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 recorded) October 2, 1997
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.)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 2, 1997, CPI Corp. issued the following press release
announcing the selling of its minority interest in the Fox Photo
Joint Venture to Eastman Kodak Company.
CPI TO SELL ITS MINORITY INTEREST IN FOX PHOTO JOINT VENTURE
TO KODAK
ST. LOUIS, MO., October 2, 1997 - CPI Corp. (NYSE-CPY) and
Eastman Kodak Company (NYSE-EK) today announced that CPI
will sell to Kodak its minority stake in the Fox Photo, Inc.
joint venture the two companies formed on October 4, 1996.
Under terms of the agreement, Kodak - owner of a 51%
interest in the venture - will purchase CPI's 49% interest
with a $43.9 million note due on January 4, 1999, and a $10
million cash payment at the time of closing, accelerating
the terms of the original agreement. In addition, CPI has
agreed to a "non-compete" clause for a period of two years.
CPI Corp. and Kodak mutually arrived at this decision in
order to facilitate Fox Photo's ability to more rapidly test
new concepts in consumer imaging products and services.
"When we entered the joint venture with Kodak, we felt that
we had the luxury of time to develop a viable new retailing
concept," said Alyn V. Essman, chairman and chief executive
officer of CPI. "However, given the feverish pace of change
taking place in the photofinishing industry, we have
concluded that retail implementation of the business - in
the overall context of the Kodak plan - could be best
managed if it were directed by just one party.
Consequently, we and Kodak decided to accelerate the option
providing for Kodak's purchase of CPI's position in the
venture."
David P. Biehn, president of Kodak's Consumer Imaging
business, concurs with Essman regarding the need to move
more rapidly. "A joint-venture structure simply did not
allow Kodak and CPI to move with sufficient speed in testing
new concepts and then making those concepts broadly
available to independent photospecialty retailers as a way
of stimulating broader growth for the category as a whole,
Kodak's fundamental reason for retail participation," said
Biehn. "As a consequence, the business strategy is best
implemented under single ownership. Kodak's intent remains
unchanged."
Once a concept proves viable, Kodak will make it broadly
available to independent photographic retailers through its
co-branded retail identity program. Several retailers have
already announced participation in the program and dozens of
<PAGE>
others are in discussions with Kodak.
Biehn announced that Ted deBuhr, president of Fox Photo,
Inc., will manage the Fox Photo chain as a wholly-owned
Kodak subsidiary, reporting to Peter D. Fitzgerald, General
Manager, Worldwide Consumer Imaging Services and a vice
president of Kodak.
Although the formal date for the completion of the
transaction is October 2, 1997, administrative activities
provided to Fox by CPI will phase out over the next six
months. "Beyond that, we expect to maintain our long-
standing productive relationship with Kodak as we continue
to explore new applications of imaging technology," said
Essman.
CPI is a consumer services company with $467.0 million in
fiscal 1996 sales, operating 1,024 Sears Portrait Studios
in the U.S., Puerto Rico and Canada, and 155 Prints Plus
wall decor stores.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
A. FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
Not applicable.
B. PRO FORMA FINANCIAL INFORMATION
On October 4, 1996, CPI Corp. and its subsidiaries, Consumer
Programs Holding, Inc. and Consumer Programs Incorporated,
("collectively "CPI" or "the Company") sold 51% of the
outstanding shares of Fox Photo, Inc. ("Fox") to Eastman
Kodak Company ("Kodak") for $56.1 million in cash (the "Joint
Venture Transaction"). On the same date, the Company entered
into collateral agreements with Fox and Kodak, including
agreements under which the Company provided certain
administrative services (the "Services Agreement") and
management services (the "Consulting Agreement") to Fox.
On October 2, 1997, the Company sold its remaining 49%
interest in Fox to Kodak for a $43.9 million non-interest
bearing promissory note due on January 4, 1999 (the
"Disposition Transaction"). In conjunction with the
Disposition Transaction, the Consulting Agreement was
canceled and the Company entered into a two-year
Noncompetition and Nonsolicitation Agreement (the
"Noncompete Agreement") with Fox under which the
Company agreed not to engage in the retail photo
finishing business and, subject to certain exceptions, not
to employ Fox employees without consent. The Company
received $10 million cash consideration for entering into
the Noncompete Agreement. The Company and Fox also
agreed to terminate all services provided under the Services
Agreement and thereby cancel the Services Agreement not later
than March 31, 1998.
As previously reported, on November 12, 1996, the Company
completed a Dutch Auction tender offer (the "Dutch Auction")
to repurchase 2,250,000 shares of its common stock for $43.6
million using cash proceeds from the Joint Venture
Transaction.
The following unaudited Pro Forma Consolidated Financial
Statements have been prepared to reflect the Joint Venture
Transaction, the Disposition Transaction, the Noncompete
Agreement, the termination of the Consulting Agreement and
the Services Agreement and the Dutch Auction and are based on
historical information which has been adjusted to reflect the
above described transactions as if they had occurred on
February 4, 1996 and February 2, 1997, the beginning of the
periods presented with respect to the income statement date,
and as of July 19, 1997, with respect to the balance sheet
date. The assumptions on which the pro forma financial
<PAGE>
information is based are further described in the Notes to
the Unaudited Pro Forma Consolidated Financial Statements.
