exh10_65.htm


    EXHIBIT 10.65

    


    September
2, 2008

    


    Mr. James
Mills

    806
Shasta Lane

    Keller,
Texas 76248

    


    RE: Offer
of Employment

    


    Dear
Jim:

    


    I am
pleased to offer you the position of Executive Vice President, Field Operations,
reporting to the Chief Executive Officer, and starting on or before Monday,
September 22, 2008.  Under the direction of the Chief Executive
Officer, your duties and responsibilities will be that of a lead executive for
field operations for the Company’s portrait studios, currently operating in
Sears Roebuck and Co. and Wal-Mart stores in the United States, Canada and
Mexico. You will also be a member of the executive team charged with helping
plan, implement and achieve the strategies and goals of the Company as reviewed
and established by the Board.  Your principal place of employment will
be St. Louis, Missouri, at the Company’s headquarters office.  This
offer includes the following terms and conditions:

    


    
      	
              1.  

            	
              Base Cash
      Salary:  Your base cash salary initially will be $275,000
      annually. Your base cash salary
      will be reviewed with you no less than annually and may be adjusted from
      time to time by the Compensation Committee of the Board of
      Directors.

            


    

    
    

    


    
      	
              2.  

            	
              Stock
      Options:  You will be granted options to purchase 25,000
      shares of common stock of CPI
      Corp. at the fair market value on the day you commence employment with the
      Company. Your options will vest in three equal increments on the first,
      second and third anniversaries of your commencement of employment and will
      thereafter be exercisable provided the stock maintains the following
      target prices for twenty consecutive trading days: $25 for the first
      one-third of options; $45 for the second one-third and $65 for the final
      one-third.  These options will expire on the tenth anniversary
      of the grant date.  Your options will be subject to your
      continuing employment and your execution and delivery of a Nonstatutory
      Stock Option Agreement.

            


    

    
    

    


    
      	
              3.  

            	
              Annual Bonus.
      You will be eligible to participate in the Performance Incentive Plan of
      the Company
      as a key executive of the Company.  It is anticipated that any
      payment due you under this plan will be paid substantially in Restricted
      Shares with annual vesting as determined by the Compensation Committee of
      the Board.

            


    

    
    

    


    
      	
              4.  

            	
              Other
      Benefits:  As a CPI executive, you will generally be
      entitled to participate in other active
      benefit plans and programs on the same terms as the other executives in
      the Company.  These benefits currently
      include:

            


    

    
    

    


    
      	
              a.  

            	
              401(k)
      Plan: This qualified plan allows employees to contribute up to 50% of base
      salary annually.  The company matches 50% of employee
      contributions up to a maximum of 5% of salary in common
      stock.  The plan is administered by Charles Schwab Trust Company
      and offers a full range of investment options.  The required
      discrimination testing, however, substantially limits the amount highly
      compensated executives may
contribute.

            


    

    


    
      	
              b.  

            	
              Health/Disability:
      The Company's benefit plan provides for competitive health care coverage
      and short-term disability insurance.  Employee premiums are
      adjusted annually.  Long-term disability insurance is also
      available.

            


    

    


    
      	
               
      

            	
                
      c.

            	
              Life
      Insurance: Executives of the Company are eligible for life insurance equal
      to two times annual base salary to a maximum benefit of
      $400,000.  Once per year, executives are offered an option to
      convert group term insurance in excess of $50,000 to a permanent cash
      value policy.  Contributions that the Company would have paid on
      the term life premiums are paid towards the permanent insurance premium,
      and the executive pays the balance.

            


    

    


    
      	
              d.  

            	
              Vacation:
      You will be entitled to four weeks of paid vacation per
    year.

            


    

     

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

     

     

    
      	
              5.  

            	
              Moving
      Expenses.  The Company will reimburse you for moving
      expenses, actual real
      estate commissions on the sale of your home and up to $10,000 in expenses
      for costs related to a new home in St. Louis (such as draperies,
      inspections and closing costs), up to a total amount of $50,000 for moving
      expenses, actual real estate commission on the sale of your home and
      expenses related to a new home in St. Louis, and up to three trips to St.
      Louis for you and your wife to search for a home.  All such
      reimbursement shall be subject to your delivering customary and reasonable
      documentation of your moving expenses and payment of
      commissions.

