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) October 1, 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' telephone number, including area code (314) 231-1575
________________________________________________________________
________________________________________________________________
(Former name or former address, if changes since last report.)
<PAGE>
Item 5. OTHER EVENTS
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 (see Form 8-K Current
Report filed August 22, 1996 with the Securities and Exchange
Commission). The consummation of the Joint Venture transaction
was subject to customary conditions including the expiration of
the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("the Act"), and
the procurement of necessary third party consents. On September
19, 1996, the Company announced the expiration of the Act's
waiting period (see Form 8-K Current Report filed September 26,
1996 with the Securities and Exchange Commission). In October of
1996, the necessary third party consents were obtained and are
being filed with this 8-K as separate documents labeled Item
5(A), Consent Letter, and Item 5(C), Consent Letter.
In addition, in October of 1996, the Company amended its $60
Million Revolving Credit Agreement with three banks (originally
filed on Form 10-Q with the Securities and Exchange Commission
and dated September 1, 1995) and Note Agreement with two
insurance companies (originally filed on Form 10-Q with the
Securities and Exchange Commission and dated September 3, 1993).
These amendments are being filed with this 8-K as separate
documents labeled Item 5(B), First Amendment to Revolving Credit
Agreement, and Item 5(D), Letter Amendment No. 4.
<PAGE>
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: October 16, 1996
<PAGE>
ITEM 5 (A)
September 30, 1996
CPI Corp.
1706 Washington Avenue
St. Louis, Missouri 63103
Ladies and Gentlemen:
Reference is hereby made to that certain Revolving Credit
Agreement dated July 13, 1995, by and among CPI Corp.
("Borrower"), the Banks party thereto (collectively, the "Banks")
and Mercantile Bank of St. Louis National Association, as agent
for the Banks (the "Revolving Credit Agreement"). All
capitalized terms used and not otherwise defined in this consent
letter shall have the respective meanings ascribed to them in the
Revolving Credit Agreement.
We understand that the Borrower has entered into a
Subscription Agreement dated August 8, 1996, by and among Eastman
Kodak Company ("Kodak"), Borrower, Consumer Programs Holding,
Inc., and Fox Photo, Inc. ("Fox Photo") (the "Subscription
Agreement") pursuant to which Fox Photo has agreed to issue to
Kodak 1,041 shares of common stock of Fox Photo, representing 51%
of the issued and outstanding shares of common stock of Fox
Photo, for a total purchase price of $56,100,000.00 (subject to
adjustment as set forth in Section 2.3 of the Subscription
Agreement). In addition, we understand that Borrower, Consumer
Programs Holding, Inc., Fox Photo and Kodak will enter into a
Stockholders' Agreement in the form of Exhibit "G" to the
Subscription Agreement (the "Stockholders' Agreement") pursuant
to which Borrower and Consumer Programs Holding, Inc. will have
the obligation under certain circumstances to sell all of the
shares of common stock of Fox Photo owned by Consumer Programs
Holding, Inc. to Kodak at Kodak's option, and Borrower and
Consumer Programs Holding, Inc. will have the right under certain
circumstances, at their option, to require Kodak to purchase all
of the shares of common stock of Fox Photo owned by Consumer
Programs Holding, Inc. As used herein, Subscription Agreement
means the Subscription Agreement filed as an Exhibit to
Borrower's Current Report on Form 8-K dated August 8, 1996.
Pursuant to Borrower's request, and notwithstanding the
provisions of Sections 7.02(g) and 7.02(j) of the Revolving
Credit Agreement to the contrary, the Banks hereby consent to
(i) Fox Photo issuing to Kodak 1,041 shares of common stock of
Fox Photo, representing 51% of the issued and outstanding shares
<PAGE>
of common stock of Fox Photo, for a total purchase price of
$56,100,000.00 (subject to adjustment as set forth in Section 2.3
of the Subscription Agreement) and (ii) Kodak purchasing all of
the shares of common stock of Fox Photo owned by Consumer
Programs Holding, Inc. pursuant to the terms of the Subscription
Agreement and the Stockholders' Agreement.
The Banks acknowledge and agree that Kodak has relied and
will rely on the provisions of this consent letter in connection
with its purchase of shares of common stock of Fox Photo from Fox
Photo and Consumer Programs Holding, Inc. and the consummation of
the transactions contemplated by the Subscription Agreement and
the Stockholders' Agreement. The Banks further acknowledge and
agree that so long as Borrower does not directly or indirectly
own all of the issued and outstanding shares (other than
directors' qualifying shares) of capital stock of Fox Photo,
neither Fox Photo nor any subsidiary of Fox Photo will be
considered a "Subsidiary" of Borrower for purposes of the
Revolving Credit Agreement.
