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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: : : Chapter 7 CPI CORP., et al.,1 : (Jointly Administered) : Debtors. : Case No. 13-11158 (BLS) : : Hearing Date: TBD : Objection Deadline: TBD

MOTION OF CHAPTER 7 TRUSTEE PURSUANT TO BANKRUPTCY CODE SECTIONS 105, 363 AND RULES 2002, 6004, 6006 AND 9014 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE FOR (I) AN ORDER (A) APPROVING THE STALKING HORSE ASSET PURCHASE AGREEMENT AND BREAK-UP FEE RELATING TO THE SALE OF CERTAIN ASSETS OF THE DEBTORS, SUBJECT TO HIGHER AND BETTER OFFERS, FREE AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES, (B) APPROVING THE NOTICE AND SALE PROCEDURES RELATED THERETO, AND (C) SETTING AUCTION AND HEARING DATES; AND (II) AN ORDER (A) APPROVING THE SALE OF CERTAIN ASSETS OF THE DEBTORS, AND (B) GRANTING RELATED RELIEF

Charles A. Stanziale, Jr., in his capacity as the Chapter 7 Trustee (the “Trustee”) in the above-captioned cases, by and through his counsel McCarter & English, LLP, hereby moves

(the “Motion”) the United States Bankruptcy Court for the District of Delaware (the

“Bankruptcy Court”) pursuant to sections 105(a) and 363 of Title 11 of the United States Code,

§§ 101-1532 (as amended, the “Bankruptcy Code”), Rules 2002, 6004 and 9014 of the Federal

Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and Rule 2002-1 and 6004-1 of the

Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for

1 The jointly administered debtors in these cases are CPI Corp., Bella Pictures Holdings, LLC, Centrics Technology, Inc., Consumer Programs, Inc., Consumer Programs Partner, Inc., CPI Canadian Holdings, Inc., CPI Images, LLC, CPI International Holdings, Inc., CPI Prints Plus, Inc., CPI Research & Development, Inc., CPI Technology Corp., Image Source, Inc., Myportraits.com, Inc., Ridgedale Prints Plus, Inc., Sandy Realty Holdings, LLC, and Texas Portraits, L.P. (collectively, the “Debtors” and each, separately, a “Debtor”). The Debtors’ estates shall collectively be referred to as the ““CPI Bankruptcy Estates”.

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the District of Delaware (respectively, “Local Rule 2001-1” and “Local Rule 6004-1”), for entry of (i) an order, substantially in the form attached hereto as Exhibit A (a) approving the terms of the stalking horse asset purchase agreement and the break-up fee relating to the sale of certain Assets (defined herein) of the Debtors, subject to higher and better offers, free and clear of liens, claims, encumbrances and interests, (b) approving the notice and sale procedures related thereto, and (c) setting auction and hearing dates; and (ii) an order (a) approving the sale of certain Assets of the Debtors, and (b) granting related relief. In support of this Motion, the Trustee respectfully represents as follows:

I. JURISDICTION, VENUE AND PREDICATES FOR RELIEF

1. The Court has jurisdiction over this Motion under 28 U.S.C. § 1334. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). Venue of this Motion and the Debtors’ cases is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409. The predicates for the relief requested herein are sections 105(a) and 363(b), (f), (m) and (n) of the

Bankruptcy Code, Bankruptcy Rules 2002, 6004 and 9014, and Local Rule 2001-1 and Local

Rule 6004-1 (or collectively, the “Local Rules”).

II. INTRODUCTION

2. Faced with assets of the Debtors located in over eighteen hundred locations inside various Sears, Wal-Mart and Toys “R” Us stores and various warehouses located across the United States of America, the Chapter 7 Trustee has aggressively sought to locate a stalking horse bidder to immediately commence the sale process, the culmination of such efforts are set forth herein.

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III. SUMMARY OF RELIEF REQUESTED

3. This Motion seeks relief in two stages and the entry of two Orders related to the sale of the Assets. First, the Trustee hereby requests an initial hearing on the Motion (the

"Preliminary Hearing") for the Court to consider entry of an order substantially in the form attached hereto as Exhibit A (the “Bidding Procedures Order”): (i) approving the Purchase

Agreement as the form of the asset purchase agreement to be used in conjunction with the sale procedure and the sale and approving the break-up fee, (ii) establishing and approving the form of notice and bidding procedures (the "Bidding Procedures") for the sale hearing (the "Sale

Hearing") with respect to the sale free and clear of liens, claims, encumbrances and interests; and (iii) setting auction and hearing dates to consider higher and better offers, if any, and to approve the sale.

4. The Trustee also requests the entry of a further order granting substantive relief at the conclusion of the Sale Hearing. Specifically, the Trustee will seek an order (the “Sale

Order”) approving the sale of the Assets pursuant to an asset purchase agreement entered into between the Trustee and Lifetouch Portrait Studios Inc. (“Lifetouch” or the “Stalking Horse

Bidder”), dated May __, 2013 (as may be amended, the “Purchase Agreement”, a copy of which is annexed hereto as Exhibit C) or such other purchase agreement entered into between the Trustee and any alternate bidder selected pursuant to the Bidding Procedures.

5. The proposed Sale Order will (i) approve the sale of the Assets on the terms and conditions set forth in the Purchase Agreement or an asset purchase agreement similar thereto selected by the Trustee pursuant to sections 105(a) and 363(b) of the Bankruptcy Code, authorizing the Trustee to proceed with the transaction contemplated by the selected asset purchase agreement, (ii) include a specific finding pursuant to section 363(m) of the

Bankruptcy Code that the purchaser is a good faith buyer, (iii) order that pursuant to section

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363(f) of the Bankruptcy Code, the sale shall be on an “AS IS” “WHERE IS” basis and free and clear of all liens, claims, encumbrances and interests whatsoever, with such liens, claims, encumbrances and interests attaching to the net proceeds of the sale, and (iv) authorize the

Trustee to consummate the sale and to arrange for the mutual execution of all necessary documents, agreements and contracts in conjunction therewith.

IV. BACKGROUND

A. The Debtors and the Bankruptcy Cases

6. On May 1, 2013 (the "Petition Date"), the Debtors filed their respective voluntary petitions for relief under chapter 7 of Title 11 of the United States Code, 11 U.S.C.

§§ 101-1532 (as amended, the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware.

7. On May 1, 2013, the Office of the United States Trustee for the District of

Delaware appointed Charles A. Stanziale, Jr. as the Chapter 7 Trustee for the Debtors.

8. Prior to the Petition Date, the Debtors retained Lazard, Ltd., who commenced an extensive marketing campaign to locate a buyer for its professional photographic business

(the “Business”).

9. The Debtors own certain items currently located in numerous studios across the

United States, including, but not limited to, studio cameras, studio camera cables, studio camera lenses, passport cameras, passport printers, passport cables, passport background, portrait printers, printer cables, backgrounds and tubes; power packs and cables, computer CPUs, and camera room lights as well as certain production and technology systems and equipment, photographic equipment, information technology systems, software, inventory and supplies, fixtures,

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furniture and equipment located at three warehouses maintained by the Debtors as well as certain intangible assets (collectively, the “Assets2”).

10. The Trustee is in the process of retaining Logistics International LLC

(“Logistics”) as a professional logistical company to assist the Chapter 7 Trustee in retrieving, transporting and safeguarding the Assets so that he may conduct an organized sale process to maximize value for all creditors of the CPI Bankruptcy Estates.

B. The Debtors’ Debt Structure

11. Prior to the Petition Date, (a) CPI Corp. entered into a certain Credit

Agreement, dated as of August 30, 2010 (as amended, the “Credit Agreement”), with Bank of

America, N.A. (“Agent”), as administrative agent for the various financial institutions identified as “Lenders” therein (the “Lenders”), and the Lenders (collectively with the Agent, the “Lender Parties”), and (b) the Debtors entered into a certain Guaranty and Collateral

Agreement, dated as of August 30, 2010 (as amended, the “Guaranty/Security Agreement”), with Agent.

12. The Agent asserts that the Lender Parties hold valid, perfected, first-priority security interests in, and liens upon, the Assets.3

2 A complete description of the Assets is referenced on Exhibit B to the Purchase Agreement. 3 The Lender Parties and the Trustee have agreed that the Trustee shall have sixty (60) days after the filing of the Chapter 7 Trustee’s Motion For Entry Of (I) Order Authorizing The Employment Of Logistics International LLC As A Professional Logistical Company To Assist The Chapter 7 Trustee, Nunc Pro Tunc To May 29, 2013, Pursuant To 11 U.S.C. § 363, And (II) Interim And Final Orders Authorizing Chapter 7 Trustee To Obtain Funding Needed To Compensate Logistics International, LLC Pursuant To 11 U.S.C. §§ 105, 362, 363, And 364 And Rule 4001 Of The Federal Rules Of Bankruptcy Procedures to challenge the extent, validity and priority of the Lender Parties’ liens on the Assets.

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C. The Proposed Sale and the Assets

13. The Trustee (or the “Seller”) has engaged in lengthy discussions and negotiated the terms of the Purchase Agreement with a stalking horse bidder identified as Lifetouch.

14. The Trustee believes that the sale of the Assets to Lifetouch would be in the best interests of the creditors of the CPI Bankruptcy Estates.

15. The Assets to be purchased under the Purchase Agreement consist of the various items referenced on Exhibit B to the Purchase Agreement, and do not include certain assets of the CPI Bankruptcy Estates which are referred to as “Excluded Assets” on Exhibit B to the Purchase Agreement (the “Excluded Assets”).

16. The Purchase agreement is subject to several conditions, including entry of the

Bidding Procedures Order and the Sale Order, approval of the Trustee’s ability to enter into the

Purchase Agreement, and approval of the Break-Up Fee (defined below).

17. The Trustee, in the exercise of his business judgment, has determined that the offer presented by the Stalking Horse Bidder represents the highest and best offer for the

Assets. Pursuant to the Purchase Agreement, the Stalking Horse Bidder has, among other things4, agreed to purchase the Assets free and clear of any liens, claims and interests for a payment of $3.3 Million less the Purchase Price Adjustment as reflected on Exhibit C to the

Purchase Agreement. The Stalking Horse Bidder will tender a good faith deposit in the amount of $250,000 to Seller upon entry of the Bidding Procedures Order.

18. The Trustee proposes to sell the Assets to the Stalking Horse Bidder, subject to higher or better offers. The proposed sale will be on an "as is," "where is," basis.

4 The summary contained herein is qualified in its entirety by reference to the provisions of the Purchase Agreement. In the event of any inconsistencies between the provisions of the Purchase Agreement and the terms described herein, the terms of the Purchase Agreement shall govern. Unless otherwise defined in the summary set forth herein, capitalized terms shall have the meanings ascribed to them in the Purchase Agreement.

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Disclosures Under Local Rule 6004-1(b)(iv)

19. Pursuant to Local Rule 6004-1(b)(iv), the Trustee sets forth the following disclosures relating to the proposed sale to Lifetouch:

 Sale to an Insider: The Stalking Horse Bidder is not an Insider of the Debtors.

 Agreements with Management: No agreements with management have been entered into in connection with the sale.

 Private Sale/No Competitive Bidding: The sale is being conducted pursuant to the competitive bidding process detailed in the Motion.

 Closing and Other Deadlines: The consummation of the transactions contemplated by the Purchase Agreement, unless otherwise agreed to by the parties, and satisfaction or waiver of each of the other conditions to closing (other than the conditions with respect to action the parties will take at the Closing itself) shall take place at a closing (the “Closing”) to be held at the offices of the Trustee (McCarter & English, Four Gateway Center, 100 Mulberry Street, Newark, New Jersey 07102) (or at such other place as the Seller and Stalking Horse Bidder may designate) no later than July 15, 2013.

 Purchase Price: The purchase price offered by the Stalking Horse Bidder is $3.3 Million less the Purchase Price Adjustment as reflected on Exhibit C to the Purchase Agreement (the “Purchase Price”), subject to higher or better offers as more fully described in the Motion.

 Good Faith Deposit: Immediately upon entry of the Bidding Procedures Order Lifetouch shall tender a deposit in the amount of Two Hundred and Fifty Thousand Dollars ($250,000) to the Trustee be held in trust. The entire Deposit shall be returned to Lifetouch (i) if Lifetouch is outbid at the auction (the “Auction”) and the Trustee closes the transaction with an alternate purchaser, and (ii) as otherwise set forth in the Purchase Agreement. All other bidders will be required to post a cash earnest money deposit with the Trustee in an amount equal to no less than $250,000.

 Interim Arrangements with Proposed Stalking Horse Bidder: The Trustee has not entered into any interim arrangements with the Stalking Horse Bidder.

 Use of Proceeds: At Closing, the Trustee is authorized and directed to distribute the proceeds from the Sale to Bank of America, N.A., as administrative agent for certain lenders (the “Post-Petition Agent”), in the amount necessary to repay all amounts owing under the Promissory Note executed by the Trustee pursuant to the [Interim] [Final] Order Authorizing Chapter 7 Trustee To Obtain Funding Needed To Compensate Logistics International, LLC Pursuant To 11 U.S.C. §§105, 363, And 364 And Rule 4001

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Of The Federal Rules Of Bankruptcy Procedures (the “Funding Order”). Following Closing, and without further Court approval, the Trustee is authorized and directed to distribute the remaining proceeds from the Sale (a) first, for payment and/or reimbursement of those amounts set forth in the Stipulation Authorizing Surcharge, Pursuant To 11 U.S.C. § 506(C), For The Chapter 7 Trustee’s Commissions And Expenses And Compensation Of The Chapter 7 Trustee’s Professionals, and (b) second, to the Pre-Petition Agent (as defined in the Funding Order) in partial repayment of the Pre-Petition Debt (as defined in the Funding Order), unless (i) a party has timely commenced an adversary proceeding or other contested matter challenging the Pre-Petition Debt or the Pre-Petition Lender Parties’ liens on the Pre-Petition Collateral (each as defined in the Funding Order) in accordance with the Funding Order, and (ii) a final order is entered in such timely-commenced adversary proceeding or contested matter sustaining such challenge.

 Requested Findings as to Successor Liability: The purchaser shall have no successor liability.

 Sale Free and Clear: The Trustee is seeking to sell the Assets free and clear of liens and other interests pursuant to Section 363(f) of the Bankruptcy Code. The Stalking Horse Bidder is not willing to enter into the Purchase Agreement or close on the sale if it does not receive the Assets free and clear of all liens, claims, encumbrances and interests.

 Relief from Bankruptcy Rule 6004(h): As noted in the Motion, the Trustee is requesting relief from the 14-day stay imposed by Bankruptcy Rule 6004(h). Costs and liabilities associated with storage and security for the Assets continue to accrue with the passage of time. Absent relief from the stay provisions of Bankruptcy Rule 6004(h), the delay in Closing will result in increased costs to the CPI Bankruptcy Estates.

The Purchase Agreement

20. The Purchase Agreement sets forth additional terms and conditions under which the proposed sale transaction shall be consummated. A summary of the principal terms of the

Purchase Agreement not referenced above is as follows:5

5 The summary contained herein is qualified in its entirety by reference to provisions of the Purchase Agreement. In the event of any inconsistencies between the provisions of the Purchase Agreement and the terms herein, the terms of the Purchase Agreement shall govern. Unless otherwise defined in the summary contained in the accompanying text, capitalized terms shall have the meanings assigned to such terms in the Purchase Agreement.

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 Access. Prior to the Closing, Seller shall furnish the Stalking Horse Bidder and its representatives with all material, documents, records and other reasonably requested information pertaining to the Assets.

