ITEM 5 (D)
CPI Corp.
0000 Xxxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
LETTER AMENDMENT NO. 4
October 2, 1996
VIA OVERNIGHT
Xx. Xxxx Xxxxxxx
The Prudential Insurance Company of America
0000 Xxxx Xxxxxx, Xxxxx 0000X
Xxxxxx, Xxxxx 00000
Mr. Xxx Xxxxxxxx
Assistant Director - Securities Investment
Principal Mutual Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
Reference is made to the Note Agreement dated as of August 31,
1993, as amended by a letter amendment dated as of February 24,
1994 ("Letter Amendment No. 1"), a letter amendment dated as of
June 14, 1994 ("Letter Amendment No. 2"), and a letter amendment
dated as of September 18, 1995 ("Letter Amendment No. 3") (as
amended, the "Note Agreement"), by and between CPI Corp. (the
"Company") and each of the purchasers listed on the Purchaser
Schedule attached thereto (collectively, the "Purchasers").
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Note Agreement.
By their execution hereof as provided below, the Company and the
Required Holders agree and consent to this Letter Amendment
No. 4 to the Note Agreement (this "Amendment"), but only to the
extent expressly provided herein, and subject to the terms and
conditions set forth below.
1. CONSOLIDATED NET WORTH. Paragraph 6A(2) of the Note
Agreement is deleted and replaced in its entirety by the
following:
6A(2). CONSOLIDATED NET WORTH. Consolidated Net Worth
at any time to be less than (i) from the date of this
Agreement through July 20, 1996, the SUM of $135,000,000
PLUS 50% of Consolidated Net Income in each fiscal quarter
ended after May 1, 1993, (ii) from July 21, 1996 through
November 9, 1996 the SUM of (x) the difference between
$157,969,000 LESS 90% of the Buyback Reduction PLUS (y) 50%
of Consolidated Net Income in the fiscal quarter ended
November 9, 1996 and (iii) at any time after November 9,
1996, the SUM of (a) $157,969,000 LESS 80% of the Buyback
Reduction PLUS (b) 50% of Consolidated Net Income in each
fiscal quarter ended after July 21, 1996. Notwithstanding
the foregoing, in no event will minimum required
Consolidated Net Worth be reduced by the amount of any
Consolidated Net Loss in any fiscal quarter. For the
purpose of this paragraph 6A(2), "BUYBACK REDUCTION", means
the reduction in Consolidated Net Worth (which shall in no
event exceed $50,000,000) resulting in the repurchase of
shares of common stock of the Company pursuant to the "Dutch
Auction" tender offer described in the Company's Current
Report on Form 8-K dated August 8, 1996.
2. DEBT. Subclause (iii) of Paragraph 6C(2) of the Note
Agreement is deleted and replaced in its entirety by the
following:
(iii) other Debt of the Company, PROVIDED that after
giving effect thereto (A) the aggregate principal amount of
all Funded Debt of the Company and its Subsidiaries
(including the Funded Debt described in clauses (i) and
(ii)(B) of this paragraph 6C(2) does not exceed forty
percent (40%) of Adjusted Capitalization and (B) the
aggregate principal amount of all Debt of the Company and
its Subsidiaries including all Debt described in this
paragraph 6C(2) and other than Debt described in paragraph
6C(2)(ii)(A) does not exceed (I) fifty percent (50%) of
Adjusted Capitalization for the fiscal quarter ended
November 9, 1996 and (II) forty-five percent (45%) of
Adjusted Capitalization at all other times.
3. CONSENT TO REPURCHASE OF CAPITAL STOCK. The Company
proposes to repurchase shares of common stock of the Company in
an aggregate amount of $50,000,000 (the "Stock Repurchase")
pursuant to the "Dutch Auction" tender offer described in the
Company's Current Report on Form 8-K dated August 8, 1996; the
Stock Repurchase would constitute a Restricted Payment
prohibited under Paragraph 6B of the Note Agreement. Required
Holders hereby (i) consent to such proposed Stock Repurchase and
waive any violation of Paragraph 6B of the Note Agreement caused
by the Stock Repurchase and (ii) agree that for purposes of any
calculation under Paragraph 6B(iii), such Stock Repurchase shall
be excluded from the aggregate of all Restricted Payments and
Restricted Investments made or committed to after the date of the
Note Agreement referred to therein.
4. CONDITIONS PRECEDENT. This Amendment is expressly
subject to and shall be effective only upon the satisfaction of
the following conditions:
4.1 The Company and Required Holders shall have
executed this Amendment.
4.2 As of the Effective Date, no Default or Event of
Default under the Note Agreement shall exist and be continuing,
after giving effect to this Amendment.
4.3 The representations of the Company in Section 5
hereof shall be true and complete.
