EXHIBIT 10.5
CPI CORP.
7.46% Senior Notes due 2007
NOTE PURCHASE AGREEMENT
Dated as of June 16, 1997
TABLE OF CONTENTS
PAGE
1. AUTHORIZATION OF NOTES 1
2. SALE AND PURCHASE OF NOTES 1
3. CLOSING 2
4. CONDITIONS TO CLOSING 2
4.1. Representations and Warranties 2
4.2. Performance; No Default 2
4.3. Compliance Certificates 3
4.4. Opinions of Counsel 3
4.5. Purchase Permitted by Applicable Law, etc. 3
4.6. Sale of Notes to Other Purchasers 3
4.7. Payment of Special Counsel Fees 4
4.8. Private Placement Number 4
4.9. Changes in Corporate Structure 4
4.10. Proceedings and Documents 4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
5.1. Organization; Power and Authority 4
5.2. Authorization, etc. 5
5.3. Disclosure 5
5.4. Organization and Ownership of Shares of
Subsidiaries;Affiliates 5
5.5. Financial Statements 6
5.6. Compliance with Laws, Other Instruments, etc. 6
5.7. Governmental Authorizations, etc. 7
5.8. Litigation; Observance of Agreements, Statutes
and Orders 7
5.9. Taxes 7
5.10. Title to Property; Leases 8
5.11. Licenses, Permits, etc. 8
5.12. Compliance with ERISA 9
5.13. Private Offering by the Company 10
5.14. Use of Proceeds; Margin Regulations 10
5.15. Existing Indebtedness; Future Liens 10
5.16. Foreign Assets Control Regulations, etc. 11
5.17. Status Under Certain Statutes 11
5.18. Environmental Matters 11
6. REPRESENTATIONS OF THE PURCHASER 12
6.1. Purchase of Notes 12
6.2. Source of Funds 12
7. INFORMATION AS TO COMPANY 13
7.1. Financial and Business Information 13
7.2. Officer's Certificate 16
7.3. Inspection 17
8. PREPAYMENT OF THE NOTES 17
8.1. Required Prepayments 17
8.2. Optional Prepayments 18
8.3. Allocation of Partial Prepayments 18
8.4. Maturity; Surrender, etc. 18
8.5. Purchase of Notes 19
8.6. Make-Whole Amount 19
8.7. Prepayment Relating to Disposition Payment 20
9. AFFIRMATIVE COVENANTS 21
9.1. Compliance with Law 21
9.2. Insurance 21
9.3. Maintenance of Properties 22
9.4. Payment of Taxes and Claims 22
9.5. Corporate Existence, etc. 22
9.6. Covenant to Secure Notes Equally 23
10. NEGATIVE COVENANTS 23
10.1. Incurrence of Indebtedness and Subsidiary
Indebtedness 23
10.2. Liens 24
10.3. Limitation on Sale and Leaseback Transactions 26
10.4. Maintenance of EBITDA and Interest Expense
Coverage 26
10.5. Asset Sales 27
10.6. Merger, Consolidation, etc. 28
10.7. Transactions with Affiliates 28
11. EVENTS OF ▇▇▇▇▇▇▇ ▇▇
▇▇. REMEDIES ON DEFAULT, etc. 31
12.1. Acceleration 31
12.2. Other Remedies 32
12.3. Rescission 32
12.4. No Waivers or Election of Remedies, Expenses,
etc. 33
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES 33
13.1. Registration of Notes 33
13.2. Transfer and Exchange of Notes 33
13.3. Replacement of Notes 34
14. PAYMENTS ON NOTES 35
14.1. Place of Payment 35
14.2. Home Office Payment 35
15. EXPENSES, ETC. 35
15.1. Transaction Expenses 35
15.2. Survival 36
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT 36
17. AMENDMENT AND WAIVER 37
17.1. Requirements 37
(ii)
17.2. Solicitation of Holders of Notes 37
17.3. Binding Effect, etc. 38
17.4. Notes held by Company, etc. 38
18. NOTICES 38
19. REPRODUCTION OF DOCUMENTS 39
20. CONFIDENTIAL INFORMATION 39
21. SUBSTITUTION OF PURCHASER 40
22. MISCELLANEOUS 41
22.1. Successors and Assigns 41
22.2. Construction 41
22.3. Jurisdiction and Process; Waiver of Jury Trial 41
22.4. Payments Due on Non-Business Days 42
22.5. Severability 42
22.6. Accounting Terms; Pro Forma Calculations 42
22.7. Counterparts 43
22.8. Governing Law 43
Exhibit 1 -- Form of 7.46% Senior Note due 2007
Exhibit 4.4(a)(1) -- Form of Opinion of Special Counsel for
the Company
Exhibit 4.4(a)(2) -- Form of Opinion of General Counsel of
the Company
Exhibit 4.4(b) -- Form of Opinion of Special Counsel for
the Purchasers
Schedule A -- Names and Addresses of Purchasers
Schedule B -- Defined Terms
Schedule 5.3 -- Disclosure Documents
Schedule 5.4 -- Subsidiaries
Schedule 5.5 -- Financial Statements
Schedule 5.8 -- Litigation
Schedule 5.11 -- Licenses, etc.
Schedule 5.15 -- Existing Indebtedness
(iii)
CPI CORP.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
7.46% Senior Notes due 2007
As of June 16, 1997
TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
CPI CORP., a Delaware corporation (the "COMPANY"),
agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company has duly authorized the issue and sale of
$60,000,000 aggregate principal amount of its 7.46% Senior Notes
due 2007 (the "NOTES"), each such note to be substantially in the
form set out in Exhibit 1. As used herein, the term "NOTES"
shall mean all notes originally delivered pursuant to this
Agreement and the Other Agreements referred to below and all
notes delivered in substitution or exchange for any such note
and, where applicable, shall include the singular number as well
as the plural. Certain capitalized and other terms used in this
Agreement are defined in Schedule B; references to a "Schedule"
or an "Exhibit" are, unless otherwise specified, to a Schedule or
an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement,
the Company will issue and sell to you and you will purchase from
the Company, at the Closing provided for in Section 3, Notes in
the principal amount specified opposite your name in Schedule A
at the purchase price of 100% of the principal amount thereof.
Contemporaneously with entering into this Agreement, the Company
is entering into separate Note Purchase Agreements (the "OTHER
AGREEMENTS") identical with this Agreement with each of the other
purchasers named in Schedule A (the "OTHER PURCHASERS"),
providing for the sale at such Closing to each of the Other
Purchasers of Notes in the principal amount specified opposite
its name in Schedule A. Your obligation hereunder and the
obligations of the Other Purchasers under the Other Agreements
are several and not joint obligations and you shall have no
obligation under any Other Agreement and no liability to any
Person for the performance or non-performance by any Other
Purchaser thereunder.
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3. CLOSING.
The sale and purchase of the Notes to be purchased by
you and the Other Purchasers shall occur at the offices of
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, One Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 a.m., New York time, at a
closing (the "CLOSING") on June 16, 1997 or on such other
Business Day thereafter on or prior to June 30, 1997 as may be
agreed upon by the Company and you and the Other Purchasers. At
the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as you may
request prior to the Closing) dated the date of the Closing and
registered in your name (or in the name of your nominee), against
delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by
wire transfer of immediately available funds for the account of
the Company to account number 100-▇▇▇▇▇▇▇ (Account Name: Consumer
Programs Incorporated) at Mercantile Bank, N.A., St. Louis, MO,
ABA number ▇▇▇▇▇▇▇▇▇.
If at the Closing the Company shall fail to tender such
Notes to you as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled
to your satisfaction, you shall, at your election, be relieved of
all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such
nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be
sold to you at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following
conditions:
4.1. REPRESENTATION AND WARRANTIES.
The representations and warranties of the Company in
this Agreement shall be correct when made and at the time of the
Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to
be performed or complied with by it prior to or at the Closing
and after giving effect to the issue and sale of the Notes (and
the application of the proceeds thereof as contemplated by
Schedule 5.14) no Default or Event of Default shall have occurred
and be continuing. Neither the Company nor any Subsidiary shall
have entered into any transactions since May 31, 1997 that would
have been prohibited by Section 10.1, 10.2, 10.6 or 10.7 hereof
had such Sections applied since such date.
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4.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have
delivered to you an Officer's Certificate, dated the date of the
Closing, certifying that the conditions specified in Sections
4.1, 4.2 and 4.9 have been fulfilled.
(b) SECRETARY'S CERTIFICATE. The Company shall have
delivered to you a certificate of the Secretary or an Assistant
Secretary of the Company certifying as to the resolutions
attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and this
Agreement and the Other Agreements.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from White
& Case, special counsel for the Company, and ▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., General Counsel of the Company, substantially in the
respective forms set forth in Exhibits 4.4(a)(1) and 4.4(a)(2)
and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such
opinions to you), and (b) from ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, your
special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(b) and
covering such other matters incident to such transactions as you
may reasonably request.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to
which you are subject, without recourse to provisions (such as
Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as
to the character of the particular investment, (b) not violate
any applicable law or regulation (including without limitation
Regulation G, T or X of the Board of Governors of the Federal
Reserve System) and (c) not subject you to any tax, penalty or
liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such
purchase is so permitted.
4.6. SALES OF NOTES TO OTHER PURCHASERS.
The Company shall sell to the Other Purchasers and the
Other Purchasers shall purchase the Notes to be purchased by them
at the Closing as specified in Schedule A.
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4.7. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the
Company shall have paid on or before the Closing the reasonable
fees, charges and disbursements of your special counsel referred
to in Section 4.4 to the extent reflected in a statement of such
counsel rendered to the Company at least one Business Day prior
to the Closing.
4.8. PRIVATE PLACEMENT NUMBER.
A Private Placement Number issued by Standard & Poor's
CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Notes.
4.9. CHANGES IN CORPORATE STRUCTURE.
The Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and
shall not have succeeded to all or any substantial part of the
liabilities of any other entity at any time following the date of
the most recent financial statements referred to in Schedule 5.5.
4.10. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with
the transactions contemplated by this Agreement and all documents
and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your
special counsel shall have received all such counterpart
originals or certified or other copies of such documents as you
or they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER ABD AUTHORITY.
The Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute
and deliver this Agreement and the Other Agreements and the Notes
and to perform the provisions hereof and thereof.