Except to the extent otherwise expressly set forth in this
consent letter, all of the terms, provisions and conditions
contained in the Revolving Credit Agreement shall be and remain
in full force and effect and the same are hereby ratified and
confirmed. This consent letter is not and shall not be construed
as a waiver of, or a consent to any noncompliance with, any of
the other terms, provisions, conditions or covenants contained in
the Revolving Credit Agreement or as a waiver of any Default or
Event of Default, if any, existing under the Revolving Credit
Agreement as of the date hereof.
This consent letter shall not be effective unless and until
it has been signed by each of the Banks and countersigned by
Borrower.
This consent letter may be executed in any number of
counterparts (including telecopy counterparts), each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Very truly yours,
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By /s/ Timothy W. Hassler
-------------------------------
Title: Assistant Vice President
-------------------------------
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By /s/ Emily L. Burt
-------------------------------
Emily L. Burt
Title: Vice President
-------------------------------
THE SUMITOMO BANK, LIMITED
By /s/ Jayleen R. P. Hague
-------------------------------
Jayleen R. P. Hague
Title: Vice President
-------------------------------
By /s/ Teresa A. Lekich
-------------------------------
Teresa A. Lekich
Title: Vice President
-------------------------------
Acknowledged and agreed to this 02 day of October, 1996.
CPI CORP.
By /s/ Barry Arthur
-------------------------------
Title: Treasurer/Chief Financial Officer
---------------------------------
<PAGE>
ITEM 5 (B)
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
---------------------------------------------
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (this
"Amendment") is made and entered into effective as of the 3rd day
of October, 1996, by and among CPI CORP., a Delaware corporation
("Borrower"), MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION,
HARRIS TRUST AND SAVINGS BANK and THE SUMITOMO BANK, LIMITED (as
assignee of The Daiwa Bank, Limited) (collectively, the "Banks")
and MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION, a national
banking association, as agent for the Banks (in such capacity,
the "Agent").
W I T N E S E T H:
--------------------
WHEREAS, Borrower, the Banks and the Agent are parties to
that certain Revolving Credit Agreement dated July 13, 1995 (the
"Credit Agreement"; all capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to
them in the Credit Agreement as amended by the Amendment); and
WHEREAS, Borrower desires to amend the Credit Agreement in
the manner hereinafter set forth and the Banks and the Agent are
willing to agree thereto on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower, the Banks
and the Agent hereby agree as follows:
1. The definition of "Commitment" set forth in Section 2.01
of the Credit Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:
"COMMITMENT shall mean, subject to termination or
reduction as set forth in Section 3.07: with respect to
Mercantile, $25,000,000.00; with respect to Harris Trust
and Savings Bank, $20,000,000; and with respect to The
Sumitomo Bank, Limited, $15,000,000.00."
2. The definition of "Pro Rata Share" set forth in Section
2.01 of the Credit Agreement is hereby deleted in its entirety
and the following substituted in lieu thereof:
"PRO RATA SHARE shall mean: with respect to
Mercantile, 41.6666667%; with respect to Harris Trust and
<PAGE>
Savings Bank, 33.3333333%; and with respect to The Sumitomo
Bank, Limited, 25%."
3. The definition of "Restricted Payment" set forth in
Section 2.01 of the Credit Agreement is hereby deleted in its
entirety and the following substituted in lieu thereof:
"RESTRICTED PAYMENT shall mean (a) any dividend
(except a dividend in Qualified Stock) on, or any
distribution (except a distribution in Qualified Stock)
in respect of, any shares of Capital Stock or (b) the
redemption, repurchase, retirement or other acquisition
of any shares of Capital Stock (except that the provisions
of clause (b) of this definition shall not apply to (i) the
retirement of any shares of Capital Stock by exchange for,
or from Net Proceeds of a concurrent sale of, shares of
Qualified Stock or (ii) if the Fox Photo/Eastman Kodak
Transaction is consummated, the redemption by Borrower of
shares of its common stock during the sixty (60) day period
following the date of consummation of the Fox Photo/Eastman
Kodak Transaction so long as the aggregate amount of
consideration paid by Borrower in connection with all such
redemptions does not exceed the sum of $50,000,000.00)."
