Exhibit 10.2

GENERAL CONTINUING GUARANTY
 
This GENERAL CONTINUING GUARANTY (this “Guaranty”), dated as of July 15, 2005,
is executed and delivered by the Persons listed below on the signature page(s)
hereof under the caption “Guarantors” and any additional entities acceding
hereto (collectively, jointly and severally, the “Guarantors” and each a
“Guarantor”), in favor of WELLS FARGO FOOTHILL, INC., a California corporation,
as arranger and administrative agent for the below defined Lenders (in such
capacity, together with its successors and assigns, if any, in such capacity,
“Agent”), in light of the following:
 
WHEREAS, pursuant to that certain Credit Agreement dated as of even date
herewith (as amended, restated, supplemented or otherwise modified from time to
time, including all schedules thereto, the “Credit Agreement”) among PORTRAIT
CORPORATION OF AMERICA INC., a Delaware corporation (“Parent Guarantor”), PCA
LLC, a Delaware limited liability company (“PCA”), each of PCA’s subsidiaries
signatory thereto (such Subsidiaries, together with PCA, are referred to
hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”), the lenders party
thereto as “Lenders” (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), and Agent, the Lender Group is
willing to make certain financial accommodations available to Borrowers from
time to time pursuant to the terms and conditions thereof;
 
WHEREAS, each Guarantor is an Affiliate of Borrowers and, as such, will benefit
by virtue of the financial accommodations extended by the Lender Group to
Borrowers under the Credit Agreement; and
 
WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement
and the other Loan Documents and to extend the financial accommodations to
Borrowers pursuant to the Credit Agreement, and in consideration thereof, and in
consideration of any loans or other financial accommodations heretofore or
hereafter extended by the Lender Group to Borrowers pursuant to the Credit
Agreement and the other Loan Documents, Guarantors have agreed to guaranty the
Guarantied Obligations.
 
NOW, THEREFORE, in consideration of the foregoing, each Guarantor hereby agrees
with Agent as follows:
 
1.  Definitions and Construction.
 
(a)  Definitions. Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Credit Agreement. The following
terms, as used in this Guaranty, shall have the following meanings:
 
“Agent” has the meaning set forth in the preamble to this Guaranty.
 
“Borrowers” and “Borrower” have the meanings set forth in the preamble to this
Guaranty.
 
“Credit Agreement” has the meaning set forth in the recitals hereto.
 
“Guarantied Obligations” means (a) the due and punctual payment of the principal
of, and interest (including any interest that, but for the commencement of an
Insolvency Proceeding, would have accrued) on, any and all premium on, and any
and all fees, costs, indemnities, and expenses incurred in connection with, the
Indebtedness owed by Borrowers to any member of the Lender Group or any Bank
Product Provider pursuant to the terms of the Credit Agreement or any other Loan
Document and (b) the due and punctual performance and payment of all other
present or future Indebtedness owing by Borrowers to any member of the Lender
Group or any Bank Product Provider.
 
“Guarantor” and “Guarantors” have the meanings set forth in the preamble to this
Guaranty.
 
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“Guaranty” has the meaning set forth in the preamble to this Guaranty.
 
“Indebtedness” means any and all obligations (including the Obligations),
indebtedness, or liabilities of any kind or character arising directly or
indirectly out of or in connection with the Credit Agreement or any other Loan
Document, including with respect to any Advances, Letters of Credit or LC
Facility Letters of Credit including all such obligations, indebtedness, or
liabilities, whether for principal, interest (including any interest which, but
for the provisions of the Bankruptcy Code, would have accrued on such amounts),
premium, reimbursement obligations, fees, costs, expenses (including attorneys’
fees), or indemnity obligations, whether heretofore, now, or hereafter made,
incurred, or created, whether voluntarily or involuntarily made, incurred, or
created, whether secured or unsecured (and if secured, regardless of the nature
or extent of the security), whether absolute or contingent, liquidated or
unliquidated, or determined or indeterminate, whether individual or joint
liability, and whether recovery is or hereafter becomes barred by any statute of
limitations or otherwise becomes unenforceable for any reason whatsoever,
including any act or failure to act by any member of the Lender Group or any
Bank Product Provider.
 
“Parent Guarantor” has the meaning set forth in the recitals hereto.
 
“PCA” has the meaning set forth in the recitals hereto.
 
“Voidable Transfer” has the meaning set forth in Section 9 of this Guaranty.
 