 Break-Up Fee: Pursuant to Section 11 of the Purchase Agreement, in the event that the Purchase Agreement is terminated (other than pursuant to Section 10(e) of the Purchase Agreement) Seller shall return the Deposit to the Stalking Horse Bidder. In the event the Purchase Agreement is terminated in accordance with Section 10(f) of the Purchase Agreement, then the Stalking Horse Bidder shall be entitled to immediate payment of the Break-Up Fee without further order of the Bankruptcy Court. As used in the Agreement, “Break-Up Fee” means $132,000. The Break-Up Fee shall constitute an administrative expense of the CPI Bankruptcy Estates of the kind specified in section 503(b) of the Bankruptcy Code.

21. The Stalking Horse Bidder, in making this offer, acknowledged and agreed that the sale of the Assets, pursuant to the terms of the Purchase Agreement, is subject to higher and better offers for the assets and this Court’s approval.

22. The Purchase Agreement includes customary representations and warranties by the Stalking Horse Bidder and Seller relating to the Assets.

23. In making its offer, the Stalking Horse Bidder, proceeded in reliance that the

Trustee would seek the Court’s approval of Break-Up Fee and in reasonable expectation that this Court would enter an order providing such relief.

24. The Trustee, in the exercise of his business judgment, believes that the Break-

Up Fee is a necessary inducement for the Stalking Horse Bidder and that such protections will both establish a “floor” for the liquidation of the Assets and ultimately encourage competitive bidding and realization of the highest value for these Assets. The offer of the Stalking Horse

Bidder allows the Trustee to immediately commence the sale process and allows him to remove the Assets from their numerous locations and to avoid future claims against the CPI

Bankruptcy Estates.

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25. The Trustee proposes that if overbidding occurs at the Auction, the Stalking

Horse Bidder shall have the right, but not the obligation, to participate in overbidding subject only to the limitations provided by the bidding and auction procedures. However, to compensate the Stalking Horse Bidder for allowing the auction process to commence and serving as a “stalking horse,” thereby subjecting its bid to higher or otherwise better offers, the

Trustee seeks authority to pay to the Stalking Horse Bidder the Break-Up Fee in the event (a) the Trustee consummates a sale of the Assets to a Successful Bidder (defined herein) who is not the Stalking Horse Bidder, and (b) the Stalking Horse Bidder is not in default under the

Purchase Agreement.

26. The Trustee believes that approval of the Break-Up Fee will enable the Trustee to assure a sale of the Assets to a contractually committed bidder at a price the Trustee believes is fair and reasonable, while providing the Trustee with the opportunity to obtain even greater benefits for the Debtors’ creditors through an auction process. Thus, approval of the Break-Up

Fee may lead to an increase in the amount of proceeds of the sale and the establishment of a baseline against which higher or otherwise better offers will be measured. If an Auction ensues, the Break-Up Fee is reasonably calculated to encourage higher or otherwise better bids.

If no Auction ensues, the Break-Up Fee will not be paid.

27. Moreover, the amount of the Break-Up Fee is reasonably calculated to compensate the Stalking Horse Bidder (a) for the time expended performing due diligence, (b) for lost opportunity in being bound to a transaction that could be topped in a competitive auction process, and (c) for serving as a “stalking horse” to encourage the submission of other bids.

28. Accordingly, the Trustee submits that the Break-Up Fee (a) represents a sound exercise of his business judgment, (b) is the product of extensive arm’s-length negotiations

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with the Stalking Horse Bidder, (c) is fair and reasonable, given the benefits to the Debtors’ creditors of having a definitive Purchase Agreement weighed against the risk to the Stalking

Horse Bidder that a third-party’s competing offer may ultimately be accepted, and (d) is necessary to maximize the proceeds of the sale of the Assets.

Avoidance and Successor Liability

29. The parties intend that the transfer of the Assets (i) will not constitute avoidable transfers under applicable bankruptcy or non-bankruptcy law; and (ii) will not subject the

Stalking Horse Bidder or a Successful Bidder to any liability with respect to the operation of the Debtors’ Business prior to the closing by reason of such transfer under the laws of the

United States, any state, territory, or possession thereof, of the District of Columbia, based in whole or in part, directly or indirectly, on any theory of law or equity, including, without limitation, any laws affecting successor, transferee or vicarious liability.

The Bidding and Auction Procedures

30. The proposed sale of the Assets contemplated by the Purchase Agreement is subject to a competitive auction process that will assure that the maximum value for the Assets will be realized for the CPI Bankruptcy Estates and their creditors.

31. Pursuant to the procedures described below, among other things, within two (2) business days of entry of the Bidding Procedures Order, the Trustee will serve a notice referencing the bid deadline, the auction date and the Sale Hearing (the “Notice of Bid

Deadline, Auction, and Sale Hearing”) (which is annexed to the Bidding Procedures Order as

Exhibit 1) together with a copy of the Bidding Procedures (which is annexed to the Notice of

Bid Deadline, Auction and Sale Hearing as Exhibit A) on (collectively, the “Auction Notice

Parties”) (i) the Office of the United States Trustee for the District of Delaware; (ii) Lifetouch or its counsel; (iii) counsel for the Agent; (iv) any party having expressed an interest in the

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Assets during the pendency of the bankruptcy proceedings; (v) parties who have requested notice in the Debtors’ cases pursuant to Bankruptcy Rule 2002; (vi) all parties who are known to possess or assert a lien, claim, encumbrance or interest in or upon any of the Assets; (vii) all applicable federal, state and local regulatory or taxing authorities or recording offices which are known by the Trustee to have an interest in the relief requested in the Motion; and (viii) all known creditors in the sixteen debtor cases.

32. The Notice of Bid Deadline, Auction, and Sale Hearing with the attached

Bidding Procedures will give the Auction Notice Parties the ability to submit higher or better offers. In addition, the Auction Notice Parties will receive reasonable notice of the Sale

Hearing to consider the proposed sale and have an opportunity to object thereto.

33. Pursuant to Bankruptcy Rule 2002(l), the Trustee proposes to publish a shortened summary version of Notice of Bid Deadline, Auction, and Sale Hearing (the

“Publication Notice”), in the national edition of The Wall Street Journal or any other national newspaper, publication or website the Trustee may choose to advertise, in his sole discretion, as soon as reasonably practicable after the entry of the Bidding Procedures Order.

34. The Trustee submits that the form and manner of the Publication Notice proposed herein constitutes good and sufficient notice of the Auction, the sale of the Assets, the Bidding Procedures, and the Sale Hearing because the Publication Notice is reasonably calculated to provide timely and adequate notice to the known and unknown creditors in the sixteen debtor cases, all parties that possess or allege a secured interest in any of the assets, those persons and entities that are likely to have an interest in submitting a Competing Bid, and to any interested parties who are unknown to the Trustee and the Trustee’s professionals.

Therefore, the Trustee submits that no other or further notice of the Auction, the sale of the

Assets, the Bidding Procedures, and the Sale Hearing need be given.

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35. The Trustee reserves the right, in his sole discretion, to amend the Bidding

Procedures up to the time of the Auction.

36. The Preliminary Hearing to seek the entry of an order approving the Bidding

Procedures is intended to, among other things, approve the Trustee’s solicitation of qualified offers for the Assets, establish the form and manner of notice of the proposed sale and establish the Bidding Procedures by which parties may participate in the Auction. The proposed Bidding

Procedures provide, in relevant part, as follows:

Bidding Process: The Trustee will solicit higher and better offers from third- party bidders (each a “Potential Bidder”) for the Assets. The Trustee shall have the sole right (i) to determine whether a Potential Bidder, in addition to the Stalking Horse Bidder, is a Qualified Bidder (defined below), (ii) to coordinate the efforts of Qualified Bidders in conducting their respective due diligence reviews, (iii) to receive offers from Qualified Bidders, (iv) to notice all parties with respect to the Bidding and Auction Procedures, and (v) to evaluate and negotiate any offers made to purchase the Assets (collectively, the “Bidding Process”). Any person who wishes to participate in the Bidding Process must be deemed a Qualified Bidder by the Trustee. Neither the Trustee nor his professionals shall be obligated to furnish any information of any kind whatsoever to any person or entity that is not a Qualified Bidder. Bid Requirements: In order for a Potential Bidder to participate in the Auction its bid (unless such requirement is waived by the Trustee) must include the following (the “Bid Requirements”):

 A cash purchase price in an amount not less than $3,500,000;

 A representation that (i) the Potential Bidder agrees to serve as the Back- Up Bidder in the event that its bid is the second highest or otherwise best Qualified Bid, (ii) the Potential Bidder is not an insider of the Debtors or provides a disclosure as to its relationship with the Debtors; and (iii) the Potential Bidder will complete all its due diligence by the Bid Deadline;

 An executed asset purchase agreement, subject to substantially the same or more favorable terms and conditions as are contained in, and marked to show changes from, the Purchase Agreement (as reasonably determined by the Trustee), except that such purchase and sale agreement shall (a) provide for a purchase price in cash of at least $3,500,000, (b) exclude any contingencies, conditions precedent or other terms excusing the performance of the Potential Bidder based upon it completing due diligence or obtaining financing for the sale, and including only such representations and warranties as may be approved 13 ME1 15730859v.4 Case 13-11158-BLS Doc 39 Filed 05/30/13 Page 14 of 32

by the Trustee, which approval shall be granted or denied in Seller’s sole and absolute discretion (provided, however, that under no circumstances shall Trustee and/or the Debtors have any liability for any breach of any representation and warranty; the Trustee is selling its right, title and interest in the Assets described in the Purchase Agreement ‘AS IS’ and any Potential Bidder should conduct whatever diligence is necessary to satisfy such Potential Bidder that the representations and warranties are true and correct), (c) exclude any provision for any break-up fee, termination fee, expense reimbursement, or similar type of payment, and (d) provide that the Potential Bidder will be solely responsible for any broker fee;

 A good faith deposit in the amount of $250,000 that must be wired to an account maintained and specified by the Trustee by the Bid Deadline (the “Good Faith Deposit”);

 provide evidence, in the form of bank or broker statements of the Potential Bidder, the most current audited and latest unaudited financial statements and financial references of the Potential Bidder, or other evidence satisfactory to the Trustee that the Potential Bidder is “financially qualified” to proceed to closing on an all-cash basis no later than July 15, 2013; and

 The identity of each entity that will be participating in such bid or otherwise participating in connection with such bid, including any proposed designee(s), and the complete terms of such participation.

The Trustee shall have the sole discretion to determine whether a bid received from a Potential Bidder shall be deemed a Qualified Bid. A bid received from a Potential Bidder that satisfies all of the Bid Requirements shall be a “Qualified Bid” and each Potential Bidder submitting a Qualified Bid shall be deemed a “Qualified Bidder.”

The Trustee reserves the right to determine the value of any Qualified Bid, which Qualified Bid constitutes the highest, best or otherwise financially superior offer and which Qualified Bid constitutes the second highest, best or otherwise financially superior offer.

Bid Deadline: To be considered a timely bid, a Qualified Bidder shall deliver a bid that satisfies all of the Bid Requirements, on or before June 21, 2013, at 11:30 a.m. (prevailing Eastern Time) (the “Bid Deadline”) to: McCarter & English, LLP, counsel to the Trustee, Four Gateway Center, 100 Mulberry Street, Newark, New Jersey 07102 (attn: Jeffrey Testa, Esq.).

Stalking Horse Bidder is a Qualified Bidder/Purchase Agreement is a Qualified Bid: The Stalking Horse Bidder is a Qualified Bidder, and the Purchase Agreement is a Qualified Bid.

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“As Is, Where Is: The sale of the Assets shall be on an “as is, where is” basis and without representations or warranties of any kind, nature, or description by the Trustee or his representatives except for the express representations contained in the Purchase Agreement. Each Qualified Bidder shall be deemed to acknowledge and represent that it has had an opportunity to conduct any and all due diligence regarding the assets prior to making its offer, that it has relied solely upon its own independent review, investigation and/or inspection of any documents and/or the Assets in making its bid, and that it did not rely upon any written or oral statements, representations, promises, warranties or guaranties whatsoever, whether express, implied, by operation of law or otherwise, regarding the Assets, or the completeness of any information provided in connection therewith, or the Auction, except as expressly stated in the Purchase Agreement.

Assets to be Sold Free of Any And All Claims: All of the Trustee’s right, title and interest in and to the Assets shall be sold free and clear of all claims, which claims shall attach to the proceeds of the sale.

Auction: If more than one Qualified Bid has been received for the Assets (i.e., at least one Qualified Bid in addition to the Purchase Agreement), the Trustee shall conduct an open Auction on the record. The Auction shall commence on June 24, 2013, at 11:00 a.m. (prevailing Eastern Time) at the offices of McCarter & English, LLP in Newark, New Jersey. If no Qualified Bid (other than the bid of the Stalking Horse Bidder) is received by the Trustee prior to the expiration of the Bid Deadline, the Trustee shall not hold an Auction, and shall proceed with the hearing to approve the sale of the Assets to the Stalking Horse Bidder. For avoidance of doubt, if no Qualified Bid (other than the bid of the Stalking Horse Bidder) is received, no party other than the Stalking Horse Bidder shall be given an opportunity to present at the Sale Hearing or otherwise, any bid for the Assets, and the Seller shall proceed to seek approval to close the sale to the Stalking Horse Bidder pursuant to the terms of the Purchase Agreement.

The Auction shall be governed by the following procedures:

 only a Qualified Bidder that has submitted a Qualified Bid is eligible to participate at the Auction. During the Auction, bidding shall begin initially with the highest Qualified Bid and subsequently continue in minimum increments of at least $50,000.

 only Qualified Bidders shall be entitled to make any subsequent bids at the Auction and only Qualified Bidders and their respective authorized representatives are entitled to attend/and or participate at the Auction, except that the Lender Parties, and their respective representatives, and creditors are entitled to attend the Auction;

 each Qualified Bidder shall appear in person at the Auction or via telephonic conference or through a duly authorized representative who appears in person at the Auction;

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 each of the Qualified Bidders may make additional modifications to their respective asset purchase agreements at the Auction, but only to the extent that such modifications satisfy the Bid Requirements and do not disqualify the Qualified Bidders;

 the Auction will be conducted openly and each Qualified Bidder will be informed of the terms of the previous bids;

 each Qualified Bidder shall confirm at the Auction that it has not engaged in any collusion with respect to the bidding or the proposed sale of the Assets; and

 the bidding at the Auction will be transcribed.

Upon conclusion of the bidding, the Auction shall be closed, and the Trustee shall, in consultation with the Agent, (a) immediately review each Qualified Bid on the basis of financial and contractual terms and the factors relevant to the sale process, including those factors affecting the speed and certainty of consummating the proposed sale of the Assets, and (b) as soon as reasonably practicable thereafter (i) identify, in his discretion and in consultation with the Agent, the highest, best or otherwise financially superior offer for the Assets (the “Successful Bid”) and the entity or entities submitting such Successful Bid (the “Successful Bidder”), which highest, best or otherwise financially superior offer will provide the greatest amount of net value to the Trustee and the Debtors’ creditors, (ii) identify, in his discretion and in consultation with the Agent, the second highest, best or otherwise financially superior offer for the Assets (the “Back-Up Bid”) and the entity or entities submitting such Back-Up Bid (the “Back-Up Bidder”), and (iii) advise the Qualified Bidders of the identities of the Successful Bidder and the Back-Up Bidder.