The historical statements are included in the Company's
Annual Report on Form 10-K for the year ended February 1,
1997 (the Company's 1996 Annual Report) and in the Unaudited
Consolidated Financial Statements included in the Company's
Quarterly Report on Form 10-Q for the period ended
July 19, 1997. More comprehensive financial information is
included in such reports and the financial information which
follows is qualified in its entirety by references to such
reports and all of the financial statements and related notes
contained therein. The Unaudited Pro Forma Consolidated
Financial Statements should be read in conjunction with the
consolidated historical information and do not purport to be
indicative of the results that would actually have been
obtained had the Joint Venture Transaction, the Disposition
Transaction, the Dutch Auction and the Noncompetition
Agreement been consummated and the Consulting Agreement and
the Services Agreement been terminated at the dates indicated
or that may be obtained in the future. The Joint Venture
Transaction and the Disposition Transaction together are
referred to in the Unaudited Pro Forma Consolidated
Financial Statements as the "Photofinishing Transaction".
<PAGE>
<TABLE>
CPI CORP. PRO FORMA-CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (in thousands of dollars except per share amounts)
Twenty-four weeks ended July 19, 1997
<CAPTION>
Photo-
finishing Non-
Unaudited Trans- Consulting Service compete
Historical action Agreement Agreement Agreement Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Net sales $138,668 $ -- $ -- $ -- $ -- $138,668
Costs and expenses:
Cost of sales (exclusive
of depreciation expense) 24,354 -- -- -- -- 24,354
Selling, administrative
and general expenses 99,317 -- 462 i 1,506 k -- 101,285
Depreciation 12,590 -- -- (23)j -- 12,567
Amortization 941 -- -- -- -- 941
--------- --------- --------- --------- --------- ---------
Income from operations 1,466 -- (462) (1,483) -- (479)
Net interest expense
(income) 1,515 (1,362)f -- -- (166)m (13)
Interest in joint
venture loss (1,830) 1,830 d -- -- -- --
Gain on sale of interest
in Photofinishing segment -- -- -- -- -- --
Other income 249 -- -- -- 2,308 l 2,557
--------- --------- --------- --------- --------- ---------
Earnings before
income taxes (1,630) 3,192 (462) (1,483) 2,474 2,091
Income tax expense (603) 1,181 n (171)n (549)n 915 n 773
--------- --------- --------- --------- --------- ---------
Net earnings (1,027) 2,011 (291) (934) 1,559 1,318
========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
<TABLE>
CPI CORP. PRO FORMA-CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (in thousands of dollars except per share amounts)
Twenty-four weeks ended July 19, 1997 (continued)
<CAPTION>
Photo-
finishing Non-
Unaudited Trans- Consulting Service compete
Historical action Agreement Agreement Agreement Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Net earnings (1,027) 2,011 (291) (934) 1,559 1,318
========= ========= ========= ========= ========= =========
Earnings per common share:
Net earnings (.09) 0.17 (0.02) (0.08) 0.13 0.11
========= ========= ========= ========= ========= =========
Weighted average number
of common and common
equivalent shares
outstanding 11,878 11,878 11,878 11,878 11,878 11,878
========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
<TABLE>
CPI CORP. PRO FORMA-CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (in thousands of dollars except per share amounts)
Fifty-two weeks ended February 1, 1997
<CAPTION>
Photo-
finishing Non-
Trans- Consulting Service compete
Historical action Agreement Agreement Agreement Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Net sales $467,034 ($114,518)c $ -- $ -- $ -- $352,516
Costs and expenses:
Cost of sales (exclusive
of depreciation expense) 110,013 (46,418)c -- -- -- 63,595
Selling, administrative
and general expenses 298,703 (58,096)c 327 i 1,275 k -- 242,209
Depreciation 34,454 (9,098)c -- (50)j -- 25,306
Amortization 3,492 -- -- -- -- 3,492
--------- --------- --------- --------- --------- ---------
Income from operations 20,372 (906) (327) (1,225) -- 17,914
Net interest expense
(income) 3,769 (2,951)f -- -- (540)m 168
(1,928)g
1,818 h
Interest in joint
venture loss (485) 485 d -- -- -- --
Gain on sale of interest
in Photofinishing segment 6,180 (6,180)e -- -- -- --
Other income 501 -- -- -- 5,000 l 5,501
--------- --------- --------- --------- --------- ---------
Earnings before
income taxes 22,799 (3,540) (327) (1,225) 5,540 23,247
Income tax expense 8,436 (1,310)n (121)n (453)n 2,050 n 8,602
--------- --------- --------- --------- --------- ---------
Net earnings 14,363 (2,230) (206) (772) 3,490 14,645
========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
<TABLE>
CPI CORP. PRO FORMA-CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (in thousands of dollars except per share amounts)
Fifty-two weeks ended February 1, 1997 (continued)
<CAPTION>
Photo-
finishing Non-
Trans- Consulting Service compete
Historical action Agreement Agreement Agreement Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Net earnings 14,363 (2,230) (206) (772) 3,490 14,645