4.4 The Company shall have paid the following amendment
fees:
The Prudential Insurance Company of America $61,000
Principal Mutual Life Insurance Company $50,000
4.5 The Company shall have received copies of an
amendment to the Revolving Credit Agreement, duly executed by the
Revolving Credit Lender, containing provisions no more
restrictive on the Company than the amendments set forth in
Sections 1, 2 and 3 hereof, and the Company shall have provided
photocopies of such amendment to each of the holders of Notes.
5. REPRESENTATIONS OF THE COMPANY. The Company, by its
execution and delivery of this Amendment, hereby represents and
warrants to each holder of Notes as follows:
5.1 Its representations and warranties in Section 8 of
the Note Agreement shall be true and complete and in all material
respects, as if made on and as of the date hereof, except that
the representation and warranty (i) with respect to the annual
audited financial statements in paragraph 8B shall be deemed to
refer to the fiscal years ended February 6, 1993, February 5,
1994, February 4, 1995 and February 3, 1996; (ii) in the last
sentence of paragraph 8B and in paragraph 8E shall be deemed to
refer to February 3, 1996; and (iii) in any other part of
paragraph 8 that is made as of a specific date shall be deemed
made as of such specific date.
5.2 As of the Effective Date, no Default or Event of
Default under the Note Agreement, or similar condition under any
other agreement to which the Company is subject, exists and is
continuing, after giving effect to this Amendment.
5.3 No dissolution proceedings with respect to the
Company have been commenced or are contemplated, and there has
been no condition, event or development that could reasonably be
expected to result in a Material Adverse Effect since February 3,
1996.
5.4 This Amendment has been duly authorized, executed
and delivered by the Company and the Note Agreement, as amended
to date, including by this Amendment, constitutes the legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
6. MISCELLANEOUS.
6.1 It is expressly understood and agreed that this
Amendment shall not constitute either (a) a modification,
alteration or amendment of the terms, conditions, and covenants
of the Note Agreement or the Notes, both of which shall remain
unchanged and in full force and effect, except as otherwise
specifically set forth herein or in Letter Amendment No. 1,
Letter Amendment No. 2 or Letter Amendment No. 3, or (b) a
waiver or release of or limitation upon the exercise by the
holders of Notes or any of them of any of their rights, legal or
equitable, under the Note Agreement except as to matters as to
which the holders herein expressly consent or waive compliance
and only for the relevant time period set forth herein. Nothing
herein is intended or shall be construed to release or relieve
the Company in any way or to any extent from any of the
obligations, covenants or agreements imposed upon the Company
by the Note Agreement or the Notes or otherwise, or from the
consequence of any default thereunder, except as to matters to
which the undersigned expressly agree herein.
6.2 The Note Agreement and the Notes are in all
respects ratified and confirmed, and all the terms, conditions
and provisions thereof shall be and remain in full force and
effect.
6.3 The execution and delivery of this Amendment by the
Required Holders shall not in any way constitute, or be construed
as, a waiver of any provision of, or of any Default or Event of
Default under, the Note Agreement except as expressly provided
herein, nor shall it constitute an agreement or obligation of
any holder of Notes to give its consent to any future waiver,
consent or amendment of the Note Agreement or to any future
transaction, event or condition which would, absent consent of
the Required Holders, constitute a Default or Event of Default.
6.4 This Amendment may be executed in as many counter-
parts as may be deemed necessary or convenient any by the
different parties hereto on separate counterparts (provided that
the Company will execute each counterpart), and each of which,
when so executed, shall be deemed to be an original, but all such
counterparts shall constitute but one and the same agreement.
6.5 This Amendment shall be deemed effective as of the
date hereof, (the "Effective Date"), provided that the conditions
precedent set forth in Section 4 hereof have been completely
satisfied.
6.6 From and after the Effective Date, each reference
in the Note Agreement to "this Agreement," "hereof," or "here-
under" or words of like import, and all references made to the
Note Agreement in any and all agreements, instruments, documents,
notes, certificates and other writings of every kind and nature
shall be deemed to mean the Note Agreement, as modified and
amended by this Amendment and Letter Amendment No. 1, Letter
Amendment No.2 and Letter Amendment No. 3.
6.7 This Amendment (a) shall be binding on the parties
hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and their respective
successors and assigns, (b) constitutes the entire agreement
among the parties hereto with respect to the matters addressed
herein, and shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
CPI Corp.
By: /s/ Xxxx X. Xxxxxx
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The Prudential Insurance Company of America
By: /s/ Xxxxxx X. Xxxx
-----------------------------------
Vice President (TPD)
Principal Mutual Life Insurance Company
By: /s/ Xxx X. Xxxxxxxx
-----------------------------------
Xxx X. Xxxxxxxx
Assistant Director-Securities Investment
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
Counsel