4. The following new definitions of "Fox Photo/Eastman
Kodak Transaction" and "Subscription Agreement" are hereby added
to Section 2.01 of the Credit Agreement:
"FOX PHOTO/EASTMAN KODAK TRANSACTION" shall mean the
issuance by Fox Photo, Inc. of One Thousand Forty-One
(1,041) shares of common stock of Fox Photo, Inc.,
representing Fifty-One Percent (51%) of the total issued and
outstanding shares of common stock of Fox Photo, Inc., to
Eastman Kodak Company for a total purchase price of
$56,100,000.00 (subject to adjustment as set forth in
Section 2.3 of the Subscription Agreement) upon the terms
set forth in the Subscription Agreement.
SUBSCRIPTION AGREEMENT shall mean that certain
Subscription Agreement dated August 8, 1996, by and among
Eastman Kodak Company, Borrower, Consumer Programs Holding,
Inc. and Fox Photo, Inc., the form of which is filed as an
Exhibit to Borrower's Current Report on Form 8-K dated
August 8, 1996.
5. Section 7.01(k) of the Credit Agreement is hereby
deleted in its entirety and the following substituted in lieu
thereof:
"(k) CONSOLIDATED NET WORTH. Borrower will keep and
maintain a Consolidated Net Worth in an amount not less than
(i) at all times prior to February 1, 1997, the sum of
<PAGE>
(A) $150,000,000.00 MINUS (B) Ninety Percent (90%) of the
aggregate consideration paid by Borrower to redeem shares
of its common stock during the sixty (60) day period
following the date of consummation of the Fox Photo/Eastman
Kodak Transaction PLUS (C) Fifty Percent (50%) of the
Consolidated Net Income for each fiscal quarter of Borrower
elapsed during the period from February 5, 1995, to and
including the last day of the fiscal quarter of Borrower
immediately preceding the date of determination hereof,
computed on a cumulative basis for said entire period,
provided that for purposes of the foregoing calculation,
Consolidated Net Income shall be deemed to be zero for any
fiscal quarter for which Consolidated Net Income is less
than or equal to zero and (ii) at all times from and after
February 1, 1997, the sum of (A) $150,000,000.00 MINUS
(B) Eighty Percent (80%) of the aggregate consideration paid
by Borrower to redeem shares of its common stock during the
sixty (60) day period following the date of consummation of
the Fox Photo/Eastman Kodak Transaction PLUS (C) Fifty
Percent (50%) of the Consolidated Net Income for each fiscal
quarter of Borrower elapsed during the period from
February 5, 1995, to and including the last day of the
fiscal quarter of Borrower immediately preceding the date
of determination hereof, computed on a cumulative basis for
said entire period, provided that for purposes of the fore-
going calculation, Consolidated Net Income shall be deemed
to be zero for any fiscal quarter for which Consolidated net
Income is less than or equal to zero."
6. Section 7.02(a) of the Credit Agreement is hereby
deleted in its entirety and the following substituted in lieu
thereof:
"(a) LIMITATIONS ON DEBT. Borrower will not create,
assume or incur or in any manner be or become liable in
respect of any Debt, and will not cause or permit any
Subsidiary to create, assume or incur or in any manner be
or become liable in respect of any Debt, except:
(i) the Borrower's Obligations;
(ii) Debt of any Subsidiary to Borrower or any other
Subsidiary;
(iii) Debt of any Subsidiary to any Person other than
Borrower or any other Subsidiary, provided that after
giving effect thereto (A) the aggregate principal amount
of all Debt described in this Section 7.02(a) (iii)
(other than any Debt incurred solely to purchase or
otherwise acquire or construct Property) does not exceed
five percent (5%) of Consolidated Capitalization and
(B) the aggregate principal amount of all Debt described
in this Section 7.02(a) (iii) (including all Debt
<PAGE>
incurred solely to purchase or otherwise acquire or
construct Property) does not exceed ten percent (10%) of
Consolidated Capitalization; and
(iv) other Debt of Borrower, provided that after
giving effect thereto (A) the aggregate principal amount
of Consolidated Funded Debt does not exceed forty
percent (40%) of Adjusted Consolidated Capitalization
and (B) the aggregate principal amount of Consolidated
Debt does not exceed (1) fifty percent (50%) of Adjusted
Consolidated Capitalization at any time prior to
February 1, 1997, or (2) forty-five percent (45%) of
Adjusted Consolidated Capitalization at any time on or
after February 1, 1997.