========= ========= ========= ========= ========= =========
Earnings per common share:
Net earnings 1.06 (0.19) (0.02) (0.07) 0.30 1.24
========= ========= ========= ========= ========= =========
Weighted average number
of common and common
equivalent shares
outstanding 13,518 11,781 11,781 11,781 11,781 11,781
========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
<TABLE>
CPI CORP. PRO FORMA CONSOLIDATED BALANCE SHEET
(unaudited) (in thousands of dollars)
<CAPTION>
07/19/97 Adjust 07/19/97
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 603 $ -- $ 603
Short-term investments 11,416 1,800 a 23,216
10,000 b
Receivables, less allowance
of $536 15,258 -- 15,258
Inventories 18,555 -- 18,555
Refundable income taxes 3,742 -- 3,742
Prepaid expenses and other
current assets 10,923 -- 10,923
--------- --------- ---------
Total current assets 60,497 11,800 72,297
Net property and equipment 129,259 129,259
Note receivable -- 40,154 a 40,154
Investment in Fox joint
venture 46,276 (46,276)a --
Other assets:
Intangible assets, net 686 -- 686
Other long-term assets 5,671 -- 5,671
--------- --------- ---------
Total assets $242,389 $ 5,678 $248,067
========= ========= =========
LIABILITIES
Current liabilities;
Current maturities of
long-term obligations 1,236 -- 1,236
Accounts payable 16,940 -- 16,940
Accrued expenses and
other liabilities 18,193 -- 18,193
Deferred income taxes, net 287 -- 287
--------- --------- ---------
Total current liabilities 36,656 -- 36,656
Long-term obligations less
current maturities 60,108 -- 60,108
Other liabilities 3,551 10,000 b 13,551
Deferred income taxes, net 6,442 (1,599)a 4,843
--------- --------- ---------
Total liabilities $106,757 $ 8,401 $115,158
Stockholders' equity 135,632 (2,723)a 132,909
--------- --------- ---------
Total liabilities and
stockholders' equity $242,389 $ 5,678 $248,067
========= ========= =========
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
a. Entry to: reflect the purchase price as adjusted; eliminate
the investment in Fox joint venture; record the estimated
transaction cost; record severance cost for certain
administrative personnel; and record the loss on the sale of
the investment in Fox joint venture, net of taxes as
follows:
<TABLE>
<CAPTION>
07/19/97
<S> <C>
Investment in Fox joint venture $ 46,276
Note receivable from Fox joint
venture which was paid in cash 4,000
---------
Net assets sold 42,276
Note receivable due January 4, 1999 43,900
Discount to reflect net present value
at 7.35% (3,746)
---------
Net value received 40,154
Estimated severance for certain
administrative personnel (2,000)
Estimated transaction costs (200)
---------
Net value received, adjusted for costs 37,954
Loss on transaction before taxes 4,322
Tax benefit 1,599
---------
Net loss on transaction $ 2,723
=========
</TABLE>
b. Entry to reflect Noncompetition and Nonsolicitation
Agreement.
c. Entry to eliminate the Photofinishing segment which was
sold.
d. Entry to eliminate interest in joint venture income (loss).
e. Entry to eliminate the gain on sale of interest in the
Photofinishing segment in 1996.
f. Entry to record imputed interest income on the note
receivable from Kodak.
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (continued)
g. Entry to record interest income on cash received from sales
of 51% interest in Fox to Kodak in 1996.
h. Entry to record interest expense on cash used to purchase
2,250,000 shares of CPI Corp. common stock for $43.6 million
on November 22, 1996.
i. Entry to eliminate consulting income derived from agreement
with the Fox joint venture.
j. Entry to reduce depreciation expense on certain assets to be
disposed.
k. Entry to record estimated unabsorbed overhead for certain
administrative expense due to the loss of the administrative
services agreement with the Fox joint venture.
l. Entry to record the amortization of the Noncompetition and
Nonsolicitation Agreement.
m. Entry to record interest income on the $10.0 million cash
proceeds from the Noncompetition and Nonsolicitation
Agreement.
n. Entry to adjust income taxes to reflect changes in taxable
income resulting from adjusting entries.
o. Weighted average number of common and common equivalent
shares outstanding have been adjusted to reflect the
2,250,000 share Dutch Auction Stock Tender Offer completed
November 12, 1996 as if it had occurred on February 4, 1996.
C. EXHIBITS
Exhibit 2 - PLAN OF ACQUISITION, REORGANIZATION,
ARRANGEMENT, LIQUIDATION OR SUCCESSION
2.1 Stock Purchase Agreement
Exhibit 99 - ADDITIONAL EXHIBITS
99.1 Noncompetition and Nonsolicitation
Agreement
<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 17, 1997
<PAGE>
EXHIBIT INDEX
Exhibit 2 - PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT,
LIQUIDATION OR SUCCESSION
2.1 Stock Purchase Agreement
Exhibit 99 - ADDITIONAL EXHIBITS
99.1 Noncompetiion and Nonsolicitation Agreement
Exhibit 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made this 2nd
day of October, 1997 between Eastman Kodak Company ("Kodak"),
Fox Photo, Inc. ("Fox") CPI Corp. ("CPI"), Consumer Programs
Holding, Inc. ("Holding") and Consumer Programs Incorporated
("Programs").
