions, this Agreement shall expire three (3)
years after the effective date of this Agreement. This Agreement
is renewable upon the mutual agreement of the parties.
Licensors may terminate this Agreement (a) with respect to
Marks licensed by Programs, on six (6) months' written notice in
the event that CPI Corp., a Delaware corporation, or any direct
or indirect subsidiary thereof, no longer holds at least
twenty-five percent (25%) of the equity ownership of Licensee, or
(b) on at least thirty (30) days' written notice to Licensee in
the event of a material breach of this Agreement by Licensee that
is not cured during said notice period.
Upon expiration or termination, all rights granted to
Licensee by this Agreement will cease. All artwork, plates and
other manufacturing aids containing any of the Marks used by
<PAGE>
Licensee especially for Products or Services are to become the
property of the applicable Licensor upon expiration or
termination of the Agreement and are to be disposed of by
Licensee according to instructions from said Licensor.
The obligations of Licensee under paragraphs 6, 8, 9, 11 and
12 shall survive expiration or termination of this Agreement and
Licensee shall not be relieved of any continuing obligations
thereunder.
12. MISCELLANEOUS. This Agreement will be governed by and
construed according to the substantive law of the State of
Missouri. The federal and state courts within the State of
Missouri shall have exclusive jurisdiction to adjudicate any
dispute arising out of this Agreement. Each party hereto
expressly consents to the personal jurisdiction of the federal
and state courts within the State of Missouri, and to service of
process being effected upon it by registered or certified mail
sent to it at the Address for Notice.
Nothing in this Agreement is to be construed as an
assignment or grant of any right, title or interest in or under
the Marks or any other trademark, copyright, design, trade dress
or patent right beyond the limited nonexclusive trademark license
expressly granted.
The parties intend by this Agreement to enter into a
trademark license agreement only and this Agreement shall not in
any way be deemed of itself to establish or affect any other
relation between the parties whether by way of agency,
partnership, joint venture or otherwise. Licensee agrees that it
does not have the authority under this Agreement and will not
directly or indirectly contract any obligations of any kind in
the name of or chargeable against Licensors or their affiliated
companies (other than Licensee) or its or their employees.
This Agreement supersedes all prior agreements or
understandings between the parties in connection with the
Products and Services covered by this Agreement.
This Agreement may be amended in writing signed by all
parties.
No party shall assign, transfer or otherwise pass the
benefit of this Agreement in whole or in part to any third party
without the prior consent in writing of the other parties to this
Agreement.
All notices and other communications required or permitted
under this Agreement must be in writing. They may be delivered
personally or sent by telex, commercial courier, postage prepaid
<PAGE>
mail or facsimile, at the option of the sending party. All
communications must be sent to, and shall be effective on the
date of delivery at, the receiving party's Address for Notice.
The initial Address for Notice set forth below and any subsequent
Address for Notice may be changed by a communication as provided
herein.
Address for Notice to CPI Research and Development, Inc.:
CPI Research and Development, Inc.
Attention: ____________________
1706 Washington Avenue
St. Louis, MO 63103
Fax: __________________________ Tel: __________________________
Copy to:
_________________________
_________________________
_________________________
_________________________
Address for Notice to Consumer Programs, Incorporated
Consumer Programs, Incorporated
Attention: ____________________
1706 Washington Avenue
St. Louis, MO 63103
Fax: __________________________ Tel: __________________________
Copy to:
_________________________
_________________________
_________________________
_________________________
<PAGE>
Address for Notice to Licensee:
Fox Photo, Inc.
Attention: ____________________
1706 Washington Avenue
St. Louis, MO 63103
Fax: __________________________ Tel: __________________________
Copy to:
_________________________
_________________________
_________________________
_________________________
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly appointed representatives.
CPI RESEARCH AND DEVELOPMENT, INC.
By: __________________________________
Name: __________________________________
Title: __________________________________
Date: __________________________________
CONSUMER PROGRAMS INCORPORATED
By: __________________________________
Name: __________________________________
Title: __________________________________
Date: __________________________________
FOX PHOTO, INC.
By: __________________________________
Name: __________________________________
Title: __________________________________
Date: __________________________________
<PAGE>
Exhibit A to Trademark License Agreement
<TABLE>
Photofinishing-Related Marks
<CAPTION>
TITLE OWNER REG. NO.
<S> <C> <C>
CPI COLOR PRINT FILM (R) 1,927,198
CPI COLOR PRINT FILM (TM) Consumer Programs Incorporated
and Design
CPI PHOTO (SM) Consumer Programs Incorporated
CPI PHOTO (SM) Consumer Programs Incorporated
CPI PHOTO EXPRESS (SM) Consumer Programs Incorporated
CPI PHOTO FINISH (R) Consumer Programs Incorporated 1,790,734
CPI PHOTO FINISH and Design Consumer Programs Incorporated 1,333,667
CPI PHOTO PREVIEW SYSTEM CPI Research and Development, Inc.
PHOTO ATM (SM) CPI Research and Development, Inc.
SMARTCOLOR (SM/TM) CPI Research and Development, Inc.
SMARTCOLOR (SM) CPI Research and Development, Inc.
SMARTCOLOR (SM) (stylized) CPI Research and Development, Inc.
SMARTCOLOR DIGITAL SYSTEM (SM) CPI Research and Development, Inc.
SMARTCOLOR DIGITAL SYSTEM (SM) CPI Research and Development, Inc.
and Design
SMARTCOLOR SYSTEM (SM) CPI Research and Development, Inc.
SMARTPAK (TM) CPI Research and Development, Inc.
<FN>
TM = Trademark
SM = Service Mark
R = Registered
</FN>
</TABLE>
<PAGE>
Exhibit A to Trademark License Agreement
<TABLE>
Photofinishing-Related Marks (continued)
<CAPTION>
TITLE APP. SER. NO. GOODS/SERVICES
<S> <C> <C>
CPI COLOR PRINT FILM (R) 74/502,551 Unexposed Photographic Film
CPI COLOR PRINT FILM (TM) 74/502,552 Unexposed Photographic Film
and Design
CPI PHOTO (SM) 74/660,816 Photographic Film Development Services
CPI PHOTO (SM) 75/038,502 Digital Imaging Services in IC 40;
Providing Information Relating to the
Field of Photography by Electronic
Means Including an Internet-based
World-wide Web Site, and Providing
Access Through an Internet-based
World-wide Web Site to an Interactive
Computer Database in the Field of
Photography in IC 42
CPI PHOTO EXPRESS (SM) 74/726,850 Photographic Fim Developing,
Processing, and Photofinishing
Services in IC 40; Retail Store
Services for Photographic Film
Developing, Processing, and
Photofinishing Services in IC 42
CPI PHOTO FINISH (R) 74/317,529 Photographic Film Development Services
CPI PHOTO FINISH and Design 430,671 Photographic Film Development Services
CPI PHOTO PREVIEW SYSTEM 75/077,340 Electronic Photographic Development
Finishing, Processing and Imaging
Services
<FN>
TM = Trademark
SM = Service Mark
R = Registered
</FN>
</TABLE>
<PAGE>
Exhibit A to Trademark License Agreement
<TABLE>
Photofinishing-Related Marks (continued)
<CAPTION>
TITLE APP. SER. NO. GOODS/SERVICES
<S> <C> <C>