Any corporation which becomes a Subsidiary after the date
hereof shall for all purposes of this Section 7.02(a) be
deemed to have created, assumed or incurred at the time it
becomes a Subsidiary all Debt of such corporation existing
immediately after it becomes a Subsidiary. Any Debt of
Borrower or a Subsidiary to a former Subsidiary shall be
deemed to have been created, assumed or incurred immediately
after such Subsidiary is no longer a Subsidiary."
7. Contemporaneously with the execution of this Amendment,
Borrower shall pay the Agent for the ratable benefit of the
Banks a nonrefundable amendment fee in the amount of $7,500.00.
8. Notwithstanding any provision contained in this
Amendment to the contrary:
(a) this Amendment shall not be effective unless
and until the Agent shall have received:
(i) this Amendment, duly executed by
Borrower and each of the Banks;
(ii) evidence satisfactory to the Agent that
(A) the minimum consolidated net worth covenant
contained in Section 6A(2) of the Note Agreement has
been amended to read the same in all material respects
as Section 7.01(k) of the Credit Agreement as amended
by this Amendment, (B) the limitation on additional
debt covenant contained in Section 6C(2) (iii) of the
Note Agreement has been amended to read the same in all
material respects as Section 7.02(a) (iv) of the Credit
Agreement as amended by this Amendment, and (C) the
"Required Holders" (as defined in the Note Agreement)
have consented to the redemption by Borrower of shares
of its common stock during the sixty (60) day period
following the date of consummation of the Fox Photo/
Eastman Kodak Transaction so long as the aggregate
amount of consideration paid by Borrower in connection
<PAGE>
with all such redemptions does not exceed the sum of
$50,000,000.00;
(iii) a copy of resolutions of the Board of
Directors of Borrower, duly adopted, which authorize
the execution, delivery and performance of this
Amendment, certified by the Secretary of Borrower;
(iv) an incumbency certificate, executed by the
Secretary of Borrower, which shall identify by name and
title and bear the signatures of all of the officers of
Borrower executing this Amendment; and
(v) certificates of corporate good standing of
Borrower issued by the Secretaries of States of the
States of Delaware and Missouri; and
(b) the provisions of Paragraphs 5 and 6 of this
Amendment shall not be effective unless and until the Agent
shall have received evidence satisfactory to the Agent that
(i) the Fox Photo/Eastman Kodak Transaction has been
consummated and (ii) the total consideration paid by
Borrower to redeem shares of its common stock during the
sixty (60) day period following the date of consummation of
the Fox Photo/Eastman Kodak Transaction was not less than
$45,000,000.00.
9. Borrower hereby agrees to reimburse the Agent upon
demand for all out-of-pocket costs and expenses, including,
without limitation, reasonable attorneys' fees and expenses,
incurred by the Agent in the preparation, negotiation and
execution of this Amendment. All of the obligations of Borrower
under this Paragraph shall survive the payment of the Borrower's
Obligations and the termination of the Credit Agreement.
10. All references in the Credit Agreement to this
"Agreement" and any other references of similar import shall
henceforth mean the Credit Agreement as amended by this
Amendment. Except to the extent specifically amended by this
Amendment, all of the terms, provisions, conditions, covenants,
representations and warranties contained in the Credit Agreement
shall be and remain in full force and effect and the same are
hereby ratified and confirmed.
11. This Amendment shall be binding upon and inure to the
benefit of Borrower, the Banks, the Agent and their respective
successors and assigns, except that Borrower may not assign,
transfer or delegate any of its rights or obligations hereunder.
12. Borrower hereby represents and warrants to the Agent and
the Banks that:
(a) the execution, delivery and performance by Borrower
<PAGE>
of this Amendment are within the corporate powers of
Borrower, have been duly authorized by all necessary
corporate action and require no action by or in respect of,
consent of or filing or recording with, any governmental or
regulatory body, agency or official or any other Person;
(b) the execution, delivery and performance by
Borrower of this Amendment do not conflict with, or result in
a breach of the terms, conditions or provisions of, or
constitute a default under or result in any violation of, the
terms of the Certificate of Incorporation or By-Laws of
Borrower, any applicable law, rule, regulation, order, writ,
judgment or decree of any court or governmental or regulatory
agency or instrumentality or any agreement, document or
instrument to which Borrower is a party or by which it is
bound or to which it is subject;
(c) this Amendment has been duly executed and
delivered by Borrower and constitutes the legal, valid
and binding obligation of Borrower enforceable in
accordance with its terms; and
(d) as of the date hereof, all of the
representations and warranties of Borrower set forth in
the Credit Agreement are true and correct and no Default
of Event of default under or within the meaning of the
Credit Agreement has occurred and is continuing.
