AMENDMENT NO. 1 TO RIGHTS AGREEMENT
AMENDMENT
NO. 1
TO
THIS
AMENDMENT NO. 1 dated as of September 5, 2007 (this "Amendment") to the
Rights Agreement dated as of March 13, 2000 (the "Agreement") by and
between CPI Corp., a Delaware corporation (the "Company"), and
Computershare Trust Company, N.A., as successor rights agent to Xxxxxx Trust
and
Savings Bank (the "Rights Agent"), is entered into with reference to the
following:
WHEREAS,
in accordance with Section 27 of the Agreement, the Board of Directors of
the Company has authorized the amendment and restatement of certain provisions
of the Agreement as described below; and
WHEREAS,
in accordance with Section 19 of the Agreement, the Rights Agent is a federally
chartered trust company that has succeeded to the corporate trust business
of
Xxxxxx Trust and Savings Bank,
WHEREAS,
the Company and Computershare Trust Company, N.A. agree that the Rights Agent
shall act as the successor rights agent under the Agreement and that notice
shall be provided by the Company if required pursuant to the Agreement;
and
WHEREAS,
capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Agreement.
NOW,
THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:
1. Amendment
of Definition of Acquiring Person. Section 1(a) of the Agreement
is hereby amended and restated in its entirety as follows:
(a). "ACQUIRING
PERSON" shall mean any Person (as hereinafter defined) who or which, together
with all Affiliates and Associates (as such terms are hereinafter defined)
of
such Person, shall hereafter become the Beneficial Owner (as such term is
hereinafter defined) of 20% or more of the Common Shares then outstanding,
but
shall not include the Company, any Subsidiary (as hereinafter defined) of the
Company, any employee benefit plan of the Company or any Subsidiary of the
Company, any Person or entity organized, appointed, or established by the
Company pursuant to any such plan, or any Exempt Person (as hereinafter
defined). Notwithstanding the foregoing, no Person or group shall
become an "Acquiring Person" as the result of an acquisition of Common Shares
by
the Company which, by reducing the number of shares outstanding, increases
the
proportionate number of shares beneficially owned by such Person or group to
20%
or more of the Common Shares of the Company then outstanding; provided, however,
that if a Person or group shall become the Beneficial Owner of 20% or more
of
the Common Shares of the Company then outstanding by reason of such an
acquisition by the Company and shall, after such acquisition, become the
Beneficial Owner of any additional Common Shares, then such Person or group
shall be deemed to be an "Acquiring Person." Notwithstanding the
foregoing, if the Board determines that a person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests
as promptly as practicable a sufficient number of Common Shares so that such
Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
(o) “EXEMPT
PERSON” shall mean the Knightspoint Group (as hereinafter defined), provided,
however, that (i) the members of the Knightspoint Group do not directly or
indirectly, in the aggregate, acquire Common Shares if, as a result, the
Knightspoint Group would become the Beneficial Owners of 30% or more of the
Common Shares then outstanding (excluding any shares or any options granted
pursuant to the Company's stock option plans or any shares acquired upon the
exercise of such stock options by members of the Knightspoint Group and/or
their
Affiliates or Associates), (ii) each Person who ceases to be a member of the
Core Knightspoint Group does not acquire Common Shares if, as a result, such
Person would become, directly or indirectly, the Beneficial Owner of more than
the greater of (x) the percentage of the Common Shares outstanding that such
Person Beneficially Owned immediately after it ceased to be a member of the
Core
Knightspoint Group and (y) 20% of the Common Shares outstanding;
(iii) each Person who is or ever becomes a member of the Knightspoint Group
delivers to the Secretary of the Company, on the date that is the latest of
(a)
September 5, 2007, (b) the date upon which such Person becomes a member of
the
Knightspoint Group and (c) the date upon which such Person first becomes the
direct Beneficial Owner of any Common Shares, an Irrevocable Proxy and Agreement
substantially in the form set forth as Exhibit D hereto which shall (1) grant
an
irrevocable proxy to the Secretary of the Company to vote from time to time
the
Pro Rata Shares owned by such Person, (2) contain an affirmative covenant by
such Person that it will never acquire Common Shares if, as a result, the number
of Common Shares directly or indirectly Beneficially Owned by all members of
the
Knightspoint Group in the aggregate would be equal to 30% or more of the Common
Shares outstanding and (3) contain an affirmative covenant by such Person (if
such Person was previously a member of the Core Knightspoint Group) that it
will
comply with clause (ii) of this sentence; (iv) no member of the Knightspoint
Group votes (whether at a meeting of shareholders or by written consent) any
of
its Pro Rata Shares in opposition to any recommendation of the Board of
Directors of the Company; and (v) no member of the Knightspoint Group takes
any
legal action in a court of law to contest the validity of the Irrevocable Proxy
and Agreement described in clause (iii) of this sentence. Notwithstanding the
foregoing, in the event that the Knightspoint Group shall fail (for any reason
and without regard to the fault or lack of fault of any particular member of
the
Knightspoint Group) to comply with clause (i) of this paragraph after having
become an Exempt Person, the Knightspoint Group shall not be disqualified from
Exempt Person status as a result of such breach of clause (i); provided, that
the Knightspoint Group cures such breach within five (5) days after written
notice identifying such breach from the Company to the members of the
Knightspoint Group of which the Company is aware. In the event that the
Knightspoint Group shall fail (for any reason and without regard to the fault
or
lack of fault of any particular member of the Knightspoint Group) to comply
with
clauses (ii), (iii), (iv) or (v) of this paragraph, then during the period
in
which the breach is outstanding, the Knightspoint Group shall not vote any
Common Shares Beneficially Owned by any of them in opposition to the
recommendations of the Board of Directors of the Company without the approval
of
the Company. The Irrevocable Proxy and Agreement described in clause
(iii) of this paragraph shall remain in full force and effect until termination
of the Rights Agreement.
