American Securities Capital Partners, L.P.
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
June 15, 1999
CPI Corp.
0000 Xxxxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
GUARANTEE
Concurrently herewith CPI Corp. ("CPI") is entering into an Agreement
and Plan of Merger dated the date hereof (the "Agreement") with SPS
International Holdings, Inc., a Delaware corporation ("Parent"), and SPS
Acquisition, Inc., a Delaware corporation. Capitalized terms in this letter
shall have the meaning ascribed thereto in the Agreement.
In the event that the Agreement is terminated by CPI pursuant to
Section 5.01(e) of the Agreement or by Parent or CPI pursuant to Section 5.01(b)
of the Agreement, American Securities Capital Partners, L.P. ("ASCP") hereby
irrevocable guarantees (the "Guarantee") the payment to CPI of any and all
amounts which are finally judicially determined to be due to CPI from Parent by
reason of the willful breach of the terms of the Agreement (any such amount
so due on "Obligation"), up to a maximum of $80,000,000.
If Parent shall default in payment of any Obligation when such amount
becomes due pursuant to a final judicial determination, then ASCP, promptly upon
CPI's written demand, shall pay to CPI an amount equal to the unpaid Obligation
then due and owing, up to a maximum of $80,000,000. Any Obligation paid by ASCP
shall be paid in lawful currency of the United States of America and in
immediately available funds.
This Guarantee shall terminate upon the earlier of (i) the Closing Date
or (ii) the termination of the Agreement pursuant to the provisions of Section
5.01 thereof under circumstances which can not give rise to any Obligation.
This Guarantee is unconditional. ASCP hereby waives all notices
(including notice of acceptance of the Guarantee, of default or nonperformance,
demands and protests in connection with the enforcement of the obligation of
hereunder).
NO REMEDIES OTHER THAN AS PROVIDED BY THIS GUARANTEE SHALL BE AVAILABLE
AGAINST ASCP, DIRECTLY OR INDIRECTLY (INCLUDING THROUGH A CLAIM AGAINST PARENT),
WITH RESPECT TO THE AGREEMENT OR WITH RESPECT
CPI Corp.
June 15, 1999
Page 2
TO THE COMTEMPLATED TRANSACTONS, OTHER THAN FOR FRAUD. IT IS UNDERSTOOD AND
AGREED THAT CPI WILL RECOVER ANY RECOVERABLE AMOUNTS ARISING OUT OF THE
AGREEMENT SOLELY FROM PARENT UNDER THE AGREEMENT OR FROM ASCP HEREUNDER (AS
PROVIDED HEREIN). CPI COVENANTS NOT TO SUE ASCP FOR ANY MATTER ARISING OUT OF
THE AGREEMENT OR OUT OF THE CONTEMPLATED TRANSACTIONS, OTHER THAN FOR FRAUD OR
TO ENFORCE THIS GUARANTEE. THIS GUARANTEE CONSTITUTES THE SOLE REMEDY OF CPI
AGAINST ASCP WITH RESPECT TO THE AGREEMENT OR WITH RESPECT TO THE CONTEMPLATED
TRANSACTIONS, OTHER THAN FOR FRAUD. CPI ACKNOWLEDGES AND AGREES THAT THE LIMITED
AMOUNT SET FORTH IN THIS GUARANTEE AS CPI'S SOLE REMEDY AGAINST ASCP (AND NOT
THE PARENT) EXCEPT AS SET FORTH ABOVE IS A REASONABLE ESTIMATE, AS LIQUIDATED
DAMAGES AND NOT A PENALTY, OF ACTUAL DAMAGES TO CPI RESULTING FROM A BREACH BY
PARENT.
ASCP hereby represents and warrants to CPI that it has all requisite
legal capacity, power and authority to enter into this Guarantee and to perform
its obligations hereunder. This Guarantee has been duly authorized, executed and
delivered by ASCP and constitutes a valid and binding obligation of ASCP
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing. The execution and delivery of
this Guarantee do not, and the compliance by ASCP with the terms hereof will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time or both) under, permit the termination of any provision
of or result in the termination of or the acceleration of the maturity or
performance of, or result in the creation or imposition of any Lien upon any of
the assets or properties of ASCP under, (i) any provision of any agreement,
instrument, permit, concession, franchise, license, judgment, order, notice,
decree, stature, law, ordinance, rule or regulation applicable to ASCP or its
property or assets, (ii) the organizational documents of ASCP or (iii) any
mortgage, lease, franchise, license, permit, agreement, instrument, law, order,
arbitration award, judgment or decree to which ASCP is a party or by which it is
bound, except to the extent that any such events would not reasonably be
expected to have a material adverse effect on ASCP's ability to perform under
this Guarantee.
Neither this Guarantee nor any of the rights or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other parties. Subject to the preceding sentence, this Guarantee will be
binding upon, inure to the benefit of and be enforceable only by the parties
hereto and their respective permitted assigns.
Any attempted assignment in violation of the terms of this paragraph
shall be null and void.
This Guarantee constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings amount the parties with respect thereto. The waiver by any party
of a breach of any provision hereunder shall not operate or be construed as
waiver of any prior or subsequent breach of the same or any other provision. Any
term
CPI Corp.
June 15, 1999
Page 3
or provision of this Guarantee which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforecability without rendering invalid or unenforceable
the remaining terms and provisions of this Guarantee or affecting the validity
of enforceability of any of the terms or provisions of this Guarantee in any
other jurisdiction.
Any party who is required to utilize legal process to recover any
amount owed to such party pursuant to this Guarantee may recover, if successful,
in addition to other amounts expressly provided for herein, such party's
reasonable out-of-pocket attorneys' fees and costs.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts executed and to be
performed entirely within such State.
AMERICAN SECURITIES CAPITAL
PARTNERS, L.P.
By: American Securities Capital
Partners G.P. Corp., its
general partner
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: President