Acceptance of Qualified Bids: The Trustee shall sell the Assets to the Successful Bidder upon the approval of the Successful Bid by the Court after a hearing (the “Sale Hearing”). The Trustee’s presentation of a particular Qualified Bid to the Court for approval does not constitute the Trustee’s acceptance of the bid. While the Successful Bid is binding on the Qualified Bidder who submitted such bid, the Trustee will be deemed to have accepted a bid only when the acceptance of the Successful Bid has been approved by the Court at the Sale Hearing. All interested parties reserve their right to object to the Trustee’s selection of the Successful Bidder and the Successful Bid; provided however that unsuccessful bidders shall not have the right to object to the Trustee’s selection of the Successful Bidder and the Successful Bid or the Back-up Bidder and the Back-up Bid.

Sale Hearing: A final hearing to consider approval of the Successful Bidder and sale will take place before the Honorable Brendan L. Shannon, United States Bankruptcy Judge, in the Bankruptcy Court, 824 N. Market Street, 6th Floor, Courtroom #1, Wilmington, Delaware 19801, on June 26, 2013, at 9:30

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a.m. (prevailing Eastern Time), or as such other time thereafter as the court directs. At or before the Sale Hearing, the Sale Hearing may be adjourned or rescheduled without prior notice. No party will be permitted to bid at the Sale Hearing.

Return of Good Faith Deposits: The Good Faith Deposits shall be held in a segregated escrow account and shall be returned to the depositing party within five (5) business days following the Sale Hearing, unless the depositing party is the Successful Bidder or the Back-up Bidder. The Good Faith Deposit of the Successful Bidder shall be applied to the purchase price. If the Successful Bidder fails to proceed to Closing of the sale, the Good Faith Deposit of the Successful Bidder shall become property of the CPI Bankruptcy Estates The Good Faith Deposit of the Back-up Bidder shall be returned to the Back-up Bidder within five (5) business days following the Closing of a sale to the Successful Bidder. In the event of a sale to the Back-up Bidder, the Good Faith Deposit of the Back-up Bidder shall be applied to the purchase price. In the event the Successful Bidder and the Back-up Bidder fail to proceed to Closing of the sale, the Good Faith Deposit of the Back-up Bidder shall become property of the CPI Bankruptcy Estates.

Closing of the Sale: Closing to occur at a time mutually agreeable to the Trustee and the Successful Bidder, but no later than July 15, 2013, unless mutually agreed upon by the Trustee and the Successful Bidder. In the event that the sale fails to close during such time period, then the Seller shall be authorized, but not required, to consummate the sale with the Back-Up Bidder.

Modifications: The Trustee reserves the right to modify, adjourn, or extend any of the deadlines established herein in consultation with the Agent. Notice of any such modification, adjournment, or extension shall be provided only to the Qualified Bidders and the Agent. The Trustee also reserves the right to modify any of the Bidding Procedures in any manner that, in his judgment, will better promote the goals of the Auction, so long as such modifications are not materially inconsistent with any of the provisions of the Bidding Procedures outlined herein or any Bankruptcy Court order, including the Bidding Procedures Order, and are made after consultation with the Agent.

31. The Trustee submits that the Bidding Procedures are fair and reasonable, and through the vehicle of the Auction, provide the best means of ensuring that the Trustee obtains the highest and best offer for the Assets. As such, the sale of the Assets pursuant to the

Bidding Procedures will be in the best interests of the Debtors’ creditors.

32. The Bidding Procedures provide that any Qualified Bidder interested in submitting a competing bid shall be afforded reasonable due diligence opportunities prior to

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the Auction in an effort to compose a competing bid (a “Competing Bid”). Further, the

Bidding Procedures contain a time frame that permits a prospective purchaser to review its

Competing Bid and, if interested, formulate a revised, increased bid. Additionally, such a time frame will allow the Trustee to consider and evaluate any Competing Bid to ensure that such a

Competing Bid is a Qualified Bid and that the potential bidder satisfies the requirements for participation in the Auction.

The Sale Hearing

37. The Trustee respectfully requests that the Sale Hearing take place on June 26,

2013, at 9:30 a.m. (prevailing Eastern Time). The Trustee submits that the fixing of such date and time will facilitate the sale process and enable the Trustee to provide interested parties with sufficient Notice of the Auction, the Bidding and Auction Procedures, the sale of the Assets and the Sale Hearing, while at the same time, permitting the Trustee to achieve his goals of maximizing the value of the assets and consummating the bid of the Successful Bidder as expeditiously as practicable.

Additional Provisions of the Proposed Sale Order

38. As additional aid to the Court, the Trustee highlights these additional provisions provided in the proposed Sale Order:

(a) Relief From Bankruptcy Rule 6004(h): The proposed form of Sale Order contains a waiver of the stay imposed by Bankruptcy Rule 6004(h). The Trustee respectfully submits that such relief is appropriate under the circumstances.

(b) Successor Liability: The proposed form of Sale Order contains findings and provisions limiting the purchaser’s successor liability. The Trustee believes that a finding that the sale can be made free and clear of successor liability complies with applicable principles of sales free and clear of successor liability claims pursuant to section 363(f) of the Bankruptcy Code and applicable non-bankruptcy law.

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V. BASIS FOR RELIEF REQUESTED

A. There is Sound Business Justification for the Sale of the Assets to Lifetouch

39. The Trustee submits that ample authority exists for the approval of the sale of the Assets to Lifetouch pursuant to the Purchase Agreement. Section 363(b) of the Bankruptcy

Code permits a trustee to sell assets outside of the ordinary course of business. Section 363(b) of the Bankruptcy Code provides, in pertinent part, that “[t]he trustee, after notice and a hearing, may use, sell or lease, other than in the ordinary course of business, property of the estate.” 11 U.S.C. § 363(b). Section 105(a) of the Bankruptcy Code further provides that

“[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” 11 U.S.C. § 105(a). In pertinent part, Bankruptcy Rule 6004 states that “[a]ll sales not in the ordinary course of business may be by private sale or by public auction.” Fed. R. Bankr. P. 6004(f)(1).

40. Courts interpreting section 363(b)(1) of the Bankruptcy Code have held that transactions should be approved when they are supported by the sound business judgment of the trustee. See, e.g., In re Abbotts Dairies of Pa., Inc., 788 F.2d 143, 145-47 (3d Cir. 1986)

(implicitly adopting the articulated business justification and good faith tests of Committee of

Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1070 (2d Cir. 1983));

In re Delaware & Hudson R.R. Co., 124 B.R. 169, 176 (D. Del. 1991) (concluding that the

Third Circuit had adopted a “sound business purpose” test in Abbotts Dairies); Dai-Ichi

Kangyo Bank, Ltd. v. Montgomery Ward Holding Corp. (In re Montgomery Ward Holding

Corp.), 242 B.R. 147, 153 (D. Del. 1999) (“In determining whether to authorize the use, sale or lease of property of the estate . . . courts require the debtor to show that a sound business purpose justifies such actions”).

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41. There is sound business justification for the Trustee’s decision to sell the Assets to Lifetouch. Lifetouch, as the proposed purchaser of the Assets, has a more vested interest in the Assets than any other potential purchaser because Lifetouch has represented to the Trustee that it has extensive experience in the Debtors’ industry and is prepared to close the transaction. In addition, the Trustee, in his business judgment, believes an Auction of the

Assets on a piece-meal basis would not obtain the same recovery for the CPI Bankruptcy

Estates or their creditors. Thus, the Trustee has negotiated with Lifetouch the terms of the

Purchase Agreement, which terms are superior to those the Trustee anticipates would be obtained from a third-party buyer.

42. The bidding procedures provide that in order to be considered a qualified bid, any third-party bidder must bid Three Million Five Hundred Thousand Dollars ($3,500,000).

43. As a result of the Lifetouch’s interest in the Assets, and Lifetouch’s willingness to provide significant consideration based on its interest, the Trustee believes that the CPI

Bankruptcy Estates would benefit from the approval of the sale of the Assets to Lifetouch. In addition, the Purchase Agreement provides strong assurance that Lifetouch is motivated to close the contemplated transaction in a timely manner.

B. The Sale of the Assets Should be Approved Free and Clear of All Encumbrances

44. Section 363(f) of the Bankruptcy Code permits a trustee to sell property free and clear of another party’s interest in the property if:

(1) applicable nonbankruptcy law permits sale of such property free and clear of such interest;

(2) such entity consents;

(3) such interest is a lien and the price at which such property is sold is greater than the aggregate value of all liens on such property;

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(4) such interest is in bona fide dispute; or

(5) such entity could be compelled in a legal or equitable proceeding to accept a monetary satisfaction of its interest.

11 U.S.C. § 363(f). Because section 363(f) of the Bankruptcy Code is drafted in the disjunctive, satisfaction of any one of its five requirements will be sufficient to permit the sale of the Assets free and clear of all liens, claims and encumbrances that may be asserted herein.

See Citicorp Homeowners Servs., Inc. v. Elliot (In re Elliot), 94 B.R. 343, 345 (E.D. Pa. 1988)

(sale “free and clear” may be approved provided the requirements of at least one subsection are met); see also In re Dundee Equity Corp., 1992 Bankr. LEXIS 436, * 12 (Bankr. S.D.N.Y.

Mar. 6, 1992) (a “sale free of the interest concerned may occur if any one of the conditions of §

363(f) have been met”).

45. At the Sale Hearing the Trustee will demonstrate that, to the extent any valid lienholders exist, one or more of the tests of section 363(f) will be satisfied with respect to the transfer of the Assets pursuant to the Purchase Agreement (or by the terms of an asset purchase agreement submitted by the Successful Bidder). In particular, any valid lienholders that exist will be adequately protected by having their liens, if any, in each instance against the Debtors or its estate, attach to any net cash proceeds of the Assets, after costs of sale, in the same order of priority, and with the same validity, force and effect that such creditor had prior to the sale, subject to any claims and defenses that the Debtors and the CPI Bankruptcy Estates may possess with respect thereto. Accordingly, section 363(f) authorizes the transfer and conveyance of the Assets free and clear of any such claims, interests, encumbrances and liens.

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46. The Trustee proposes that absence of an objection to the relief sought in this

Motion be deemed consent within the meaning of section 363(f)(2) of the Bankruptcy Code.

See Hargrave v. Township of Pemberton (In re Tabone, Inc.), 175 B.R. 855, 858 (Bankr. D.

N.J. 1994) (by not objecting to the sale motion, the secured creditor was deemed to consent under section 363(f)(2) of the Bankruptcy Code); see also Pelican Homestead & Sav. A’ssn v.

Wooten (In re Gabel), 61 B.R. 661, 667 (Bankr. W.D. La. 1985) (same). Accordingly, the

Trustee requests that the sale of the Assets to Lifetouch be free and clear of all liens, claims, and encumbrances, with such liens, claims, and encumbrances, if any, attaching to the proceeds of the sale of the Assets.

C. Lifetouch is a Good Faith Buyer Within the Meaning of Section 363(m) of the Bankruptcy Code

47. Section 363(m) of the Bankruptcy Code provides that a purchaser of property of a debtor’s estate is protected from the effects of reversal on appeal of authorization to the debtor to sell such property as long as the purchaser acted in good faith and the appellant failed to obtain a stay of the sale order.6 Section 363(m) of the Bankruptcy Code “affords finality to judgments by protecting good faith purchasers, the innocent third parties who rely on the finality of bankruptcy judgments in making their offers and bids.” In re Chateaugay Corp.,

1993 U.S. Dist. LEXIS 6130, * 9 (S.D.N.Y. May 10, 1993) (internal quotation marks and citation omitted); see also Allstate Ins. Co. v. Hughes, 174 B.R. 884, 888 (S.D.N.Y. 1994)

(“Section 363(m) . . . provides that good transfers of property will not be affected by the

6 Section 363(m) of the Bankruptcy Code provides that: The reversal or modification on appeal of an authorization under subsection (b) or subsection (c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease was stayed pending appeal. 11 U.S.C. § 363(m).

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reversal or modification on appeal of an unstayed order, whether or not the transferee knew of the pendency of the appeal”).

48. The Bankruptcy Code does not define “good faith,” but courts have adopted various definitions. A good faith purchaser is “one who buys property . . . for value, without knowledge of adverse claims.” In re Mark Bell Furniture Warehouse, Inc., 992 F.2d 7, 8 (1st

Cir. 1993). The requirement that a purchaser act in good faith speaks to the integrity of the purchaser’s conduct in the course of the sale proceeding. See In re Abbotts Dairies, Inc., 788

F.2d 143, 147 (3d Cir. 1986).

49. The terms of the Purchase Agreement were negotiated at arm’s-length, without collusion or fraud, in good faith and all of the terms of the Purchase Agreement have been disclosed. Lifetouch and the Trustee are not related companies and do not share corporate officers or directors. The terms of the Purchase Agreement do not personally benefit the

Trustee. These negotiations have involved substantial time and energy by the parties and their professionals. Accordingly, the Trustee requests that the Court determine that Lifetouch has acted in good faith, has bought for value and is entitled to the protections of a good faith purchaser provided by section 363(m) of the Bankruptcy Code. See In re United Press Int’l,

Inc., Case No. 91-B-13955, 1992 Bankr. LEXIS 842, ** 3, 10 (Bankr. S.DN.Y. May 18, 1992).

D. The Break-Up Fee Should be Approved

50. The Stalking Horse Bidder proceeded in reliance that the Trustee would seek a

Break-Up Fee and in reasonable expectation that this Court would enter an order providing such relief. The Trustee submits that the Break-Up Fee is a normal and oftentimes necessary component of sales outside the ordinary course of business under section 363 of the

Bankruptcy Code. In particular, such protections encourage a potential purchaser to invest the requisite time, money and effort to conduct due diligence and sale negotiations with a debtor

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despite the inherent risks and uncertainties of the bankruptcy sale process. See, e.g., In re

Comdisco, Inc., Case No. 01-24795 (Bankr. N.D. Ill. Aug. 9, 2002) (approving a termination fee as, inter alia, an actual and necessary cost and expense of preserving the debtor’s estate, of substantial benefit to the debtor’s estate and a necessary inducement for, and a condition to, the proposed purchaser’s entry into the purchase agreement); Official Comm. of Subordinated

Bondholders v. Integrated Res., Inc. (In re Integrated Res., Inc.), 147 B.R. 650, 660 (S.D.N.Y.

1992) (noting that fees may “‘be legitimately necessary to convince a ‘white knight’ to enter the bidding by providing some form of compensation for the risks it is undertaking’”) (internal citations omitted); In re Hupp Indus., 140 B.R. 191, 194 (Bankr. N.D. Ohio 1997) (without any reimbursement, “bidders would be reluctant to make an initial bid for fear that their first bid will be shopped around for a higher bid from another bidder who would capitalize on the initial bidder’s. . . due diligence”); In re Marrose Corp., Nos. 89 B 12171 to 89 B 12179, 1992 WL

33848, at *5 (Bankr. S.D.N.Y. 1992) (stating that, “[a]greements to provide breakup fees or reimbursement of fees and expenses are meant to compensate the potential acquirer who serves as a catalyst or ‘stalking horse’ which attracts more favorable offers”); Samjens Partners I v.

Burlington Indus., Inc., 663 F. Supp. 614, 624 (S.D.N.Y. 1987) (concluding that bidding incentives may be “legitimately necessary to convince a white knight to enter the bidding by providing some form of compensation for the risks it is undertaking”).