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5.2. AUTHORIZATION, ETC.
This Agreement and the Other Agreements and the Notes
have been duly authorized by all necessary corporate action on
the part of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each Note will constitute, a
legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (b)
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
5.3. DISCLOSURE.
The Company, through its agent, Credit Suisse First
Boston Corporation, has delivered to you a copy of a Direct
Placement Memorandum, dated May 1997 (the "MEMORANDUM"), relating
to the transactions contemplated hereby. The Memorandum fairly
describes, in all material respects, the general nature of the
business and principal properties of the Company and its
Subsidiaries. This Agreement, the Memorandum, the documents,
certificates or other writings delivered to you by or on behalf
of the Company in connection with the transactions contemplated
hereby and described in Schedule 5.3 (together with the
Memorandum, the "DISCLOSURE DOCUMENTS"), and the financial
statements listed in Schedule 5.5, taken as a whole, do not
contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were
made. Since February 1, 1997, there has been no change in the
financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except as disclosed in
the Disclosure Documents or in the financial statements listed in
Schedule 5.5 and other changes that individually or in the
aggregate could not reasonably be expected to have a Material
Adverse Effect. The Company has no reason to believe that Sears,
▇▇▇▇▇▇▇ & Co. will exercise its rights under its license
agreement with the Company to materially reduce the scope of the
Company's business with Sears, ▇▇▇▇▇▇▇ & Co. There is no fact
known to the Company that could reasonably be expected to have a
Material Adverse Effect that has not been set forth herein or in
the Disclosure Documents.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES;
AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein)
complete and correct lists of the Company's (i) Subsidiaries,
showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests
6
outstanding owned by the Company and each other Subsidiary, (ii)
Affiliates, other than Subsidiaries, and (iii) directors and
senior officers. Schedule 5.4 also identifies all Significant
Subsidiaries as of February 2, 1997.
(b) All of the outstanding shares of capital stock or
similar equity interests of each Subsidiary shown in Schedule 5.4
as being owned by the Company and its Subsidiaries have been
validly issued, are fully paid and nonassessable and are owned by
the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. Each such Subsidiary has the corporate power and
authority to own or hold under lease the properties it purports
to own or hold under lease and to transact the business it
transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject
to any legal restriction or any agreement (other than this
Agreement, the agreements listed in Schedule 5.4 and customary
limitations imposed by corporate law statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or
any of its Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Subsidiary.
5.5. FINANCIAL STATEMENTS.
The Company has delivered to you copies of the
financial statements of the Company and its Subsidiaries listed
in Schedule 5.5. All of said financial statements (including in
each case the related schedules and notes) fairly present in all
material respects the consolidated financial position of the
Company and its Subsidiaries as of the respective dates specified
in such Schedule and the consolidated results of their operations
and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes
thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company
of this Agreement and the Notes will not (i) contravene, result
in any breach of, or constitute a default under, or result in the
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creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the
Company or any Subsidiary is bound or by which the Company or any
Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree,
or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (iii) violate any
provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any
Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS,ETC.
No consent, approval or authorization of, or
registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery
or performance by the Company of this Agreement or the Notes.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no
actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in
any court or before any arbitrator of any kind or before or by
any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect.
(b) Neither the Company nor any Subsidiary is in
default under any term of any agreement or instrument to which it
is a party or by which it is bound, or any order, judgment,
decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental
Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
5.9. TAXES.
The Company and its Subsidiaries have filed all Federal
income tax returns and all other material tax returns that are
required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all
other taxes and assessments levied upon them or their properties,
assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have
become delinquent, except for any taxes and assessments (a)
currently payable without penalty or interest, (b) the amount of
which is not individually or in the aggregate Material or
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(c) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be,
has established adequate reserves in accordance with GAAP. The
Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Company
and its Subsidiaries in respect of Federal, state or other taxes
for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Subsidiaries have been
determined by the Internal Revenue Service and paid for all
fiscal years up to and including the fiscal year ended February
6, 1988.
5.10. TITLE OF PROPERTY; LEASE.
The Company and its Subsidiaries have good and
sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet listed on
Schedule 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement. All leases
that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material
respects.
5.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11,
(a)the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents,
proprietary software, copyrights, service marks, trademarks and
trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of
others;
(b)to the best knowledge of the Company, no product of
the Company infringes in any material respect any license,
permit, franchise, authorization, patent, proprietary software,
copyright, service ▇▇▇▇, trademark, trade name or other right
owned by any other Person; and
(c)to the best knowledge of the Company, there is no
Material violation by any Person of any right of the Company or
any of its Subsidiaries with respect to any patent, proprietary
software, copyright, service ▇▇▇▇, trademark, trade name or other
right owned or used by the Company or any of its Subsidiaries.
5.12. COMPLIANCE WITH ERISA.
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(a) The Company and each ERISA Affiliate have operated
and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in Section 3 of ERISA), and no event,
transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets
of the Company or any ERISA Affiliate, in either case pursuant to
Title I or IV of ERISA or to such penalty or excise tax
provisions or to section 401(a)(29) or 412 of the Code, other
than such liabilities or Liens as would not be individually or in
the aggregate Material.
(b)The present value of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer
Plans) currently maintained or contributed to by the Company and
its ERISA Affiliates, determined as of the end of such Plan's
most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most
recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such
benefit liabilities. The term "benefit liabilities" has the
meaning specified in section 4001 of ERISA and the terms "CURRENT
VALUE" and "PRESENT VALUE" have the meaning specified in section
3 of ERISA.
(c) The Company and its ERISA Affiliates have not
incurred withdrawal liabilities (and are not subject to
contingent withdrawal liabilities) under section 4201 or 4204 of
ERISA in respect of Multiemployer Plans that individually or in
the aggregate are Material.
(d) The execution and delivery of this Agreement and
the issuance and sale of the Notes at the Closing hereunder will
not involve any transaction prohibited by section 406(a)(i) of
ERISA or described in section 4975 (c) (1) (A) - (D) of the Code,
that could subject the Company or any holder of a Note to any tax
or penalty on prohibited transactions imposed under said section
4975 of the Code or by section 502(i) of ERISA. The
representation by the Company in the preceding sentence of this
Section 5.12(d) is made in reliance upon and subject to the
accuracy of your representation in Section 6.2 as to the sources
of the funds used to pay the purchase price of the Notes to be
purchased by you.
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5.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has
offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person
other than you, the Other Purchasers and not more than 12 other
Institutional Investors, each of which has been offered the Notes
at a private sale for investment. Neither the Company nor anyone
acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to the
registration requirements of Section 5 of the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the net proceeds of the sale of
the Notes to prepay its outstanding Senior Notes Due August 31,
2000, and the balance of such proceeds will be used for general
corporate purposes, including repurchases of shares of the
Company's Common Stock. Except for such repurchases and other
repurchases for the treasury, no part of the proceeds from the
sale of the Notes hereunder will be used, and no part of the
proceeds from the sale of such outstanding Senior Notes was used,
directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the
purpose of buying or carrying or trading in any securities under
such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR
220). Margin stock (excluding treasury stock) does not
constitute more than 5% of the value of the consolidated assets
of the Company and its Subsidiaries and the Company does not have
any present intention that margin stock (excluding treasury
stock) will constitute more than 5% of the value of such assets.
As used in this Section, the terms "MARGIN STOCK" and "PURPOSE OF
BUYING OF CARRYING" shall have the meanings assigned to them in
said Regulation G.
5.15. EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Schedule 5.15 sets forth a complete and correct
list of all outstanding Indebtedness of the Company and its
Subsidiaries as of June 16, 1997, since which date there has been
no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Indebtedness of the
Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default, and no waiver of default is currently
in effect, in the payment of any principal or interest on any
Indebtedness of the Company or such Subsidiary, and no event or
condition exists with respect to any such Indebtedness of the
Company or any Subsidiary that would permit (or that with the
giving of notice or the lapse of time, or both, would permit) one
or more Persons to cause such Indebtedness to become due and
11
payable before its stated maturity or before its regularly
scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the
Company nor any Subsidiary has agreed or consented to cause or
permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 10.2.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder
nor its use of the proceeds thereof will violate the Trading with
the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, as amended, or the Federal Power Act, as
amended.
5.18. ENVIRONMENTAL MATTERS.
Neither the Company nor any Subsidiary has knowledge of
any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or any of their respective
real properties now or formerly owned, leased or operated by any
of them or other assets, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material
Adverse Effect. Except as otherwise disclosed to you in writing
prior to your execution and delivery of this Agreement,
(a) neither the Company nor any Subsidiary has
knowledge of any facts which would give rise to any claim, public
or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related
to real properties now or formerly owned, leased or operated
by any of them except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has
stored any Hazardous Materials on real properties now or
formerly owned, leased or operated by any of them and has not
disposed of any Hazardous Materials in violation of any
Environmental Laws in each case in any manner that could
12
reasonably be expected to result in a Material Adverse Effect;
and
(c) all buildings on all real properties now owned,
leased or operated by the Company or any of its Subsidiaries
are in compliance with applicable Environmental Laws, except
where failure to comply could not reasonably be expected to
result in a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER.
You represent to the Company that:
6.1. PURCHASE OF NOTES.
You are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view
to the distribution thereof, provided that the disposition of
your or their property shall at all times be within your or their
control. You understand that the Notes have not been registered
under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under
circumstances where neither such registration nor such an
exemption is required by law, and that the Company is not
required to register the Notes.
6.2. SOURCE OF FUNDS.
At least one of the following statements is an accurate
representation as to each source of funds (a "Source") to be used
by you to pay the purchase price of the Notes to be purchased by
you hereunder:
(a)the Source is an "insurance company general
account", as such term is defined in Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995), and the purchase
of the Notes by you is eligible for, and satisfies the
requirements of, the exemption provided in Section I of PTE 95-60
as in effect as of the date of this Agreement; or
(b) the Source is either (i) an insurance company
pooled separate account, within the meaning of Prohibited
Transaction Exemption ("PTE") ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇), ▇▇
(▇▇) a bank collective investment fund, within the meaning of the
PTE 91-38 (issued July 12, 1991) and, except as you have
disclosed to the Company in writing pursuant to this paragraph
(b), no employee benefit plan or group of plans maintained by the
same employer or employee organization beneficially owns more
than 10% of all assets allocated to such pooled separate account
or collective investment fund.