WHEREAS, on October 4, 1996, Kodak acquired 51% of the
stock of Fox pursuant to the terms of a Subscription Agreement
("Subscription Agreement"), dated August 8, 1996 among Kodak,
CPI, Holding and Fox, and Holding continued to hold the
remaining 49% of the stock of Fox; and
WHEREAS, Kodak, Holding and CPI made certain agreements
regarding the governance, business and operation of Fox in a
Stockholders' Agreement (the "Stockholders' Agreement"), dated
October 4, 1996; and
WHEREAS, Kodak and CPI have determined that it is in the
best interests of Fox and their respective corporations to end
the joint ownership of Fox, and for Kodak to acquire all the
stock of Fox owned, directly or indirectly, by CPI, all upon
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements set forth in this Agreement, the parties agree
as follows:
1. SALE AND PURCHASE. Upon and subject to the terms and
conditions stated in this Agreement, in consideration of the
purchase price set forth in Paragraph 2 of this Agreement and
the performance of the other obligations under this Agreement,
CPI and Holding hereby convey, transfer and deliver to Kodak
all of CPI's and Holding's right, title and interest in and to
all of the outstanding capital stock of Fox not previously
issued to Kodak consisting of 1,000 shares of common stock, par
value $.01 per share, of Fox (the "Stock"), free and clear of
all liens and encumbrances. Simultaneously with the execution
and delivery of this Agreement, CPI delivers to Kodak
certificate number 2 representing the Stock, with a stock power
duly endorsed to Kodak affixed thereto.
2. PURCHASE PRICE. Simultaneously with the execution and
delivery of this Agreement, Kodak delivers to Holding Kodak's
non-negotiable promissory note in the principal amount of
$43,900,000 due and payable in full on January 4, 1999 without
interest (the "Kodak Note").
<PAGE>
3. REPRESENTATIONS OF CPI, HOLDING AND PROGRAMS. CPI,
Holding and Programs, jointly and severally, represent and
warrant to Kodak as follows:
(a) ORGANIZATION, POWER. Each of CPI and Holding is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and Programs
is a corporation duly organized, validly existing and in good
standing in the State of Missouri, and each of CPI, Holding and
Programs 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.
(b) POWER AND AUTHORITY. This Agreement is a valid and
binding obligation of each of CPI, Holding and Programs,
enforceable against each of them 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. The
Noncompetition Agreement (the" Noncompetition Agreement") among
CPI and its affiliates and Fox and Kodak, of even date
herewith, is a valid and binding obligation of each of CPI and
its affiliates party hereto and thereto, enforceable against
each of them 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. Each of CPI and its
affiliates party thereto has all requisite corporate power and
authority to enter into this Agreement and the Noncompetition
Agreement and to perform all of its obligations hereunder and
thereunder. The Board of Directors of CPI, Holding and
Programs and each of the other affiliates party hereto and
thereto have each duly authorized the execution and delivery of
this Agreement and the Noncompetition Agreement and the
performance of the transactions contemplated hereby and
thereby. No approval of the stockholders of CPI, Holding or
Programs is required with respect to the consummation of the
transactions contemplated by this Agreement or the
Noncompetition Agreement, either singly or in light of other
transactions undertaken or contemplated by CPI.
(c) VALIDITY OF CONTEMPLATED TRANSACTIONS. The execution,
delivery and performance of this Agreement by CPI, Holding and
Programs and the execution and delivery of the Noncompetition
Agreement by CPI and its affiliates party thereto and the
consummation of the transactions contemplated hereby and
thereby, (i) do not contravene any provision of the Certificate
of Incorporation or By-laws of CPI, Holding or Programs or such
affiliates; or (ii) constitute a breach of or result in a
default under, or cause the acceleration of any payments
<PAGE>
pursuant to, any agreement, contract, indenture, lease, or
mortgage to which CPI, Holding or Programs or such affiliates
is a party or by which CPI, Holding or Programs or such
affiliates or any of their assets is bound, or violate any
provision of law, rule, regulation, order, permit, or license
to which CPI, Holding or Programs is subject which will
adversely effect the transactions contemplated by this
Agreement or the Noncompetition Agreement or which will have a
material adverse effect on the business or operations of such
entities.
(d) 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 CPI, Holding or Programs or the affiliates party to the
Noncompetition Agreement is required in connection with the
execution or delivery by CPI, Holding and Programs or such
affiliates of this Agreement or the Noncompetition Agreement or
the consummation of the transactions contemplated hereby or
thereby other than those which have previously been obtained
and other than filing of this Agreement, the Note or the
Noncompetition Agreement by CPI with the Securities and
Exchange Commission.
(e) PURCHASED STOCK. The Stock when issued was duly
authorized, duly and validly issued, fully paid and
nonassessable. Holding is the beneficial and record owner of
the 1,000 shares of Stock. There are no outstanding options,
warrants, conversion privileges, subscriptions, calls,
commitments or similar rights relating to the Stock or
otherwise issued to CPI, Holding, Programs or their affiliates.
The delivery and transfer of the Stock to Kodak in accordance
with the terms of this Agreement will transfer to Kodak all of
CPI's and Holding's right, title and interest in and to the
Stock, free and clear of all liens and encumbrances.
(f) Except as set forth on Schedule I, none of CPI,
Holding or Programs has, in its individual capacity or as a
shareholder of Fox, entered into any agreement binding, or
purported to be binding, upon Fox or incurred any liability
binding, or purported to be binding, on Fox.