(p)
“EXCESS
SHARES” shall mean the
amount of Common Shares directly or indirectly Beneficially Owned by the
Knightspoint Group in excess of 20% of the voting power of the outstanding
Common Shares.
(q)
“KNIGHTSPOINT
GROUP” shall mean all
of the following combined: (i) Xxxxx X. Xxxxx and the Persons with which he
is a
Beneficial Owner and any Person who is an Affiliate of Xx. Xxxxx, including
those Persons with which Xx. Xxxxx files a Schedule 13D under the Exchange
Act
(the “Core Knightspoint Group”); (ii) any Person who was (for any length of
time) a member of the Core Knightspoint Group on or after September 5, 2007;
and
(iii) any Person who is a Beneficial Owner with or Affiliate of (including
by
virtue of jointly filing a Schedule 13D under the Exchange Act) any member
of
the Core Knightspoint Group or any Person described in clause (ii) of this
sentence.
(r)
“PRO
RATA SHARES” means, with
respect to any Person that is a member of the Knightspoint Group, the number
of
Common Shares at any given time equal to the following: (i) the number of Common
Shares directly Beneficially Owned by such Person divided by (ii) the aggregate
number of Common Shares directly or indirectly Beneficially Owned by all members
of the Knightspoint Group multiplied by (iii) the number of Excess Shares;
provided, however, that the aggregate sum of all Pro Rata Shares at any given
time for all members of the Knightspoint Group shall always be equal to the
number of Excess Shares, and the foregoing calculation shall be adjusted on
a
pro rata basis to account for any member of the Knightspoint Group that fails
to
comply with the requirement described in Section 1(o)(iii) or to correct for
any
other anomaly that may result in the foregoing calculation causing the aggregate
sum of all Pro Rata Shares at any given time for all members of the Knightspoint
Group not to be equal to the number of Excess Shares.
3. Amendment
of Section 2. Section 2 of the Agreement is hereby amended to add
the following to the end of the last sentence:
“,
upon
ten (10) days’ prior written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and in no event be liable for, the acts
or omissions of any such co-rights agents.”
4. Amendment
of Section 18. Section 18 of the Agreement is hereby amended to
delete the word “negligence” and replace it in its entirety with “gross
negligence”.
5. Amendment of
Section 20. Section 20(c) of the Agreement is hereby a mended to
delete the word “negligence” and replace it in its entirety with “gross
negligence”
6. Amendment
of Section
21. Section 21 of the Agreement is hereby amended to insert the
following sentence after the second sentence:
“In
the
event the transfer agency relationship in effect between the Company and the
Rights Agent terminates, the Rights Agent will be deemed to resign automatically
on the effective date of such termination; any required notice will be sent
by
the Company.”
7. Amendment of
Section 26. Section 26 of the Agreement is hereby amended to
delete the Rights Agent notice address in its entirety and replace it with
the
following:
Computershare
Trust Company, N.A.
0
Xxxxx
XxXxxxx Xxxxxx
Xxxxxxx
XX 00000
Attn:
Xxxxxx Xxxxxxx, Client Services
8. New
Section 35. The Agreement is hereby amended to insert the
following new Section 35:
“Section
35. Force Majeure. Notwithstanding anything to the
contrary contained herein, the Rights Agent shall not be liable for any delays
or failures in performance resulting from acts beyond its reasonable control
including, without limitation, acts of God, terrorist acts, shortage of supply,
breakdowns or malfunctions, interruptions or malfunction of computer facilities,
or loss of data due to power failures or mechanical difficulties with
information storage or retrieval systems, labor difficulties, war, or civil
unrest.”
9. No
Further Amendments. Except as expressly amended pursuant to
Section 1 hereof, the remaining provisions of the Agreement shall remain in
full
force and effect in accordance with their terms.
10. Counterparts;
Facsimile Signatures. This Amendment may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument. This Amendment may be executed by
electronic or facsimile signature, and an electronic or facsimile signature
shall constitute an original for all purposes.
[Signature
page follows.]
IN
WITNESS WHEREOF, the Company and the Rights Agent have caused this Amendment
to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
The
"Company":
| CPI CORP. | |||
|
|
By:
|
/s/ Xxxx X. Xxxxxxxx | |
| Xxxx X. Xxxxxxxx | |||
| Executive Vice President, Finance, | |||
| Chief Financial Officer and Treasurer | |||
The
"Rights Agent":
| COMPUTERSHARE TRUST COMPANY, N.A. | |||
|
|
By:
|
/s/ Xxxxxx X. Xxxxxx | |
| Xxxxxx X. Xxxxxx | |||
| Managing Director | |||
| By: | /s/ Xxxxx Xxxxx | ||
| Xxxxx Xxxxx | |||
| Managing Director | |||