PHOTO ATM (SM) 74/633,105 Photographic Film Development Services
SMARTCOLOR (SM/TM) 74/660,785 Unexposed Photographic Film in IC 1;
Photographic Film Development Services
in IC 40
SMARTCOLOR (SM) 75/005,614 Photographic and Imaging Development,
Finishing, and Processing Services in IC
40; Retail Store Services for
Photographic and Imaging Development,
Finishing, and Processing Services in IC
42
SMARTCOLOR (SM) (stylized) 74/675,173 Unexposed Photographic Film in IC 1;
Photographic Film Development Services
in IC 40
SMARTCOLOR DIGITAL SYSTEM (SM) 74/660,587 Photographic Film Development Services
SMARTCOLOR DIGITAL SYSTEM (SM) 74/675,174 Photographic Film Development Services
and Design
SMARTCOLOR SYSTEM (SM) 74/615,852 Photographic Film Development Services
SMARTPAK (TM) 74/676,008 Unexposed Photographic Film
<FN>
TM = Trademark
SM = Service Mark
R = Registered
</FN>
</TABLE>
<PAGE>
Exhibit A to Trademark License Agreement
<TABLE>
Photofinishing-Related Marks (continued)
<CAPTION>
TITLE CLASS (ES) STATUS
<S> <C> <C>
CPI COLOR PRINT FILM (R) Int'l Class 1 Registered
CPI COLOR PRINT FILM (TM) Int'l Class 1 Published in Official
and Design Gazette 3/5/96 at TM 89
CPI PHOTO (SM) Int'l Class 40 Response to Office Action No.1
Filed 12/95
CPI PHOTO (SM) Int'l Classes
40 & 42
CPI PHOTO EXPRESS (SM) Int'l Classes Response to OA No. 2 Due
40 & 42 8/29/96
CPI PHOTO FINISH (R) Int'l Class 40 Registered
CPI PHOTO FINISH and Design Int'l Class 40 Sections 8 & 15 Acknowledged
& Accepted
CPI PHOTO PREVIEW SYSTEM Int'l Class 40 Filing Receipt Received from
PTO
PHOTO ATM (SM) Int'l Class 40 Statement of Use Filed 5/24/96
SMARTCOLOR (SM/TM) Int'l Classes Filing Receipt for Trademark
1 & 40 Application Received from PTO;
Published in Official Gazette
12/12/95
SMARTCOLOR (SM) Int'l Classes Filing Receipt Received from
40 & 42 PTO
SMARTCOLOR (SM) (stylized) Int'l Classes Response to Office Action No.2
1 & 40 Due 8/26/96
<FN>
TM = Trademark
SM = Service Mark
R = Registered
</FN>
</TABLE>
<PAGE>
Exhibit A to Trademark License Agreement
<TABLE>
Photofinishing-Related Marks (continued)
<CAPTION>
TITLE CLASS (ES) STATUS
<S> <C> <C>
SMARTCOLOR DIGITAL SYSTEM (SM) Int'l Class 40 Response to Office Action No.1
Filed 4/19/96
SMARTCOLOR DIGITAL SYSTEM (SM) Int'l Class 40 Response to Office Action N0.1
and Design Filed 5/7/96
SMARTCOLOR SYSTEM (SM) Int'l Class 40 Response to Office Actoin No.2
Due 7/24/96
SMARTPAK (TM) Int'l Class 1 Published in Official Gazette
12/12/95
<FN>
TM = Trademark
SM = Service Mark
R = Registered
</FN>
</TABLE>
<PAGE>
EXHIBIT J
PATENT LICENSE AGREEMENT
This Agreement made effective as of the ___ day of ________,
1996 by and between:
EASTMAN KODAK COMPANY, a New Jersey corporation, having its
principal place of business at 343 State Street, Rochester, New
York 14650 (hereinafter KODAK); and
PROEX PHOTO SYSTEMS, INC., a Missouri corporation with its
principal place of business at 7101 Ohms Lane, Edina, Minnesota
55439 (hereinafter LICENSEE).
WITNESSETH THAT:
WHEREAS, KODAK owns U.S. Patents No. 4,805,037; No.
5,006,871; and No. 5,008,697 and all patents corresponding
thereto relating to video proofing systems; and
WHEREAS, KODAK granted, under a Patent License
Agreement dated 10 June 1993, certain contingent rights to
LICENSEE to manufacture and use video proofing systems under
said patents; and
WHEREAS, KODAK now indirectly holds a 51% equity
interest in LICENSEE and desires to grant to LICENSEE the license
set forth herein;
NOW, THEREFORE, KODAK and LICENSEE agree as follows:
ARTICLE I - DEFINITIONS
A. "Licensed Patents" shall mean the United States
patents and all corresponding patents and patent applications in
other countries, all of which are listed in the Schedule attached
hereto.
B. "Licensed System" shall mean a system for video
proofing in which a scene is simultaneously recorded by a
portrait camera as a latent image on photographic film and by an
electronic video camera as a video rendition whereby the video
rendition may be displayed and evaluated prior to
photographically processing and printing the film to produce a
positive image, and which is covered by one or more Licensed
Patents.
C. "Affiliate" means any company, partnership, joint
venture, or other entity which directly or indirectly controls,
is controlled by or is under common control with a party hereto.
<PAGE>
Control shall mean the possession of fifty percent (50%) or more
of the voting stock or the power to direct or cause the direction
of the management and policies of the controlled entity, whether
through the ownership of voting securities, by contract or
otherwise.
ARTICLE II - LICENSE GRANT
A. For valuable consideration, the sufficiency and
delivery of which is hereby acknowledged, KODAK grants to
LICENSEE and its Affiliates a royalty-free, fully-paid
nonexclusive license under the Licensed Patents to make and to
have made Licensed Systems and to use, but not to sell, Licensed
Systems so made.
B. The license granted herein shall become effective
upon the effective date of this Agreement.
C. Unless this license is terminated under the
provisions of Article III hereof, the license granted hereunder
shall be for the full term of each Licensed Patent.
ARTICLE III - TERMINATION
A. If LICENSEE shall fail or refuse to comply with
any of its obligations hereunder, KODAK may give LICENSEE written
notice of such failure or refusal, and if, within sixty (60) days
after such notice, LICENSEE fails to remedy such failure or
refusal, then in addition to its other legal remedies, KODAK
shall have the right to terminate this Agreement and the license
granted herein, effective upon written notice to that effect.
Failure by KODAK to give any such notice or to invoke the
termination provision of this Paragraph shall not condone or
excuse any such failure or refusal by LICENSEE.
B. LICENSEE shall have the right to terminate
forthwith the license granted hereunder, as to any or all
Licensed Patents, upon written notice to KODAK. Termination
under this Paragraph shall not prejudice any rights of KODAK
relating to any Licensed Patent(s) thus removed.
C. Unless sooner terminated, the license granted
hereunder with respect to each Licensed Patent shall continue in
force until expiration of such Licensed Patent. This Agreement
shall terminate as of the expiration date of the last Licensed
Patent to expire.
<PAGE>
ARTICLE IV - MISCELLANEOUS
A. Except as otherwise expressly provided herein,
nothing contained in this Agreement shall:
(1) Grant any license or sublicensing right or confer any
right, by implication, estoppel or otherwise, such as under any
patent application or patent;
(2) Impose any obligation to furnish any technical
information or to file or prosecute any patent application, or
maintain any patent in force;
(3) Impose any obligation or confer any right to enforce
any patent; or
(4) Constitute any representation, warranty, assurance,
guarantee or inducement whatsoever by KODAK.
B. Neither this Agreement nor any license granted
herein shall be assignable or otherwise transferable by LICENSEE
or its Affiliates without written authorization of KODAK.
C. This Agreement, which shall be governed by the
laws of New York State, constitutes the entire Agreement between
the parties with respect to the subject matter hereof. Any
modification of this Agreement shall be set forth in writing and
duly executed by both parties.
IN WITNESS WHEREOF, the parties have caused their
respective corporate names to be affixed hereto and this
instrument to be signed by their duly authorized officers, all as
of the day and year first above written.
EASTMAN KODAK COMPANY
By _______________________
Title:____________________
PROEX PHOTO SYSTEMS, INC..