51. Moreover, bid protections, similar to the Break-Up Fee sought to be approved by this Motion, have been approved in other bankruptcy cases in this Court. See, e.g., In re

Nortel Networks Inc., Case No. 09-10138 (Bankr. D. Del. Feb. 27, 2009) (approving $650,000 break-up fee in connection with $17.65 million sale, or 5.9%); In re Tallvgenicom, L.P., Case

No. 09-10266 (Bankr. D. Del. Feb. 19, 2009) (approving $2 million break-up fee in connection with $36.6275 million sale, or 5.5%); In re Carolina Fluid Handling Intermediate Holding

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Corp (f/k/a Fluid Routing Solutions Intermediate Holding Corp.), No. 09-10384 (Bankr. D.

Del. Feb. 19, 2009) (court approved expense reimbursement of up to $1.25 million in connection with a $11 million sale, or up to 11.4%); In re Archway Cookies LLC, Case No.

08-12323 (Bankr. D. Del. Dec. 3, 2008) (approving $750,000 break-up fee in connection with a $25 million sale, or 3.8%); In re Wickes Holdings, LLC, et al., Case No. 08-10212 (KJC)

(Bankr. D. Del. Feb. 19, 2008) (authorizing debtor to enter into stalking horse agreement providing break-up fee of up to 3%); In re Tweeter Home Entm’t Group, Inc., Ch. 11 Case No.

07-10787 (PJW) (Bankr. D. Del. July 13, 2007) (authorizing debtor to pay stalking horse’s termination fee); In re Radnor Holdings, Case No. 06-10110 (Bankr. D. Del. Sept. 22, 2006)

(aggregate fee and expense reimbursement of 3% permitted).

52. A proposed bidding incentive, such as the Break-Up Fee should be approved when it is in the best interests of the estate. In re S.N.A. Nut Co., 186 B.R. 98, 104 (Bankr.

N.D. Ill. 1995) (stating that the “test is whether the payment…is in the best interests of the estate); see also In re America West Airlines, Inc., 166 B.R. 908, 912 (Bankr. D. Ariz. 1994)

(same); In re Hupp Indus., Inc., 140 B.R. at 193-95 (same). Typically, this requires that the bidding incentive provide some benefit to the debtor’s estate. See Calpine Corp.,181 F.3d at

533 (holding even though bidding incentives are measured against a business judgment standard in non-bankruptcy transactions the administrative expense provisions of Bankruptcy

Code section 503(b) govern in the bankruptcy context).

53. In Calpine Corp, the Third Circuit found that whether break-up fees and expenses could be paid to Calpine Corp. (“Calpine”) as a “stalking horse” depended on whether such fees were necessary to preserve the value of the estate. O’Brien Envtl. Energy,

181 F.3d at 536. The court determined that Calpine’s right to break up fees and expenses depended on whether it provided a benefit to the debtor’s estate by promoting competitive

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bidding or researching the value of the assets at issue to increase the likelihood that the selling price reflected the true value of the company. Id. at 537. The Trustee submits that approval of this Break-Up Fee will create such a competitive bidding process.

54. First, the Break-Up Fee induced the Stalking Horse Bidder to submit a bid that will serve as a minimum floor bid upon which other bidders may rely. In addition, the Stalking

Horse Bidder’s rapid entry into the Purchase Agreement benefitted the estate by allowing the

Trustee to file this Motion prior to further depreciation in value to the Assets, which may be incurred by a period of extended inactivity. Therefore, the Stalking Horse Bidder has provided a material benefit to the CPI Bankruptcy Estates and their respective creditors by encouraging bidding and increasing the likelihood that the best possible price for the Assets will be received. See, e.g., In re Comdisco, Inc., No. 01 B 24795 (RB) (Bankr. N.D. Ill. Aug. 9, 2002)

(finding proposed termination fee to be of substantial benefit to the debtor’s estate); In re

Kmart Corp., No. 02 B 02474 (SPS) (Bankr. N.D. Ill. May 10, 2002); Integrated Res., 147

B.R. at 659 (noting that termination payment is an “important tool to encourage bidding and to maximize the value of the debtor’s assets”).

55. Second, the proposed Break-Up Fee is the result of an arm’s-length negotiated agreement between the Trustee and the Stalking Horse Bidder. There is no evidence or reason to believe that the relationship between the Trustee, the CPI Bankruptcy Estates and the

Stalking Horse Bidder has been tainted by self-dealing or manipulation.

56. Third, the Trustee believes that the proposed Break-Up Fee is fair and reasonably compensates the Stalking Horse Bidder for taking actions that will benefit the CPI

Bankruptcy Estates. The Break-Up Fee compensates the Stalking Horse Bidder for diligence and professional fees incurred in negotiating the terms of the Purchase Agreement on an expedited timeline.

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57. Fourth, the Trustee does not believe that the Break-Up Fee will have a chilling effect on the sale process. Rather, the Stalking Horse Bidder has increased the likelihood that the best possible price for the Assets will be received, by permitting other qualified bidders to rely on the diligence performed by the Stalking Horse Bidder, and moreover, by allowing

Qualified Bidders to utilize the Purchase Agreement as a platform for negotiations and modifications in the context of a competitive bidding process.

58. Finally, the Break-Up Fee will be paid only if, among other things, the Trustee enters into and closes a transaction with a bidder other than the Stalking Horse Bidder.

Accordingly, no Break-Up Fee will be paid unless a higher and better offer is achieved and consummated.

59. In sum, the Break-Up Fee is reasonable under the circumstances and will enable the Trustee to maximize the value for the Assets while limiting any chilling effect in the sale process. The Break-Up Fee not only compensates the estate for the risk that its assumes in foregoing a known, willing and able purchaser for a new potential acquirer, but also ensures that there is an increase in the net proceeds received by the estate, after deducting the Break-Up

Fee to be paid to the Stalking Horse Bidder in the event of a prevailing overbid.

E. The Notice of Bidding Procedures, Auction and Sale Hearing Are Appropriate

60. The Trustee believes that he will obtain the maximum recovery for creditors of the CPI Bankruptcy Estates if the Assets are sold through a well-advertised sale and Auction.

The Trustee has already taken significant steps to identify potential purchasers prior to the filing of this Motion and several interested parties have been provided access to the Business.

61. Under Bankruptcy Rules 2002(a) and (c), the Trustee is required to notify creditors of the proposed sale of the Debtors’ Assets, including a disclosure of the time and

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place of an auction, the terms and conditions of a sale, and the deadline for filing any objections. The Trustee submits that the notice procedures herein comply fully with

Bankruptcy Rule 2002 and are reasonably calculated to provide timely and adequate notice of the sale by Auction to the Debtors’ creditors and other interested parties, as well as to those parties who have expressed an interest, or may express an interest; in bidding on the Assets.

The proposed time frame between the filing of this Motion, the commencement of the bidding process and the Auction should provide interested purchasers ample time to participate in the

Auction, especially considering that before the Petition Date, a sale of the Assets was widely discussed in the marketplace, and multiple interested parties have already evaluated a potential transaction for the Assets.

G. The Assets Should Be Sold Free And Clear Of Successor Liability Claims

62. Lifetouch shall not be liable for any of the Debtors’ liabilities in connection with the proposed sale of the Assets as a successor to the Debtors’ business or otherwise.

Extensive case law exists providing that claims against a winning bidder are directed to the proceeds of a free and clear sale of property and may not be asserted against a buyer subsequently.

63. A number of courts have held that a buyer of a debtor’s assets pursuant to a section 363 sale takes free from successor liability resulting from pre-existing claims. In re

Trans World Airlines Inc., 322 F.3d 283 (3d Cir. 2003) (holding that the sale free and clear of the successor liability claims was properly authorized under § 363(f) because the claims were connected to or arose from the assets being sold.). See Ninth Ave. Remedial Group v. Allis-

Chalmers Corp., 195 B.R. 716, 732 (N.D. Ind. 1996) (stating that a bankruptcy court has the power to sell assets free and clear of any interest that could be brought against the bankruptcy estate during the bankruptcy); MacArthur Co. v. Johns-Manville Corp. (In re Johns-Manville

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Corp.), 837 F.2d 89, 93-94 (2d Cir. 1988) (channeling of claims to proceeds consistent with intent of sale free and clear under section 363(f) of the Bankruptcy Code); In re New England

Fish Co., 19 B.R. 323, 329 (Bankr. W.D. Wash. 1982) (transfer of property in free and clear sale included free and clear of Title VII employment discrimination and civil rights claims of debtor’s employees); In re Hoffman, 53 B.R. 874, 876 (Bankr. D.R.I. 1985) (transfer of liquor license free and clear of any interest permissible even though the estate had unpaid taxes);

American Living Sys. v. Bonapfel (In re All Am. Of Ashburn, Inc.), 56 B.R. 186, 190 (Bankr.

N.D. GA 1986) (product liability claims precluded on successor doctrine in a sale of assets free and clear); WBQ P’ship v. Virginia Dept. of Med. Assistance Servs. (In re WBQ P’ship), 189

B.R. 97, 104-05 (Bankr. E.D. Va. 1995) (Commonwealth of Virginia’s right to recapture depreciation is an “interest” as used in section 363(f)).

64. The purpose of an order purporting to authorize the transfer of assets free and clear of all “interests” would be frustrated if claimants could thereafter use the transfer as a basis to assert claims against the Successful Bidder arising from the Debtors’ pre-sale conduct.

Under section 363(f) of the Bankruptcy Code, the Successful Bidder is entitled to know that the Assets are not infected with latent claims that may be asserted against the Successful

Bidder after the proposed transaction is completed. Here, the request that the Successful

Bidder not be liable for successor liability is fair, reasonable and, in the Trustee’s business judgment, necessary.

65. Accordingly, consistent with the above-cited case law, including the seminal decision in this Circuit – namely, In re Trans World Airlines Inc., 322 F.3d 283 (3d Cir. 2003)

– the order approving the sale of the Assets should state that the Successful Bidder is not liable as a successor under any theory of successor liability for claims that may encumber or

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otherwise relate to the Assets, including, without limitation, any encumbrances arising under a theory of successor liability.

G. Relief Under Bankruptcy Rule 6004(h) is Appropriate

66. Bankruptcy Rule 6004(h) provides that an order authorizing the use, sale, or lease of property … is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise." Fed. R. Bankr. P. 6004(h). The Trustee requests that any order approving the Purchase Agreement (or the Bidding Procedures in connection with the proposed sale thereunder) be effective immediately by providing that the fourteen (14) day stays under

Bankruptcy Rule 6004(h) is waived.

67. The purpose of Bankruptcy Rule 6004(h) is to provide sufficient time for an objecting party to appeal before an order can be implemented. See Advisory Committee Notes to Fed. R. Bankr. P. 6004(h). Although Bankruptcy Rule 6004(h) and the Advisory Committee

Notes are silent as to when a court should "order otherwise" and eliminate or reduce the fourteen (14) day stay period, Collier suggests that the fourteen (14) day stay period should be eliminated to allow a sale or other transaction to close immediately "where there has been no objection to the procedure." 10 Lawrence P. King, Collier on Bankruptcy, 6004.10 (16th ed.

2010). Collier further provides that if an objection is filed and overruled, and the objecting party informs the court of its intent to appeal, the stay may be reduced to the amount of time actually necessary to seek a stay, unless the court determines that the need to proceed sooner outweighs the interests of the objecting party. Id.

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68. To maximize the value received for the Assets, the Trustee seeks to close the proposed sale as soon as possible after the Sale Hearing, subject to the terms of the Purchase

Agreement and the Successful Bidders' closing conditions (if any). Accordingly, the Trustee hereby requests that the Court waive the fourteen (14) day stay period under Bankruptcy Rule

6004(h) or, in the lesser alternative, if an objection to the sale is filed and overruled by the

Court, reduce the stay period to the minimum amount of time needed by the objecting party to seek a stay pending appeal.

H. No Prior Request

69. No prior request for the relief sought in this Motion has been made to this or any other court.

VI. NOTICE

70. This Motion and its accompanying exhibits has been provided to (i) the Office of the United States Trustee for the District of Delaware; (ii) counsel to the Debtors; (iii)

Lifetouch or its counsel; (iv) counsel for the Agent; and (v) parties who have requested notice in the sixteen debtor cases pursuant to Bankruptcy Rule 2002. In addition, this Motion has been posted on the CPI website, www.cpichapter7.com. Upon entry of an Order approving the bid procedures, the Notice of Bid Deadline, Auction and Sale Hearing (which is annexed to the Bidding Procedures Order as Exhibit 1) together with a copy of the Bidding Procedures will be provided to the following parties and will also be posted on the CPI website: (i) to all known creditors of the sixteen debtors; (ii) all parties who are known to possess or assert a lien, claim, encumbrance or interest in or upon any of the Assets; and (iii) all applicable federal, state and local regulatory or taxing authorities or recording offices which are known by the Trustee to have an interest in the relief requested in the Motion; and (iv) any party having expressed an interest in the Assets during the pendency of the bankruptcy proceedings.

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In light of the nature of the relief requested herein, the Trustee submits that no other or further notice is required.

VII. CONCLUSION

WHEREFORE, for the foregoing reasons, the Trustee respectfully requests that the

Bankruptcy Court (i) enter orders substantially in the forms attached hereto as Exhibit A and

Exhibit B: (a) granting the relief requested herein and (b) granting to the Trustee such other and further relief as the Bankruptcy Court may deem just and proper, and (ii) approving the

Purchase Agreement substantially in the form attached hereto as Exhibit C.

Dated: May 30, 2013 Respectfully submitted, Wilmington, Delaware McCARTER & ENGLISH, LLP

By: /s/ Katharine L. Mayer Katharine L. Mayer, Esq. (DE # 3758) Renaissance Centre 405 N. King Street, 8th Floor Wilmington, DE 19801 Telephone (302) 984-6300 Facsimile (302) 984-6399 [email protected]

- and -

Charles A. Stanziale, Jr., Esq. Jeffrey T. Testa, Esq. Four Gateway Center 100 Mulberry Street Newark, NJ 07102 Telephone: (973) 622-4444 Facsimile: (973) 624-7070 [email protected] [email protected]

Attorneys for the Chapter 7 Trustee

32 ME1 15730859v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 1 of 17

EXHIBIT A TO MOTION

Bidding Procedures Order

ME1 15730859v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 2 of 17

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: : : Chapter 7 CPI CORP., et al.,1 : (Jointly Administered) : Debtors. : Case No. 13-11158 (BLS) : : Re: Doc. No. ___

ORDER PURSUANT TO BANKRUPTCY CODE SECTIONS 105, 363 AND RULES 2002, 6004, 6006 AND 9014 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE (A) APPROVING THE STALKING HORSE ASSET PURCHASE AGREEMENT AND THE BREAK-UP FEE RELATING TO THE SALE OF CERTAIN OF THE ASSETS OF THE DEBTORS, SUBJECT TO HIGHER AND BETTER OFFERS, FREE AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES, (B) APPROVING THE NOTICE AND SALE PROCEDURES RELATED THERETO, AND (C) SETTING AUCTION AND HEARING DATES

Upon consideration of part 1 of the motion, (the “Motion”), filed by Charles A.