13
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL INFORMATION.
The Company shall deliver to each holder of Notes that
is an Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 60 days after the
end of each quarterly fiscal period in each fiscal year of the
Company (other than the last quarterly fiscal period of each
such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of earnings and cash
flows and changes in stockholders' equity of the
Company and its Subsidiaries, for such quarter and (in the case
of the second and third quarters) for the portion of the
fiscal year ending with such quarter,
setting forth in each case in comparative form the consolidated
figures for the corresponding periods in the previous fiscal
year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in
all material respects, the financial position of the companies
being reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments, provided
that delivery within the time period specified above of copies of
the Company's Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a);
(b) ANNUAL STATEMENTS -- within 105 days after the end
of each fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such year, and
(ii) consolidated statements of earnings and cash
flows and a consolidated statement of changes in stockholders'
equity, in each case of the Company and its Subsidiaries for such
year,
setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by
14
(A) an opinion thereon of independent public
accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all
material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards, and that such audit provides a
reasonable basis for such opinion in the circumstances, and
(B) a certificate of such accountants stating that
they have reviewed this Agreement and stating further whether, in
making their audit, they have become aware of any condition or
event that then constitutes a Default or an Event of Default,
and, if they are aware that any such condition or event then
exists, specifying the nature and period of the existence thereof
(it being understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain knowledge of
any Default or Event of Default unless such accountants should
have obtained knowledge thereof in making an audit in accordance
with generally accepted auditing standards or did not make such
an audit),
(C) industry segment information prepared in the
same amount of detail as set forth in the Company's annual report
to shareholders for the fiscal year ended February 1, 1997,
certified by a Senior Financial Officer as fairly presenting the
information therein,
provided that the delivery within the time period specified
above of the Company's Annual Report on Form 10-K for such
fiscal year (together with the Company's annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under
the Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission,
together with the accountant's certificate described in clause
(B) above, shall be deemed to satisfy the requirements of this
Section 7.1(b) as to the delivery of the audited consolidated
statements referred to above and, so long as the annual report to
shareholders accompanying such Annual Report on Form 10-K is
prepared as to business segment information in the same amount of
detail as set forth in the annual report to shareholders for the
fiscal year ended February 1, 1997, the industry segment
information referred to above;
(c) SEC AND OTHER REPORTS -- promptly upon their
becoming available, one copy of (i) each financial statement,
report, notice or proxy statement sent by the
15
Company or any Subsidiary generally to its stockholders or to
its creditors (other than the Company or another Subsidiary),
and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by
such holder), and each prospectus and all amendments thereto
filed by the Company or any Subsidiary with the Securities and
Exchange Commission and of each press release and other
statement made available generally by the Company or any
Subsidiary to the public concerning developments that are
Material;
(d) NOTICE OF DEFAULT OF EVENT OF DEFAULT -- promptly,
and in any event within five days after a Responsible Officer
becoming aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any
action with respect to a claimed default hereunder or that any
Person has given any notice or taken any action with respect
to a claimed default of the type referred to in Section 11(f),
a written notice specifying the nature and period of existence
thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within
five days after a Responsible Officer becoming aware of any of
the following, a written notice setting forth the nature
thereof and the action, if any, that the Company or an ERISA
Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable
event, as defined in section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has not
been waived pursuant to such regulations as in effect on
the date hereof; or
(ii) the taking by the PBGC of steps to institute,
or the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt
by the Company or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC
with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that
could result in the incurrence of any liability by the Company or
any ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then
16
existing, could reasonably be expected to have a Material Adverse
Effect;
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly,
and in any event within 30 days of receipt thereof, copies of any
notice to the Company or any Subsidiary from any Federal or
state Governmental Authority relating to any order, ruling,
statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and
(g) REQUESTED INFORMATION -- with reasonable
promptness, such other data and information relating to the
business, operations, affairs, financial condition, assets or
properties of the Company or any of its Subsidiaries or relating
to the ability of the Company to perform its obligations
hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder
of Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be
accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) COVENANT COMPLIANCE -- the information (including
detailed calculations) required in order to establish whether
the Company was in compliance with the requirements of
Sections 10.1 through 10.6, inclusive, during the quarterly or
annual period covered by the statements then being furnished
(including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence) and a detailed
description of any Related Party Agreements entered into
during the period covered by such statements; and
(b) DEFAULT -- a statement that such Senior Financial
Officer has reviewed the relevant terms hereof and has made, or
caused to be made, under his or her supervision, a review of the
transactions and conditions of the Company and its Subsidiaries
from the beginning of the quarterly or annual period covered by
the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the
existence during such period of any condition or event that
constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without
limitation, any such event or condition resulting from the
failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature
17
and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
7.3. INSPECTION.
The Company shall permit the representatives of each
holder of Notes that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default
then exists, at the expense of such holder and upon reasonable
prior notice to the Company, to visit the principal executive
office of the Company, to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the
Company's officers, and (with the consent of the Company,
which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may
be reasonably requested in writing; and
(b) DEFAULT -- if a Default or Event of Default then
exists, at the expense of the Company, to visit and inspect
any of the offices or properties of the Company or any
Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers, employees and
independent public accountants (and by this provision the
Company authorizes said accountants to discuss the affairs,
finances and accounts of the Company and its Subsidiaries),
all at such times and as often as may be requested.
8. PREPAYMENT OF THE NOTES.
In addition to the payment of the entire unpaid
principal amount of the Notes at the final maturity thereof, the
Company will make required, and may make optional, prepayments in
respect of the Notes as hereinafter provided.
8.1. REQUIRED PREPAYMENTS.
On June 16, 2001 and on each June 16 thereafter to and
including June 16, 2006 the Company will prepay $8,580,000
principal amount (or such lesser principal amount as shall then
be outstanding) of the Notes, such prepayment to be made at the
principal amount to be prepaid, together with accrued interest
thereon to the date of such prepayment, without premium and
allocated as provided in Section 8.3, provided that upon any
partial prepayment of the Notes pursuant to Section 8.2 or 8.7,
the principal amount of each required prepayment of the Notes
becoming due under this Section 8.1 on and after the date of such
18
prepayment or purchase shall be reduced in the same proportion as
the aggregate unpaid principal amount of the Notes is reduced as
a result of such prepayment or purchase.
8.2. OPTIONAL PREPAYMENTS.
The Company may, at its option and upon notice as
provided below, prepay at any time all, or from time to time any
part of, the Notes (in a minimum amount of $1,000,000 and
otherwise in multiples of $100,000) at the principal amount so
prepaid, together with interest accrued thereon to the date of
such prepayment, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal amount. The
Company will give each holder of Notes written notice of each
optional prepayment under this Section 8.2 not less than 30 days
and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify the date fixed for
such prepayment (which shall be a Business Day), the aggregate
principal amount of the Notes to be prepaid on such date, the
principal amount of Notes (if any) held by such holder to be
prepaid (determined in accordance with Section 8.3) and the
interest to be paid on the prepayment date with respect to such
principal amount being prepaid.
Each such notice of prepayment shall be accompanied by
a certificate of a Senior Financial Officer as to the estimated
Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two
Business Days prior to such prepayment of Notes, the Company
shall deliver to each holder of the Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-
Whole Amount as of the specified prepayment date.
8.3. ALLOCATION OF PARTIAL PAYMENTS.
In the case of each partial prepayment of the Notes,
the principal amount of the Notes to be prepaid shall be
allocated among all the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof.
8.4. MATURITY, SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to
this Section 8, the principal amount of each Note to be prepaid
shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount
accrued to such date and the applicable Make-Whole Amount, if
any, but subject to the provisions of Section 8.7. From and
after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the
interest and Make-Whole Amount, if any, as aforesaid, interest on
such principal amount shall cease to accrue. Any Note paid or
19
prepaid in full shall be surrendered to the Company and cancelled
and shall not be reissued, and no Note shall be issued in lieu of
any prepaid principal amount of any Note.
8.5. PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate
to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment
or prepayment of the Notes in accordance with the terms of this
Agreement and the Notes.
8.6. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any
Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section
8.2 or 8.7 or has become or is declared to be immediately due and
payable pursuant to Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment
Yield with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, 0.50% (0.85% in the case of a prepayment
under Section 8.7) over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to
such Called Principal, on the display designated as "Page 500" on
the Telerate Access Service (or such other display as may replace
Page 500 on Telerate Access Service) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date,
or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the latest
day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with
20
respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant
maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury ▇▇▇▇
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with a maturity closest
to and greater than the Remaining Average Life and (2) the
actively traded U.S. Treasury security with a maturity closest
to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any
Called Principal, the number of years (calculated to the
nearest one-twelfth year) obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b)
the number of years (calculated to the nearest one-twelfth
year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of
such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to
the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due after the
Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is
not a date on which interest payments are due to be made under
the terms of the Notes, then the amount of the next succeeding
scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be
paid on such Settlement Date pursuant to Section 8.2, 8.7 or
12.1.
"SETTLEMENT DATE" means, with respect to the Called
Principal of any Note, the date on which such Called Principal
is to be prepaid pursuant to Section 8.2 or 8.7 or has become
or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
8.7. PREPAYMENT RELATING TO DISPOSITION PAYMENT.
In connection with any Disposition Payment of
unsubordinated Indebtedness as contemplated by Section 10.5(d)
the Company will prepay a portion of the Notes which is the same
proportion as the amount of the Disposition Payment represents to
the aggregate principal amount of all unsubordinated Indebtedness
at the time outstanding (other than that owing by the Company or
a Subsidiary to another Subsidiary or the Company, as the case
21
may be), in each case at the principal amount thereof, together
with interest accrued thereon to the date of such prepayment,
plus the Make-Whole Amount determined for the prepayment date
with respect to such principal amount. Such prepayment shall be
made in the same manner (as to notice and all other provisions)
as a prepayment made under Section 8.2, provided that the holder
of any Note so to be prepaid may, by notice given to the Company
at least two Business Days prior to the prepayment date, elect
that the Notes of such holder to be prepaid (or any portion
thereof) shall not be prepaid and the Company shall not prepay
the Notes of such holder. Any notice of prepayment given under
this Section 8.7 shall clearly and prominently make reference to
the provisions of this Section 8.7 permitting the holder of the
Notes to elect that their Notes not be prepaid. For purposes of
Section 10.5(d) any Notes the holders of which elect that they
not be prepaid shall be deemed to have been repaid as part of a
Disposition Payment.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes
are outstanding:
9.1. COMPLIANCE WITH LAW.
The Company will and will cause each of its
Subsidiaries to comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including
without limitation Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits,
franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
9.2. INSURANCE.
The Company will and will cause each of its
Subsidiaries to maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties
and businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a
similar business and similarly situated.