By: _______________________
Title: ____________________
<PAGE>
Schedule to Patent License Agreement
LICENSED PATENTS
1. U.S. Patent 4,805,037 entitled IMAGE RECORDING SYSTEM
Issued February 14, 1989
Corresponding foreign applications:
EP 88-909150.0 dated October 5,1988
Japan 88/0508516 dated October 5, 1988
PCT/US88/03392 dated October 5, 1988
2. U.S. Patent 5,006,871 entitled IMAGE RECORDING SYSTEM AND
METHOD
Issued April 9, 1991
Inventor: Stephen A. Noble
No corresponding foreign applications or patents
3. U.S. Patent 5,008,697 entitled IMAGE RECORDING SYSTEM AND
METHOD
Issued April 16, 1991
Inventor: Stephen A. Noble
No corresponding foreign applications or patents
<PAGE>
EXHIBIT K
SOFTWARE LICENSE AGREEMENT
This Software License Agreement ("Agreement") is entered
into this ____ day of ______, 1996 ("Effective Date"), by and
between CPI Research and Development, Inc. a Delaware corporation
with its principal place of business at 1706 Washington Avenue,
St. Louis, MO 63103 ("Licensor"), and Fox Photo, Inc., a
Delaware corporation, with its principal place of business at
1706 Washington Avenue, St. Louis, MO 63103 ("Licensee").
WHEREAS, Licensor owns and has developed certain
computer programs, documentation, training materials and
associated technological know-how as further defined below;
WHEREAS, Licensee is a 49%-owned affiliate of the
parent of Licensor; and
WHEREAS, Licensor wishes to grant to Licensee, and
Licensee wishes to receive, a royalty-free license to use the
Software, as hereinafter defined, in the Business (as that term
is defined in the Subscription Agreement, dated August _, 1996,
among Eastman Kodak Company, CPI Corp., Consumer Programs
Holding, Inc., and Fox Photo, Inc. (the "Subscription
Agreement"));
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, the adequacy and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE 1. SOFTWARE
As used herein, the "Software" shall mean the computer
software described in Exhibit A attached hereto and made a part
of this Agreement, as said exhibit may be modified from time to
time in accordance with this Agreement.
ARTICLE 2 LICENSE OF SOFTWARE
2.1 Grant of License. Licensor hereby grants to Licensee
on the terms and conditions of this Agreement a royalty-free,
nonexclusive, nontransferable license to use the Software during
the term of this Agreement in connection with the operation of
the Business. Licensee shall not apply for any domestic or
foreign copyright, patent or other form of proprietary right to
the Software.
<PAGE>
2.2 Grant of Right to Sublicense.
(i) Licensor hereby grants to Licensee a
nonexclusive, nontransferable right to grant sublicenses in the
Software to third parties at Licensee's discretion.
(ii) For each such sublicense, Licensee shall pay
a royalty to Licensor in the amount of the greater of (x) __% of
the license fee charged by Licensee for the sublicenses for the
same Software, or (y) if Licensor is then engaged in granting
sublicenses for the same Software, ___% of the then current
license fee charged by Licensor for sublicenses that it grants
for that Software.
(iii) Each such sublicense must be embodied in a
written agreement that contains terms and conditions no less
restrictive on the sublicensee than are applicable to Licensee's
use of the Software under this Agreement; no such sublicensee
shall have the right to grant any sublicenses.
(iv) Under the provisions of Exhibit C, attached
hereto and made a part of this Agreement, Licensee may deliver to
sublicensees without payment of any additional royalty to
Licensor, any Support Service that Licensor provides to Licensee,
as defined in Exhibit C.
ARTICLE 3.LICENSOR'S OBLIGATIONS
3.1 Licensor will cause to be delivered to Licensee on a
date or dates mutually agreed upon, but not later than five (5)
days after the Effective Date, the executable machine code, any
necessary object code libraries and user documentation for the
Software.
3.2 For so long as Licensor and/or its Affiliates own
shares in Licensee, Licensor will provide to Licensee, software
maintenance and support for the features and functions of the
Software in accordance with the terms of Exhibit C.
3.3 At such time as Licensor and its Affiliates no longer
own stock in Licensee, Licensor shall deliver to Licensee a copy
of the then existing source code and system documentation for the
Software, and hereby grants to Licensee a license to use and
modify said source code, and to use said modified source code,
pursuant to Article 2 herein. Ownership of such modifications
shall reside in Licensee, subject to Licensor's ownership of the
underlying Software.
<PAGE>
3.4 At such time as Licensor and its Affiliates no longer
own stock in Licensee, Licensee shall pay a royalty of
________________ for exercise of rights granted pursuant to
Article 2 and Section 3.3 herein.
ARTICLE 4.LICENSEE'S OBLIGATIONS
4.1 Licensee shall be responsible for setting up and
maintaining each Business site for the installation and operation
of the Software and the utilization of the Software at its own
expense in accordance with the telecommunications, interface, and
environmental specifications provided by Licensor.
4.2 Licensee shall be responsible for setting up and
maintaining at its own expense all local and wide area networks,
telecommunications circuits and electricity necessary to house
and operate the Software.
4.3 Licensee shall be solely responsible for obtaining at
its own expense any necessary permits or permissions from
governmental authorities, its landlord or others for preparing
the site, installing cables or taking other actions required for
the installation and operation of the Software.
4.4 Licensor will have the right upon reasonable notice to
audit periodically Licensee's usage of the Software and its
compliance with the license restrictions in this Agreement and
Licensee's records concerning such use of the Software. Such
audit shall be at Licensor's expense.
ARTICLE 5 SOFTWARE LICENSE AND USE RESTRICTIONS
5.1 Except as provided in Section 2.2 herein, the
licenses herein granted are limited to Licensee's use of object
code for the Software, solely for Licensee's internal purposes in
connection with the Business. Licensee shall notify Licensor
more than ninety (90) days prior to any intended use outside the
United States, including without limitation the intended
countries in which the Software will be used, so that the parties
may ensure that they are in compliance with United States export
laws and other applicable law.
5.2 Title to the Software and all copies thereof shall at
all times remain in Licensor and all rights not explicitly
granted to Licensee shall be retained by Licensor.
<PAGE>
5.3 Licensor shall own all updates, enhancements and new
versions of the Software and all copies thereof, except that
title to Modifications (as defined in Exhibit C attached hereto
and made a part of hereof) shall be determined in accordance with
Exhibit C.
5.4 Licensee recognizes and acknowledges that the
Software embodies trade secrets and confidential information of
Licensor. Except as otherwise provided herein, Licensor and
reserves all trade secret and other proprietary rights in the
Software.
5.5 Licensee's use of the Software shall be subject to
the following restrictions:
(i) Licensee may install the object code for the
Software only at the Business sites.
(ii) Licensee may make a reasonable number of
copies of the Software provided to Licensee solely for backup or
archival purposes, to be kept on Licensee's premises or at a
remote storage facility, or as required to use the Software in
accordance with this license. Licensee shall not otherwise make
or permit others to make any copies of the Software.
(iii) Except as provided in Section 2.2 herein,
Licensee shall not assign, transfer or sublicense its license to
the Software, except to its Affiliates, as defined in the
Subscription Agreement, without the prior written consent of
Licensor.
(iv) Licensee shall not decompile, disassemble or
reverse engineer the Software.
(v) Licensee shall not adapt or modify the
Software in any manner without express written permission of
Licensor.
(vi) Licensee shall not remove or destroy any
copyright, trademark or other proprietary marks, notices or
legends contained in or on the Software and agrees to include
such proprietary markings, notices or legends on all copies or
partial copies of the Software permitted to be made under this
Agreement.
ARTICLE 6 LIMITED WARRANTIES AND INDEMNITIES
6.1 Licensee represents, warrants and covenants:
<PAGE>
(i) that it has the right, power and authority to
enter into this Agreement.
(ii) that it will not permit the Software or cause the
Software to be utilized other than in the Business, except as
permitted pursuant to Section 2.2 herein.
6.2 Licensor represents, warrants and covenants:
(i) that it has the right, power and authority to
enter into this Agreement and to grant the licenses contained in
this Agreement, and that such grants do not conflict with any
licenses or rights previously granted to Licensor or to any third
party by Licensor.
(ii) that Licensees's use of the Software will not
infringe any U.S. patent or copyright, or misappropriate any
trade secret.
(iii) that, for a period of ninety (90) days after the
Effective Date, when executed on the Hardware and Software
Configuration described in Exhibit B attached hereto and made a
part of this Agreement, the Software will perform substantially
in accordance with the user documentation; provided, however,
that Licensor does not warrant that use and operation of the
Software will be uninterrupted or error-free, or that the
functions contained in the Software shall meet Licensee's
requirements. Licensee's sole and exclusive remedy for breach of
this Section shall be for Licensor to correct any errors or
nonconformities upon notice from Licensee.