Stanziale, Jr., in his capacity as the Chapter 7 Trustee (the “Trustee”) of the above-referenced cases, pursuant to sections 105(a) and 363 of Title 11 of the United States Code, §§ 101-1532

(as amended, the “Bankruptcy Code”), Rules 2002, 6004 and 9014 of the Federal Rules of

Bankruptcy Procedure (the “Bankruptcy Rules”) and Rule 2001-1 and Rule 6004-1 of the

Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) for entry of an order (a) approving the stalking horse asset purchase agreement relating to the sale of certain of the assets of the

Debtors (the “Assets”) to Lifetouch Portrait Studios Inc., a Minnesota corporation (“Lifetouch”

1 The debtors in these cases are CPI Corp., Bella Pictures Holdings, LLC, Centrics Technology, Inc., Consumer Programs, Inc., Consumer Programs Partner, Inc., CPI Canadian Holdings, Inc., CPI Images, LLC, CPI International Holdings, Inc., CPI Prints Plus, Inc., CPI Research & Development, Inc., CPI Technology Corp., Image Source, Inc., Myportraits.com, Inc., Ridgedale Prints Plus, Inc., Sandy Realty Holdings, LLC, and Texas Portraits, L.P. However, for purposes of the sale contemplated herein, the term “Debtors” shall not include the following six debtors: : Consumer Programs Partner, Inc., CPI Prints Plus, Inc., CPI Research & Development, Inc., Myportraits.com, Inc., and Ridgedale Prints Plus, Inc. (collectively, the “Debtors”. The Debtors’ estates shall collectively be referred to as the ““CPI Bankruptcy Estates”.

ME1 15730859v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 3 of 17

or the “Stalking Horse Bidder”) (the “Purchase Agreement”) and the break-up fee, subject to higher and better offers, free and clear of liens, claims, encumbrances and interests, (b) approving the notice and sale procedures related thereto, and (c) setting an auction date and a hearing date to consider higher and better offers, if any, and to approve the sale; and the Court having heard the statements in support of the relief requested therein conducted and hearing on the relief sought in part 1 of the Motion (the “Sale Hearing”); and it appearing that the relief sought in the Motion is in the best interest of the Debtors, the creditors of the CPI Bankruptcy

Estates, and all other parties in interest; and it further appearing that the legal and factual bases set forth in the Motion and at the hearing establish just cause for the relief granted herein; and after due deliberation thereon and sufficient cause appearing therefore,

IT IS HEREBY FOUND AND DETERMINED THAT:2

A. Capitalized terms not otherwise defined herein shall have the meaning ascribed such terms in the Motion or the Purchase Agreement.

B. The Court has jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. § 1334. Consideration of the Motion and the relief requested therein constitutes a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). Venue of the Motion and this case is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

C. The basis for the relief sought in the Motion are sections 105(a) and 363(b), (f),

(m) and (n) of the Bankruptcy Code, Bankruptcy Rules 2002, 6004 and 9014, and Rule 6004-1 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy

Court for the District of Delaware.

2 Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as findings of fact when appropriate. See Fed. R. Bankr. P. 7052.

2 ME1 15730859v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 4 of 17

D. As evidenced by the Affidavit of Service previously filed with the Court, (i) due,

proper, timely, adequate and sufficient notice of the Motion, the Sale Hearing and the sale of

the Assets has been provided in accordance with Bankruptcy Rules 2002, 6004 and 9014, (ii)

such notice was good, sufficient and appropriate under the circumstances, and reasonably

calculated to reach and appraise all parties in interest about the sale of the Assets, the Sale

Hearing, and related relief, and (iii) no other or further notice of the Motion, the Sale Hearing

and the sale of the Assets need be provided.

E. The Trustee has demonstrated a compelling and sound business justification for

entering into the Purchase Agreement, and the consummation of the sale of the Assets to

Lifetouch is in the best interests of the Debtors, the creditors of the CPI Bankruptcy Estates,

and all other parties in interest. The Purchase Agreement is reasonable and appropriate in light

of the sale.

F. The Trustee has articulated good and sufficient reasons for approving the Notice of Bid Deadline, Auction, and Sale Hearing and the Bidding Procedures. The Notice of Bid

Deadline, Auction, and Sale Hearing and the Bidding Procedures are fair, reasonable and appropriate and represent the best method for maximizing the return for the Assets. The method of notice for the sale proposed in the Motion is good and sufficient notice of the Notice of Bid

Deadline, Auction, and Sale Hearing, the Bidding Procedures and the sale, and no other further notice is required.

G. The Stalking Horse Bidder has expended, and likely will continue to expend,

considerable time, money and energy pursuing the purchase of the Assets and has engaged in

extended arm’s-length and good faith negotiations.

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H. Recognizing this expenditure of time, energy and resources, the Trustee has agreed to pay the Break-Up Fee to the Stalking Horse Bidder under certain terms and conditions. The Break-Up Fee is (i) an actual and necessary cost and expense of preserving the

CPI Bankruptcy Estates within the meaning of Bankruptcy Code section 503(b); (ii) commensurate to the real and substantial benefit conferred upon the CPI Bankruptcy Estates by the Stalking Horse Bidder; (iii) reasonable and appropriate in light of the size and nature of the proposed sale, comparable transactions, the commitments that have been made, and the efforts that have been and will be expended by the Stalking Horse Bidder; and (iv) necessary to induce the Stalking Horse Bidder to continue to pursue the purchase of the Assets and to consummate the transaction documents.

I. The Trustee has demonstrated a sound business justification for authorizing the payment of the Break-Up Fee to the Stalking Horse Bidder. The Break-Up Fee has been negotiated at arm’s-length and is reasonable under the circumstances.

NOW THEREFORE, THE COURT HEREBY ORDERS THAT:

1. The relief requested in the Motion shall be, and hereby is, granted. All objections to the Motion or the relief provided herein that have not been withdrawn, waived or settled, shall be, and hereby are, overruled and denied on the merits with prejudice.

2. The Purchase Agreement is hereby approved, and Lifetouch is deemed the

Stalking Horse Bidder.

3. Any Potential Bidder must submit an executed asset purchase agreement, subject to substantially the same or more favorable terms and conditions as are contained in, and marked to show changes from, the Purchase Agreement, and subject to all other terms

4 ME1 15730859v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 6 of 17

referenced in the Bidding Procedures, including but not limited to the completion of all due diligence by the Bid Deadline.

4. The Break-Up Fee is approved, which shall not exceed four percent (4%) of the

Stalking Horse Bidder’s Purchase Price or $132,000, and shall be payable only if (a) the

Trustee consummates a sale of the Assets to a Successful Bidder other than the Stalking Horse

Bidder, and (b) the Stalking Horse Bidder is not in default under the Purchase Agreement.

5. The Notice of Bid Deadline, Auction, and Sale Hearing, a copy of which is attached to this Order as Exhibit 1, is hereby approved in all respects as a form of notice to be used in conjunction with the Bidding Procedures and sale.

6. The Bidding Procedures, a copy of which is annexed to Notice of Bid Deadline,

Auction, and Sale Hearing as Exhibit A, are hereby approved in all respects and shall govern all proceedings relating to the sale, the Auction and bids for the Assets.

7. If Qualified Bids are timely received, an Auction will be held on June 24, 2013, at 11:00 a.m. (prevailing Eastern Time) at the law offices of McCarter & English, LLP, 100

Mulberry Street, Four Gateway Center, Newark, New Jersey 07102. All Qualified Bidders shall have the option to participate telephonically in the Auction.

8. The hearing to consider the sale of the Assets shall take place before the

Honorable Kevin Gross, Chief Judge, in the Bankruptcy Court, 824 N. Market Street, 6th Floor,

Courtroom #3, Wilmington, Delaware 19801, on June 26, 2013, at 9:30 a.m. (prevailing

Eastern Time).

9. Within two (2) business days of entry of this Order, the Notice of Bid Deadline,

Auction, and Sale Hearing with the annexed Bidding Procedures shall be mailed to (i) the

Office of the United States Trustee for the District of Delaware; (ii) Lifetouch or its counsel;

5 ME1 15730859v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 7 of 17

(iii) counsel for the Agent; (iv) any party having expressed an interest in the Assets during the pendency of the bankruptcy proceedings; (v) parties who have requested notice in the Debtors cases pursuant to Bankruptcy Rule 2002; (vi) all parties who are known to possess or assert a lien, claim, encumbrance or interest in or upon any of the Assets; (vii) all applicable federal, state and local regulatory or taxing authorities or recording offices which are known by the

Trustee to have an interest in the relief requested in the Motion; and (viii) all known creditors in the sixteen debtor cases.

10. The Trustee shall have the authority, in his sole discretion, to amend the

Bidding Procedures, up to the time of the Auction, which in no event shall be inconsistent with the terms of the Purchase Agreement or any order of this Court, including this Bidding

Procedures Order. All actions that the Trustee is authorized or directed to take pursuant to this

Order and the Bidding Procedures shall be taken by the Trustee in consultation with the Agent.

11. As soon as practicable after entry of this Order, the Trustee shall advertise the sale of the Assets in the national edition of The Wall Street Journal or any other national newspaper, publication or website the Trustee in his discretion may choose.

12. Notwithstanding the possible applicability of Fed. R. Bankr. P. 6004(h), 7062,

9014 or otherwise, the terms and conditions of this Order shall be immediately effective and enforceable upon its entry, and no automatic stay of execution shall apply to this Order.

13. This Court shall retain jurisdiction to resolve any dispute arising from or relating to the sale of the Assets, the Break-Up Fee, the Bidding Procedures, the Sale Hearing, the Auction, the Successful Bid, the Back-Up Bid, and/or any other matter that in any way relates to the foregoing.

6 ME1 15730859v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 8 of 17

Dated: ______, 2013 Wilmington, Delaware

______THE HONORABLE BRENDAN LINEHAN SHANNON UNITED STATES BANKRUPTCY JUDGE

7 ME1 15730859v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 9 of 17

EXHIBIT 1 TO BIDDING PROCEDURES ORDER

Notice of Bid Deadline, Auction, and Sale Hearing

ME1 15730859v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 10 of 17

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: : : Chapter 7 CPI CORP., et al.,1 : (Jointly Administered) : Debtors. : Case No. 13-11158 (BLS) : : Related Docket Nos. ___ & ___ : : Bid Deadline: June 21, 2013, at 11:30 a.m. (ET) : Auction: June 24, 2013, at 11:00 a.m. (ET) : Sale Hearing: June 26, 2013, at 9:30 a.m. (ET)

NOTICE OF BID DEADLINE, AUCTION AND SALE HEARING FOR THE APPROVAL OF THE SALE OF CERTAIN OF THE ASSETS OF THE DEBTORS

PLEASE TAKE NOTICE THAT:

1. Introduction. On ______, 2013, the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), upon the motion (the “Motion”) [D.I. __] of Charles A. Stanziale, Jr., solely in his capacity as the duly appointed Chapter 7 Trustee (“Trustee”), of the Debtors (defined herein), entered an order (the “Bidding Procedures Order”) [D.I. __]: (a) approving the bidding procedures and break-up fee (the “Bidding Procedures”) with respect to the sale (the “Sale”) of certain of the assets of the Debtors (the “Assets2”); (b) scheduling an auction (the “Auction”) for the Assets and a hearing approving the sale of the Assets (the “Sale Hearing”). A copy of the Bidding Procedures is annexed hereto as Exhibit A.

2. Important Dates. Pursuant to the Bidding Procedures, the Bankruptcy Court has established the following dates:

Bid Deadline June 21, 2013, at 11:30 a.m. (prevailing Eastern Time) Auction June 24, 2013, at 11:00 a.m. (prevailing Eastern Time) Sale Hearing June 26, 2013, at 9:30 a.m. (prevailing Eastern Time)

1 The jointly administered debtors in these cases are CPI Corp., Bella Pictures Holdings, LLC, Centrics Technology, Inc., Consumer Programs, Inc., Consumer Programs Partner, Inc., CPI Canadian Holdings, Inc., CPI Images, LLC, CPI International Holdings, Inc., CPI Prints Plus, Inc., CPI Research & Development, Inc., CPI Technology Corp., Image Source, Inc., Myportraits.com, Inc., Ridgedale Prints Plus, Inc., Sandy Realty Holdings, LLC, and Texas Portraits, L.P. (collectively, the “Debtors” and each, separately, a “Debtor”). The Debtors’ estates shall collectively be referred to as the ““CPI Bankruptcy Estates”.

2 A complete list of the assets to be acquired is attached as Exhibit B to the Purchase Agreement between the Trustee and the Stalking Horse Bidder, which may be obtained by submitting a written request to the undersigned counsel for the Trustee.

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3. The Stalking Horse Agreement. The Trustee has entered into that certain Asset Purchase Agreement for the sale of the Assets (the “Stalking Horse Agreement”) with Lifetouch Portrait Studios Inc., a Minnesota corporation (the “Stalking Horse Bidder”). As set forth in the Bidding Procedures, the sale of the Assets remains subject to competing offers from any prospective bidder. The Trustee will consider qualified bids for the purchase of the Assets in bulk; meaning that a competing qualified bidder must submit a competing offer to purchase the Assets in their entirety as one transaction.

4. Submission of Bids. To participate in the bidding process and to have a bid considered by the Trustee, each potential bidder must deliver a binding written offer satisfying the criteria prescribed in the Bidding Procedures. Each potential bidder must submit a minimum bid in the amount of $3.5 Million and sufficient information, as requested by the Trustee, to allow the Trustee to determine that the bidder has the financial wherewithal to close the transaction, as set forth in the bidding procedures. Each bid package must be delivered in written and electronic form (where available) to: McCarter & English, LLP, Four Gateway Center, 100 Mulberry Street, Newark, New Jersey 07102, Attn: Jeffrey T. Testa, Esq. ([email protected]), so as to actually be received no later than June 21, 2013, at 11:30 a.m. (prevailing Eastern Time) (the “Bid Deadline”).

6. Auction. In the event that the Trustee receives a qualified bid for the Assets, the Trustee intends to conduct an Auction with respect to the Assets. The Auction will take place at the offices of McCarter & English, LLP, Four Gateway Center, 100 Mulberry Street, Newark, New Jersey 07102, on June 24, 2013, starting at 11:00 a.m. (prevailing Eastern Time) or at such other place, date, and time as may be designated by the Trustee at or prior to the Auction.

7. Sale Hearing. The Bidding Procedures Order provides that the Sale Hearing will be held on June 26, 2013, at 9:30 a.m. (prevailing Eastern Time), before the Honorable Brendan Linehan Shannon, United States Bankruptcy Judge, at the United States Bankruptcy Court for the District of Delaware, 824 North Market Street, Sixth Floor, Courtroom No. 1, Wilmington, Delaware 19801. At the Sale Hearing, the Trustee will request that the Bankruptcy Court enter an order approving, among other things, the Successful Bid3 for the Assets, and under that order the Trustee will transfer the Assets to the Successful Bidder, free and clear of all liens, claims and interests. At the Sale Hearing, the Bankruptcy Court may enter such orders as it deems appropriate under applicable law and as required by the circumstances and equities of this chapter 7 case. PURSUANT TO 11 U.S.C. §§ 105(a), 363(b) AND (f), THE PROPOSED SALE IS FREE AND CLEAR OF ALL LIENS, CLAIMS AND INTERESTS OF OTHERS, AND ALL SUCH LIENS, CLAIMS AND INTERESTS SHALL ATTACH TO THE NET PROCEEDS OF THE SALE, IF ANY, WITH THE SAME VALIDITY AND PRIORITY THAT EXISTED IMMEDIATELY PRIOR TO THE SALE AND SUBJECT TO THE TRUSTEE’S DEFENSES THERETO.