9.3. MAINTENANCE OF PROPERTIES.
22
The Company will and will cause each of its
Subsidiaries to maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order
and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly
conducted at all times, provided that this Section shall not
prevent the Company or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and
the Company has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause each of its
Subsidiaries to file all income or similar tax returns required
to be filed in any jurisdiction and to pay and discharge all
taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies imposed on
them or any of their properties, assets, income or franchises, to
the extent such taxes and assessments have become due and payable
and before they have become delinquent and all claims for which
sums have become due and payable that have or might become a Lien
on properties or assets of the Company or any Subsidiary,
provided that neither the Company nor any Subsidiary need pay any
such tax or assessment or claim if (i) the amount, applicability
or validity thereof is contested by the Company or such
Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books
of the Company or such Subsidiary or (ii) the nonpayment of all
such taxes and assessments in the aggregate could not reasonably
be expected to have a Material Adverse Effect.
9.5. CORPORATE EXISTENCE, ETC.
The Company will at all times preserve and keep in full
force and effect its corporate existence. Subject to Sections
10.5 and 10.6, the Company will at all times preserve and keep in
full force and effect the corporate existence of each of its
Subsidiaries (unless merged into the Company or a Subsidiary) and
all rights and franchises (as franchisee) of the Company and its
Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force
and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse
Effect.
9.6. COVENANT TO SECURE NOTES EQUALLY.
The Company covenants that if it or any of its
Subsidiaries shall create or assume any Lien upon any of its
respective properties or assets, whether now owned or hereafter
23
acquired, other than Liens permitted by the provisions of Section
10.2 (unless prior written consent to the creation or assumption
thereof shall have been obtained pursuant to Section 17), it will
make or cause to be made effective provision satisfactory in form
and substance to the Required Holders whereby the Notes will be
secured by such Lien equally and ratably with any and all other
Indebtedness thereby secured so long as any such other
Indebtedness shall be so secured. Securing the Notes as provided
in this Section 9.6 shall not permit the existence of any Lien
not permitted by Section 10.2.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes
are outstanding:
10.1. INCURRENCE OF INDEBTEDNESS AND SUBSIDIARY INDEBTEDNESS.
(a) The Company will not and will not permit any
Subsidiary to create, assume, incur, guarantee or otherwise
become liable in respect of any Indebtedness (by way of merger,
consolidation or otherwise) unless immediately after giving
effect thereto and to the application of the proceeds thereof
Consolidated Indebtedness does not exceed 55% of Consolidated
Capitalization.
(b) The Company will not permit any Subsidiary to
create, assume, incur, guarantee or otherwise become liable in
respect of any Indebtedness except
(i) Indebtedness existing on the date of the Closing
and described in Schedule 5.15,
(ii) Indebtedness secured by Liens permitted by clause
(b) of Section 10.2,
(iii) Indebtedness owing to the Company or a Wholly-
Owned Subsidiary,
(iv) Indebtedness of any Person outstanding at the
time such Person becomes a Subsidiary (not incurred in
anticipation thereof), and
(v) other Indebtedness, provided that immediately
after giving effect to the incurrence of such other
Indebtedness the sum (without duplication) of (A) the
aggregate unpaid amount of Indebtedness (including
Capitalized Lease Obligations) of the Company secured by
Liens permitted by Section 10.2(e) plus (B) the aggregate
unpaid amount of Indebtedness of all Subsidiaries (other than
Indebtedness permitted by clause (iii) above) plus (C) the
aggregate Attributable Debt in connection with all sale and
leaseback transactions of the Company and its Subsidiaries
entered into after the date of the Closing in
24
accordance with the provisions of Section 10.3(c), does not
exceed 15% of Consolidated Assets.
For purposes of this Section 10.1(b), a Subsidiary shall be
deemed to have incurred Indebtedness in respect of any obligation
previously owed to the Company or to a Wholly-Owned Subsidiary on
the date the obligee ceases for any reason to be the Company or
a Wholly-Owned Subsidiary.
10.2. LIENS.
The Company will not and will not permit any Subsidiary
to create, assume, incur or suffer to exist any Lien upon or with
respect to any property (other than treasury stock), whether now
owned or hereafter acquired and without regard to whether or not
provision is made for equally and ratably securing the Notes as
provided in Section 9.6, provided that nothing in this Section
10.2 shall prohibit
(a) Liens in respect of property of the Company or a
Subsidiary existing on the date of the Closing and described
in Schedule 5.15;
(b)Liens in respect of property acquired by the Company
or a Subsidiary after the date of the Closing, existing on
such property at the time of acquisition thereof (and not
created in anticipation thereof), or in the case of any Person
that after the date of the Closing becomes a Subsidiary or is
consolidated with or merged with or into the Company or a
Subsidiary or sells, leases or otherwise disposes of all or
substantially all of its property to the Company or a
Subsidiary, Liens existing at the time such Person becomes a
Subsidiary or is so consolidated or merged or effects such
sale, lease or other disposition of property (and not created
in anticipation thereof), provided that in any such case no
such Lien shall extend to or cover any other property of the
Company or such Subsidiary, as the case may be;
(c) Liens securing Indebtedness owed by a Subsidiary to
the Company or to a Wholly-Owned Subsidiary;
(d) Liens not involving the borrowing of money, the
obtaining of advances or credit or the payment of the deferred
purchase price of property, as follows:
(i) Liens for taxes, assessments or other
governmental charges which are not yet due and payable
or the payment of which is not at the time required by
Section 9.4,
(ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other
similar Liens, in each case incurred in the
25
ordinary course of business for sums not yet due and
payable or the payment of which is not at the time
required or is being contested in good faith,
(iii) Liens incurred or deposits made in the
ordinary course of business (x) in connection with
workers' compensation, unemployment insurance and other
types of social security or retirement benefits (other
than Liens imposed under ERISA), (y) to secure (or to
obtain letters of credit that secure) the performance of
tenders, statutory obligations, surety bonds, appeal
bonds (not in excess of $10,000,000) bids, leases (other
than Capital Leases), performance bonds, purchase,
construction or sales contracts and other similar
obligations or (z) which do not materially detract from
the value of the property to which they pertain,
(iv) any attachment or judgment Lien, unless the
judgment it secures (x) shall not, within 120 days after
the entry thereof, have been discharged or execution
thereof stayed pending appeal, or shall not have been
discharged within 120 days after the expiration of any
such stay or (y) exceeds $1,000,000 in the aggregate for
all of such judgments, and
(v) Liens arising in favor of a Governmental
Authority to secure partial, progress, advance or other
payments pursuant to any contract or statute; and
(e) Liens which would otherwise not be permitted by
clauses (a) through (c) above, securing additional
Indebtedness of the Company or a Subsidiary, provided that
after giving effect thereto the sum (without duplication) of
(i) the aggregate unpaid amount of Indebtedness (including
Capitalized Lease Obligations) of the Company secured by such
Liens permitted by this Section 10.2(e) plus (ii) the
aggregate unpaid principal amount of Indebtedness of
Subsidiaries (other than Indebtedness permitted by clause
(iii) of Section 10.1(b)) plus (iii) the aggregate
Attributable Debt in connection with all sale and leaseback
transactions of the Company and its Subsidiaries entered into
after the date of the Closing in accordance with the
provisions of Section 10.3(c), does not exceed 15% of
Consolidated Assets.
For purposes of this Section 10.2 any Lien existing in respect of
property at the time such property is acquired or in respect of
property of a Person at the time such Person is acquired,
consolidated or merged with or into the Company or a Subsidiary
shall be deemed to have been created at that time.
10.3. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
26
The Company will not, and will not permit any
Subsidiary to sell, lease, transfer or otherwise dispose of
(collectively, a "TRANSFER") any asset on terms whereby the asset
or a substantially similar asset is or may be leased or
reacquired by the Company or any Subsidiary over a period in
excess of three years, unless
(a) the lease is between the Company and a Wholly-Owned
Subsidiary or between Wholly-Owned Subsidiaries;
(b) the Company or a Subsidiary could create a Lien
under clause (b) of Section 10.2 on such property to secure
Indebtedness in an amount at least equal to the Attributable
Debt in respect of such transaction;
(c) after giving effect to such transaction and the
incurrence of Attributable Debt in respect thereof, the sum
(without duplication) of (i) the aggregate unpaid principal
amount of Indebtedness (including Capitalized Lease
Obligations) of the Company secured by such Liens permitted by
Section 10.2(e) plus (ii) the aggregate unpaid principal
amount of Indebtedness of Subsidiaries (other than
Indebtedness permitted by clause (iii) of Section 10.1(b))
plus (iii) the aggregate Attributable Debt in connection with
all sale and leaseback transactions of the Company and its
Subsidiaries entered into after the date of the Closing in
accordance with the provisions of this clause (c), does not
exceed 15% of Consolidated Assets; or
(d) the net proceeds realized from the transfer are
applied within 180 days after the receipt thereof (i) to the
repayment of unsubordinated Indebtedness (other than that
owing by the Company or a Subsidiary to another Subsidiary or
the Company, as the case may be) (which may but need not
include prepayment of the Notes pursuant to Section 8.2) or
(ii) to the purchase of non-current assets for use in the
business of the Company and its Subsidiaries.
10.4. MAINTENANCE OF EBITDA AND INTEREST EXPENSE COVERAGE.
The Company will not at any time permit
(a) the sum of Consolidated EBITDA and Consolidated
Lease Rental Expense for any period of four consecutive fiscal
quarters (beginning with the four fiscal quarters ending on
July 19, 1997) to be less than 200% of Consolidated Fixed
Charges for such period, or
(b) Consolidated Indebtedness on any date to exceed
300% of pro forma EBITDA for the period of four consecutive
fiscal quarters ending on or immediately before such date.
Pro forma EBITDA shall be determined in accordance with
Section 22.6.