13. In the event of any inconsistency or conflict between
this Amendment and the Credit Agreement, the terms, provisions
and conditions of this Amendment shall govern and control.
14. This Amendment shall be governed by and construed in
accordance with the Substantive laws of the State of Missouri
(without reference to conflict of law principles).
15. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT,
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT
ENFORCEABLE. TO PROTECT BORROWER, THE BANKS AND THE AGENT FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED BY
BORROWER, THE BANKS AND THE AGENT COVERING SUCH MATTERS ARE
CONTAINED IN THE CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT
AND THE OTHER TRANSACTION DOCUMENTS, WHICH CREDIT AGREEMENT AS
AMENDED BY THIS AMENDMENT AND OTHER TRANSACTION DOCUMENTS ARE A
COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENTS AMONG
BORROWER, THE BANKS AND THE AGENT, EXCEPT AS BORROWER, THE BANKS
AND THE AGENT MAY LATER AGREE IN WRITING TO MODIFY THEM.
16. This Amendment may be signed in any number of
counterparts (including telecopy counterparts), each of which
shall be an original, with the same effect as if the signatures
<PAGE>
thereto and hereto were upon the same instrument.
17. This Amendment supersedes that certain First Amendment
to Credit Agreement dated effective as of October 1, 1996, by and
among Borrower, the Banks and the Agent (the "Original First
Amendment"), which Original First Amendment never became
effective because the condition precedent set forth in subclause
(B) of clause (ii) of subparagraph (a) of Paragraph 9 thereof was
not satisfied and which original First Amendment is hereby
declared to be null and void by Borrower, the Banks and the
Agent.
IN WITNESS WHEREOF, Borrower, the Banks and the Agent have
executed this First Amendment to Revolving Credit Agreement
effective as of the 3rd day of October, 1996.
CPI CORP.
By /s/ Barry Arthur
-------------------------------
Title: Treasurer/Chief Financial Officer
---------------------------------
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By /s/ Timothy W. Hassler
------------------------------
Title: Assistant Vice President
------------------------------
HARRIS TRUST AND SAVINGS BANK
By /s/ Stephen S. Gray
-------------------------------
Title: Vice President
-------------------------------
THE SUMITOMO BANK, LIMITED
By /s/ Jayleen R. P. Hague
------------------------------
Jayleen R. P. Hague
Title: Vice President
-------------------------------
By /s/ Teresa A. Lekich
------------------------------
Teresa A. Lekich
Title: Vice President
------------------------------
<PAGE>
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as agent
By /s/ Timothy W. Hassler
------------------------------
Title: Assistant Vice President
------------------------------
<PAGE>
ITEM 5 (C)
[Letterhead]
the Principal Financial Group
Principal Mutual Life Insurance Company
Mailing Address: Des Moines, Iowa 50392-0001 (515)247-5111
CONSENT LETTER
Air Express / Telecopy
October 1, 1996
Ms. Jan Nevois
CPI Corporation
1706 Washington Avenue
St. Louis, Missouri 63103
Ladies and Gentlemen:
Reference is made to the Note Agreement, dated as of August
31, 1993 as amended by letter agreements dated as of February 24,
1994, June 14, 1994, and September 18, 1995 (as amended the "Note
Agreement"), by and between CPI Corp. (the "Company") and each of
the purchasers listed on the Purchaser Schedule attached thereto
(collectively, the "Purchasers"). Pursuant to the Note Agreement,
the Company issued, and Purchasers purchased, Series A Senior
Notes of the Company (collectively the "Series A Notes") in the
aggregate principal amount of $33,000,000.00 and Series B Senior
Notes of the Company (collectively, the "Series B Notes") in the
aggregate principal amount of $27,000,000.00, in each case due
August 31, 2000. The Series A Notes and the Series B Notes are
collectively referred to herein as the "Notes." Capitalized
terms used but not defined herein shall have the meanings
ascribed to them in the Note Agreement.