8. Objections. Objections, if any, to the proposed sale to the Successful Bidder may be made at the Sale Hearing.

9. Related Sale Documents: Copies of the Bidding Procedures Order, the Purchase Agreement, and the Motion to approve the proposed sale of the Assets, can be viewed and obtained on the Bankruptcy Court’s website at https://ecf.deb.uscourts.gov, or may be obtained by submitting a written request to the undersigned counsel for the Trustee. This Notice is subject to the full terms and conditions of the Bidding Procedures and the Bidding Procedures Order, which shall control in the event of any conflict, and the Trustee encourages parties in interest to review such documents in their entirety.

IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF REQUESTED WITHOUT FURTHER NOTICE OR HEARING.

Dated: ______, 2013 McCARTER & ENGLISH, LLP Wilmington, Delaware By: /s/ Katharine L. Mayer Katharine L. Mayer, Esq. (DE # 3758)

3 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.

-2- ME1 15698427v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 12 of 17

Renaissance Centre 405 N. King Street, 8th Floor Wilmington, DE 19801 Telephone: (302) 984-6300 Facsimile: (302) 984-6399 [email protected]

- and -

Charles A. Stanziale, Jr., Esq. Jeffrey T. Testa, Esq. Curtis A. Johnson, Esq. Four Gateway Center 100 Mulberry Street Newark, NJ 07102 Telephone: (973) 622-4444 Facsimile: (973) 624-7070 [email protected]

Attorneys for the Chapter 7 Trustee

-3- ME1 15698427v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 13 of 17

Exhibit A

Bidding Procedures

The following are the bidding procedures (the “Bidding Procedures”) to be employed by Charles A. Stanziale, Jr., in his capacity as the Chapter 7 Trustee (the “Trustee” or “Seller”) of the debtors (the “Debtors1”) with respect to the sale of certain of the Assets of the Debtor.

1. The Stalking Horse Bidder. The Seller selected Lifetouch Portrait Studios Inc., a Minnesota corporation, as the stalking horse bidder (“Lifetouch” or the “Stalking Horse Bidder”) relating to the sale of the “Assets”. The Seller and the Stalking Horse Bidder have entered into a form of asset purchase agreement (the “Purchase Agreement”), which provides that, subject to these Bidding Procedures, the Stalking Horse Bidder will purchase the Assets. A copy of the Purchase Agreement may be obtained upon written request to the undersigned counsel for the Trustee.

2. The Bidding Process. The Seller will solicit higher and better offers from third- party bidders (each a “Potential Bidder”) for the Assets. The Seller shall have the sole right (i) to determine whether a Potential Bidder, in addition to the Stalking Horse Bidder is a Qualified Bidder (defined below), (ii) to coordinate the efforts of Qualified Bidders in conducting their respective due diligence reviews, (iii) to receive offers from Qualified Bidders, (iv) to notice all parties with respect to the Bidding and Auction Procedures, and (v) to evaluate and negotiate any offers made to purchase the Assets (collectively, the “Bidding Process”). Any person who wishes to participate in the Bidding Process must be deemed a Qualified Bidder by the Trustee. Neither the Trustee nor his professionals shall be obligated to furnish any information of any kind whatsoever to any person or entity that is not a Qualified Bidder.

3. Bid Requirements. In order for a Potential Bidder to participate in the Auction, its bid (unless such requirement is waived by the Trustee) must include the following (the “Bid Requirements”):

 A cash purchase price in an amount not less than $3,500,000;

 A representation that (i) the Potential Bidder agrees to serve as the Back-Up Bidder2 in the event that its bid is the second highest or otherwise best Qualified Bid, (ii) the Potential Bidder is not an insider of the Debtor or provides a disclosure as to its relationship with the Debtors; and (iii) the Potential Bidder will complete all its due diligence by the Bid Deadline;

1 The jointly administered debtors in these cases are CPI Corp., Bella Pictures Holdings, LLC, Centrics Technology, Inc., Consumer Programs, Inc., Consumer Programs Partner, Inc., CPI Canadian Holdings, Inc., CPI Images, LLC, CPI International Holdings, Inc., CPI Prints Plus, Inc., CPI Research & Development, Inc., CPI Technology Corp., Image Source, Inc., Myportraits.com, Inc., Ridgedale Prints Plus, Inc., Sandy Realty Holdings, LLC, and Texas Portraits, L.P.

2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.

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 An executed asset purchase agreement, subject to substantially the same or more favorable terms and conditions as are contained in, and marked to show changes from, the Purchase Agreement (as reasonably determined by the Trustee), except that such purchase and sale agreement shall (a) provide for a purchase price in cash of at least $3,500,000, (b) exclude any contingencies, conditions precedent or other terms excusing the performance of the Potential Bidder based upon it completing due diligence or obtaining financing for the sale, and including only such representations and warranties as may be approved by the Trustee, which approval shall be granted or denied in Seller’s sole and absolute discretion (provided, however, that under no circumstances shall Trustee and/or the Debtors have any liability for any breach of any representation and warranty; the Trustee is selling its right, title and interest in the Assets described in the Purchase Agreement ‘AS IS’ and any Potential Bidder should conduct whatever diligence is necessary to satisfy such Potential Bidder that the representations and warranties are true and correct), (c) exclude any provision for any break-up fee, termination fee, expense reimbursement, or similar type of payment, and (d) provide that the Potential Bidder will be solely responsible for any broker fee;

 A good faith deposit in the amount of $250,000 that must be wired to an account maintained and specified by the Trustee by the Bid Deadline (the “Good Faith Deposit”);

 provide evidence, in the form of bank or broker statements of the Potential Bidder, the most current audited and latest unaudited financial statements and financial references of the Potential Bidder, or other evidence satisfactory to the Trustee that the Potential Bidder is “financially qualified” to proceed to closing on an all-cash basis no later than July 15, 2013; and

 The identity of each entity that will be participating in such bid or otherwise participating in connection with the such bid, including any proposed designee(s), and the complete terms of such participation.

The Trustee shall have the discretion, in consultation with the Agent, to determine, whether a bid received from a Potential Bidder shall be deemed a Qualified Bid. A bid received from a Potential Bidder that satisfies all of the Bid Requirements shall be a “Qualified Bid” and each Potential Bidder submitting a Qualified Bid shall be deemed a “Qualified Bidder.”

The Trustee reserves the right, in consultation with the Agent, to determine the value of any Qualified Bid, which Qualified Bid constitutes the highest, best or otherwise financially superior offer and which Qualified Bid constitutes the second highest, best or otherwise financially superior offer.

BP1 ME1 15698427v.4 Case 13-11158-BLS Doc 39-1 Filed 05/30/13 Page 15 of 17

4. Bid Deadline: To be considered a timely bid, a Qualified Bidder shall deliver a bid that satisfies all of the Bid Requirements on or before June 21, 2013, at 11:30 a.m. (prevailing Eastern Time) (the “Bid Deadline”) to: McCarter & English, LLP, counsel to the Trustee, Four Gateway Center, 100 Mulberry Street, Newark, New Jersey 07102 (attn: Jeffrey Testa, Esq.).

5. Stalking Horse Bidder is a Qualified Bidder/Purchase Agreement is a Qualified Bid: The Stalking Horse Bidder is a Qualified Bidder, and the Purchase Agreement is a Qualified Bid.

6. “As Is, Where Is: The sale of the Assets shall be on an “as is, where is” basis and without representations or warranties of any kind, nature, or description by the Trustee or his representatives except for the express representations contained in the Purchase Agreement. Each Qualified Bidder shall be deemed to acknowledge and represent that it has had an opportunity to conduct any and all due diligence regarding the assets prior to making its offer, that it has relied solely upon its own independent review, investigation and/or inspection of any documents and/or the Assets in making its bid, and that it did not rely upon any written or oral statements, representations, promises, warranties or guaranties whatsoever, whether express, implied, by operation of law or otherwise, regarding the Assets, or the completeness of any information provided in connection therewith, or the Auction, except as expressly stated in the Purchase Agreement.

7. Assets to be Sold Free of Any And All Claims: All of the Trustee’s right, title and interest in and to the Assets shall be sold free and clear of all claims, which claims shall attach to the proceeds of the sale.

8. Auction: If more than one Qualified Bid has been received for the Assets (i.e., at least one Qualified Bid in addition to the Purchase Agreement), the Trustee shall conduct an open Auction on the record. The Auction shall commence on June 24, 2013, at 11:00 a.m. (prevailing Eastern Time) at the offices of McCarter & English, LLP in Newark, New Jersey. If no Qualified Bid (other than the bid of the Stalking Horse Bidder), is received by the Trustee prior to the expiration of the Bid Deadline, the Trustee shall not hold an Auction and shall proceed with the hearing to approve the sale of the Assets to the Stalking Horse Bidder. For avoidance of doubt, if no Qualified Bid (other than the bid of the Stalking Horse Bidder) is received, no party other than the Stalking Horse Bidder shall be given an opportunity to present at the Sale Hearing or otherwise any bid for the Assets, and the Seller shall proceed to seek approval to close the sale to the Stalking Horse Bidder pursuant to the terms of the Purchase Agreement.

The Auction shall be governed by the following procedures:

 only a Qualified Bidder that has submitted a Qualified Bid is eligible to participate at the Auction. During the Auction, bidding shall begin initially with the highest Qualified Bid and subsequently continue in minimum increments of at least $50,000.

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 only Qualified Bidders shall be entitled to make any subsequent bids at the Auction and only Qualified Bidders and their respective authorized representatives are entitled to attend/and or participate at the Auction, except that the Lender Parties, and their respective representatives, and creditors are entitled to attend the Auction;

 each Qualified Bidder shall appear in person at the Auction or via telephonic conference or through a duly authorized representative who appears in person at the Auction;

 each of the Qualified Bidders may make additional modifications to their respective asset purchase agreements at the Auction, but only to the extent that such modifications satisfy the Bid Requirements and do not disqualify the Qualified Bidders;

 the Auction will be conducted openly and each Qualified Bidder will be informed of the terms of the previous bids;

 each Qualified Bidder shall confirm at the Auction that it has not engaged in any collusion with respect to the bidding or the proposed sale of the Assets; and

 the bidding at the Auction will be transcribed.

Upon conclusion of the bidding, the Auction shall be closed, and the Trustee shall, in consultation with the Agent, (a) immediately review each Qualified Bid on the basis of financial and contractual terms and the factors relevant to the sale process, including those factors affecting the speed and certainty of consummating the proposed sale of the Assets, and (b) as soon as reasonably practicable thereafter (i) identify, in his discretion and in consultation with the Agent, the highest, best or otherwise financially superior offer for the Assets (the “Successful Bid”) and the entity or entities submitting such Successful Bid (the “Successful Bidder”), which highest, best or otherwise financially superior offer will provide the greatest amount of net value to the Trustee and the Debtors’ creditors, (ii) identify, in his discretion and in consultation with the Agent, the second highest, best or otherwise financially superior offer for the Assets (the “Back-Up Bid”) and the entity or entities submitting such Back-Up Bid (the “Back-Up Bidder”), and (iii) advise the Qualified Bidders of the identities of the Successful Bidder and the Back-Up Bidder.

9. Acceptance of Qualified Bids: The Trustee shall sell the Assets to the Successful Bidder upon the approval of the Successful Bid by the Court after a hearing (the “Sale Hearing”). The Trustee’s presentation of a particular Qualified Bid to the Court for approval does not constitute the Trustee’s acceptance of the bid. While the Successful Bid is binding on the Qualified Bidder who submitted such bid, the Trustee will be deemed to have accepted a bid only when the acceptance of the Successful Bid has been approved by the Court at the Sale Hearing. All interested parties reserve their right to object to the Trustee’s selection of the Successful Bidder and the Successful Bid.

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10. The Sale Hearing. A final hearing to consider approval of the Successful Bidder and sale will take place before the Honorable Brendan L. Shannon, United States Bankruptcy Judge, in the Bankruptcy Court, 824 N. Market Street, 6th Floor, Courtroom #1, Wilmington, Delaware 19801, on June 26, 2013, at 9:30 a.m. (prevailing Eastern Time), or as such other time thereafter as the court directs. At or before the Sale Hearing, the Sale Hearing may be adjourned or rescheduled without prior notice. No party will be permitted to bid at the Sale Hearing.

11. Return of Good Faith Deposits: The Good Faith Deposits shall be held in a segregated escrow account and shall be returned to the depositing party within five (5) business days following the Sale Hearing, unless the depositing party is the Successful Bidder or the Back-up Bidder. The Good Faith Deposit of the Successful Bidder shall be applied to the purchase price. If the Successful Bidder fails to proceed to Closing of the sale, the Good Faith Deposit of the Successful Bidder shall become property of the CPI Bankruptcy Estates The Good Faith Deposit of the Back-up Bidder shall be returned to the Back-up Bidder within five (5) business days following the Closing of a sale to the Successful Bidder. In the event of a sale to the Back-up Bidder, the Good Faith Deposit of the Back-up Bidder shall be applied to the purchase price. In the event the Successful Bidder and the Back-up Bidder fail to proceed to Closing of the sale, the Good Faith Deposit of the Back- up Bidder shall become property of the CPI Bankruptcy Estates.

12. Closing of the Sale. Closing to occur at a time mutually agreeable to the Trustee and the Successful Bidder, but no later than July 15, 2013, unless mutually agreed upon by the Trustee and the Successful Bidder. In the event that the sale fails to close during such time period, then the Seller shall be authorized, but not required, to consummate the sale with the Back-Up Bidder.

13. Modifications: The Trustee reserves the right to modify, adjourn, or extend any of the deadlines established herein in consultation with the Agent. Notice of any such modification, adjournment, or extension shall be provided only to the Qualified Bidders and the Agent. The Trustee also reserves the right to modify any of the Bidding Procedures in any manner that, in its judgment, will better promote the goals of the Auction, so long as such modifications are not materially inconsistent with any of the provisions of the Bidding Procedures outlined herein or any Bankruptcy Court order, including the Bidding Procedures Order, and are made after consultation with the Agent.

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EXHIBIT B TO MOTION

Proposed Sale Order

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IN UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: : : Chapter 7 CPI CORP., et al.,1 : (Jointly Administered) : Debtors. : Case No. 13-11158 (BLS) : : Re: Doc. No. ___

SALE ORDER PURSUANT TO BANKRUPTCY CODE SECTIONS 105, 363 AND RULES 2002, 6004, 6006 AND 9014 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE APPROVING THE SALE OF CERTAIN ASSETS OF CERTAIN OF THE DEBTORS TO LIFETOUCH PORTRAIT STUDIOS, INC. FREE AND CLEAR OF LIENS, CLAIMS, ENCUMBRANCES AND INTERESTS

Upon the motion (the “Motion”) of Charles A. Stanziale, in his capacity as the Chapter 7

Trustee (the “Trustee” or the “Seller”) of the above-captioned cases, by and through his counsel

McCarter & English, LLP, dated ______, 2013, pursuant to sections 105(a) and 363 of title 11 of the United States Code (the “Bankruptcy Code”), Rules 2002, 6004, 6006, and 9014 of the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 6004-1 of the Local

Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the

District of Delaware (the “Local Rules”) for approval of the sale of certain of the assets2 of

1 The debtors in these cases are CPI Corp., Bella Pictures Holdings, LLC, Centrics Technology, Inc., Consumer Programs, Inc., Consumer Programs Partner, Inc., CPI Canadian Holdings, Inc., CPI Images, LLC, CPI International Holdings, Inc., CPI Prints Plus, Inc., CPI Research & Development, Inc., CPI Technology Corp., Image Source, Inc., Myportraits.com, Inc., Ridgedale Prints Plus, Inc., Sandy Realty Holdings, LLC, and Texas Portraits, L.P. However, for purposes of the sale contemplated herein, the assets of the following six Debtors are not included: Consumer Programs Partner, Inc., CPI Prints Plus, Inc., CPI Research & Development, Inc., Myportraits,com, Inc., and Ridgedale Prints Plus, Inc. (the “Excluded Debtors”). For purposes herein, the term “Debtors” shall refer only to the ten entities referenced in the Asset Purchase Agreement between the Trustee and the Stalking Horse Bidder (as defined herein) and shall not include the Excluded Debtors. The estates of the ten Debtors shall be referred to herein as the “CPI Bankruptcy Estates” and shall not include the estates of the Excluded Debtors.

