8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported):October 26, 2006

CPI CORP.

(Exact name of registrant as specified in its charter)

Delaware	1-10204	43-1256674
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification Code Number)

1706 Washington Ave., St. Louis, Missouri	63103
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:(314) 231-1575

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01  Entry into a Material Definitive Agreement

On October 26, 2006, CPI Corp. (the “Company”) entered into a Second Amendment to that certain Retention Agreement with Thomas Gallahue, the Executive Vice President, Special Projects of the Company, dated as of January 12, 2006. The summary of the Amendment set forth in this Form 8-K is qualified in its entirety by reference to the Second Amendment, a copy of which is filed as Exhibit 10.65 to this Form 8-K. A copy of the Retention Agreement was filed as an exhibit to the Company’s Form 8-K filed on January 19, 2006 and a copy of the First Amendment to Retention Agreement was filed on August 29, 2006.

The Second Amendment changed Mr. Gallahue’s Retirement Date from October 27, 2006 to the later of (a) February 3, 2007 or (b) such date as the Company and Gallahue mutually agree. The Second Amendment also provides for a bonus to be paid to Mr. Gallahue for the period from October 8, 2006 through the Retirement Date based on the Company’s performance for the fourth quarter of its 2006 fiscal year.

On October 30, 2006, the Company entered into a Resignation Agreement with Paul Rasmussen, who served as the Company’s Chief Executive Officer and President until he left the Company on October 10, 2006. The summary of the Resignation Agreement set forth in this Form 8-K is qualified in its entirety by reference to the agreement, a copy of which is filed as Exhibit 10.66 to this Form 8-K. Under the Resignation Agreement, Mr. Rasmussen resigned from his employment and all officer positions with the Company and its subsidiaries and the Company agreed to pay Mr. Rasmussen a lump sum Separation Payment equal to 12 months of his base salary.

Item 9.01. Financial Statements and Exhibits

(c)   Exhibits

10.65   Second Amendment to Retention Agreement, dated as of October 26, 2006, by and between Consumer Programs Incorporated and Thomas Gallahue

10.66    Resignation Agreement dated as of October 30, 2006, by and between CPI Corp. and Paul C. Rasmussen

SIGNATURES

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.
Date: November 11, 2006	By:	/s/  Gary W. Douglass
		Gary W. Douglass
		Executive Vice President, Finance, Chief Financial Officer and Treasurer

EX-10.65

EXHIBIT 10.65

SECOND AMENDMENT TO

RETENTION AGREEMENT

THIS SECOND AMENDMENT to that certain Retention Agreement by and between THOMAS GALLAHUE, an individual (hereinafter referred to as “Gallahue”) and CONSUMER PROGRAMS INCORPORATED, a Missouri corporation (on behalf of itself and its affiliates hereinafter referred to, alternatively and collectively, as “CPI”) dated as of January 12, 2006 and amended as of August 23, 2006 (hereinafter the Agreement and the First Amendment referred to as the “Retention Agreement”) is entered into as of the 26th day of October, 2006.

WHEREAS, the parties desire to extend Gallahue’s employment under the Retention Agreement;

NOW, THEREFORE, in consideration of the covenants set forth herein, the parties hereby agree to amend the Retention Agreement as follows:

1.Section 1 of the Retention Agreement shall be amended in its entirely to read as follows:

Retirement. Gallahue shall retire from employment with CPI on the later of (a) February 3, 2007 or (b) such date as the parties mutually agree (the “Retirement Date”).

2. Subsections 3(a) and 3(b) of the Retention Agreement shall be amended in their entirety to read as follows:

(a)   base salary (i) from May 1, 2006 through October 8, 2006 and from October 29, 2006 through the Retirement Date, based on the annual rate of One Hundred Two Thousand Dollars ($102,500.00) and (ii) from October 9, 2006 through October 28, 2006, based on the annual rate of Two Hundred Five Thousand Dollars ($205,000.00);

(b)   a bonus for the (i) first quarter of fiscal year in the amount of Eight Thousand Seventy-one Dollars ($8,071.00), which is Gallahue’s guaranteed bonus amount and (ii) for the period from October 9, 2006 through the Retirement Date based on CPI performance for the fourth quarter of fiscal year 2006;

3.Section 4 of the Retention Agreement shall be deleted in its entirety and replaced by the following:

4. Benefits and Responsibilities.

(a) From May 1, 2006 through the Retirement Date, Gallahue will not be required to supervise any CPI employees and will not accrue any paid vacation.

(b) Gallahue shall provide (i) an average of twenty (20) hours of service to CPI each week from August 31, 2006 through October 8, 2006; (ii) an average of forty (40) hours of service to CPI each week from October 9, 2006 through October 28, 2006; and (iii) such hours as Gallahue deems necessary to carry out his duties from October 29, 2006 through the Retirement Date.

(c) From October 29, 2006 through the Retirement Date, Gallahue shall (i) be authorized to work from his homes in St. Louis, Missouri, and Sarasota, Florida; (ii) shall have continued access to CPI computer equipment and networks; and (iii) shall receive reimbursement for Internet access at his homes so that he may carry out the duties of his position with CPI.

(d) From October 29, 2006 through the Retirement Date, CPI will arrange and/or reimburse Gallahue for air travel, from Sarasota, Florida to St. Louis, Missouri, at reasonable intervals as Gallahue deems necessary to carry out the duties of his position with CPI.

4.Unless otherwise defined herein, all capitalized terms shall have the definition ascribed to them in the Retention Agreement.

5.The Retention Agreement is hereby ratified and affirmed as amended by this Second Amendment.