The Purchasers understand that the Company has entered into
a Subscription Agreement dated August 8, 1996 by and among
Eastman Kodak Company ("Kodak"), the Company, Consumer Programs
Holding, Inc., and Fox Photo ("Fox Photo") pursuant to which Fox
Photo has agreed to issue to Kodak 1,041 shares of common stock
of Fox Photo, representing 51% of the issued and outstanding
shares of common stock of Fox Photo, for a total purchase price
of $56,100,000.00 (subject to adjustment as set forth in Section
2.3 of the Subscription Agreement). In addition, the Purchasers
understand that Company will enter into a Stockholders' Agreement
in the form of Exhibit "G" to the Subscription Agreement (the
"Stockholders' Agreement") pursuant to which the Company will
have the obligation to sell its remaining shares of common stock
of Fox Photo to Kodak at Kodak's option, and may, under certain
circumstances, require Kodak to purchase the Company's remaining
<PAGE>
shares of Fox Photo. As used herein, "Subscription Agreement"
means the Subscription Agreement filed as an Exhibit to the
Company's Current Report on Form 8-K dated August 8, 1996.
Pursuant to the Company's request, and notwithstanding the
provisions of Paragraph 6C(5) and Paragraph 6D of the Note
Agreement to the contrary, the Purchasers hereby consent (i) to
Fox Photo issuing to Kodak 1,041 shares of common stock of Fox
Photo representing 51% of the issued and outstanding shares of
common stock of Fox Photo for a total purchase price of
$56,100,000.00 (subject to adjustment as set forth in Section 2.3
of the Subscription Agreement) and (ii) to Kodak purchasing the
remaining shares of common stock of Fox Photo held by the Company
pursuant to the terms of the Subscription Agreement and the
Stockholders' Agreement.
The Purchasers acknowledge and agree that Kodak has relied
and will rely on the provisions of this Consent letter in
connection with its purchase of the common stock of Fox
Photo and the consummation of the transactions
contemplated by the Subscription Agreement and the Stockholders'
Agreement. The Purchasers further agree that so long as the
Company does not own directly or indirectly, 100% of the equity
of any of Fox Photo, Proex Photo Systems, Inc., Fox Photo
Partners, Inc. or Texas Photo Finish, L.P., such entity shall not
be considered a "Subsidiary" for purposes of the Note Agreement.
Except to the extent otherwise expressly set forth in this
consent letter, all of the terms, provisions and conditions
contained in the Note Agreement shall be and remain in full force
and effect and the same are hereby ratified and confirmed. This
consent letter is not and shall not be construed as a waiver of,
or a consent to any noncompliance with, any of the other terms,
provisions, conditions or covenants contained in the Note
Agreement or as a waiver of any Default or Event of Default, if
any, existing under the Note Agreement as of the date hereof.
This consent letter shall not be effective unless and until
it has been signed by each of the Purchasers and countersigned by
the Company.
This consent letter may be executed in any number of
counterparts (including telecopy counterparts), each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Principal Mutual Life Insurance Company
By /s/ Jon M. Davidson
---------------------------------
Jon M. Davidson
Assistant Director-
Title: Securities Investment
---------------------------------
<PAGE>
By /s/ Jon C. Heiny
---------------------------------
Jon C. Heiny
Title: Counsel
---------------------------------
The Prudential Insurance Company of America
By /s/ Paul L. Meiring
---------------------------------
Title Vice President (TPD)
---------------------------------
Acknowledged and agreed to this 1st day of October, 1996.
CPI Corporation
By /s/ Alyn V. Essman
--------------------------------
Title Chairman
--------------------------------
<PAGE>
ITEM 5 (D)
CPI Corp.
1706 Washington Avenue
St. Louis, Missouri 63103
LETTER AMENDMENT NO. 4
October 2, 1996
VIA OVERNIGHT
Mr. Paul Meiring
The Prudential Insurance Company of America
2200 Ross Avenue, Suite 4200E
Dallas, Texas 75201
Mr. Jon Davidson
Assistant Director - Securities Investment
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0800
Ladies and Gentlemen:
Reference is made to the Note Agreement dated as of August 31,
1993, as amended by a letter amendment dated as of February 24,
1994 ("Letter Amendment No. 1"), a letter amendment dated as of
June 14, 1994 ("Letter Amendment No. 2"), and a letter amendment
dated as of September 18, 1995 ("Letter Amendment No. 3") (as
amended, the "Note Agreement"), by and between CPI Corp. (the
"Company") and each of the purchasers listed on the Purchaser
Schedule attached thereto (collectively, the "Purchasers").