2 The assets (the “Assets”) to be acquired by Lifetouch Portrait Studios, Inc. (“Lifetouch”) are identified in Exhibit B to the Asset Purchase Agreement dated as of May [__], 2013, between Lifetouch and the Seller (the “Purchase Agreement”).

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certain of the Debtors free and clear of all liens, claims, encumbrances, obligations, liabilities, contractual commitments or interests of any kind or nature whatsoever (each, a “Lien” or

“Claim”) and collectively, the “Liens” or “Claims”) pursuant to the Purchase Agreement, and granting such other and further relief as the Court deems just and proper; and the Trustee having marketed the Assets for higher and better offers; and it appearing after seeking higher and better offers that the offer accepted by the Trustee from Lifetouch is the highest and best offer received for the Assets; and the Court having determined that Lifetouch is a good faith purchaser in accordance with section 363(m) of the Bankruptcy Code; and all parties in interest having been heard, or having had the opportunity to be heard, regarding the Purchase Agreement; and the

Court having reviewed and considered the Motion, all arguments made and all evidence presented at the hearing on the Motion (the “Sale Hearing”); and upon the record of the Sale

Hearing, the Declaration of Charles A. Stanziale, Jr. in support of the Motion [D.I. _____], any and all declarations and other materials submitted by the Trustee in connection with the Motion; and it further appearing that the relief provided in this Order is in the best interest of the CPI

Bankruptcy Estates and all other parties in interest; and after due deliberation thereon, and for other good and sufficient cause appearing therefore:

THIS COURT HEREBY FINDS AND DETERMINES THAT:

A. Findings and Conclusions. The findings and conclusions set forth herein constitute the Court’s findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. To the extent any of the following findings of fact constitute conclusions of law, they are adopted as such. To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such.

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B. Jurisdiction and Venue. The Court has jurisdiction over the Motion, the Sale (as defined in the Motion), and the Sale Hearing pursuant to 28 U.S.C. §§ 157 and 1334. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue of these cases in this district is proper under 28 U.S.C. §§ 1408 and 1409.

C. Statutory Predicates. The statutory predicates for the relief requested in the

Motion are sections 105(a) and 363 of the Bankruptcy Code, Bankruptcy Rules 2002, 6004, and

6006, and 9014 and Local Rule 6004-1.

D. Notice. In accordance with the provisions of the Order Pursuant to Bankruptcy

Code Sections 105, 363 and Rules 2002, 6004 and 9014 of the Federal Rules of Bankruptcy

Procedure (A) Approving the Stalking Horse Asset Purchase Agreement and the Break-Up Fee

Relating to the Sale of Certain of the Assets of Certain of the Debtors, Subject to Higher and

Better Offers, Free and Clear of Liens, Claims and Encumbrances, and (B) Approving the Notice and Sale Procedures Related Thereto [D.I. __] (the “Bid Procedures Order”), and as evidenced by the affidavits of service and/or the affidavits of publication previously filed with this Court, the Trustee (i) served the Notice of Bid Deadline, Auction, and Sale Hearing with together with a copy of the Bidding Procedures upon the auction notice parties referenced in paragraph __ of the

Motion (the “Notice of Bid Deadline”), and (ii) timely caused to be published a summarized version of the Notice of Bid Deadline in the national edition of the ______. The notice given by the Trustee of the Motion, the Sale Hearing, and the Sale, constitutes appropriate notice under the circumstances and complies with sections 105(a) and 363 of the Bankruptcy Code,

Bankruptcy Rules 2002, 6004, 6006, and 9014, Local Rule 6004-1 and the Bid Procedures

Order. No other or further notice of the Motion, the Sale Hearing, the Auction (as defined in the

Motion), or the Sale is required by applicable law.

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E. Title in the Assets. The Assets constitute property of the CPI Bankruptcy Estates and title thereto is vested in the CPI Bankruptcy Estates within the meaning of section 541(a) of the Bankruptcy Code.

F. Business Justification. The Trustee has demonstrated both (i) good, sufficient, and sound business purpose and justification for the Sale, and (ii) compelling circumstances for the Sale pursuant to section 363(b) of the Bankruptcy Code.

G. Opportunity to Bid. As demonstrated by: (i) the testimony and other evidence proffered or adduced at the Sale Hearing; (ii) the representations of counsel made on the record at the Sale Hearing, and (iii) the certification of auction results, the Trustee marketed the Assets and conducted the sale process and auction in compliance with the Bankruptcy Code and the Bid

Procedures Order. The Auction process set forth in the Bid Procedures Order afforded a full and fair opportunity for any qualified entity to make a higher or otherwise better offer to purchase the

Assets. Based upon the record of these proceedings, all creditors and other parties in interest and all prospective purchasers have been afforded a reasonable and fair opportunity to bid for the

Assets.

H. Highest or Otherwise Best Offer. At the conclusion of the auction, Lifetouch was declared the successful bidder. The total consideration to be paid by Lifetouch in the amount of $______for the Assets is the highest or otherwise best offer received by the

Trustee.

I. Good Faith Purchaser. Lifetouch is a good faith buyer under section 363(m) of the Bankruptcy Code, will be acting in good faith in consummating the Sale and is not an

“insider” as that term is defined in section 101(31) of the Bankruptcy Code. As such, Lifetouch is entitled to all of the protections afforded thereby.

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J. No Collusion. The Purchase Agreement and the sale contemplated thereby have been negotiated, proposed and entered into by the Trustee and Lifetouch without collusion, in good faith, and from arm’s-length bargaining positions. Neither the Trustee, nor Lifetouch, have engaged in any conduct that would cause or permit Purchase Agreement to be avoided, or costs or damages to be imposed, under section 363(n) of the Bankruptcy Code.

K. Purchase Agreement; Fair and Reasonable. The terms and conditions of the

Purchase Agreement and the Sale, including the total consideration to be realized by the CPI

Bankruptcy Estates pursuant to the Purchase Agreement, are fair and reasonable, and therefore approval of the Sale at this time is in the best interests of the CPI Bankruptcy Estates.

L. Corporate Power and Authority. No consents or approvals, other than those expressly provided for in the Purchase Agreement, or expressly set forth herein, are required for the Trustee to consummate such transactions. Subject to the entry of this Order, Lifetouch has full corporate power and authority to execute and deliver the Purchase Agreement and the Sale and to perform all of its obligations thereunder, and the Sale has been duly and validly authorized by all corporate authority necessary to consummate the Sale.

M. “AS IS” “WHERE IS. Pursuant to 11 U.S.C. §§ 105(a) and 363(f), the Assets shall be transferred to Lifetouch pursuant to the Purchase Agreement on an “AS IS, WHERE IS” basis.

N. Free and Clear. The Assets constitute property of the CPI Bankruptcy Estates and sole title thereto is vested in the CPI Bankruptcy Estates pursuant to section 541(a) of the

Bankruptcy Code. The sale of the Assets to Lifetouch will be, as of the Closing (as defined in the Purchase Agreement), a legal, valid, and effective transfer of the Assets, and will vest

Lifetouch with all right, title, and interest of the Trustee and the Debtors to the Assets free and

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clear of all Liens and Claims with any Liens and Claims to attach to the consideration to be received by the Trustee in the same priority and subject to the same defenses and avoidability, if any, as of the Closing.

O. Free and Clear; Best Interests of CPI Bankruptcy Estates. If the sale to

Lifetouch by the Trustee was not free and clear of all Liens and Claims as set forth in the

Purchase Agreement and this Order, or if Lifetouch would, or in the future could, be liable for any Liens and Claims, Lifetouch would not have entered into the Purchase Agreement and would not consummate the Sale or any other transaction contemplated by the Purchase Agreement. A sale of the Assets other than one free and clear of all Liens and Claims would adversely impact the CPI Bankruptcy Estates, would yield substantially less value for the CPI Bankruptcy Estates and would result in less certainty than the Sale. Therefore, the sale contemplated by the

Purchase Agreement is in the best interests of the CPI Bankruptcy Estates and all other parties in interest.

P. Satisfaction of Section 363(f) Standards. The Trustee may sell the Assets free and clear of all Liens and Claims of any kind or nature whatsoever because, in each case, one or more of the standards set forth in sections 363(f)(l)-(5) of the Bankruptcy Code have been satisfied. Any party with interests in the Assets who did not object, or who withdrew its objections, to the Sale or the Motion is deemed to have consented pursuant to section 363(f)(2) of the Bankruptcy Code. Those parties with interests in the Assets who did object fall within one or more of the other subsections of section 363(f) of the Bankruptcy Code and are adequately protected by having their interests, if any, attach to the cash proceeds of the Sale ultimately attributable to the Assets against or in which they claim an interest.

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Q. No Successor Liability. Lifetouch and any of its affiliates are not (i) a mere continuation of the Debtors or the CPI Bankruptcy Estates and there is no continuity between

Lifetouch and its affiliates and the CPI Bankruptcy Estates, (ii) holding itself out to the public as a continuation of the CPI Bankruptcy Estates, or (iii) successors to the Debtors or the CPI

Bankruptcy Estates and the Sale does not constitute a consolidation, merger or de facto merger of

Lifetouch and its affiliates and the Debtors. Lifetouch has given substantial consideration under the Purchase Agreement for the benefit of the holders of Liens and Claims against the CPI

Bankruptcy Estates. The consideration given by Lifetouch constitutes valid and valuable consideration for the releases of any potential claims of successor liability of Lifetouch and its affiliates, which releases shall be deemed to have been given in favor of Lifetouch and its affiliates by all holders of Liens and Claims against or interests in the Debtors, the CPI

Bankruptcy Estates, or any of the Assets.

R. No Fraudulent Transfer. The Sale does not have the purpose of hindering, delaying, or defrauding creditors under the Bankruptcy Code or under the laws of the United

States, any state, territory, possession or the District of Columbia. Neither the Trustee nor

Lifetouch is or will be entering into the sale transactions fraudulently.

S. Consideration. The consideration provided by Lifetouch pursuant to the

Purchase Agreement constitutes reasonably equivalent value and fair consideration (as those terms are defined in the Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act, and section 548 of the Bankruptcy Code). The Purchase Agreement represents a fair and reasonable offer to purchase the Assets and assume or acquire liabilities under the circumstances of the Debtors’ cases. Approval of the Purchase Agreement and the consummation of the Sale are in the best interests of the CPI Bankruptcy Estates and all other parties in interests.

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T. Compliance with the Bankruptcy Code. The consummation of the Sale is legal, valid, and properly authorized under all applicable provisions of the Bankruptcy Code, including without limitation sections 105(a) and 363 of the Bankruptcy Code, and all of the applicable requirements of such sections have been or will be complied with in respect of the Sale as of the

Closing or the effective date of assignment.

U. Bulk Sale Laws. No bulk sales law or any similar law of any state or other jurisdiction shall apply in any way to the Sale.

V. Sale Hearing. The Sale Hearing was fair and open to all parties potentially affected by the relief requested in the Motion.

W. Time of Essence. Time is of the essence in closing the Sale, and therefore the

Trustee and Lifetouch intend to close the Sale as soon as practicable.

X. Final Order. This Order constitutes a final and appealable order within the meaning of 28 U.S.C. § 158(a). Notwithstanding Bankruptcy Rules 6004 and 6006, the parties may consummate the Sale immediately upon entry of this Order. To any extent necessary under

Bankruptcy Rule 9014 and Rule 54(b) of the Federal Rules of Civil Procedure, as made applicable by Bankruptcy Rule 7054, the Court expressly finds that there is no just reason for delay in the implementation of this Order.

NOW THEREFORE, IT IS HEREBY ORDERED, ADJUSTED AND DECREED THAT:

1. Relief Granted. The Motion is granted and approved in all respects (other than with respect to matters already addressed by the Bid Procedures Order), and the Sale and other transactions contemplated by the Purchase Agreement are approved in all respects.

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2. Objections Overruled. All objections to the Motion or the Sale, that have not been withdrawn, waived, or settled, and all reservations of rights included therein, are hereby overruled on the merits.

3. Notice. Notice of the Motion, including without limitation, notice of the transactions set forth in the Purchase Agreement, the Auction, the Sale Hearing, and the Sale was fair and equitable under the circumstances and complied in all respects with sections 105(a) and

363 of the Bankruptcy Code, Bankruptcy Rules 2002, 6004, and 6006, and 9014 and Local Rule

6004-1.

4. Prior Findings of Fact and Conclusions of Law. The Court’s findings of fact and conclusions of law in the Bid Procedures Order, including the record of all previous hearings on the Motion, are incorporated herein by reference.

5. Order and Purchase Agreement Binding on All Parties in Interest. This

Order and the Purchase Agreement shall be binding in all respects upon all creditors and other stakeholders (whether known or unknown) of the CPI Bankruptcy Estates, the Trustee,

Lifetouch, and all successors and assigns of Lifetouch, and shall not be subject to rejection.

6. “AS IS” “WHERE IS. Pursuant to 11 U.S.C. §§ 105(a) and 363(f) the Assets shall be transferred to Lifetouch pursuant to the Purchase Agreement on an “AS IS, WHERE IS” basis.

7. Approval. Pursuant to section § 363(b) of the Bankruptcy Code, the Trustee together with Lifetouch are authorized to fully perform under, consummate, and implement the terms of the Purchase Agreement, together with any and all additional instruments and documents that may be reasonably necessary or desirable to implement and effectuate the terms of the Purchase Agreement, this Order, and the Sale, without any further corporate action or

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orders of this Court. Lifetouch is hereby approved as the successful bidder for the Assets having submitted the highest and best offer in the amount of $______. At Closing, the Trustee is authorized to distribute the proceeds from the Sale in accordance the priorities set forth in the

Bankruptcy Code without further Court approval.

8. Good Faith Purchaser. Lifetouch is a good faith buyer of the Assets, is not an

“insider” as that term is defined in section 101(31) of the Bankruptcy Code, and is hereby granted and is entitled to all of the protections provided to a good faith purchaser under section

363(m) of the Bankruptcy Code. Pursuant to section 363(m) of the Bankruptcy Code, if any or all of the provisions of this Order are hereafter reversed, modified, or vacated by a subsequent order of the Bankruptcy Court or any other court, such reversal, modification, or vacatur shall not affect the validity and enforceability of any sale, transfer or assignment under the Purchase

Agreement or obligation or right granted pursuant to the terms of this Order (unless stayed pending appeal), and notwithstanding any reversal, modification or vacatur, any sale, transfer, or assignment shall be governed in all respects by the original provisions of this Order or the

Purchase Agreement, as the case may be.

9. Section 363(n) of the Bankruptcy Code. The Sale approved by this Order and the Trustee’s and Lifetouch’s entry into the Purchase Agreement is not subject to avoidance or any recovery or damages pursuant to section 363(n) of the Bankruptcy Code.

