EXHIBIT 5.1
SECOND AMENDMENT TO LICENSE AGREEMENT
THIS SECOND AMENDMENT TO LICENSE AGREEMENT ("Second
Amendment") is made as of November 10, 1999, by and between SEARS,
XXXXXXX AND CO., a New York corporation ("Sears") and CONSUMER
PROGRAMS INCORPORATED, a Missouri corporation, ("Licensee")
WHEREAS, Sears and Licensee are parties to that certain
License Agreement (Off Premise) dated as of January 1, 1999, (the
"License Agreement"); and
WHEREAS, the License Agreement is the latest and current in a
series of agreements under which Sears and Licensee have enjoyed a
long and mutually beneficial relationship; and
WHEREAS, Sears and Licensee agreed to amend the License
Agreement pursuant to the First Amendment to License Agreement
dated June 11, 1999 (the "First Amendment"); and
WHEREAS, it appears that the First Amendment will become null
and void on December 31, 1999, in accordance with its terms; and
WHEREAS, Sears and Licensee still desire to amend the License
Agreement to strenghten their mutual commitment to continue their
cooperative relationship;
NOW THEREFORE, in consideration of the mutual covenants set
forth herein, Sears and Licensee hereby agree to amend the License
Agreement as follows:
1. Article III of the License Agreement shall be amended
in its entirety to read as follows:
The term of this Agreement ("Term") shall be for
a ten (10) year period beginning on January 1,
1999, and ending at the close of business on
December 31, 2008, unless sooner terminated under
any provisions of this Agreement.
2. Article V of the License Agreement shall be amended by
adding a new Section 5.11 to read as follows:
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5.11 EXCLUSIVE RELATIONSHIP
Except for the three (3) "Mainstreet Portrait"
businesses currently owned and operated by
Licensee's affiliate, Licensee agrees that during
the term of this Agreement, neither Licensee,
CPI Corp., nor any of their respective affiliates
controlling, controlled by, or under common control
with Licensee or CPI Corp., shall perform or license
the services or have any direct or indirect,
controlling or non-controlling interest as a
disclosed or beneficial owner, investor, partner,
director, officer, employee, manager, consultant,
representative, or agent, or in any other capacity,
in any business offering or selling professional
portrait photography studio services and related
portrait products in the United States, Puerto Rico
or Canada ("Competitive Business"), which is:
(1) located in any specialty store, department
store, discount store or other similar
retail format;
(2) located within twenty (20) miles of a
Licensed Business licensed under this
Agreement or under the License Agreement
between Licensee and Sears for Licensed
Businesses located on the premises of Sears
stores ("On Premise Agreement"); or
(3) offered or promoted through the following
media:
(a) World Wide Web sites available to the
public over the Internet;
(b) Secured Internet sites or Intranet sites;
(c) other interactive media for use in the
Licensed Businesses; and
(d) in electronic processing, data interchange
and other communications done or made in
connection with any commercial transaction
consummated through the Internet or
Intranet.
If, during the term of this Agreement, Sears develops Competitive
Businesses in any territory or country outside of the United
States, Puerto Rico or Canada and Licensee has no professional
portrait businesses located within that country or territory at the
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time of this development, Licensee shall no longer have the right
to develop Competitive Businesses in that country or territory
throughout the remainder of the term of this Agreement in
accordance with Section 5.11. Licensee and Sears agree to use
reasonable efforts to discuss their respective global strategies
with each other as they develop.
3. Section 9.4 shall be deleted in its entirety and the
following substituted in its place:
9.4 REPORTS
If requested by Sears, Licensee shall provide to Sears
reports of sales and income and Sears commissions paid
in the manner and form prescribed by Sears, together
with any other information Sears may require for its
records or auditing purposes. If requested by Sears,
Licensee shall promptly submit its financial report to
Sears after the close of Licensee's fiscal year. Such
report shall be audited by a certified public
accountant. Such report shall include, but shall not
be limited to, Licensee's profit and loss statement
for such fiscal year and balance sheet at the end of
such fiscal year, and shall be prepared in accordance
with generally accepted accounting principles. If
Licensee is a publicly held corporation, this
requirement may be fulfilled by submission of
Licensee's Annual Report on Form 10-X. Xxxxx shall
not disclose any such information that is not
available to the public to any third parties without
Licensee's prior consent.
4. Section 14.1 of the License Agreement is hereby
deleted in its entirety.
5. Section 14.2 of the License Agreement is hereby
amended by revising clause (b) to read:
(b) there is a Change in Control (as defined in
Section 15.1 below) with respect to Licensee
to which Sears has not consented;
6. Article XIV of the License Agreement shall be amended
by adding a new Section 14.5 to read as follows:
14.5 COVENANT NOT TO COMPETE
Except for the three (3) Mainstreet Portrait
businesses currently owned and operated by
Licensee's affiliate, upon:
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(1) termination of this Agreement by Sears in
accordance with its terms and conditions, or
(2) termination of this Agreement by Licensee
without cause,
Licensee and its affiliates agree, that for a
period of two (2) years commencing on the
effective date of termination, neither Licensee,
CPI Corp., nor any of their affiliates
controlling, controlled by or under common
control with Licensee or CPI Corp., will
perform or license the services or have any
direct or indirect interest as a disclosed or
beneficial owner, employee, investor, partner,
director, officer, employee, consultant,
representative, or agent or in any other capacity
in any Competitive Business:
(a) operating within ten (10) miles of any
Licensed Business licensed under this
Agreement or the On-Premises Agreement;
or
(b) offered or promoted through the following
media:
(i) World Wide Web sites available to
the public over the Internet;
(ii) Secured Internet sites or Intranet
sites;
(iii) other interactive media for use in
the Licensed Businesses; and
(iv) in electronic processing, data
interchange and other communications
done or made in connection with any
commercial transaction consummated
through the Internet or Intranet.
7. Section 15.1 of the Agreement shall be amended in its
entirety to read as follows:
15.1 ASSIGNMENT BY LICENSEE
Notwithstanding any other provision in this
Agreement, Licensee may not assign, transfer,
sublicense or convey any of its rights or
obligations under this Agreement in whole or in
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part, without Sears' prior written consent. Any
Change in Control of Licensee shall constitute an
assignment of this Agreement, for which Sears' prior
written consent is required. Any attempted
assignment, transfer, sublicense, conveyance or
Change in Control without Sears' prior written
consent is void.
For purposes of this Agreement, a "CHANGE IN CONTROL"
means an asset sale, merger, consolidation, or any
other transaction or arrangement the effect of which
is that fifty percent (50%) or more of the total
voting power entitled to vote in the election of
Licensee's board of directors is held by a person
or persons other than the shareholders of Licensee,
who, individually or as a group, held fifty percent
(50%) or more of such voting power immediately prior
to such event.
8. Sears and Licensee hereby affirm the License Agreement
as amended by this Second Amendment. This Second
Amendment replaces and supersedes the First Amendment
in its entirety.
IN WITNESS WHEREOF, the parties have caused their authorized
representatives to execute and deliver this Second Amendment as of
the date first written above.
SEARS, XXXXXXX AND CO. CONSUMER PROGRAMS INCORPORATED
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxx Xxxxx
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Its: President and Chief Its: President
Operating Officer -------------------------
Full-Line Stores
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