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Note Agreement.
By their execution hereof as provided below, the Company and the
Required Holders agree and consent to this Letter Amendment
No. 4 to the Note Agreement (this "Amendment"), but only to the
extent expressly provided herein, and subject to the terms and
conditions set forth below.
1. CONSOLIDATED NET WORTH. Paragraph 6A(2) of the Note
Agreement is deleted and replaced in its entirety by the
following:
6A(2). CONSOLIDATED NET WORTH. Consolidated Net Worth
at any time to be less than (i) from the date of this
Agreement through July 20, 1996, the SUM of $135,000,000
PLUS 50% of Consolidated Net Income in each fiscal quarter
<PAGE>
ended after May 1, 1993, (ii) from July 21, 1996 through
November 9, 1996 the SUM of (x) the difference between
$157,969,000 LESS 90% of the Buyback Reduction PLUS (y) 50%
of Consolidated Net Income in the fiscal quarter ended
November 9, 1996 and (iii) at any time after November 9,
1996, the SUM of (a) $157,969,000 LESS 80% of the Buyback
Reduction PLUS (b) 50% of Consolidated Net Income in each
fiscal quarter ended after July 21, 1996. Notwithstanding
the foregoing, in no event will minimum required
Consolidated Net Worth be reduced by the amount of any
Consolidated Net Loss in any fiscal quarter. For the
purpose of this paragraph 6A(2), "BUYBACK REDUCTION", means
the reduction in Consolidated Net Worth (which shall in no
event exceed $50,000,000) resulting in the repurchase of
shares of common stock of the Company pursuant to the "Dutch
Auction" tender offer described in the Company's Current
Report on Form 8-K dated August 8, 1996.
2. DEBT. Subclause (iii) of Paragraph 6C(2) of the Note
Agreement is deleted and replaced in its entirety by the
following:
(iii) other Debt of the Company, PROVIDED that after
giving effect thereto (A) the aggregate principal amount of
all Funded Debt of the Company and its Subsidiaries
(including the Funded Debt described in clauses (i) and
(ii)(B) of this paragraph 6C(2) does not exceed forty
percent (40%) of Adjusted Capitalization and (B) the
aggregate principal amount of all Debt of the Company and
its Subsidiaries including all Debt described in this
paragraph 6C(2) and other than Debt described in paragraph
6C(2)(ii)(A) does not exceed (I) fifty percent (50%) of
Adjusted Capitalization for the fiscal quarter ended
November 9, 1996 and (II) forty-five percent (45%) of
Adjusted Capitalization at all other times.
3. CONSENT TO REPURCHASE OF CAPITAL STOCK. The Company
proposes to repurchase shares of common stock of the Company in
an aggregate amount of $50,000,000 (the "Stock Repurchase")
pursuant to the "Dutch Auction" tender offer described in the
Company's Current Report on Form 8-K dated August 8, 1996; the
Stock Repurchase would constitute a Restricted Payment
prohibited under Paragraph 6B of the Note Agreement. Required
Holders hereby (i) consent to such proposed Stock Repurchase and
waive any violation of Paragraph 6B of the Note Agreement caused
by the Stock Repurchase and (ii) agree that for purposes of any
calculation under Paragraph 6B(iii), such Stock Repurchase shall
be excluded from the aggregate of all Restricted Payments and
Restricted Investments made or committed to after the date of the
Note Agreement referred to therein.
4. CONDITIONS PRECEDENT. This Amendment is expressly
<PAGE>
subject to and shall be effective only upon the satisfaction of
the following conditions:
4.1 The Company and Required Holders shall have
executed this Amendment.
4.2 As of the Effective Date, no Default or Event of
Default under the Note Agreement shall exist and be continuing,
after giving effect to this Amendment.
4.3 The representations of the Company in Section 5
hereof shall be true and complete.
4.4 The Company shall have paid the following amendment
fees:
The Prudential Insurance Company of America $61,000
Principal Mutual Life Insurance Company $50,000
4.5 The Company shall have received copies of an
amendment to the Revolving Credit Agreement, duly executed by the
Revolving Credit Lender, containing provisions no more
restrictive on the Company than the amendments set forth in
Sections 1, 2 and 3 hereof, and the Company shall have provided
photocopies of such amendment to each of the holders of Notes.