(g) Except as set forth on Schedule II, none of CPI,
Holding or Programs is aware of any threatened legal or
regulatory actions involving Fox as a defendant, responsible
party or co-defendant nor are any of them aware of any set of
facts or circumstances which might reasonably be expected to
give rise to such an action or any threat thereof.
4. REPRESENTATIONS OF KODAK. Kodak represents and
warrants to CPI, Holding and Programs as follows:
<PAGE>
(a) 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.
(b) POWER AND AUTHORITY. This Agreement and the Note are
valid and binding obligations of Kodak, enforceable against it
in accordance with their terms except to the extent that
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
issue the Note and to perform all of its obligations hereunder
and thereunder.
(c) VALIDITY OF CONTEMPLATED TRANSACTIONS. The execution,
delivery and performance of this Agreement and the Note by
Kodak and the consummation of the transactions contemplated
hereby and thereby, (i) do not contravene any provision of the
Certificate of Incorporation or By-laws of Kodak; or (ii)
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 any of its assets is bound, or
violate any provision of law, rule, regulation, order, permit,
or license to which Kodak is subject, which will adversely
effect the transactions contemplated by this Agreement or which
will have a material adverse effect on the business or
operations of such Kodak.
(d) 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 Note or the consummation of
the transactions contemplated hereby or thereby other than
those which have previously been obtained or any filing of this
Agreement or the Note which may be required with the Securities
and Exchange Commission.
5. COVENANTS REGARDING SUBSCRIPTION AGREEMENT AND
COLLATERAL DOCUMENTS.
(a) Article IX of the Subscription Agreement, and any
other provisions thereof which survived the closing under the
Subscription Agreement through the date of this Agreement
shall continue in full force and effect as written and shall
not be amended or modified except as expressly set forth in
this Agreement. All claims of any party with respect to
the "Consideration", as such term is defined in Article II of
<PAGE>
the Subscription Agreement and as adjusted pursuant to Section
2.3 of the Agreement are deemed in all respects satisfied or
waived by the execution and delivery of this Agreement. The
obligations of CPI pursuant to Section 5.12 of the Subscription
Agreement with respect to any royalty-free licenses to Fox are
hereby terminated. Within 10 days after the date hereof, Kodak
shall deliver to CPI its check in the amount of $11,387.45 in
full settlement of all amounts under Section 11.4 of the
Subscription Agreement.
(b) The Stockholders' Agreement shall terminate
simultaneously with the execution and delivery of this
Agreement and shall be of no further force or effect after the
date hereof.
(c) The Services Agreement, dated October 4, 1996, between
Programs and Fox shall continue in full force and effect
(except with respect to "Marketing and Advertising" and the
services of "Treasury" previously provided by a salaried
employee which have heretofore been terminated) through the
earlier of: (i) 90 days following the date of notice of
termination, or (ii) the date agreed to by the parties, or
(iii) March 31, 1998 at the rates specified therein for the
services utilized and for the services described therein and
herein, provided, however, that Fox shall be entitled to offset
against such rates the salary and benefit expenses included
therein with respect to any employee of CPI or its affiliates
who becomes an employee of Fox during such period. Termination
of services will relate to the entire set of services provided
under each grouping in the Appendix to the Services Agreement,
not by subset of services within a priced group, except as
otherwise agreed by the parties. Within 10 days after the date
hereof, Fox shall deliver to Programs its check in the amount
of $597,210.00 for the unpaid portions of fees for services
rendered prior to the date of this Agreement in full
satisfaction of all amounts due under the Services Agreement
through August 31, 1997. Programs covenants and agrees to work
jointly in good faith with Fox to provide for the transition of
all services to Fox or another service provider in accordance
with the guidelines attached to this Agreement as Exhibit A.
Fox shall pay, or reimburse Programs, for any fee required to
be paid to licensors of software which is required to be paid
in order for Programs to provide the services after the date of
this Agreement, provided that Programs has given Fox prior
notice of such requirement and Fox has agreed that the software
license is required for Programs to perform the services once
Fox is no longer an affiliate of CPI, and further provided,
that such fee is not duplicative of any such fee heretofore
paid by Programs, Holding or CPI for rights which would allow
Programs to perform services once Fox is no longer an affiliate
of CPI, provided, however, Programs shall be relieved of
providing services under the Services Agreement to the extent
such services require the use of any license for which
<PAGE>
Fox declines to make a required payment. Except as otherwise
expressly set forth herein, Fox will not owe Programs, Holding
or CPI any additional amounts for the transition services
described in the Services Agreement and in Exhibit A
notwithstanding any provision in any letter agreement executed
prior to the date of this Agreement.
(d) The Consulting Agreement, dated October 4, 1996,
between Fox and Programs shall terminate simultaneously with
the execution and delivery of this Agreement and shall be of no
further force or effect after the date hereof other than the
provisions of Section 9.8 thereof which shall survive the
consummation of this Agreement, and Fox, within 10 days
after the date hereof, shall deliver to Programs its check in
the amount of $534,804.00 in full satisfaction thereof.
(e) The Professional Products Supply Agreement, dated
August 8, 1996 between Kodak and CPI, as amended, shall
continue in full force and effect as written.
