-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DF3CkL8KTQQQwYW4ZZX6tg5J94xAvIZbovkPtKdXeObHcnIqyE8hpGbMwdGz/myX R23gPJyaNbfu+efnuIuB3Q== 0000025354-97-000022.txt : 19971020 0000025354-97-000022.hdr.sgml : 19971020 ACCESSION NUMBER: 0000025354-97-000022 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971002 ITEM INFORMATION: FILED AS OF DATE: 19971017 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CPI CORP CENTRAL INDEX KEY: 0000025354 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200] IRS NUMBER: 431256674 STATE OF INCORPORATION: DE FISCAL YEAR END: 0203 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10204 FILM NUMBER: 97697563 BUSINESS ADDRESS: STREET 1: 1706 WASHINGTON AVE CITY: ST LOUIS STATE: MO ZIP: 63103-1790 BUSINESS PHONE: 3142311575 MAIL ADDRESS: STREET 1: 1706 WASHINGTON AVE CITY: ST LOUIS STATE: MO ZIP: 63103 8-K 1 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.) 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 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. 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 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". 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
Photo- finishing Non- Unaudited Trans- Consulting Service compete Historical action Agreement Agreement Agreement Pro Forma 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 ========= ========= ========= ========= ========= =========
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)
Photo- finishing Non- Unaudited Trans- Consulting Service compete Historical action Agreement Agreement Agreement Pro Forma 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 ========= ========= ========= ========= ========= =========
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
Photo- finishing Non- Trans- Consulting Service compete Historical action Agreement Agreement Agreement Pro Forma 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 ========= ========= ========= ========= ========= =========
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)
Photo- finishing Non- Trans- Consulting Service compete Historical action Agreement Agreement Agreement Pro Forma 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 ========= ========= ========= ========= ========= =========
CPI CORP. PRO FORMA CONSOLIDATED BALANCE SHEET (unaudited) (in thousands of dollars)
07/19/97 Adjust 07/19/97 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 ========= ========= =========
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:
07/19/97 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 =========
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. 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 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 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 EX-2.1 2 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"). 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 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: (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 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 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. 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 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 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 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 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. 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 EX-99.1 3 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; (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 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: (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 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): 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. 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 -----END PRIVACY-ENHANCED MESSAGE-----