5. REPRESENTATIONS OF THE COMPANY. The Company, by its
execution and delivery of this Amendment, hereby represents and
warrants to each holder of Notes as follows:
5.1 Its representations and warranties in Section 8 of
the Note Agreement shall be true and complete and in all material
respects, as if made on and as of the date hereof, except that
the representation and warranty (i) with respect to the annual
audited financial statements in paragraph 8B shall be deemed to
refer to the fiscal years ended February 6, 1993, February 5,
1994, February 4, 1995 and February 3, 1996; (ii) in the last
sentence of paragraph 8B and in paragraph 8E shall be deemed to
refer to February 3, 1996; and (iii) in any other part of
paragraph 8 that is made as of a specific date shall be deemed
made as of such specific date.
5.2 As of the Effective Date, no Default or Event of
Default under the Note Agreement, or similar condition under any
other agreement to which the Company is subject, exists and is
continuing, after giving effect to this Amendment.
5.3 No dissolution proceedings with respect to the
Company have been commenced or are contemplated, and there has
been no condition, event or development that could reasonably be
expected to result in a Material Adverse Effect since February 3,
1996.
<PAGE>
5.4 This Amendment has been duly authorized, executed
and delivered by the Company and the Note Agreement, as amended
to date, including by this Amendment, constitutes the legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
6. MISCELLANEOUS.
6.1 It is expressly understood and agreed that this
Amendment shall not constitute either (a) a modification,
alteration or amendment of the terms, conditions, and covenants
of the Note Agreement or the Notes, both of which shall remain
unchanged and in full force and effect, except as otherwise
specifically set forth herein or in Letter Amendment No. 1,
Letter Amendment No. 2 or Letter Amendment No. 3, or (b) a
waiver or release of or limitation upon the exercise by the
holders of Notes or any of them of any of their rights, legal or
equitable, under the Note Agreement except as to matters as to
which the holders herein expressly consent or waive compliance
and only for the relevant time period set forth herein. Nothing
herein is intended or shall be construed to release or relieve
the Company in any way or to any extent from any of the
obligations, covenants or agreements imposed upon the Company
by the Note Agreement or the Notes or otherwise, or from the
consequence of any default thereunder, except as to matters to
which the undersigned expressly agree herein.
6.2 The Note Agreement and the Notes are in all
respects ratified and confirmed, and all the terms, conditions
and provisions thereof shall be and remain in full force and
effect.
6.3 The execution and delivery of this Amendment by the
Required Holders shall not in any way constitute, or be construed
as, a waiver of any provision of, or of any Default or Event of
Default under, the Note Agreement except as expressly provided
herein, nor shall it constitute an agreement or obligation of
any holder of Notes to give its consent to any future waiver,
consent or amendment of the Note Agreement or to any future
transaction, event or condition which would, absent consent of
the Required Holders, constitute a Default or Event of Default.
6.4 This Amendment may be executed in as many counter-
parts as may be deemed necessary or convenient any by the
different parties hereto on separate counterparts (provided that
the Company will execute each counterpart), and each of which,
when so executed, shall be deemed to be an original, but all such
counterparts shall constitute but one and the same agreement.
6.5 This Amendment shall be deemed effective as of the
date hereof, (the "Effective Date"), provided that the conditions
precedent set forth in Section 4 hereof have been completely
satisfied.
<PAGE>
6.6 From and after the Effective Date, each reference
in the Note Agreement to "this Agreement," "hereof," or "here-
under" or words of like import, and all references made to the
Note Agreement in any and all agreements, instruments, documents,
notes, certificates and other writings of every kind and nature
shall be deemed to mean the Note Agreement, as modified and
amended by this Amendment and Letter Amendment No. 1, Letter
Amendment No.2 and Letter Amendment No. 3.
6.7 This Amendment (a) shall be binding on the parties
hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and their respective
successors and assigns, (b) constitutes the entire agreement
among the parties hereto with respect to the matters addressed
herein, and shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
CPI Corp.
By: /s/ Alyn V. Essman
-----------------------------------
The Prudential Insurance Company of America
By: /s/ Robert G. Gwin
-----------------------------------
Vice President (TPD)
Principal Mutual Life Insurance Company
By: /s/ Jon M. Davidson
-----------------------------------
Jon M. Davidson
Assistant Director-Securities Investment
By: /s/ Clint Woods
-----------------------------------
Clint Woods
Counsel
<PAGE>