6.3 EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE,
LICENSOR MAKES NO WARRANTIES, EXPRESS, OR IMPLIED, INCLUDING, BUT
NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND ANY IMPLIED WARRANTIES
ARISING OUT OF TRADE USAGE OR PRACTICE, COURSE OF DEALING OR
COURSE OF PERFORMANCE.
6.4 (a) This Agreement is for the benefit of Licensee
and its Affiliates and Licensor and its Affiliates only.
(b) Licensee will indemnify Licensor and hold Licensor
harmless from and against any third party claim arising from
Licensee's use of the Software, except to the extent said claim
results from Licensor's breach of its warranty set forth in
Section 6.2 herein. Licensor will indemnify Licensee and hold
Licensee harmless from and against any breach of Licensor's
representations, warranties and covenants set forth in Section
6.2 herein.
<PAGE>
(c) For each such indemnity, the indemnitor shall
defend, indemnify and hold harmless the indemnified party, and
its Affiliates, agents, employees, successors and permitted
assigns, from and against all liabilities, suits, claims, losses,
damages and expenses, including costs and reasonable attorney's
fees, relating to or arising from the specified type of claim.
This obligation shall be inapplicable if the indemnitor is not
notified promptly of the legal proceeding or charge and is
prejudiced by the delay in notice. In any claim or action within
the scope of this Section, the indemnitor shall have the right to
control the defense, retain counsel of its choice that is
reasonably acceptable to it, and settle at its expense the claim
or action. The indemnitee shall cooperate to the extent
necessary in the defense and shall have the rights to retain
separate counsel at its expense and to participate in the
defense.
(d) In the event that either party receives notice
alleging that Licensee's use of the Software constitutes
infringement of a copyright or U.S. patent, or misappropriation
of a trade secret, Licensor at its option and expense shall (i)
modify the Software so as to make it non-infringing or
non-misappropriating without losing functionality or capability;
(ii) purchase for Licensee a right to use the Software; or (iii)
purchase for Licensee the right to use other software of
equivalent functionality and capability. In the event that none
of these options is possible, Licensor shall promptly so notify
Licensee, at which time Licensee, at its option and its sole risk
with regard to any damages resulting from continued infringement,
shall either (x) terminate this Agreement, or (y) assume the risk
of continuing infringement.
ARTICLE 7 DISCLAIMERS AND LIMITATIONS OF LIABILITY
7.1 Neither Licensor nor its Affiliates, or employees,
shall be liable, even if negligent, to Licensee or any other
person for any incompleteness, inaccuracy, unavailability, error
or untimeliness in the Software or results obtained by using the
Software, except as expressly provided in this Agreement.
7.2 The parties acknowledge that the terms in this
Agreement including the limitations on liability reflect an
agreed upon allocation of risk between the parties as authorized
by the Uniform Commercial Code and applicable law.
7.3 LICENSOR SHALL NOT BE LIABLE FOR ANY DAMAGES ARISING
OUT OF LICENSEE'S USE OF THE INFORMATION PRODUCED BY THE SOFTWARE
NOR FOR ANY INTERRUPTION, DELAY OR DISCONTINUATION OF USE OF THE
SOFTWARE DUE TO ANY CAUSE WHATSOEVER, UNLESS IN EACH CASE CAUSED
BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LICENSOR.
<PAGE>
7.4 IN NO EVENT SHALL LICENSOR OR ITS LICENSORS BE LIABLE
UNDER ANY THEORY OF LIABILITY FOR ANY INDIRECT, SPECIAL,
PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND,
INCLUDING, WITHOUT LIMITATION, LOSS OF USE, INTERRUPTION OF
BUSINESS, LOSS OF BUSINESS PROFITS, AND LOSS OF BUSINESS
INFORMATION, ON ACCOUNT OF ENTERING INTO OR RELYING ON THIS
AGREEMENT, EVEN IF LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES.
7.5 LICENSOR'S LIABILITY FOR ANY AND ALL DAMAGES, WHETHER
DIRECT OR OF ANY OTHER KIND, INCLUDING ANY LIABILITY UNDER
SECTION 6.2 HEREOF, SHALL BE LIMITED TO THE CAP AND BY THE
THRESHOLD SET FORTH IN SECTION 9.7 OF THE SUBSCRIPTION AGREEMENT.
ARTICLE 8 CONFIDENTIALITY
8.1 Neither Licensor nor Licensee shall use any material
or information relating to the other party's or a third party's
research, development, trade secrets and business operations and
affairs that has or will come into its possession in negotiating
or performing this Agreement, including, but not limited to, the
Software and the terms of this Agreement, for any purpose other
than for the performance of this Agreement, nor shall a party
disclose such information to any person other than (i) its
employee who needs to know such to perform this Agreement and has
agreed to use it only for such performance and not to disclose it
except to (x) another employee of the party with a similar need
or (y) a third party who needs to know it to perform necessary
work for a party and who has executed a suitable confidentiality
agreement, and (ii) a third party who needs to know it to perform
work for a party and who has executed suitable confidentiality
agreement. This obligation shall not apply to material or
information that (i) is or becomes publicly known through no
fault of the disclosing party; (ii) is developed prior to
disclosure independently by the disclosing party; (iii) is known
by the disclosing party prior to its being furnished pursuant to
this Agreement if the disclosing party does not have a prior duty
to maintain its confidentiality; (iv) is obtained by the
disclosing party from a third party who did not owe the other
party a duty to preserve its confidentiality; or (v) is required
to be disclosed by a court or other governmental authority
provided that prompt notice shall first be given to the other
party.
8.2 Each party shall notify and inform employees having
access to the other party's confidential or proprietary
information of limitations, duties and obligations concerning
confidentiality.
<PAGE>
8.3 Licensee shall adopt and enforce, with respect to
persons entering its place of business, reasonable rules to
prevent copies of the Software or copies of any portion of the
Software from being taken improperly from such place of business,
and Licensee shall ensure that any subcontractor of Licensee with
access to Licensor's confidential or proprietary information
agrees to be bound by the terms of this Article.
8.4 The parties acknowledge that either party's breach of
this Article would cause the other party irreparable injury for
which it would not have an adequate remedy at law. In the event
of a breach, the non-breaching party shall have the right to
equitable and injunctive relief to prevent any unauthorized use,
copying or disclosure, and to such damages as are occasioned by
such unauthorized use, copying or disclosure.
ARTICLE 9 TERM AND TERMINATION
9.1 This Agreement shall be in force perpetually unless
terminated as set forth herein
9.2 Licensor may terminate this Agreement on ten (10)
days' notice if Licensee knowingly uses, or knowingly permits any
other person to use, the Software for any illegal purpose, and
such person is as a result convicted of a crime.
9.3 This Agreement may be terminated by either party if
the other party commits a material breach of any provision,
covenant or obligation and does not cure such breach within
thirty (30) days of actual receipt of written notice thereof from
the non-breaching party; provided, however, that this Agreement
may not be terminated if the nature of the breach is such that it
is curable but cannot reasonably be cured within such thirty (30)
day period so long as the offending party, within the thirty (30)
day period, commences action to cure said breach, and thereafter
diligently pursues said cure.
9.4 Upon termination for any reason, Licensee shall (i)
immediately cease use of the Software and return to Licensor or
destroy, at Licensee's option, all copies of the Software, any
other confidential or proprietary information of Licensor in its
possession at the time of termination and any documents derived
from the foregoing, and (ii) deliver to Licensor a written
statement certifying that Licensee has complied fully with the
requirements of this Section 9.4.
ARTICLE 10 MISCELLANEOUS TERMS
10.1 Assignability. Neither party shall assign this
Agreement, except to its Affiliates, without the prior written
consent of the other party.