(f) The Employment Agreement ("Employment Agreement"),
dated May 22, 1995 between Programs and Theodore J. deBuhr II,
as partially assigned and assumed by Fox pursuant to the
Assignment and Amendment of Employment Agreement (the
"Assignment"), dated October 3, 1996, among Programs, deBuhr
and Fox, shall continue in full force and effect as written,
including, without limitation, the ongoing accrual of "Years of
Service" for purposes of the "Vesting Percentage" so long as
deBuhr is an employee of Fox (as such terms are defined in the
Employment Agreement). The parties further agree that Fox, and
its successors and assigns, shall indemnify and hold harmless
Programs, CPI and Holding and their respective affiliates for
any obligation which Programs, Holding, CPI or their respective
affiliates may incur under Paragraph 6(d) and related
provisions of Paragraphs 7 and 12 of the Employment Agreement
or the Assignment with respect to any termination or non-
renewal of employment of deBuhr which is incurred after the
earlier of: (i) the first anniversary of this Agreement or (ii)
the date a corporate officer of Kodak provides written notice
to CPI that Fox or Kodak or one of their affiliates will retain
deBuhr for more than one year after the date of this Agreement.
(g) The CPI Trademark License Agreement, dated October 4,
1996 between CPI Research and Development, Inc. ("CPI R&D"),
Programs and Fox shall continue in full force and effect as
written, provided, however, that CPI R&D and Programs agree not
to give notice of termination pursuant to Paragraph 11(a)
thereof prior to the expiration of the third anniversary of
this Agreement.
(h) The Working Capital Note, dated October 4, 1996, in
the maximum principal amount of $4,000,000 from Fox to Programs
shall continue in full force and effect as written.
<PAGE>
6. OTHER COVENANTS.
(a) On and after the date of this Agreement, the parties
shall take such additional actions as may be reasonably
necessary or desirable to fully vest in Kodak all of the
ownership, rights and privileges in the Stock and to otherwise
effectuate the transactions contemplated by this Agreement.
(b) None of Kodak, Fox or CPI shall (and none of them
shall permit any of their Affiliates to): issue any public
release or announcement 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 CPI
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 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, nor
shall any of Kodak, Fox or CPI publicly file all or any part of
this Agreement, any Schedule or Exhibit hereto, or any document
listed in Paragraph 5 of this Agreement 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),
cooperate with the other party to the extent reasonable and
practicable in obtaining confidential treatment for such
filing.
7. SURVIVAL AND INDEMNIFICATION.
(a) 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 date of this Agreement,
survive the execution and delivery of this Agreement and the
delivery of the Stock and the Note (the "Closing") for the
period set forth in this Paragraph 7(a). The representations
and warranties of CPI, Holding and Programs set forth in
Paragraphs 3(a), (b), (c), (e), (f) and (g) shall have no
expiration date; the representations and warranties in
Paragraph 3(d) shall survive until January 4, 1999. The
representations and warranties of Kodak set forth in Paragraphs
4(a), (b) and (c) shall have no expiration date; the
representations and warranties in Paragraph 4(d) shall survive
until January 4, 1999. In the event notice of any claim for
indemnification under Paragraph 7 (d) shall have been given
prior to midnight on the last day of the applicable survival
<PAGE>
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.
(b) INDEMNIFICATION BY CPI. To the extent and in the
manner herein provided, CPI shall indemnify and hold harmless
Kodak, its Affiliates and 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 (as defined in
Paragraph 7(e) below), which they or any of them may suffer or
incur as a result of or arising from any misrepresentation or
breach of warranty of CPI, Holding or Programs in this
Agreement.
(c) INDEMNIFICATION BY KODAK OR FOX. From and after the
Closing Date, Kodak shall indemnify and hold harmless CPI, its
Affiliates 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 as a result of any
guarantees of leasehold obligations for facilities leased by
Fox or its subsidiaries Proex Photo Systems, Inc., Fox Photo
Partners, Inc. and Texas Photo Finish, L.P. existing on the
date of this Agreement.
(d) PROCEDURE. Promptly after acquiring knowledge of any
Loss, or any action, suit, investigation, proceeding, demand,
assessment, audit, judgment, or claim ("Claim") which may
result in a Loss, and prior to the Expiration Date, the Person
seeking indemnity under this Paragraph 7 (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 Indemnitee's counsel),
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
<PAGE>
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 therefore. 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.
(e) CERTAIN DEFINITIONS. For purposes of this Paragraph
7, the following terms have the meanings set forth below:
"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.
8. MISCELLANEOUS
(a) ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the
Note, the Noncompetition Agreement and the agreements described
in Paragraph 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 or supplemented only by a written instrument duly
executed by CPI, Holding, Programs, Fox and Kodak and any
provision may be waived only in a writing executed by the party
granting such waiver. This Agreement, the Note, the
Noncompetition Agreement and the agreements described in
<PAGE>
Paragraph 5 shall be binding upon and inure to the benefit of,
the parties and their affiliates and their respective
successors and assigns, including any assignee of assets of the
business of Fox.
(b) EXPENSES. Each party shall bear its own expenses
incurred in connection with the transactions contemplated by
this Agreement except with respect to certain software
transfer, consent or waiver fees as provided in Paragraph 5(c)
of this Agreement.
(c) 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 14650-0126
Attention: David Monderer
Managing Director, Strategic Business Investments
Telecopier: (716) 724-4926
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, Holding or Programs, to:
CPI Corp.