27
10.5. ASSET SALES.
The Company will not and will not permit any Subsidiary
to, directly or indirectly, make any sale, transfer, lease (as
lessor), loan or other disposition (an "ASSET SALE") of any
property or assets other than treasury stock and
(a) Asset Sales in the ordinary course of business;
(b) Sale of the Company's interest in Fox Photo, Inc.,
pursuant to the provisions of section 8 or 9 of that certain
Stockholder's Agreement among ▇▇▇▇▇▇▇ Kodak Company, CPI
Corp., Consumer Programs Holding, Inc. and Fox Photo, Inc.
(the "Fox Shareholders), dated as of October 4, 1996, or as
otherwise agreed by the Fox Shareholders; or
(c) Asset Sales of property or assets by a Subsidiary
to the Company or a Wholly-Owned Subsidiary; or
(d) other Asset Sales, provided that in each case
(i) immediately before and after giving effect
thereto, no Default or Event of Default shall have occurred and
be continuing, and
(ii) the aggregate net book value of property or
assets disposed of in such Asset Sale and all other
Asset Sales by the Company and its Subsidiaries during
the immediately preceding twelve months does not exceed
20% of Consolidated Assets (as of the last day of the
quarterly accounting period ending on or most recently
prior to the last day of such twelve month period),
and provided further that for purposes of clause (ii) above
there shall be excluded the net book value of property or
assets disposed of in an Asset Sale if and to the extent such
Asset Sale is made for cash, payable in full upon the
completion of such Asset Sale, and an amount equal to the net
proceeds realized upon such Asset Sale is applied by the
Company or such Subsidiary, as the case may be, within 180
days after the effective date of such Asset Sale (x) to
reinvest in the business of the Company and its Subsidiaries
(either through capital expenditures or acquisitions) or (y)
to repay (a "Disposition Payment") unsubordinated Indebtedness
(other than that owing by the Company or a Subsidiary to
another Subsidiary or the Company, as the case may be) (which
may but need not include prepayment of the Notes pursuant to
Section 8.2, but in respect of which the Company shall in any
event offer to prepay a PRO RATA portion of the Notes pursuant
to Section 8.7).
For purposes of this Section 10.5 any shares of Voting
Stock of a Subsidiary that are the subject of an Asset Sale shall
28
be valued at the greater of (1) the fair market value of such
shares as determined in good faith by the Board of Directors of
the Company and (2) the aggregate net book value of the assets of
such Subsidiary multiplied by a fraction of which the numerator
is the aggregate number of shares of Voting Stock of such
Subsidiary disposed of in such Asset Sale and the denominator is
the aggregate number of shares of Voting Stock of such Subsidiary
outstanding immediately prior to such Asset Sale.
10.6. MERGER, CONSOLIDATION, ETC.
The Company will not consolidate with or merge with any
other corporation or convey, transfer or lease all or
substantially all of its assets in a single transaction or series
of transactions to any Person unless:
(a) the continuing, surviving or acquiring corporation
(the "SURVIVING CORPORATION") shall be a solvent corporation
organized and existing under the laws of the United States or
any State thereof (including the District of Columbia) and, if
the Company is not the surviving corporation, shall have (i)
executed and delivered to each holder of a Note its assumption
of the due and punctual performance and observance of all
obligations of the Company under this Agreement, the Other
Agreements and the Notes and (ii) caused to be delivered to
each holder of a Note an opinion of counsel (which may be
internal counsel) reasonably satisfactory to the Required
Holders to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with
their terms and comply with the terms hereof; and
(b) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred
and be continuing.
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the
Company or any successor corporation that shall theretofore have
become such in the manner prescribed in this Section 10.6 from
its liability under this Agreement or the Notes.
10.7. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Subsidiary
to enter into directly or indirectly any transaction or Material
group of related transactions (including without limitation the
purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the
Company or another Subsidiary), except in the ordinary course and
pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be
obtainable in a comparable arm's-length transaction with a Person
29
not an Affiliate. The provisions of this Section shall not apply
to transactions between the Company or any of its Subsidiaries
and Fox Photo, Inc. The provisions of this Section shall not
apply to any arrangements between the Company or any of its
subsidiaries and any entity subsequently created to continue
development and licensing of certain of the Company's software
and related intellectual property, provided that the terms of
such arrangements are determined to be fair and reasonable from
the Company's point of view by the Company's Board of Directors
(any such arrangement being herein referred to as a "Related
Party Arrangement").
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the
following conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any
principal or Make-Whole Amount, if any, on any Note when the same
becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest
on any Note for more than five Business Days after the same
becomes due and payable; or
(c) the Company defaults in the performance of or
compliance with any term contained in Section 7.1(d) or
Sections 10.1 to 10.7, inclusive (and, in the case of any such
default under Section 10.4(b), such default shall have
continued for a period of 30 days after a Responsible Officer
obtains knowledge thereof if and so long as the Company is
proceeding diligently and in good faith, by issuing equity
securities or otherwise, to remedy such default during such
30-day period); or
(d) the Company defaults in the performance of or
compliance with any term contained herein (other than those
referred to in paragraphs (a), (b) and (c) of this Section 11)
and such default is not remedied within 30 days after a
Responsible Officer obtaining knowledge of such default; or
(e) any representation or warranty made in writing by
or on behalf of the Company or by any officer of the Company in
this Agreement or in any writing furnished in connection with
the transactions contemplated hereby proves to have been false
or incorrect in any material respect on the date as of which
made; or
(f) (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of
any principal of or premium or make-whole amount or interest
on any Indebtedness (other than the Notes) that
30
is outstanding in an aggregate principal amount of at least
$5,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Subsidiary is in default
in the performance of or compliance with any term of any
evidence of any Indebtedness in an aggregate amount of at
least $5,000,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and
as a consequence of such default or condition such
Indebtedness has become, or has been declared (or one or more
Persons are entitled to declare such Indebtedness to be), due
and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity
interests or a sale of assets or other transaction that is
permitted if made in connection with a repayment of
Indebtedness), the Company or any Subsidiary has become
obligated to purchase or repay (or one or more Persons are
entitled to cause the Company or any Subsidiary to purchase or
repay) Indebtedness in an aggregate principal amount of at l
east $5,000,000 before its regular maturity or before its
regularly scheduled dates of payment; or
(g) the Company or any Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts
as they become due, (ii) files, or consents by answer or
otherwise to the filing against it of, a petition for relief
or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent
or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by
the Company or any Subsidiary, a custodian, receiver, trustee
or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for
relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any
such Subsidiary, or any such petition shall be filed against
the Company or any such Subsidiary and such petition shall not
be dismissed within 60 days; or
31
(i) a final judgment or judgments for the payment of
money aggregating in excess of $1,000,000 are rendered against
one or more of the Company and its Subsidiaries which
judgments are not, within 120 days after entry thereof,
bonded, paid, discharged or stayed pending appeal, or are not
discharged within 120 days after the expiration of such stay;
or
(j) if (i) any Plan shall fail to satisfy the minimum
funding standards of ERISA or the Code for any plan year or part
thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of
the Code, (ii) a notice of intent to terminate any Plan shall
have been or is reasonably expected to be filed with the PBGC
or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer
any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of
ERISA) under all Plans, determined in accordance with Title IV
of ERISA, shall exceed $1,000,000, (iv) the Company or any
ERISA Affiliate shall have incurred or is reasonably expected
to incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or
any Subsidiary establishes or amends any employee welfare
benefit plan that provides post-employment welfare benefits in
a manner that would increase the liability of the Company or
any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either
individually or together with any other such event or events,
could have a Material Adverse Effect.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and
"EMPLOYEE WELFARE BENEFIT PLAN" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company
described in paragraph (g) or (h) of Section 11 has occurred, all
the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is
continuing, the Required Holders may at any time at its or their
option, by notice or notices to the Company, declare all the
Notes at the time outstanding to be immediately due and payable.
32
(c) If any Event of Default described in paragraph (a)
or (b) of Section 11 has occurred and is continuing, any holder
or holders of Notes at the time outstanding affected by such
Event of Default may at any time, at its or their option, by
notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this
Section 12.1, whether automatically or by declaration, such Notes
will forthwith mature and the entire unpaid principal amount of
such Notes, plus (x) all accrued and unpaid interest thereon and
(y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case
without presentment, demand, protest or further notice, all of
which are hereby waived. The Company acknowledges, and the
parties hereto agree, that each holder of a Note has the right to
maintain its investment in the Notes free from repayment by the
Company (except as herein specifically provided) and that the
provision for payment of a Make-Whole Amount by the Company in
the event that the Notes are prepaid or are accelerated as a
result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such
circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section
12.1, the holder of any Note at the time outstanding may proceed
to protect and enforce the rights of such holder by an action at
law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in
any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise.
12.3. RESCISSION.
At any time after any Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 12.1, the
Required Holders, by written notice to the Company, may rescind
and annul any such declaration and its consequences if (a) the
Company has paid all overdue interest on the Notes, all principal
of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration,
and all interest on such overdue principal and Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the Default Rate,
(b) all Events of Default and Defaults, other than the non-
payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for
33
the payment of any monies due pursuant hereto or to the Notes.
No rescission and annulment under this Section 12.3 will extend
to or affect any subsequent Event of Default or Default or impair
any right consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any
holder of any Note in exercising any right, power or remedy shall
operate as a waiver thereof or otherwise prejudice such holder's
rights, powers or remedies. No right, power or remedy conferred
by this Agreement or by any Note upon any holder thereof shall be
exclusive of any other right, power or remedy referred to herein
or therein or now or hereafter available at law, in equity, by
statute or otherwise. Without limiting the obligations of the
Company under Section 15, the Company will pay to the holder of
each Note on demand such further amount as shall be sufficient to
cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including
without limitation reasonable attorneys' fees, expenses and
disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive
office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one
or more Notes, each transfer thereof and the name and address of
each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer,
the Person in whose name any Note shall be registered shall be
deemed and treated as the owner and holder thereof for all
purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly
upon request therefor, a complete and correct copy of the names
and addresses of all registered holders of Notes.
13.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive
office of the Company for registration of transfer or exchange
(and in the case of a surrender for registration of transfer,
duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or his
attorney duly authorized in writing and accompanied by the
address for notices of each transferee of such Note or part
thereof), within five Business Days thereafter the Company shall
execute and deliver, at the Company's expense (except as provided
below), one or more new Notes (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount
equal to the unpaid principal amount of the surrendered Note.