<PAGE>
10.2 Governing Law. This Agreement shall be deemed to
have been executed and delivered in the State of New York and
shall be governed by and construed in accordance with the laws of
New York. The parties hereby consent to the exclusive
jurisdiction and venue of the U.S. District Court for the
Southern District of New York for the purpose of any action or
proceeding brought by either of them on or in connection with
this Agreement or any alleged breach thereof, and in such action
or proceeding hereby waive any objection they may have based on
lack of personal jurisdiction, improper venue, or inconvenient
forum.
10.3 Severability. The provisions of this Agreement are
severable, and the unenforceability of any provision of this
Agreement shall not affect the enforceability of the remainder of
this Agreement. The parties acknowledge that it is their
intention that in the event that any provision of this Agreement
is determined by a court to be unenforceable as drafted, that
provision should be construed in a manner designed to effectuate
the purposes of that provision to the greatest extent possible
under applicable law.
10.4 Headings. All headings in this Agreement are
included solely for convenient reference, are not intended to be
full and accurate descriptions of the contents of this Agreement,
shall not be deemed a part of this Agreement, and shall not
affect the meaning or interpretation of this Agreement.
10.5 Modification of Agreement. This Agreement may be
modified or amended only by written agreement of the parties.
10.6 Notices. If either party is required or permitted
to send any notice to the other party, that notice shall be in
writing and (i) hand delivered; (ii) transmitted by telex,
legible telecopy or cable, with a copy sent concurrently by
certified mail, postage prepaid, return receipt requested; or
(iii) delivered by prepaid overnight courier to the following
address or such other addresses as the party subsequently may
provide in a notice in accordance with this Section:
If to Licensor: ______________
______________
______________
Attention: ______________
Telephone: ______________
Fax: ______________
<PAGE>
With a Copy
To: ______________
______________
______________
Telephone: ______________
Fax: ______________
If to Licensee: ______________
______________
______________
Attention: ______________
Telephone: ______________
Fax: ______________
With a Copy
To: ______________
______________
______________
Telephone: ______________
Fax: ______________
10.7 Nonwaiver. The failure of either party to assert a
right or employ a remedy shall not constitute a waiver of that
right or remedy or any other right or remedy which that party may
otherwise have at law or equity. No right or remedy shall be
deemed waived unless expressly waived in writing.
10.8 Relationship of the Parties. Nothing in this
Agreement shall be construed as creating or altering any existing
partnership, joint venture, fiduciary or agency relationship
between the parties, or as authorizing either party to act as
agent for the other.
10.9 Force Majeure. Neither party shall be liable to the
other party for delay in performing any of its obligations under
this Agreement due to causes beyond its reasonable control,
including, but not limited to, acts of God, fires, strikes not
involving its employees, accidents, wars both declared and
undeclared, embargoes, legal restrictions, riots, insurrections
and actions of utility companies; provided, however, that the
party shall give notice to the other party of any actual or
anticipated delay, take diligent steps to minimize the delay and
overcome its effects, and promptly resume performance when the
cause of the delay is removed.
<PAGE>
10.10 Remedies Cumulative. Except as specifically
provided in this Agreement, the rights and remedies provided in
this Agreement and all other rights and remedies available to
either party at law or in equity are, to the extent permitted by
law, cumulative and not exclusive of any other right or remedy
now or hereafter available at law or in equity. Neither
asserting a right nor employing a remedy shall preclude the
concurrent assertion of any other right or employment of any
other remedy.
10.11 Successors. This Agreement shall be binding upon
and shall inure to the benefit of the parties, their successors,
permitted assigns and legal representatives.
10.12 Survivability. The Sections or Articles of this
Agreement captioned "Limited Warranties and Indemnities,"
"Disclaimers and Limitations of Liability," "Confidentiality,"
"Term and Termination" and "Miscellaneous Terms," shall remain in
effect after the termination of this Agreement and all licenses
granted hereunder, provided that indemnities shall survive only
with respect to causes of action accruing prior to termination of
the licenses granted hereunder.
10.13 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be original but
all of which together shall constitute a single instrument.
10.14 Entire Agreement. This Agreement together with its
Exhibits constitutes the entire agreement between the parties
concerning the subject matter of this Agreement and supersedes
all prior Agreements between the parties concerning the subject
matter of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their respective duly authorized officers.
CPI RESEARCH AND DEVELOPMENT INC. FOX PHOTO, INC
By: _______________________ By: ______________________
Name:_______________________ Name: ______________________
Title:_______________________ Title:______________________
Date:_______________________ Date: ______________________
<PAGE>
Exhibit A to Software License Agreement
The Software
"Software" shall mean the following software as it may exist
at any time during which this Agreement or the licenses granted
hereunder is in effect.
<PAGE>
Exhibit B to Software License Agreement
Hardware and Software Configuration
[This configuration will be set forth individually in each
Agreement at the time that it is executed.]
<PAGE>
Exhibit C to Software License Agreement
SOFTWARE MAINTENANCE AGREEMENT
1. Services to be Provided. Licensor does not represent
that the Software is free from errors or defects. During the
term of the Agreement, Licensor will use reasonable efforts to
provide Error Correction, Updates, and Hotline Service, as those
terms are defined below in this Exhibit (collectively, the
"Support Service"), and Licensor shall make or cause to be made
such modifications to the Software other than Error Correction
and Updates as may reasonably be requested by Licensee
("Modifications").
2. Support Service to be Provided.
(a) Error Correction. Licensor shall attempt to correct
documented errors in the Software reported to it that cause the
Software not to perform substantially in accordance with user
documentation, if the manifestations of such errors can be
repeated by Licensor. If a reported error causes the Software to
be inoperable or if Licensee's notice to Licensor states that
such error is substantial and material with respect to Licensee's
use of the Software, Licensor shall, as expeditiously as
possible, use its best efforts to correct such error, or to
provide a software patch or bypass around such error. However,
under no circumstances does Licensor warrant or represent that
all errors can or will be corrected.
(b) Updates. Licensor shall provide to Licensee updates,
enhancements, modifications and improvements made by Licensor for
its own use. However, Licensor shall not be obligated to make
any updates, enhancements, modifications or improvements for its
own use.
(c) Hotline Service. Licensor shall provide to Licensee
remote access to Licensor personnel to assist Licensee in
answering routine questions with respect to use of the Software.
Licensee's access to Licensor personnel for this purpose shall
include telephone access and facsimile access.
(d) Exclusions. Licensor shall have no responsibility to
correct (i) deficiencies resulting from changes to or
modifications of the Software made without Licensor' consent by
any person other than Licensor, (ii) failure of the Software to
function, properly or at all, in connection with any hardware or
system software configuration other than that shown on Exhibit B
to the Software License Agreement to which this is an Exhibit; or
(iii) failure of the Software to function, properly or at all,
with any other software.
<PAGE>
(e) Licensee Assistance. Licensor's obligations under this
Software Maintenance Agreement shall be abrogated to the extent
Licensee does not give Licensor (i) reasonable access to
Licensee's equipment, the Software, other pertinent software, and
all relevant documentation, records, data and information, and
(ii) such reasonable assistance as Licensor may request,
including but not limited to sample output and other diagnostic
information.
(f) Media. Any modified program code provided under this
Software Maintenance Agreement shall be provided to Licensee in
machine-readable form on media specified by Licensor. Licensee
shall pay the cost of any such media (including shipping charges)
provided by Licensor, in addition to any other fees required to
be paid under this Software Maintenance Agreement.
3. Maintenance Fees.
(a) Fees for Support Service shall be payable by Licensee
to Licensor in accordance with rates and fees recited in the
Services Agreement between CPI and Fox (which shall continue to
have effect for purposes of this provision even if said agreement
terminates prior to termination of this Agreement).
(b) The fee for each Modification shall be on terms
(including without limitation price, timing, ownership and
identification of deliverables) to be negotiated by the parties
after the request for said Modification has been made.
<PAGE>
EXHIBIT L
PROMISSORY NOTE
$4,000,000.00 _________, 1996
FOR VALUE RECEIVED, Fox Photo, Inc. ("Fox"), a
Delaware corporation, with its principal office at 1706
Washington Avenue, St. Louis, Missouri 63103, hereby promises
to pay to Consumer Programs Incorporated ("Programs"), a
Missouri corporation, with its principal office at 1706
Washington Avenue, St. Louis, Missouri 63010, the principal sum
of Four Million Dollars ($4,000,000.00) in lawful money of the
United States and in immediately available funds, together with
interest thereon at the rate of seven percent (7%) per annum,
on the first anniversary of the date of this Note (the
"Maturity Date").