1706 Washington Avenue
St. Louis, Missouri 63103
Attention: Chief Executive Officer
Telecopier: (314) 231-8150
<PAGE>
With a copy to:
CPI Corp.
1706 Washington Avenue
St. Louis, Missouri 63103
Attention: General Counsel
Telecopier: (314) 231-4233
and a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
Telecopier: (212) 354-8113
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.
(d) GOVERNING LAW; JURISDICTION. 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.
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.
(e) 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, CPI, Holding, Programs, Fox and Kodak
have caused this Agreement to be executed by their duly
authorized officers on the date first above written.
<PAGE>
CPI Corp.
/s/ Alyn V. Essman
------------------------------------
Alyn V. Essman
Chairman and Chief Executive Officer
Consumer Programs Holding, Inc.
/s/ Richard G. Albo
------------------------------------
Richard G. Albo
President
Consumer Programs Incorporated
/s/ Russell Isaak
------------------------------------
Russell Isaak
President
Fox Photo, Inc.
/s/ C. J. Chapman
-----------------------------------
C. J. Chapman
Director
Eastman Kodak Company
/s/ David P. Biehn
-----------------------------------
David P. Biehn
Senior Vice President
Exhibit 99.1
NONCOMPETITION AND NONSOLICITATION AGREEMENT
This Agreement is made this 2nd day of October, 1997
(Effective Date) among CPI Corporation ("CPI"), a Delaware
corporation, Eastman Kodak Company ("Kodak"), a New Jersey
corporation, and Fox Photo, Inc. ("Fox"), a Delaware
corporation.
WHEREAS, Kodak, Fox and CPI and certain of its affiliates
have entered into a Stock Purchase Agreement of even date
herewith pursuant to which Kodak is acquiring 49% of the common
stock of Fox from Holding so that Kodak will own 100% of the
issued and outstanding common stock of Fox, and terminating the
Stockholders' Agreement between Kodak, Fox, CPI and Holding and
certain other transactions described in the Purchase Agreement;
and
WHEREAS, Kodak desires to preserve its investment in Fox
and the business of Fox and its subsidiaries, which consists 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 Fox and its subsidiaries on the date hereof
(the "Business"); and
WHEREAS, the covenants and agreements contained in this
Agreement are important to the value and prospects of the
Business; and
NOW, THEREFORE, in consideration of Ten Million Dollars
($10,000,000) paid by wire transfer from Kodak to CPI on the
date hereof and other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS:
(a) "Protected Persons" shall mean Kodak, Fox and their
subsidiaries and affiliates, successors and assigns;
(b) Restricted Persons shall mean CPI and its subsidiaries
and each of their respective subsidiaries and affiliates,
successors and assigns;
<PAGE>
(c) "Restricted Area" means the North America, both
continental and the islands belonging to the countries located
in continental North America; and
(d) Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase
Agreement.
2. NON-COMPETITION. During the period beginning upon the
Effective Date and ending on the second anniversary thereof and
except as permitted below, the Restricted Persons shall not,
and shall cause their affiliates not to, directly or
indirectly: (a) own, manage, operate or control any business
competitive with the Business other than ownership of less than
5% of the outstanding capital stock of a publicly traded
corporation; (b) enter into strategic alliances, preferred
provider or other publicly announced and promoted affiliations
with any provider of goods or services competitive with the
Business (other than cross-promotions and customer-list
exchanges comparable with those used by Restricted Persons on
the date hereof), or (c) otherwise engage in competition with
the Business in the Restricted Area, provided, however, nothing
contained in clauses (a), (b) or (c) shall restrict or prohibit
any Restricted Person from engaging in any business activity in
which it engages on the date hereof.
Kodak and Fox acknowledge that CPI and/or its
subsidiaries (i) own and operate professional portrait studios
throughout the United States, Canada and Puerto Rico and wall
decor stores in the United States ("CPI Business"); (ii) are
engaged in research and development operations relating to
imaging products and services and imaging business operations;
and (ii) desire to expand and further develop the CPI Business,
the research and development activities and may desire to add
new lines of business. Kodak and Fox further acknowledge that
CPI's existing research and development projects include a
Store Automation System for Minilabs ("SAS Minilab"), a Photo
Preview/Photo Proof System ("Photo Preview System"), a Photo
Preview Online System and image archiving services
(alternatively and collectively, "R&D Products") and that CPI
intends to sell rights to use the R&D Products, including the
SAS Minilab and the Photo Preview System to third parties,
including retail photofinishing businesses that may compete
with Fox.
Kodak and Fox agree that this Agreement shall not
restrict the continued operation and development of CPI
Business or the research and development operations conducted
by CPI and/or its subsidiaries, including the commercial
development and licensing of the R&D Products and other imaging
products, services and systems; provided that CPI and its
subsidiaries shall not own, in whole or in part, or operate any
business in the Restricted Area that is engaged to any material
<PAGE>
extent in retail photofinishing operations (but not including
operations primarily engaged in professional portraiture
operations).
CPI agrees that it (or its subsidiaries owning such
products) will offer to negotiate in good faith with Fox for
licenses to use the SAS Minilab, the Photo Preview System and
any other imaging systems developed by CPI or its subsidiaries.