(b)  Construction. Unless the context of this Guaranty clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the terms “includes” and “including” are not
limiting, and the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or.” The words
“hereof,”“herein,”“hereby,”“hereunder,” and similar terms in this Guaranty refer
to this Guaranty as a whole and not to any particular provision of this
Guaranty. Section, subsection, clause, schedule, and exhibit references herein
are to this Guaranty unless otherwise specified. Any reference in this Guaranty
to any agreement, instrument, or document shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein). Neither this Guaranty nor any uncertainty or
ambiguity herein shall be construed against the Lender Group, any Bank Product
Provider, any Guarantor or Borrowers, whether under any rule of construction or
otherwise. On the contrary, this Guaranty has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to accomplish fairly the purposes and intentions of all parties
hereto. Any reference herein to the satisfaction or payment in full of the
Guarantied Obligations shall mean the payment in full in cash (or cash
collateralization in accordance with the terms of the Credit Agreement) of all
Guarantied Obligations other than contingent indemnification Guarantied
Obligations and other than any Bank Product Obligations that, at such time, are
allowed by the applicable Bank Product Provider to remain outstanding and are
not required to be repaid or cash collateralized pursuant to the provisions of
the Credit Agreement. Any reference herein to any Person shall be construed to
include such Person’s successors and assigns. Any requirement of a writing
contained herein shall be satisfied by the transmission of a Record and any
Record transmitted shall constitute a representation and warranty as to the
accuracy and completeness, in all material respects, of the information
contained therein.
 
2.  Guarantied Obligations. Each Guarantor hereby irrevocably and
unconditionally, jointly and severally, guaranties to Agent, for the benefit of
the Lender Group and the Bank Product Providers, as and for its own debt, until
final payment in full thereof has been made, (a) the prompt payment of the
Guarantied Obligations, when and as the same shall become due and payable,
whether at maturity, pursuant to a mandatory prepayment requirement, by
acceleration, or otherwise; it being the intent of each Guarantor that the
guaranty set forth herein shall be a guaranty of payment and not a guaranty of
collection; and (b) the punctual and faithful performance, keeping, observance,
and fulfillment by Borrowers of all of the agreements, conditions, covenants,
and obligations of Borrowers contained in the Credit Agreement and under each of
the other Loan Documents.
 
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3.  Continuing Guaranty. This Guaranty includes Guarantied Obligations arising
under successive transactions continuing, compromising, extending, increasing,
modifying, releasing, or renewing the Guarantied Obligations, changing the
interest rate, payment terms, or other terms and conditions thereof, or creating
new or additional Guarantied Obligations after prior Guarantied Obligations have
been satisfied in whole or in part. To the maximum extent permitted by law, each
Guarantor hereby waives any right to revoke this Guaranty as to future
Guarantied Obligations. If such a revocation is effective notwithstanding the
foregoing waiver, each Guarantor acknowledges and agrees, to the maximum extent
permitted by law, that (a) no such revocation shall be effective until written
notice thereof has been received by Agent, (b) no such revocation shall apply to
any Guarantied Obligations in existence on such date (including any subsequent
continuation, extension, or renewal thereof, or change in the interest rate,
payment terms, or other terms and conditions thereof), (c) no such revocation
shall apply to any Guarantied Obligations made or created after such date to the
extent made or created pursuant to a legally binding commitment of Agent in
existence on the date of such revocation, (d) no payment by any Guarantor,
Borrowers, or from any other source, prior to the date of such revocation shall
reduce the maximum obligation of such Guarantor hereunder, and (e) any payment
by Borrowers or from any source other than Guarantor subsequent to the date of
such revocation shall first be applied to that portion of the Guarantied
Obligations as to which the revocation is effective and which are not,
therefore, guarantied hereunder, and to the extent so applied shall not reduce
the maximum obligation of the Guarantors hereunder.
 
4.  Performance Under this Guaranty. In the event that Borrowers fail to make
any payment of any Guarantied Obligations, on or prior to the due date thereof,
or if Borrowers shall fail to perform, keep, observe, or fulfill any other
obligation referred to in clause (b) of Section 2 of this Guaranty in the
manner, and subject to any cure periods, provided in the Credit Agreement or any
other Loan Document, each of the Guarantors immediately shall cause, as
applicable, such payment to be made or such obligation to be performed, kept,
observed, or fulfilled.
 