Events of Default.
(a) The following events shall constitute events of
default under this Note:
(i) Fox fails to make any payment of principal
when due or fails to make any payment of interest
within fifteen days of the Maturity Date;
(ii) Fox makes an assignment for the benefit of
creditors, commences (as the debtor) any case in
bankruptcy under Title 11 of the United States Code
("Bankruptcy"), commences (as the debtor) any
proceeding under any other insolvency or receivership
law or files a petition or answer seeking
reorganization or an arrangement with creditors or to
take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or
liquidation law or statute or files an answer
admitting the material allegations of a petition
filed against Fox in any proceeding under any such
law or any corporate action is taken for the purpose
of effecting any of the foregoing;
(iii) A case in Bankruptcy or any proceeding
under any insolvency or receivership law is commenced
against Fox (as the debtor in such case or
proceeding) and a court having jurisdiction in the
premises enters an order for relief against such
debtor in such case or proceeding, or such case or
proceeding is consented to by Fox or remains
undismissed for 90 days, or Fox consents to or admits
the material allegations against it in any case or
proceeding; or
<PAGE>
(iv) A trustee, receiver, agent or custodian
(however named) is appointed or authorized to take
charge of substantially all of the property of Fox
for the purpose of enforcing a lien against such
property for the benefit of creditors.
(b) Upon the occurrence of any event of default
specified in subsection (i) above, all amounts owing hereunder
shall at Program's option become due and payable without
notice, presentation or demand of any kind, all of which are
hereby waived. Upon the occurrence of any of the events of
default specified in subsections (ii), (iii) or (iv) above, all
amounts owing hereunder shall immediately and without further
action by Programs become due and payable without notice,
presentation or demand of any kind, all of which are hereby
waived.
(c) No failure or delay on the part of Programs in
the exercise of any power or right in this Note and no course
of dealing between Fox and Programs shall operate as a waiver
thereof, and no exercise or waiver of any single power or
right, or the partial exercise thereof, shall affect Programs'
rights with respect to any and all other rights and powers.
(d) The rights, powers and remedies expressly
provided in this Note are cumulative and not exclusive of any
rights, powers or remedies which Programs may otherwise have.
No notice to or demand on Fox in any circumstance shall entitle
Fox to a notice or demand in similar or other circumstances or
constitute a waiver of Programs' rights in any circumstances
without notice or demand.
Miscellaneous.
(a) This Note may be prepaid, in whole or in part,
at any time without penalty. Each prepayment of principal
shall be accompanied by accrued and unpaid interest to the date
of prepayment on the principal amount of this Note being
prepaid.
(b) Fox waives presentment and demand for payment,
notice of dishonor, protest and notice of protest of this Note.
(c) The provisions of this Note shall inure to the
benefit of and extend to Programs or any holder hereof or any
assigns of Programs and be binding upon any successors of Fox.
(d) Any notice given pursuant to this Note shall be
in writing and shall be deemed to have been given when
delivered by hand or deposited for certified mail delivery in
the United States mail with postage prepaid or recognized
<PAGE>
overnight delivery service and addressed to the party for whom
it is intended at the address for such party set forth above or
at such other address as to which the parties may from time to
time notify each other in like manner.
(e) This Note shall be governed by and construed
under the laws of the State of New York, without reference to
and regardless of the application of any of its principles of
conflicts of laws.
(f) In the event this Note is placed in the hands of
an attorney for the collection hereof as a result of an event
of default hereunder, Fox agrees to pay all reasonable costs of
collection, including reasonable attorneys' fees.
(g) Neither this Note nor any terms hereof may be
changed or waived unless such change or waiver is in a writing
signed by Fox and Programs.
IN WITNESS WHEREOF, Fox has caused this Note to be
issued as of the date first above written.
FOX PHOTO, INC.
By: _____________________
Name: _____________________
Title: _____________________
<PAGE>
EXHIBIT M
Form of Opinion of General Counsel to CPI
Closing Date
Eastman Kodak Company
343 State Street
Rochester, New York 14650
Ladies and Gentlemen:
I am General Counsel to CPI Corp. ("CParent"), and in
such capacity I have acted as counsel to certain subsidiaries
and certain affiliates of CParent listed on Annex I hereto (the
"Subsidiaries") in connection with the Subscription Agreement
(the "Subscription Agreement") dated August 8, 1996 among
CParent, Holding, Fox and Eastman Kodak Company ("Kodak"), and
the Stockholders' Agreement (the "Stockholders' Agreement"),
dated today, among CParent, Holding, Fox and Kodak. I have
also acted as counsel to CParent, Fox and Consumer Programs
Incorporated ("Programs") in connection with certain
"Collateral Documents" (as such term is defined in the
Subscription Agreement) to which any of them is a party. This
opinion is the opinion required by Section 7.1.16 of the
Subscription Agreement. Capitalized terms used in this opinion
and not otherwise defined shall have the meaning ascribed
thereto in the Subscription Agreement.
[Customary introductory language][Customary
qualifying language providing no less coverage than the opinion
in Exhibit N]
[Opinions]
1. Fox and each of the Subsidiaries is duly
qualified to do business and is in good standing in each
jurisdiction where the conduct of its business or the ownership
or operation of its assets requires such qualification except
where failure to be so qualified or in such good standing can
be cured without material expense and will not result in a
Material Adverse Effect on Fox and the Subsidiaries taken as a
whole.
2. The Services Agreement - Programs, the Services
Agreement-Kodak, the CPI Trademark License Agreement, the
Employment Agreement and the Consulting Agreement are valid and
binding obligations each of Holding, Fox and Programs who is a
party thereto, enforceable against each of them in accordance
with their terms.
<PAGE>
3. The execution, delivery and performance of the
Subscription Agreement and the Stockholders' Agreement by
CParent, Holding and Fox, the execution, delivery and
performance by CParent, Holding, Fox and Programs of the
Collateral Documents to which each such entity is a party, and
the consummation of the transactions contemplated thereby, do
not constitute a breach of or result in a default under, or
cause the acceleration of any payments pursuant to, any
agreement, contract, indenture, lease, or mortgage of which I
have knowledge to which CParent, Holding, Fox, Programs,
Properties or the Subsidiaries is a party or by which CParent,
Holding, Fox or the Subsidiaries or any of their assets is
bound, or violate any provision of any order of any court of
which I have knowledge, any law, rule, regulation, permit, or
license to which CParent, Holding, Fox or the Subsidiaries is
subject, except for (i) requirements for consents of Persons
specified in Schedule 3.4 to the Subscription Agreement and
(ii) breaches, defaults or accelerations of agreements,
contracts, indentures, leases or mortgages which, individually
or in the aggregate, would not have a Material Adverse Effect
on the Business.
4. No permit, consent, approval, or authorization
of, or designation, declaration or filing with, any
governmental authority or any other Person on the part of any
of CParent, Holding, Fox or any of the Subsidiaries is required
in connection with the execution or delivery by CParent,
Holding and Fox of the Subscription Agreement or the
Stockholders' Agreement or the Collateral Documents to which
CParent or Fox is a party or the consummation of the
transactions contemplated thereby other than those that have
previously been obtained and those specified in Schedule 3.4 to
the Subscription Agreement and other than such permits,
consents, approvals, authorizations, designations, declarations
or filings the absence of which, individually or in the
aggregate, would not materially impair the ability of CParent,
Holding and Fox to consummate the transactions contemplated by
the Subscription Agreement or have a Material Adverse Effect on
the Business as it will be conducted immediately following the
Closing Date.
5. At the Closing, the Purchased Stock will be
free and clear of all liens and encumbrances and will not be
subject to any restrictions on transfer except as set forth in
the Stockholders' Agreement and as may be imposed under
applicable federal and state securities laws.