All such licenses shall be negotiated at arms length and shall
include fair market terms which, during the first two years
after commercial availability of any such product, shall be no
less favorable than those offered to any other customer of CPI
or such subsidiary at the time Fox's order is placed with CPI
or the subsidiary.
3. NONSOLICITATION. During the period from the date
hereof and ending on the second anniversary thereof, the
Restricted Persons shall not, and shall cause their affiliates
not to, directly or indirectly, on their own behalf or on
behalf of any other person in any manner whatsoever: (a)
without the prior written consent of Fox, induce or endeavor to
induce or hire any employee of the Business ("Covered Person")
to terminate his, her or its association with the Business or
in any manner interfere with the relationship of a Protected
Person with such Covered Person, provided, however, the
provisions of this Paragraph 3(a) shall not restrict the
Restricted Persons from hiring or consulting with a Covered
Person if such Covered Person's employment was terminated by
the Business or such Covered Person had ceased to be employed
or retained by the Business for at least one year prior to the
date of being solicited for hiring by a Restricted Person; or
(b) induce or endeavor to induce, or assist others to induce
any supplier of any Protected Person, whether existing on the
date hereof or hereafter arising, to terminate its relationship
with a Protected Person or do anything, directly or indirectly,
to interfere with the business relationship between a Protected
Person and any such person; or (c) in any manner whatsoever,
induce or endeavor to induce, or assist others to induce, any
customer, distributor, channel partner or other person
purchasing or distributing the products or services of any
Protected Person, to terminate its use, purchase or further
purchase of the products or services of any Protected Person,
or to purchase substitute or replacement products or services
from any other person.
4. In the event that any Restricted Person breaches any
provision of this Agreement, the Protected Persons shall have
the following rights and remedies, each of which shall be
independent of the others and severally enforceable, and each
of which shall be in addition to, and not in lieu of, any other
rights and remedies available to a Protected Person under law
or in equity, and each of which may be pursued by a Protected
Person in any order that either of them desires:
<PAGE>
(a) SPECIFIC PERFORMANCE. In the event that any
Restricted Person breaches any provision hereof, the Protected
Person shall have the right and remedy to have the provisions
of this Agreement specifically enforced by injunctive relief in
any court of competent jurisdiction, without posting a bond or
other security of any kind whatsoever, it being agreed that any
breach of this Agreement would cause irreparable injury to the
Protected Persons and that money damages alone would not
provide an adequate remedy to the Protected Persons.
(b) DAMAGES AND OTHER REMEDIES. In the event that any
Restricted Person breaches any provision hereof, the Restricted
Persons shall be jointly and severally liable to the Protected
Persons for all losses and damages suffered by any Protected
Person as a result thereof and other right or remedy which any
Protected Person may have at law or in equity.
(c) COSTS OF ENFORCEMENT. In the event a Restricted
Person is found to have breached its obligations in Sections 2
or 3 of this Agreement, the Protected Persons shall have the
right to be paid by the Restricted Persons, jointly and
severally, for all of the Protected Persons reasonable costs
and expenses, including reasonable attorneys' fees and
disbursements, incurred in enforcing the terms of this
Agreement.
5. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without
reference to its principles of conflicts of law. The Restricted
Parties acknowledge and agree that the provisions of this
Agreement are reasonable and valid in duration and scope and in
all other respects. If any court of competent jurisdiction
determines that any of the provisions of this Agreement, or any
part thereof, is invalid or unenforceable, such court shall
have the power to reduce the duration or scope of such
provision, as the case may be, to the extent reasonably
necessary for the protection of the Protected Persons and, in
its reduced form, such provision shall then be enforceable.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of
any other provision.
6. 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
<PAGE>
heard and determined in such federal court. 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.
7. This Agreement together with the Purchase Agreement
and the other documents described therein constitute the entire
agreement of the parties with respect to the matters set forth
herein. 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. No action taken pursuant to this Agreement
shall be deemed a waiver or consent by the party taking such
action of compliance by the other party with any of the
covenants or obligations of the other party contained in this
Agreement.
8. This Agreement shall be binding upon and inure to the
benefit of the Business, the parties and their affiliates and
their respective successors and assigns, including any assignee
of assets of the Business.
9. 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):
<PAGE>
If to Kodak or Fox, to:
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0126
Attention: David Monderer
Managing Director, Strategic Business Investments
Telecopier: (716) 724-4926
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, New York 14604
Rochester, New York 14603
Attention: Deborah McLean Quinn, Esq.
Telecopier: (716) 263-1600
If to CPI, to:
CPI Corp.
1706 Washington Avenue
St. Louis, Missouri 63103
Attention: Chief Executive Officer
Telecopier: (314) 231-8150
With a copy to:
CPI Corp.
1706 Washington Avenue
St. Louis, Missouri 63103
Attention: General Counsel
Telecopier: (314) 231-4233
and a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
Telecopier: (212) 354-8113
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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CPI CORP.
/s/ Alyn V. Essman
------------------------------------
Alyn V. Essman
Chairman and Chief Executive Officer
EASTMAN KODAK COMPANY
/s/ David P. Biehn
------------------------------------
David P. Biehn
Senior Vice President
FOX PHOTO, INC.
/s/ C. J. Chapman
-----------------------------------
C. J. Chapman
Director
<PAGE>