            


    

    
    

    


    
      	
              6.  

            	
              Temporary Housing
      Allowance.  The Company will reimburse you for reasonable
      costs of temporary
      housing in St. Louis, MO, not to exceed $15,000.00, subject to your
      providing customary and reasonable documentation of the expenses you incur
      for temporary housing.

            


    

    
    

    


    
      	
              7.  

            	
              Termination and
      Severance:  If your employment is terminated by the
      Company without Cause (a) on or before the first anniversary of your
      commencement of employment, you will be entitled to a severance amount
      equal to six months’ base salary and (b) at any time after the first
      anniversary of your commencement of employment, you will be entitled to a
      severance amount equal to one year’s base salary, provided, however, that
      the payment of any severance under (a) or (b) shall be conditioned upon
      your execution and delivery of a release of all claims arising from or
      related to your employment and the termination of your employment in a
      form satisfactory to the Company.  Any severance shall be
      payable in a lump sum within ten days after the Company’s receipt of your
      signed release.  If your employment is terminated for any other
      reason, you will be entitled to no benefits, except as provided by law or
      under the specific terms of the Company’s benefit programs in which you
      are then participating.  “Cause” as used herein shall mean any
      of the following acts by you or other circumstances:  (i) an act
      committed, after the date of this Agreement, in bad faith and to the
      detriment of the Company or any of its affiliates, (ii) refusal or failure
      to act in substantial accordance with any written material direction or
      order of the Company, (iii) repeated unfitness or unavailability for
      service, disregard of the Company’s rules or policies after reasonable
      notice and opportunity to cure, or misconduct, but not incapacity, (iv)
      entry of a final order of judgment affirming the conviction of a crime
      involving dishonesty, breach of trust, or physical or emotional harm to
      any person, (v) any breach or threatened breach of Sections 8, 9, 10 or 11
      of this Agreement, or (vi) material breach or violation of any other
      provision of this Agreement or of any other contractual obligation to the
      Company or any of its affiliates.

            


    

    


    
      	
              8.  

            	
              Insider
      Status.  As an executive of the Company, you will be
      considered an “insider” subject to SEC reporting of all stock
      transactions and to pre-clearance of all transactions through the
      Company’s General Counsel.

            


    

     

    
      	
              9.  

            	
              Confidentiality.  You
      will maintain in confidence all non-public information you learn a bout
      the Company and its business, including strategies, plans, prospects and
      financial, employee, vendor and customer information.  You will
      not use, copy or disclose any such information except as necessary to
      perform the functions of your job or with the prior consent of the
      Company.

            


    

     

    
      	
              10.

            	
              Non-Compete and
      Non-Solicitation.  It is agreed that you will not be
      employed directly by or act in an advisory role for any direct competitor
      of the Company during the period of your employment and for a period of
      one year from the date of
termination.

            


    

     

    
      	
               11.

            	
              Work for
      Hire.  As an employee, you agree that your ideas,
      concepts, graphics, creative o other
      products of your work will be owned by the Company, and you agree to
      acknowledge the Company’s ownership in writing upon request from the
      Company.

            


    

    


    
      	
              12.

            	
              Existing
      Agreements.  This offer is conditioned on your
      confirmation that your employment by the Company will not violate the
      terms of any existing agreements to which you are a party, including but
      not limited to employment agreements and agreements relating to your
      competitive employment.

            


    

    


    


    


    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    


     

    


    We look
forward to a productive and valuable relationship.

    


    We hope
you find this offer acceptable and ask that you kindly respond by no later than
Friday, September 5, 2008.   We look forward to hearing from
you.

    


    Sincerely,

    


    /s/Renato Cataldo

    ___________________________

    Renato Cataldo

    Chief Executive
Officer/President

    


    Accepted
this 2nd 
day of  September, 2008

    


    


    /s/James
Mills

    ____________________________

    


    James Mills