34
Each such new Note shall be payable to such Person as such holder
may request. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Company may require
payment of a sum sufficient to cover any stamp tax or other
similar governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in
denominations of less than $500,000, provided that if necessary
to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than
$500,000.
The Company shall not be required to register the
transfer of any Note to any Person (other than your nominee) or
to any separate account maintained by you unless the Company
receives from the transferee a representation to the Company (and
appropriate information as to any separate accounts or other
matters, including disclosure pursuant to Section 6.2(b) at least
3 Business Days prior to any such proposed transfer) to the same
or, in the reasonable opinion of the Company, similar effect with
respect to the transferee as is contained in Section 6.2,
together with such other assurances reasonably satisfactory to
the Company that such transfer does not involve a prohibited
transaction (as such term is used in Section 5.12(d). No
transferor shall be liable for any damages in connection with any
such representations or assurances provided to the Company by any
transferee.
13.3.REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be,
in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided that if the
holder of such Note is, or is a nominee for, an original
Purchaser or any other Institutional Investor, such Person's
own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
within five Business Days thereafter the Company at its own
expense shall execute and deliver, in lieu thereof, a new Note,
dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.
35
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal,
premium, if any, and interest becoming due and payable on the
Notes shall be made at the principal office of The Bank of New
York in New York City. The Company may at any time, by notice to
each holder of a Note, change the place of payment of the Notes
so long as such place of payment shall be either the principal
office of the Company in New York City or the principal office of
a bank or trust company in New York City.
14.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of
any Note, and notwithstanding anything contained in Section 14.1
or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if
any, and interest by the method and at the address specified for
such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to
time specified to the Company in writing for such purpose,
without the presentation or surrender of such Note or the making
of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company
pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note
or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that
is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.2.
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all reasonable costs and
expenses (including reasonable attorneys' fees of your special
counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in
connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or
consent becomes effective), including without limitation: (a) the
36
costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under
this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in
connection with this Agreement or the Notes, or by reason of
being a holder of any Note, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with
the insolvency or bankruptcy of the Company or any Subsidiary or
in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company
will pay, and will save you and each other holder of a Note
harmless from, all claims in respect of any fees, costs or
expenses if any, of brokers and finders (other than those
retained by you).
In furtherance of the foregoing, on the date of the Closing the
Company will pay or cause to be paid the reasonable fees,
disbursements and other charges (including estimated unposted
disbursements and other charges as of the date of the Closing) of
your special counsel which are reflected in the statement of such
special counsel submitted to the Company on or prior to the date
of the Closing. The Company will also pay, promptly upon receipt
of supplemental statements therefor, reasonable additional fees,
if any, and disbursements and other charges of such special
counsel in connection with the transactions hereby contemplated
(including disbursements and other charges unposted as of the
date of the Closing to the extent such amounts exceed estimated
amounts paid as aforesaid).
15.2. SURVIVAL.
The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this
Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein
shall survive the execution and delivery of this Agreement and
the Notes, the purchase or transfer by you of any Note or portion
thereof or interest therein and the payment of any Note, and may
be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the
Company pursuant to this Agreement shall be deemed
representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement and
the Notes embody the entire agreement and understanding between
you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
37
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the
written consent of the Company and the Required Holders, except
that (a) no amendment or waiver of any of the provisions of
Section 1, 2, 3, 4, 5, 6 or 21, or any defined term (as it is
used therein), will be effective as to you unless consented to by
you in writing, and (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of
Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or
change the rate or the time of payment or method of computation
of interest or of the Make-Whole Amount on, the Notes, (ii)
change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or
waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17
or 20.
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder
of the Notes (irrespective of the amount of Notes then owned by
it) with sufficient information, sufficiently far in advance of
the date a decision is required, to enable such holder to make an
informed and considered decision with respect to any proposed
amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or
true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 17 to each
holder of outstanding Notes promptly following the date on which
it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) PAYMENT. The Company will not directly or
indirectly pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, or
grant any security, to any holder of Notes as consideration for
or as an inducement to the entering into by any holder of Notes
of any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security
is concurrently granted, on the same terms, ratably to each
holder of Notes then outstanding even if such holder did not
consent to such waiver or amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in
this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and
38
upon the Company without regard to whether such Note has been
marked to indicate such amendment or waiver. No such amendment
or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon. No course of
dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As
used herein, the term "THIS AGREEMENT" and references thereto
shall mean this Agreement as it may from time to time be amended
or supplemented.
17.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the
holders of the requisite percentage of the aggregate principal
amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or
the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal
amount of Notes then outstanding, Notes directly or indirectly
owned by the Company or any of its Affiliates shall be deemed not
to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder
shall be in writing and sent (a) by telecopy if the sender on the
same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by
registered or certified mail with return receipt requested
(postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or at
such other address as you or it shall have specified to the
Company in writing,
(ii) if to any other holder of any Note, to such
holder at such address as such other holder shall have specified
to the Company in writing, or
(iii) if to the Company, to the Company at its
address set forth at the beginning hereof to the attention of the
Chief Financial Officer, or at such other address as the Company
shall have specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when
actually received.
39
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto,
including, without limitation, (a) consents, waivers and
modifications that may hereafter be executed, (b) documents
received by you at the Closing (except the Notes themselves), and
(c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and you may
destroy any original document so reproduced. The Company agrees
and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not
such reproduction was made by you in the regular course of
business) and any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.
This Section 19 shall not prohibit the Company or any other
holder of Notes from contesting any such reproduction to the same
extent that it could contest the original, or from introducing
evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL
INFORMATION" means information delivered to you by or on behalf
of the Company or any Subsidiary in connection with the
transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when
received by you as being confidential information of the Company
or such Subsidiary, provided that such term does not include
information that (a) was publicly known or otherwise known to you
prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person
acting on your behalf, (c) otherwise becomes known to you other
than through disclosure by the Company or any Subsidiary or (d)
constitutes financial statements delivered to you under Section
7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance
with procedures adopted by you in good faith to protect
confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential
Information to (i) your directors, officers, trustees, employees,
agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and
other professional advisors whose duties require them to hold
confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you
sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior
40
to its receipt of such Confidential Information to be bound by
the provisions of this Section 20), (v) any Person from which you
offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having
jurisdiction over you, (vii) the National Association of
Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other
Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default
has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the
rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of
this Section 20 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered
to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the
Company embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to
purchase hereunder, by written notice to the Company, which
notice shall be signed by both you and such Affiliate, shall
contain such Affiliate's agreement to be bound by this Agreement
and shall contain a confirmation by such Affiliate of the
accuracy with respect to it of the representations set forth in
Section 6. Upon receipt of such notice, wherever the word "you"
is used in this Agreement (other than in this Section 21), such
word shall be deemed to refer to such Affiliate in lieu of you.
In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of
the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, wherever the word "you" is
used in this Agreement, such word shall no longer be deemed to
refer to such Affiliate, but shall refer to you, and you shall
have all the rights of an original holder of the Notes under this
Agreement.
41
22. MISCELLANEOUS.
22.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this
Agreement by or on behalf of any of the parties hereto bind and
inure to the benefit of their respective successors and assigns
(including without limitation any subsequent holder of a Note)
whether so expressed or not.
22.2. CONSTRUCTION.
Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent
of each other covenant contained herein, so that compliance with
any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be
taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is
taken directly or indirectly by such Person.
22.3. JURISDICTION AND PROCESS; WAIVER OF JURY TRIAL.
(a) The Company irrevocably submits to the
non-exclusive IN PERSONAM jurisdiction of any New York State or
federal court sitting in the Borough of Manhattan, The City of
New York, over any suit, action or proceeding arising out of or
relating to this Agreement or the Notes. To the fullest
extent permitted by applicable law, the Company irrevocably
waives and agrees not to assert, by way of motion, as a
defense or otherwise, any claim that it is not subject to the IN
PERSONAM jurisdiction of any such court, any objection that it
may now or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
(b) The Company agrees, to the fullest extent permitted
by applicable law, that a final judgment in any suit, action or
proceeding of the nature referred to in Section 22.3 (a) brought
in any such court shall be conclusive and binding upon the
Company subject to rights of appeal, as the case may be, and may
be enforced in the courts of the United States of America or the
State of New York (or any other courts to the jurisdiction of
which the Company is or may be subject) by a suit upon such
judgment.
(c) The Company consents to process being served in any
suit, action or proceeding of the nature referred to in Section
22.3 (a) by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to the Company
at its address specified in Section 18 or at such other address
of which you shall then have been notified pursuant to
42
said Section. The Company agrees that such service upon receipt
(i) shall be deemed in every respect effective service of process
upon it in any such suit, action or proceeding and (ii) shall, to
the fullest extent permitted by applicable law, be taken and held
to be valid personal service upon and personal delivery to the
Company. Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the
United States Postal Service or any reputable commercial delivery
service.
(d) Nothing in this Section 22.3 shall affect the right
of any holder of a Note to serve process in any manner permitted
by law, or limit any right that the holders of any of the Notes
may have to bring proceedings against the Company in the courts
of any appropriate jurisdiction or to enforce in any lawful
manner a judgment obtained in one jurisdiction in any other
jurisdiction.
(e) THE COMPANY WAIVES TRIAL BY JURY IN ANY ACTION
BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE OTHER
AGREEMENTS, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH.
22.4. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding (but without limiting the requirement in Section
8.2 that notice of any optional prepayment specify a Business Day
as the date fixed for such prepayment), any payment of principal
of or Make-Whole Amount (if any) or interest on any Note that is
due on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next
succeeding Business Day.
22.5. SEVERABILITY.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the extent permitted by applicable law)
not invalidate or render unenforceable such provision in any
other jurisdiction.
22.6. ACCOUNTING TERMS; PRO FORMA CALCULATIONS.
All accounting terms used herein which are not
expressly defined in this Agreement have the meanings
respectively given to them in accordance with GAAP. Except as
otherwise specifically provided herein, all computations made
pursuant to this Agreement shall be made in accordance with GAAP
and all balance sheets and other financial statements with
43
respect thereto shall be prepared in accordance with GAAP.