6. To my knowledge, there are no outstanding
options, warrants, conversion privileges, subscriptions, calls,
commitments or similar rights relating to the Common Stock.
<PAGE>
There are no other classes or series of capital stock or other
equity interest of Fox authorized or, to my knowledge, issued
or outstanding.
7. Except as set forth in Schedule 3.15 of the
Disclosure Letter to the Subscription Agreement, there are no
actions, suits, proceedings, orders, grievance procedures,
investigations or claims pending by or against or, to my
knowledge, threatened against Fox or the Subsidiaries or the
Business, or affecting any of their or its property, at law or
in equity, or before or by any governmental department,
commission, board, bureau, agency, or instrumentality where the
amount claimed or in dispute is greater than $5,000
individually or $50,000 in the aggregate; and none of Fox, the
Subsidiaries nor the Business are subject to, or in default of,
any outstanding order, writ, injunction, judgment or decree of
any court or governmental or regulatory authority of which I am
aware and no proceeding is pending or, to my knowledge,
threatened against CParent, Holding, Fox, Programs or
Properties, or any of the Subsidiaries before any court or
governmental agency which seeks to restrain or prohibit the
execution or delivery by CParent, Holding or Fox or any
Subsidiary or to obtain damages or other relief in connection
with the Subscription Agreement, the Stockholders' Agreement or
the Collateral Documents to which CParent, Holding or Fox is a
party or the consummation of the transactions contemplated
thereby, and no investigation that might result in any such
suit, action or proceeding is, to my knowledge, pending or
threatened.
[Customary qualifying language providing no less coverage than
the opinion in Exhibit N]
Very truly yours,
<PAGE>
Form of Opinion of Counsel to CPI, Fox and Subsidiaries
Closing Date
Eastman Kodak Company
343 State Street
Rochester, New York 14650
Ladies and Gentlemen:
[Customary introductory language]
1. Each of CParent, Holding and Fox is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to carry on its
business as it is now being conducted and to own and operate
the properties and assets now owned and operated by it.
2. The Subsidiaries have been duly organized and
are validly existing and in good standing in the jurisdiction
of their organization. Each of the Subsidiaries has all
requisite corporate or partnership, as the case may be, power
and authority to carry on its business as it is now being
conducted and to own and operate the properties and assets now
owned and operated by it.
3. The Board of Directors of CParent, Holding and
Fox have each duly authorized the execution and delivery of the
Subscription Agreement, the Stockholders' Agreement, and each
of the Collateral Documents to which such corporation is a
party, and the performance of the transactions contemplated
thereby. No approval of the stockholders of CParent or Holding
is required with respect to the consummation of the
transactions contemplated by such agreements, either singly or
in light of other transactions undertaken or contemplated by
CParent or Holding. The Subscription Agreement (except for
Section 5.12(c) thereof, with respect to which no opinion is
expressed), the Stockholders' Agreement (except for Section 12
thereof with respect to which no opinion is expressed) , and
each of the following documents to which such corporation is a
party are valid and binding obligations of CParent, Holding,
Programs and Fox, enforceable against each of them in
accordance with their terms: the CPI Corp. Supply Agreement,
the Fox Supply Agreement (except for the second sentence of
Section 3 thereof, with respect to which no opinion is
expressed) and the Working Capital Note.
<PAGE>
4. The execution, delivery and performance of the
Subscription Agreement and the Stockholders' Agreement by
CParent, Holding and Fox, the execution, delivery and
performance by CParent and Fox of the Collateral Documents to
which CParent or Fox is a party, and the consummation of the
transactions contemplated hereby and thereby, do not
contravene any provision of the Certificate of Incorporation or
By-laws of CParent, Holding or Fox.
5. The Purchased Stock is duly authorized and, when
paid for as provided in the Subscription Agreement, will be
duly and validly issued, fully paid and nonassessable. The
offer and sales of the Purchased Stock is exempt from the
registration requirements of the Securities Act of 1933, as
amended.
6. Fox's total authorized capital stock consists
of 2,041 shares of Common Stock. To our knowledge,
immediately prior to the Closing Date, 1,000 shares of the
Common Stock were outstanding and validly issued, all of which
are owned by Holding, free and clear of all liens and
encumbrances. All of the issued and outstanding shares of
Common Stock are validly issued, fully paid and non-assessable.
7. The prepayment of the Dividend Note was duly
authorized by Fox and the additional capital contribution to
Fox of the Dividend Note by Holding to the extent that the
principal and accrued and unpaid interest thereon exceed the
Consideration was duly authorized by Holding.
Customary qualifying language providing no less coverage than
the opinion in Exhibit N.]
Very truly yours,
<PAGE>
EXHIBIT N
Form of Opinion of Inside General Counsel to Kodak
Closing Date
CPI Corp.
1706 Washington Avenue
St. Louis, Missouri 63103
Ladies and Gentlemen:
As the General Counsel of Eastman Kodak Company
("Kodak"), a New Jersey corporation, I am familiar with the
actions taken by Kodak in connection with the Subscription
Agreement (the "Subscription Agreement") dated August 8, 1996
among CPI Corp. ("CParent"), Consumer Programs Holding, Inc.
("Holding"), Fox Photo, Inc. ("Fox") and Kodak and the
Stockholders' Agreement (the "Stockholders' Agreement"), dated
today, among CParent, Holding, Fox and Kodak and certain other
"Collateral Documents" (as such term is defined in the
Subscription Agreement) to which Kodak is a party. This
opinion is the opinion required by Section 7.2.9 of the
Subscription Agreement. Capitalized terms used in this opinion
and not otherwise defined shall have the meaning ascribed
thereto in the Subscription Agreement.
In connection with this opinion, I have examined the
Subscription Agreement and the Stockholders' Agreement, each of
the other Collateral Documents to which Kodak is a party, the
Restated Certificate of Incorporation and By-Laws of Kodak, and
the minutes of certain meetings of the Board of Directors of
Kodak or committees thereof. I have also made such
examinations of certificates of public officials and such other
documents, instruments and agreements as I have deemed
necessary in order to express the opinions set forth herein.
Based upon the foregoing and subject to the
limitations and qualifications set forth below, I am of the
opinion that:
1. Kodak is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
New Jersey and has all requisite corporate power and authority
to carry on its business as it is now being conducted and to
own or operate the properties and assets now owned and operated
by it and to enter into the Subscription Agreement, the
Stockholders' Agreement and the other Collateral Documents to
which it is a party and to perform its obligations thereunder.
2. The Board of Directors of Kodak has duly
authorized the execution and delivery of the Subscription
<PAGE>
Agreement and the Stockholders' Agreement, and the performance
of the transactions contemplated thereby. No approval of the
stockholders of Kodak is required with respect to the
consummation of the transactions contemplated by the
Subscription Agreement. The Subscription Agreement, the
Stockholders' Agreement, the CPI Corp. Supply Agreement, the
Fox Supply Agreement and each of the other Collateral Documents
to which Kodak is a party are valid and binding obligations of
Kodak, enforceable against Kodak in accordance with their
terms.
3. The execution, delivery and performance of the
Subscription Agreement and the Stockholders' Agreement, the CPI
Corp. Supply Agreement, the Fox Supply Agreement and the
Collateral Documents to which Kodak is a party, and the
consummation of the transactions contemplated thereby, do not
contravene any provision of the Restated Certificate of
Incorporation or By-Laws of Kodak; or constitute a breach of or
result in a default under, or cause the acceleration of any
payments pursuant to, any agreement, contract, indenture,
lease, or mortgage to which Kodak is a party or by which Kodak
or its assets is bound, or violate any provision of law, rule,
regulation, order, permit, or license to which Kodak is
subject, where any such breaches, defaults or accelerations or
violations would have a Material Adverse Effect on Kodak.
4. No permit, consent, approval, or authorization
of, or designation, declaration or filing with, any
governmental authority or any other Person on the part of Kodak
is required in connection with the execution or delivery by
Kodak of the Subscription Agreement or the Stockholders'
Agreement or the consummation of the transactions contemplated
thereby other than those which have previously been obtained
and the filing and consent under the HSR Act described in
Section 6.1 of the Subscription Agreement and other than such
permits, consents, approvals, authorizations, designations,
declarations or filings the absence of which, individually or
in the aggregate, would not materially impair the ability of
Kodak to consummate the transactions contemplated thereby or
have a Material Adverse Effect on the Business.