10. Valid Transfer. Effective as of the Closing the Sale of the Assets by the Trustee to Lifetouch shall constitute a legal, valid, and effective transfer of the Assets notwithstanding any requirement for approval or consent by any person and vests Lifetouch with all right, title and interest of the Debtors in and to the Assets, free and clear of all Liens and Claims, pursuant to section 363(f) of the Bankruptcy Code.

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11. Free and Clear. Pursuant to sections 105(a), 363(b), and 363(f) of the

Bankruptcy Code, the Trustee shall be, and hereby is, authorized, empowered, and directed to sell the Assets to Lifetouch free and clear of all Liens and Claims of any kind whatsoever with all such interests to attach to the net proceeds of the Sale in the order of their priority, with the same validity, force and effect which they now have as against the Assets. The Motion shall be deemed to provide sufficient notice as to the sale of the Assets free and clear of all Liens and

Claims in accordance with Local Rule 6004-1. Following the Closing, no holder of any Lien or

Claim on or against the Trustee, the Debtors, or the Assets may interfere with Lifetouch’s use and enjoyment of the Assets based on or related to such Lien or Claim, or any actions that the

Trustee may take in these bankruptcy cases, and no interested party may take any action to prevent, interfere with, or otherwise enjoin consummation of the Sale.

12. Order Self Executing. The provisions of this Order authorizing the Sale and assignment of the Assets free and clear of Liens and Claims, shall be self-executing, and neither the Trustee nor Lifetouch shall be required to execute or file releases, termination statements, assignments, consents, or other instruments in order to effectuate, consummate, and implement the provisions of this Order.

13. Direction to Government Agencies. Each and every federal, state and local governmental agency, unit, or department is hereby authorized to accept any and all documents and instruments necessary and appropriate to consummate the transactions contemplated by this

Order, the Purchase Agreement, and any ancillary documents.

14. Licenses and Permits. To the greatest extent available under applicable law,

Lifetouch shall be authorized, as of the Closing, to operate under any license, permit, registration, and any other governmental authorization or approval of the Debtors with respect to

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the Assets, and all such licenses, permits, registrations, and governmental authorizations and approvals are deemed to have been, and hereby are, directed to be transferred to Lifetouch as of the Closing;

15. Fair Consideration. The sale of the Assets and the consideration provided by

Lifetouch under the Purchase Agreement is fair and reasonable and shall be deemed for all purposes to constitute a transfer for reasonably equivalent value and fair consideration under the

Bankruptcy Code and any other applicable law.

16. No Successor Liability. Lifetouch and its affiliates and their respective successors, assigns, shareholders and principals shall not have any liability or other obligation of the Trustee, the Debtors, or the CPI Bankruptcy Estates arising under or related to any of the

Assets. Without limiting the generality of the foregoing, Lifetouch shall not be liable for any

Liens and Claims against the Trustee, the Debtors, or any of their predecessors or affiliates, and

Lifetouch shall have no successor or vicarious liabilities of any kind or character (whether under federal or state law or otherwise), including, but not limited to, under any theory of antitrust law, environmental law, bulk sales law, tax law, successor or transferee liability, labor law, or theories of de factor merger, mere continuation, or substantial continuation, whether known or unknown as of the Closing Date (as defined in the Purchase Agreement), now existing or hereafter arising, whether fixed or contingent, whether asserted or unasserted, whether legal or equitable, whether liquidated or unliquidated, including, but not limited to, liabilities on account of warranties, liabilities relating to or arising from any environmental law, and any taxes arising, accruing or payable under, out of, or in connection with, or in any way relating to the operation of the Assets prior to the Closing. The Motion contained sufficient notice of such limitations in accordance with Local Rule 6004-1.

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17. Injunction. Except as otherwise provided in the Purchase Agreement, all persons and entities, including, but not limited to, the Trustee, the Debtors, the Debtors’ current and former employees, all debt security holders, administrative agencies, governmental tax and regulatory authorities, secretaries of state, federal, state, and local officials, lenders, contract parties, bidders, lessors, warehousemen, customs brokers, freight forwarders, carriers, and other parties in possession of any of the Assets at any time, trade creditors, and all other creditors, holding Liens and Claims of any kind or nature whatsoever against or in the Debtors or in the

Debtors’ interest in the Assets (whether legal or equitable, secured or unsecured, matured or unmatured, contingent or noncontingent, known or unknown, liquidated or unliquidated, senior or subordinated), arising under or out of, in connection with, or in any way relating to, the

Debtors, the Trustee, the Assets, the operation of the Debtors’ business before the Closing Date, the Sale, or the transfer of the Assets to Lifetouch, shall be and hereby are forever barred, estopped, and permanently enjoined from asserting, prosecuting, commencing, continuing, or otherwise pursuing in any manner any action, claim, or other proceeding of any kind, directly or indirectly, against Lifetouch, or any affiliates, successors or assigns thereto and each of their respective current and former shareholders (or equivalent), officers, directors, managed funds, investment advisors, attorneys, employees, principals, affiliates, financial advisors, and representatives (each of the foregoing in its individual capacity), their property, or the Assets.

Following the Closing Date, no holder of a Lien or Claim on or against the Debtors or the Assets shall interfere with Lifetouch’s title to or use and enjoyment of the Assets based on or related to such Lien or Claim, or any actions that the Trustee may take in the Debtors’ bankruptcy cases.

18. Excluded Assets. Lifetouch has not assumed and shall have no responsibility whatsoever for the Trustee’s or the Debtors’ liabilities and Lifetouch has not acquired any of the

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assets described in Exhibit B of the Purchase Agreement (the “Excluded Assets”).

Consequently, all persons, Governmental Units (as defined in section 101(27) of the Bankruptcy

Code) and all holders of Liens and Claims, based upon or arising out of liabilities retained by the

Debtors are hereby enjoined from taking any action against Lifetouch or the Assets, including asserting any setoff, right of subrogation or recoupment of any kind, to recover any Liens and

Claims or on account of any liabilities of the Debtors pursuant to the Purchase Agreement. All persons holding or asserting any Lien or Claim on the Excluded Assets are hereby enjoined from asserting or prosecuting such Lien or Claim against Lifetouch or the Assets for any liability associated with the Excluded Assets.

19. No Bulk Sales; No Brokers. No bulk sales law or any similar law of any state or other jurisdiction shall apply in any way to the Sale. No brokers were involved in consummating the Sale, and no brokers’ commissions are due to any person or entity in connection with the

Sale.

20. Amendments. Subject to the terms of the Purchase Agreement, the Purchase

Agreement and any related agreements may be waived, modified, amended, or supplemented by agreement of the Trustee and Lifetouch, without further action or order of this Court. The

Trustee and Lifetouch are expressly authorized, without further order of this Court, to execute an amendment to the Purchase Agreement to provide for the Closing to occur on one or more

Closing Dates.

21. Failure to Specify Provisions. The failure specifically to include any particular provisions of the Purchase Agreement or any ancillary documents in this Order shall not diminish or impair the effectiveness of such provisions, it being the intent of the Court that the

Purchase Agreement and any ancillary documents be authorized and approved in their entirety.

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22. Binding Order. This Order (a) shall be effective as a determination that, upon the Closing of the Sale, all Liens and Claims of any kind or nature whatsoever existing as to the

Assets being sold by the Trustee prior to the Closing of the Sale have been unconditionally released, discharged, and terminated, and that the conveyances described herein have been effected, and (b) shall be binding upon and shall govern the acts of all persons and entities including all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, registrars of deeds, administrative agencies, governmental departments, secretaries of state, federal, state, and local officials, and all other persons and entities who may be required by operation of law, the duties of their office, or contract, to accept, file, register, or otherwise record or release any documents or instruments, or who may be required to report or insure any title or state of title in or to any of the Assets. Upon consummation of the transactions set forth in the Purchase Agreement, Lifetouch shall be authorized to file termination statements or lien terminations in any jurisdiction to remove any record, notice filing or financing statement recorded to attach, perfect or otherwise notice any lien or encumbrances that is extinguished or otherwise released pursuant to this Order under section 363 and the related provisions of the

Bankruptcy Code. To the extent of any inconsistency between the provisions of the Purchase

Agreement (or any documents executed in connection therewith) and this Order, the provisions contained in this Order shall govern.

23. No Stay of Order. Notwithstanding Bankruptcy Rules 6004 and 6006, this Order shall not be stayed for fourteen (14) days after the entry hereof and shall be effective and enforceable immediately upon entry and its provisions shall be self-executing.

24. Lifting of Automatic Stay. The automatic stay pursuant to section 362 of the

Bankruptcy Code is hereby lifted with respect to the Trustee to the extent necessary, without

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further order of the Court, to allow Lifetouch to deliver any notice provided for in the Purchase

Agreement and allow Lifetouch to take any and all actions permitted under the Purchase

Agreement in accordance with the terms and conditions thereof.

25. Retention of Jurisdiction. The Court shall retain exclusive jurisdiction to (i) interpret, construe and enforce the provisions of this Order, the Bid Procedures Order, the

Purchase Agreement, any ancillary documents, all amendments thereto, any waivers and consents thereunder, and each of the agreements executed in connection therewith in all respects,

(ii) hear and determine any and all disputes arising under or related to this Order, the Bid

Procedures Order, the Purchase Agreement, any ancillary documents, all amendments thereto, any waivers and consents thereunder, and each of the agreements executed in connection therewith in all respects, except as otherwise provided therein, (iii) enforce the injunctions set forth herein in favor of Lifetouch or any of its respective successors and assigns, each of which injunction shall act to bar any claim enjoined and as a complete defense to any such claim or action, and (iv) compel transfer and delivery of any of the Assets to Lifetouch.

26. Further Assurances. After the Closing, upon the reasonable request of Buyer

(which request shall include Buyer’s agreement to reimburse Seller for all out-of-pocket costs and expenses incurred by Seller in connection with such request (including reasonable attorneys’ fees)), the Seller shall execute and deliver any and all further materials, documents, and instruments of conveyance, transfer, or assignment (including any such materials, documents, or instruments to be filed in the United States Patent and Trademark Office) and take such further action as may reasonably be requested by Buyer to effect, record, or verify the transfer to, and vesting in Buyer, of the Seller’s right, title, and interest in and to the Assets in accordance with the terms of the Purchase Agreement.

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Dated: ______, 2013 Wilmington, DE ______THE HONORABLE BRENDAN LINEHAN SHANNON UNITED STATES BANKRUPTCY JUDGE

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EXHIBIT C TO MOTION

Purchase Agreement

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CERTIFICATE OF SERVICE

I, Katharine L. Mayer, hereby certify that on May 30, 2013, I caused a true and correct copy of the foregoing Motion of Trustee Pursuant To Bankruptcy Code Sections 105, 363 And

Rules 2002, 6004, 6006 And 9014 Of The Federal Rules Of Bankruptcy Procedures For (I) An

Order (A) Approving The Stalking Horse Asset Purchase Agreement And Break-Up Fee Relating

To The Sale Of Certain Assets of the Debtors, Subject To Higher And Better Offers, Free And

Clear Of Liens, Claims, Encumbrances And Interests, (B) Approving The Notice And Sale

Procedures Related Thereto, and (C) Setting Auction And Hearing Dates; And (II) An Order (A)

Approving The Sale of Certain Assets of the Debtors, And (B) Granting Related Relief to be served upon counsel on the annexed service list below by hand delivery or electronic mail or facsimile or in the manner so indicated.

/s/ Katharine L. Mayer Katharine L. Mayer (DE # 3758)

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Via E-Mail ([email protected]) Cousins Chipman & Brown, LLP CPI CORP. Scott D. Cousins, Esq. Service List for Motion to Shorten Notice The Nemours Building 123167-1 1007 North Orange Street, Suite 1110 Wilmington, DE 19801 Counsel for the Debtors Via FedEx Via Hand Delivery Becket & Lee LLP United States Trustee Gilbert B Weisman, Esq. 844 King Street, Room 2207 16 General Warren Blvd Lockbox #35 Malvern, PA 19355 Wilmington, DE 19899-0035

Via E-Mail ([email protected]) and Via E-Mail ([email protected]) [email protected]) Robert J. Miller, Esq. Dustin P. Branch, Esq. Bryan Cave LLP Brian D. Huben, Esq. One Renaissance Square Katten Muchin Rosenman LLP Two North Central Avenue, Suite 2200 2029 Century Park East, Suite 2600 Phoenix, Arizona 85004 Los Angeles, California 90067-3012 Via E-Mail ([email protected] and Via E-Mail ([email protected]) [email protected] Michelle McMahon, Esq. Stuart E. Bernsen, Esq. Bryan Cave LLP Pension Benefit Guaranty Corporation 1290 Avenue of the Americas Office of the Chief Counsel New York, New York 10104 1200 K Street, N.W. Washington, D.C. 20005-4026 Via E-Mail ([email protected] ) Via Facsimile ([email protected]) Bryan Cave LLP Linebarger, Goggan, Blair & Sampson, LLP David M. Unseth, Esq. David G. Aelvoet, Esq. One Metropolitan Square 711 Navarro Ste 300 211 North Broadway, Suite 3600 San Antonio, TX 78205 St. Louis, Missouri 63102

Via E-Mail ([email protected]) Via Facsimile ([email protected]) Eboney Cobb, Esq. Lee Gordon, Esq. Perdue, Brandon, Fielder, Collins & Mott, LLP MCCREARY, VESELKA, BRAGG & ALLEN, P.C. P.O. Box 13430 P.O. Box 1269 Arlington, Texas 76094-0430 Round Rock, Texas 78680

Via E-Mail ([email protected]) & Via FedEx Facsimile ([email protected]) Laclede Gas Company John P. Dillman, Esq. 720 Olive Street Taxing Authorities: MONTGOMERY COUNTY HARRIS COUNTY St. Louis, Missouri 63101 Post Office Box 3064 Houston, Texas 77 253 -3064

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Via FedEx Via FedEx Bank of America Texas Ad Valorem Taxing Jurisdictions Attention: Maria Bulin Attention: Lee Gordon 901 Main Street, 14th Floor 1524 S IH 35, Suite 235 Dallas TX 75202-3738 Austin, Texas 78704

Via FedEx Via FedEx Department of Labor Fifth Third Bank Division of Unemployment Insurance Attention: Jessica Cornish 4425 North Market Street 5050 Kingsley Drive Wilmington, DE 19802 Cincinnati, OH 45227-1115

Via FedEx Via FedEx State of Delaware U.S. Equal Employment Opportunity Commission Division of Revenue Attention: Marie M. Tomasso 820 N. French Street, 8th Floor Philadelphia District Office Wilmington, DE 19801-3509 801 Market Street Penthouse Suite 1300 Philadelphia, PA 19107-3127

Via FedEx Via FedEx Private Bank PA Human Relations Commission Attention: Debra Nadell Harrisburg Regional Office 70 West Madison Riverfront Office Center, 5th Floor Chicago, IL 60602-4282 1101-1125 South Front Street Harrisburg, PA 17104-2570

Via Priority Overnight, US Postal Service Via FedEx JPMorgan Chase Bank N.A. Associated Bank NorthEast Market, Catalyst/ASO CGLlC as Admin Attention: Jennifer Neinas PO Box 659754 2870 Holmgrem Way San Antonio, TX 78265-9754 Green Bay, WI 54307

Via Facsimile ([email protected]) Via E-Mail ([email protected] and Christina Flores [email protected]) Flores & Saucedo, PLLC Michael A. Stanchfield, Esq. 5517 McPherson, Ste. 14 Michael R. Stewart, Esq. Laredo, Texas 78041 FaegreBD 2200 Wells Fargo Center, 90 S. Seventh Street Minneapolis, Minnesota 55402-3901

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