Except as otherwise specifically provided herein, any
consolidated financial statement or financial computation shall
be done in accordance with GAAP; and, if at the time that any
such statement or computation is required to be made the Company
shall not have any Subsidiary, such terms shall mean a financial
statement or a financial computation, as the case may be, with
respect to the Company only.
Any pro forma computation required to be made hereby
shall include adjustments (without limitation as to other
appropriate pro forma adjustments in accordance with generally
accepted financial practice) giving effect to all acquisitions
and dispositions made during the period with respect to which
such computation is being made as if such acquisitions and
dispositions were made on the first day of such period.
22.7. COUNTERPARTS.
This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may
consist of a number of copies hereof, each signed by less than
all, but together signed by all, of the parties hereto.
22.8. GOVERNING LAW.
This Agreement and the Notes shall be construed and
enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New York excluding
choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than
such State.
44
If you are in agreement with the foregoing, please sign
the form of agreement in the space below provided on a
counterpart of this Agreement and return it to the Company,
whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
CPI CORP.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board
The foregoing is hereby agreed
to as of the date thereof.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
/s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
THE GUARDIAN LIFE INSURANCE COMPANY
OF AMERICA
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Second Vice President
SCHEDULE A
This Schedule A shows the names and addresses of the Purchasers
under the foregoing Note Purchase Agreement and the Other
Agreements referred to therein and the respective principal
amounts of Notes to be purchased by each.
NAME AND ADDRESS OF PURCHASER:
The Prudential Insurance Company of America
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED:
$40,000,000
(1) All payments on account of Notes held by such Purchaser
shall be made by wire transfer of immediately available funds for
credit to:
Account No. ▇▇▇-▇▇▇▇-▇▇▇
The Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth reference to "CPI Corp.
7.46% Senior Notes due June 16, 2007, Security No. !INV5641!" in
respect of which such payment is being made, and the due date and
application (as among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments and written
confirmation of such wire transfers.
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Investment Operations Group
(Attention: Manager)
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Managing Director
(4) Recipient of telephonic or facsimile prepayment notices:
Manager, Investment Structure and Pricing
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
(5) Tax Identification No. ▇▇-▇▇▇▇▇▇▇
NAME AND ADDRESS OF PURCHASER:
The Guardian Life Insurance Company of America
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED:
$20,000,000
(1) Notes to be registered in the name of:
▇▇▇▇ & CO.
Tax ID No. ▇▇-▇▇▇▇▇▇▇
(2) All payments on account of Notes held by such Purchaser
shall be made by wire transfer of immediately available funds for
credit to:
The Chase Manhattan Bank
FED ABA #▇▇▇▇▇▇▇▇▇
CHASE/NYC/CTR/BNF
A/C ▇▇▇-▇-▇▇▇▇▇▇
Each such wire transfer shall set forth reference to "CPI Corp.
7.46% Senior Notes due June 16, 2007, PPN 12617# AC O," in
respect of which such payment is being made, and the due date and
application (as among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(3) Address for all notices relating to payments and written
confirmation of such wire transfers:
The Guardian Life Insurance Company of America
Attn: Investment Accounting M-IA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX (▇▇▇) ▇▇▇-▇▇▇▇
(4) Address for all other communications and notices:
The Guardian Life Insurance Company of America
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Investment Department 7B
FAX (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof
following such term:
"AFFILIATE" means, at any time, (a) with respect to any
Person, any other Person that at such time directly or indirectly
through one or more intermediaries Controls, or is Controlled by,
or is under common Control with, such first Person, and (b) with
respect to the Company, any Person beneficially owning or
holding, directly or indirectly, 10% or more of any class of
voting or equity interests of the Company or any Subsidiary or
any corporation of which the Company and its Subsidiaries
beneficially own or hold, in the aggregate, directly or
indirectly, 10% or more of any class of voting or equity
interests. As used in this definition, "CONTROL" means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract
or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the
Company.
"ATTRIBUTABLE DEBT" means, as to any particular lease
relating to a sale and leaseback transaction, the total amount of
rent (discounted semiannually from the respective due dates
thereof at the interest rate implicit in such lease) required to
be paid by the lessee under such lease during the remaining term
thereof. The amount of rent required to be paid under any such
lease for any such period shall be (a) the total amount of the
rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of maintenance
and repairs, insurance, taxes, assessments, utilities, operating
and labor costs and similar charges plus (b) without duplication,
any guaranteed residual value in respect of such lease to the
extent such guarantee would be included in indebtedness in
accordance with GAAP.
"BUSINESS DAY" means (a) for the purposes of Section
8.6 only, any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City are required or
authorized to be closed, and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City or St.
Louis, Missouri are required or authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with
respect to which the lessee is required concurrently to recognize
the acquisition of an asset and the incurrence of a liability in
accordance with GAAP.
Schedule B
-2-
"CAPITALIZED LEASE OBLIGATIONS" means with respect to
any Person, all outstanding obligations of such Person in respect
of Capital Leases, taken at the capitalized amount thereof
accounted for as a liability on a balance sheet of such Person in
accordance with GAAP.
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations
promulgated thereunder from time to time.
"COMPANY" means CPI Corp., a Delaware corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED ASSETS" means, at any date, the total
assets of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED CAPITALIZATION" means, at any date, the
sum of (a) Consolidated Indebtedness plus (b) Consolidated Net
Worth, all as determined on a consolidated basis for the Company
and its Subsidiaries in accordance with GAAP.
"CONSOLIDATED FIXED CHARGES" shall mean for the period
in question, without duplication, the sum of (i) all Consolidated
Interest Expense and (ii) all Consolidated Lease Rental Expense,
for such period.
"CONSOLIDATED INDEBTEDNESS" means, at any date, all
Indebtedness of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" for any period means
the sum for the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, of all amounts which
would be deducted in computing Consolidated Net Income on account
of interest on Indebtedness (including imputed interest in
respect of Capitalized Lease Obligations and amortization of debt
discount and expense).
"CONSOLIDATED LEASE RENTAL EXPENSE" shall mean, for the
period in question, the aggregate amount of operating lease
expense (i.e., all minimum rental payments plus all additional
rentals payable under percentage operating leases) during such
period under all operating leases of the Company and its
Subsidiaries, all determined on a consolidated basis for the
Company and its Subsidiaries, but excluding any amounts required
to be paid by the Company or a Subsidiary (whether or not
designated as rent or additional rent) on account of maintenance,
repairs, insurance, taxes, assessments, amortization and similar
charges.
Schedule B
-3-
"CONSOLIDATED NET INCOME" for any period means the net
income (or loss) of the Company and its Subsidiaries for such
period, determined on a consolidated basis in accordance with
GAAP, excluding
(a) the proceeds of any life insurance policy,
(b) any gains arising from (i) the sale or other
disposition of any assets (other than current assets) to the
extent that the aggregate amount of the gains during such period
exceeds the aggregate amount of the losses during such period
from the sale, abandonment or other disposition of assets (other
than current assets), (ii) any write-up of assets or (iii) the
acquisition of outstanding securities of the Company or any
Subsidiary,
(c) any amount representing any interest in the
undistributed earnings of any other Person (other than a
Subsidiary),
(d) any earnings, prior to the date of acquisition, of
any Person acquired in any manner, and any earnings of any
Subsidiary prior to its becoming a Subsidiary,
(e) any earnings of a successor to or transferee of the
assets of the Company prior to its becoming such successor or
transferee,
(f) any deferred credit (or amortization of a deferred
credit) arising from the acquisition of any Person, and
(g) any extraordinary gains not covered by clause (b)
above.
"CONSOLIDATED NET WORTH" means, at any date, on a
consolidated basis for the Company and its Subsidiaries, (a) the
sum of (i) capital stock taken at par or stated value plus (ii)
capital in excess of par or stated value relating to capital
stock plus (iii) retained earnings (or minus any retained earning
deficit) minus (b) the sum of treasury stock, capital stock
subscribed for and unissued and other contra-equity accounts, all
determined in accordance with GAAP.
"DEFAULT" means an event or condition the occurrence or
existence of which would, with the giving of notice or the lapse
of time, or both, become an Event of Default.
"Default Rate" means that rate of interest that is the
greater of (i) 8.46% and (ii) 2% above the rate of interest
publicly announced by The Bank of New York from time to time at
its principal office in New York City as its prime rate.
"DISPOSITION PAYMENT" is defined in Section 10.5(d).
Schedule B
-4-
"EBITDA" for any period means Consolidated Net Income
plus all amounts deducted in the computation thereof on account
of (a) Consolidated Interest Expense, (b) depreciation and
amortization expenses and (c) income and profits taxes.
"ENVIRONMENTAL LAWS" means any and all Federal, state,
local, and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or
the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time.
"ERISA AFFILIATE" means any trade or business (whether
or not incorporated) that is treated as a single employer
together with the Company under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended from time to time.
"GAAP" means generally accepted accounting principles
as in effect from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business,
or which asserts jurisdiction over any properties of
the Company or any Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
"GUARANTY" means, with respect to any Person, any
obligation (except the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection) of
such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person in
any manner, whether directly or indirectly, including without
limitation obligations incurred through an agreement, contingent
or otherwise, by such Person:
Schedule B
-5-
(a) to purchase such Indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such Indebtedness or obligation, or (ii) to
maintain any working capital or other balance sheet
condition or any income statement condition of any other
Person or otherwise to advance or make available funds for
the purchase or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of any other
Person to make payment of the Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness
or obligation against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of
the obligor under any Guaranty, the Indebtedness or other
obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
"HAZARDOUS MATERIAL" means any and all pollutants,
toxic or hazardous wastes or any other substances that might pose
a hazard to health or safety, the removal of which may be
required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage,
or filtration of which is or shall be restricted, prohibited or
penalized by any applicable law (including without limitation
asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
"HOLDER" means, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by
the Company pursuant to Section 13.1.