IN WITNESS WHEREOF, the parties have executed this Second Amendment to the Retention Agreement as of the date first written above.

CONSUMER PROGRAMS INCORPORATED,

a Missouri corporation, on behalf of itself and its affiliates

By: /s/ Renato Cataldo

                                                                ___________________________________

Renato Cataldo

Chief Executive Officer

/s/ Thomas Gallahue

____________________________________

Thomas Gallahue

EX-10.66

EXHIBIT 10.66

AGREEMENT

CPI Corp., a Delaware corporation (the "Corporation"), and Paul C. Rasmussen (“Executive”) enter into this Agreement (this “Agreement”), as of the 30th day of October, 2006.

WITNESSETH:

WHEREAS, Executive is currently employed by the Corporation as its Chief Executive Officer and Corporation wishes to terminate that employment arrangement so the Executive can pursue other interests;

WHEREAS, Corporation and Executive entered into an Employment Agreement dated July 12, 2005 and accepted by Executive on July 13, 2005 (the “Employment Agreement”);

     NOW, THEREFORE, in consideration of the covenants and mutual promises herein contained, it is agreed as follows:

 1.Separation Date. Executive hereby resigns his employment and all officer positions with the Corporation and all of its subsidiaries effective October 10, 2006 (“Separation Date”).

 2.Separation Payment. Following the Separation Date, in accordance with the Employment Agreement, the Corporation hereby agrees to pay Executive a lump sum payment equal to 12 months of his current base salary (the “Separation Payment”). This payment will occur as soon as administratively practicable following the Separation Date, but no later than 30 days following the Separation Date. The Corporation shall have the right to withhold from the Separation Payment and from any other payments made to Executive hereunder to the extent required by law or regulation, all federal, state and local income and other taxes applicable to such payments.

 3.Receipt of Other Compensation. Executive acknowledges and agrees that, other than as specifically set forth in this Agreement, following the Separation Date, Executive is not and will not be due any compensation, including, but not limited to, compensation for unpaid salary (except for amounts unpaid and owing for Executive’s employment with the Corporation prior to the Separation Date), unpaid bonus, or severance from the Corporation under the terms of the Employment Agreement, any plan or policy of the Corporation or otherwise. Executive will, however, be entitled to receive benefits which are vested and accrued prior to the Separation Date pursuant to the employee benefit plans of the Corporation in which Executive participates including any accrued but unused vacation. Participation by the Executive (if any) in any of the compensation or benefit plans of the Corporation as of and after the Separation Date shall be subject to and determined in accordance with the terms and conditions of such plans. The Corporation shall promptly reimburse Executive for business expenses incurred in the ordinary course of Executive’s employment on or before the Separation Date, but not previously reimbursed, provided the Corporation's policies of documentation and approval are satisfied.

 4.Executive’s Understanding. Executive acknowledges by signing this Agreement that Executive has read and understands this document, that Executive has conferred with or had the opportunity to confer with Executive’s attorney regarding the terms and meaning of this Agreement, that Executive has had sufficient time to consider the terms provided for in this Agreement, that no representations or inducements have been made to Executive except as set forth in this Agreement, and that Executive has signed the same KNOWINGLY AND VOLUNTARILY.

 5.Severability of Provisions. In the event that any one or more of the provisions of this Agreement is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions will not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this Agreement are held to be excessively broad as to duration, scope, activity, or subject, such provisions will be construed by limiting and reducing them so as to be enforceable to the maximum extent compatible with applicable law.

 6.Non-Admission of Liability. Executive agrees that neither this Agreement nor the performance by the parties hereunder constitutes an admission by the Corporation, its subsidiaries or the officers, directors, employee or agents of the Corporation or its subsidiaries of any violation of any federal, state, or local law, regulation, common law, breach of any contract, or any other wrongdoing of any type.

 7.Non-Assignability. The rights and benefits under this Agreement are personal to Executive and such rights and benefits shall not be subject to assignment, alienation, or transfer, except to the extent such rights and benefits are lawfully available to the estate or beneficiaries of Executive upon death.

 8.Entire Agreement. This Agreement sets forth all the terms and conditions with respect to compensation, remuneration of payments, and benefits due Executive from the Corporation and supersedes and replaces any and all other agreements or understandings Executive may have had with respect thereto, provided that the provisions of the Employment Agreement and the Confidentiality, Noncompetition and Nonsolicitation Agreement executed in connection with the Employment Agreement shall remain in full force and effect. This Agreement may not be modified or amended except in a writing signed by both Executive and an authorized representative of the Corporation.

 9.Choice of Law. The provisions of this Agreement shall be construed in accordance with the internal laws of the State of Missouri without regard to any state’s conflict of law principles. Any action brought for the interpretation, application and/or enforcement of this Agreement shall be brought exclusively in the United States District Court for the Eastern District of Missouri and/or the Circuit Court of St. Louis County, Missouri.

 10.Counterpart. This Agreement may be signed in single or separate counterparts each or which shall constitute an original.

 11.Notice. Any notice to be given hereunder shall be in writing and shall be deemed given when mailed by certified mail, return receipt requested, addressed as follows:

To Executive at:

1034 Savonne Court

Chesterfield, MO 63005

To the Corporation at:

1706 Washington Avenue

St. Louis, Missouri 63103

Attention: ________________

IN WITNESS WHEREOF, the parties have executed this Agreement.

CPI CORP.

By:	/s/ Turner White
Title:	Turner White Chairman, Compensation Committee
Date:	October, 30, 2006

/s/ Paul C. Rasmussen

Paul C. Rasmussen

Executive