5. No proceeding is pending or, to my knowledge,
threatened against Kodak before any court or governmental
agency which seeks to restrain or prohibit the execution or
delivery by Kodak of the Subscription Agreement, the
Stockholders' Agreement, the CPI Corp. Supply Agreement, the
Fox Supply Agreement or the Collateral Documents to which Kodak
is a party or the consummation of the transactions contemplated
thereby, and no investigation that might result in any such
suit, action or proceeding is, to my knowledge, pending or
threatened.
<PAGE>
The opinions set forth herein are subject to the
following limitations and qualifications:
(i) The enforceability of any obligation of Kodak
may be limited by bankruptcy, reorganization, insolvency,
fraudulent conveyance, moratorium, marshalling or other laws
affecting the enforcement of creditors' rights and remedies
(including such as may deny giving effect to waivers of
debtors' or guarantors' rights) and the application of
equitable principles, including but not limited to, specific
performance and injunctive relief (regardless of whether any of
the foregoing remedies are sought to be enforced in a
proceeding in equity or at law). With respect to the opinion
in the third sentence of paragraph 2 of this letter, I express
no opinion as to the CPI Software Agreement, Section 5.12(c)
of the Subscription Agreement, Section 12.1 of the
Stockholders' Agreement, and the second sentence of Section 3
of the Fox Supply Agreement
(ii) I express no opinion as to the effect of other
agreements or understandings among the parties, written or
oral, or any usage of trade or course of prior dealing among
the parties or whether, in either case, any of the foregoing
would define, supplement or qualify any of the terms of the
Collateral Agreements to which Kodak is a party.
(iii) I have assumed the genuineness of all
signatures by parties other than Kodak, the authenticity of all
documents submitted to me as originals, the conformity to the
originals of all documents submitted to me as copies and the
authenticity of the originals of all such latter documents.
(iv) I have assumed the due execution and delivery of
the Subscription Agreement and the Stockholders' Agreement by
CParent, Holding and Fox and of the Collateral Documents to
which each is a party by CParent, Holding and Fox and that such
documents are binding and enforceable obligations of CParent,
Holding and Fox respectively.
(v) I have relied (to the extent I have no actual
knowledge to the contrary), without investigation, as to
matters of fact upon certificates furnished by governmental
officials.
(vi) I am qualified to practice law in the State of
New York and have not made a special examination of any law
other than laws of the State of New York, the Business
Corporation Act of the State of New Jersey and the federal law
of the United States. Accordingly, in connection with
rendering this opinion, I express no opinion as to the laws of
any state, or as to any matters subject to such laws, other
<PAGE>
than the laws of the State of New York and the New Jersey
Business Corporation Act and the federal law of the United
States.
This opinion letter is rendered solely to you and is
solely for your benefit in connection with the transactions
covered hereby. This opinion letter may not be distributed to
or relied upon by you for any other purpose, or furnished to,
quoted to or relied upon by any other person, firm or
corporation, other than your legal counsel, for any purpose,
without my express prior written consent.
Very truly yours,
ITEM 5 (B)
CPI CORP OUTLINES NEW STRATEGY
IN FORMING PHOTOFINISHING JOINT VENTURE WITH KODAK
St. Louis, MO, August 8, 1996 - CPI Corp. and Eastman Kodak
Company today announced a joint venture to be formed by Kodak's
acquisition of a 51% stake in CPI's photofinish subsidiary. The
subsidiary, Fox Photo, Inc., operates about five hundred and
fifty one-hour photofinish minilabs under the CPI Photo, Fox
Photo and Proex names, and is one of the nation's largest photo
specialty retailers. Under terms of the agreement, which is
subject to regulatory approval, Kodak will pay $56 million for
its 51% stake in Fox Photo (a valuation of $110 million), which
will have a joint board of directors headed by Alyn V. Essman as
chairman.
Commenting on the new venture, Alyn V. Essman, CPI's chairman and
chief executive officer, said, "This alliance with Kodak is a new
opportunity in which, together, we can recreate and expand the
business in our photofinishing division through the joint
venture. Since 1992, we have been engaged in an effort to get
our customers more directly involved in preserving their family
memories through creative imaging offered in our retail
locations. Our efforts bore first fruit in the Sears Portrait
Studio division, where we have witnessed enthusiastic customer
response to an expanding spectrum of portrait options based on
digital imaging technology. Now, with our alliance with Kodak,
we see a great opportunity to focus efforts on the retail
photofinish market, enable new technology, and test product
marketing to expand the photo retail segment."
"Our objective is to move the photofinishing business from a
routine photo processing operation to a creative imaging
endeavor, taking advantage of all the technologies and all of the
capabilities developed by our two companies. By combining our
mutual expertise in digital imaging technology and retail
marketing, CPI and Kodak will be able to create a
customer-responsive business providing a broad spectrum of
specialized imaging services. Retail associates will assist
customers in combining and manipulating images from diverse
sources - prints, slides, portraits, digital images, and drawings
- - to create family mementos that bridge time, space and
generations. Through the ongoing development of these and future
services, we will be able to create a differentiating business
model that will not only serve venture locations, but will also
be expandable through trade licenses to other retailers within
the marketplace."
<PAGE>
"Over the past 40 years, the Kodak/CPI relationship has evolved
from that of valued vendor/customer to one of strategic partners.
We are now positioned with Kodak in a true operating partnership
that will enable us to integrate new technology, products, and
services to increase image utilization through the photo retail
business. We expect to be co-owners for a long time as we
develop the models for successful operation of a retail
enterprise, but being realistic about unforseen changes in
business relationships, there are provisions which would allow
for orderly termination of the venture through a put/call
mechanism generally based on initial valuation."
CPI Corp. is a consumer services company with $526.7 million in
fiscal 1995 sales from continuing operations, operating over
1,700 retail locations, including 1,018 Sears Portrait Studios in
the U.S., Puerto Rico and Canada, 555 CPI/Fox Photo/Proex
photofinishing locations and 150 Prints Plus wall decor
locations.
ITEM 5 (C)
CPI CORP. PLANS STOCK REPURCHASE WITH CASH FROM KODAK JOINT
VENTURE; EXPECTS LOWER SECOND QUARTER EARNINGS.
St. Louis, MO., August 19, 1996 - CPI Corp. (NYSE - CPY) said
today that its board of directors approved a plan authorizing
management to purchase up to $50 million of the company's common
stock in a Dutch Auction tender offer. The tender offer is
expected to be commenced on or prior to completion of the joint
venture transaction with Eastman Kodak Company that was announced
on August 8, 1996. In the previous announcement it was indicated
that Kodak will acquire a 51% stake in CPI's photofinishing
division for $56 million. CS First Boston is financial advisor
to CPI. The company has approximately 14 million shares of
common stock outstanding.
In addition, the company announced that sales for the second
quarter will be approximately equal to the prior year's quarter,
at about $105 million. However, earnings from continuing
operations will be lower than in 1995's second quarter, with an
anticipated loss of about six cents per share, compared with
income of 18 cents per share in 1995.
Commenting on the results, Alyn V. Essman, CPI chairman and chief
executive officer, said, "The primary reason for the decline in
earnings is the impact of fixed costs incurred in the Sears
Portrait Studio during the second quarter seasonally weak sales
period. These fixed costs of depreciation, R&D, and studio labor
are directly related to the divisions's major repositioning, now
in process, that is expected to positively affect results in the
1996 second half and future years. The poor performance in the
first two quarters was expected and does not change our
optimistic outlook for the full-year results."
CPI Corp. is a consumer services company with $526.7 million in
fiscal 1995 sales from continuing operations, operating over
1,700 retail locations, including 1,018 Sears Portrait Studios in
the U.S., Puerto Rico and Canada, 150 Prints Plus wall decor
locations, plus the 555 CPI/Fox Photo/Proex photofinish
locations.