"INDEBTEDNESS" with respect to any Person means, at any
time, without duplication,
(a) its liabilities for borrowed money or its mandatory
purchase, redemption or other retirement obligations in
respect of mandatorily redeemable Preferred Stock,
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business and not overdue
but including all liabilities created or arising under any
conditional sale or other title retention agreement with
respect to any such property),
(c) its Capitalized Lease Obligations,
Schedule B
-6-
(d) all liabilities for borrowed money secured by any
Lien with respect to any property owned by such Person
(whether or not it has assumed or otherwise become liable
for such liabilities),
(e) all its liabilities in respect of letters of credit
or instruments serving a similar function issued or accepted
for its account by banks and other financial institutions
(whether or not representing obligations for borrowed
money),
(f) Swaps of such Person, and
(g) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a)
through (f) above.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g)
above to the extent such Person remains legally liable in respect
thereof notwithstanding that any such obligation is deemed to be
extinguished under GAAP.
"INSTITUTIONAL INVESTORS" means (a) any original
purchaser of a Note, (b) any holder of a Note holding (together
with one or more of its Affiliates) more than 2% of the aggregate
principal amount of the Notes then outstanding, and (c) any bank,
trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"LIEN" means, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or
any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or
other title retention agreement or Capital Lease, upon or with
respect to any property or asset of such Person (including in the
case of stock, stockholder agreements, voting trust agreements
and all similar arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.6.
"MATERIAL" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or
prospects of the Company and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse
effect on (a) the business, operations, affairs, financial
condition, assets or properties of the Company and its
Subsidiaries taken as a whole, (b) the ability of the Company to
perform its obligations under this Agreement and the Notes or (c)
the validity or enforceability of this Agreement or the Notes.
Schedule B
-7-
"MEMORANDUM" is defined in Section 5.3.
"MUTLIEMPLOYER PLAN" means any Plan that is a
"multiemployer plan" (as such term is defined in section
4001(a)(3) of ERISA).
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose
responsibilities extend to the subject matter of such
certificate.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
"PLAN" means an "employee benefit plan" (as defined in
section 3(3) of ERISA) that is or, within the preceding five
years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been
made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.
"PREFERRED STOCK", as applied to any corporation, means
shares of such corporation that shall be entitled to preference
or priority over any other shares of such corporation in respect
of either the payment of dividends or the distribution of assets
upon liquidation, or both.
"PROPERTY" or "PROPERTIES" means, unless otherwise
specifically limited, real or personal property of any kind,
tangible or intangible, inchoate or otherwise.
"PTE" is defined in Section 6.2.
"QPAM EXEMPTION" means Prohibited Transaction Class
Exemption 84-14 issued on March 13, 1984 by the United States
Department of Labor.
"RELATED PARTY ARRANGEMENT" is defined in Section 10.7
"REQUIRED HOLDERS" means, at any time, (x) the holders
of at least a majority in unpaid principal amount of the Notes at
the time outstanding and (y), so long as any of the original
Schedule B
-8-
purchasers shall hold any Note, such purchasers as holders of the
Notes.
"RESPONSIBLE OFFICER" means any Senior Financial
Officer and any other officer of the Company with responsibility
for the administration of the relevant portion of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as
amended from time to time.
"SENIOR FINANCIAL OFFICER" means the chief financial
officer, principal accounting officer, treasurer or comptroller
of the Company.
"SUBSIDIARY" means, as to any Person, any corporation
or other business entity a majority of the combined voting power
of all Voting Stock of which is owned by such Person or one or
more of its Subsidiaries or such Person and one or more of its
Subsidiaries. Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the
Company.
"SWAPS" means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps
and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency. For
the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case,
the amount of such obligation shall be the net amount so
determined.
"VOTING STOCK" means, with respect to any Person, any
shares of stock or other equity interests of any class or classes
of such Person whose holders are entitled under ordinary
circumstances (irrespective of whether at the time stock or other
equity interests of any other class or classes shall have or
might have voting power by reason of the happening of any
contingency) to vote for the election of a majority of the
directors, managers, trustees or other governing body of such
Person.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any
Subsidiary all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any
one or more of the Company and the Company's other Wholly-Owned
Subsidiaries at such time.
Schedule B
EXHIBIT 1
[FORM OF NOTE]
CPI CORP.
7.46% SENIOR NOTE DUE 2007
No. [_____] New York, New York
$[_______] [Date]
PPN: 12617# AC O
FOR VALUE RECEIVED, the undersigned, CPI CORP. (the
"COMPANY"), a Delaware corporation, hereby promises to pay to
[______________], or registered assigns, the principal sum of
[______________] DOLLARS on June 16, 2007, with interest
(computed on the basis of a 360-day year of twelve 30-day months)
(a) from the date hereof on the unpaid balance thereof at the
rate of 7.46% per annum, payable semiannually on June 16 and
December 16 in each year, until the principal hereof shall have
become due and payable, and (b) on any overdue payment of
principal, any overdue payment of interest (to the extent
permitted by applicable law) and any overdue payment of any
premium or Make-Whole Amount (as defined in the Note Purchase
Agreements referred to below), payable semiannually as aforesaid
(or, at the option of the holder hereof, on demand) at a rate per
annum from time to time equal to the greater of (i) 8.46% and
(ii) 2% above the rate of interest publicly announced by The Bank
of New York from time to time at its principal office in New York
City as its prime rate.
Payments of principal of, interest on and any Make-
Whole Amount with respect to this Note are to be made in lawful
money of the United States of America at said principal office of
The Bank of New York in New York City or at such other place as
the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreements referred
to below.
This Note is one of an issue of Senior Notes issued
pursuant to separate Note Purchase Agreements dated as of June
16, 1997 (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS") between the Company and the respective Purchasers
named therein and is entitled to the benefits thereof. Each
holder of this Note will be deemed, by its acceptance hereof, to
have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the
Note Purchase Agreements, upon surrender of this Note for
registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued
-2-
to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other
purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal
on the dates and in the amounts specified in the Note Purchase
Agreements. This Note is also subject to optional prepayment, in
whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the
manner, at the price (including any applicable premium or Make-
Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance
with, and the rights of the Company and the holder hereof shall
be governed by, the laws of the State of New York, excluding
choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than
such State.
CPI CORP.
By_________________________
Title:
EXHIBITS 4.4(a)(1) and 4.4(a)(2)
OPINIONS OF COUNSEL FOR THE COMPANY
(These Exhibits contain opinions received from White & Case,
special counsel for the Company and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., General
Counsel of the Company.)
EXHIBIT 4.4(b)
FORM OF OPINION OF SPECIAL COUNSEL FOR THE PURCHASERS
(This Exhibit contains an opinion received from ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, special counsel for the purchasers.)
SCHEDULE 5.3
DISCLOSURE DOCUMENTS
1. CPI Corp. Due Diligence Book, dated June 9, 1997.
2. CPI Corp. Officer's Certificate dated June 16, 1997.
3. CPI Corp. Secretary's Certificate dated June 16, 1997.
SCHEDULE 5.4
SUBSIDIARIES
(This Exhibit lists the Company's (i) Subsidiaries, showing, as to
each Subsidiary, the correct name thereof, the jurisdiction of
its organization, and the percentage of shares of each class of
its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary, (ii) Affiliates, other
than Subsidiaries, and (iii) directors and senior officers.)
SCHEDULE 5.5
FINANCIAL STATEMENTS
1. Consolidated balance sheets and statements of income, cash
flows and changes in stockholders' equity of Borrower and
its Subsidiaries as of February 1, 1997, as published in
the Company's Form 10-K Annual Report filed with the
Securities and Exchange Commission.
2. Unaudited consolidated balance sheets and statements of
income, cash flows and changes in stockholders' equity of
Borrower and its Subsidiaries as of April 26, 1997, as
published in the Company's Form 10-Q Quarterly Report
filed with the Securities and Exchange Commission.
SCHEDULE 5.8
LITIGATION
None
SCHEDULE 5.11
LICENSES, ETC.
None
SCHEDULE 5.15
EXISTING INDEBTEDNESS
NAME AMOUNT DESCRIPTION
Principal/Prudential $ 55,000,000 Senior long-term-debt--
Senior Notes see further disclosure in
Note A
CPI Corp. Revolving - CPI Corp. revolving credit
Credit Agreement agreement with Mercantile
Bank of St.Louis, ▇▇▇▇▇▇
Trust and Savings Bank,
and The Sumitomo Bank,
Limited--maximum borrowing
limit: $60,000,000--
covenants similar to Senior
Notes-see Note A
St. Louis Equity Fund 40,799 Investment in St. Louis
------------- Equity Fund 1990 Limited
Partnership
45,040,799
Insurance Costs (145,129) Senior long-term debt--see
------------- further disclosure in
Note A
Total as of May 24, $ 44,895,670
1997 financial =============
statements
SCHEDULE 5.15 (...continued)
EXISTING INDEBTEDNESS (...continued)
NOTE A
On August 31, 1993, CPI Corp. privately placed senior notes
in the amount of $60,000,000 (the "Note Agreement") with
two insurance companies. The notes, issued pursuant to the
Note Agreement, mature over a seven-year period with an
average maturity of 5.42 years and with the first principal
payment due at the end of the third year. Interest on the
notes is payable semi-annually at an average effective
fixed rate of 6.44%. The Note Agreement requires the
Company maintain certain financial ratios and comply with
certain restrictive covenants including a limitation on
dividend payment, purchase of treasury stock and certain
restricted investments are not to exceed $25,000,000 plus
50% of net earnings (or less 100% of net losses) credited
at the end of each fiscal year. The Company incurred
$459,000 in issuance costs associated with the private
placement of the notes. These costs are being amortized
ratably over the seven-year life of the notes.
The Company's performance of the conditions of the Note
Agreement and the underlying notes issued under the
agreement was originally secured by a pledge of the stock
of the Company's direct subsidiaries. As the Company
achieved the stipulated financial ratios required by the
agreement to release the pledge of stock and pursuant to the
direction of the lenders, on June 5, 1995, the lien on the
pledged shares of the Company's direct, wholly owned
subsidiaries was released.
The Note Agreement has been amended on the following dates:
February 24, 1994, June 14, 1994, September 18, 1995,
October 2,1 996 and April 11, 1997.
CPI Corp. guarantees all lines of credits to its subsidiaries
and routinely guarantees leases entered into by subsidiaries.
There are numerous intercompany accounts payable and notes
arising in the ordinary course of the business of the Company
and its subsidiaries.
The above information represents both short- and long-term debt
agreements of CPI Corp. as of its most recent fiscal period
close, May 24, 1997. No additional short- or long-term debt,
loan or guarantees agreements have been entered into as of
June 16, 1995.