5.  Primary Obligations. This Guaranty is a primary and original obligation of
each Guarantor, is not merely the creation of a surety relationship, and is an
absolute, unconditional, and continuing guaranty of payment and performance
which shall remain in full force and effect without respect to future changes in
conditions. Each Guarantor hereby agrees that it is directly, jointly and
severally with each other Guarantor, and any other guarantor of the Guarantied
Obligations, liable to Agent, for the benefit of the Lender Group and the Bank
Product Providers, that the obligations of each Guarantor hereunder are
independent of the obligations of Borrowers, each other Guarantor or any other
guarantor, and that a separate action may be brought against Guarantor, whether
such action is brought against Borrowers, any other Guarantor, or any other
guarantor or whether Borrowers, any other Guarantor or any other guarantor is
joined in such action. Each Guarantor hereby agrees that its liability hereunder
shall be immediate and shall not be contingent upon the exercise or enforcement
by any member of the Lender Group or any Bank Product Provider of whatever
remedies they may have against Borrowers, any other Guarantor or any other
guarantor, or the enforcement of any lien or realization upon any security by
any member of the Lender Group or any Bank Product Provider. Each Guarantor
hereby agrees that any release which may be given by Agent to Borrowers, any
other Guarantor or any other guarantor shall not release such Guarantor. Each
Guarantor consents and agrees that no member of the Lender Group nor any Bank
Product Provider shall be under any obligation to marshal any property or assets
of Borrowers, any other Guarantor or any other guarantor in favor of Guarantor,
or against or in payment of any or all of the Guarantied Obligations.
 
6.  Waivers.
 
(a)  To the fullest extent permitted by applicable law, each Guarantor hereby
waives: (i) notice of acceptance hereof; (ii) notice of any loans or other
financial accommodations made or extended under the Credit Agreement, or the
creation or existence of any Guarantied Obligations; (iii) notice of the amount
of the Guarantied Obligations, subject, however, to such Guarantor’s rights to
make inquiry of Agent to ascertain the amount of the Guarantied Obligations at
any reasonable time; (iv) notice of any adverse change in the financial
condition of Borrowers or of any other fact that might increase such Guarantor’s
risk hereunder; (v) notice of presentment for payment, demand, protest, and
notice thereof as to any instrument among the Loan Documents; (vi) notice of any
Default or Event of Default under the Credit Agreement; and (vii) all other
notices (except if such notice is specifically required to be given to any
Guarantor under this Guaranty or any other Loan Documents to which any Guarantor
is a party) and demands to which any Guarantor might otherwise be entitled.
 
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(b)  To the fullest extent permitted by applicable law, each Guarantor hereby
waives the right by statute or otherwise to require any member of the Lender
Group or any Bank Product Provider, to institute suit against Borrowers or to
exhaust any rights and remedies which any member of the Lender Group or any Bank
Product Provider, has or may have against Borrowers. In this regard, each
Guarantor agrees that it is bound to the payment of each and all Guarantied
Obligations, whether now existing or hereafter arising, as fully as if the
Guarantied Obligations were directly owing to Agent, the Lender Group, or the
Bank Product Providers, as applicable, by each Guarantor. Each Guarantor further
waives any defense arising by reason of any disability or other defense (other
than the defense that the Guarantied Obligations shall have been performed and
paid in the manner provided for by the applicable Loan Documents, to the extent
of any such payment) of Borrowers or by reason of the cessation from any cause
whatsoever of the liability of Borrowers in respect thereof.
 
(c)  To the fullest extent permitted by applicable law, each Guarantor hereby
waives: (i) any right to assert against any member of the Lender Group or any
Bank Product Provider, any defense (legal or equitable), set-off, counterclaim,
or claim which such Guarantor may now or at any time hereafter have against
Borrowers or any other party liable to any member of the Lender Group or any
Bank Product Provider; (ii) any defense, set-off, counterclaim, or claim, of any
kind or nature, arising directly or indirectly from the present or future lack
of perfection, sufficiency, validity, or enforceability of the Guarantied
Obligations or any security therefor; (iii) any right or defense arising by
reason of any claim or defense based upon an election of remedies by any member
of the Lender Group or any Bank Product Provider; (iv) the benefit of any
statute of limitations affecting such Guarantor’s liability hereunder or the
enforcement thereof, and any act which shall defer or delay the operation of any
statute of limitations applicable to the Guarantied Obligations shall similarly
operate to defer or delay the operation of such statute of limitations
applicable to Guarantor’s liability hereunder.
 
(d)  Until such time as all of the Guarantied Obligations have been paid in
full: (i) each Guarantor hereby waives and postpones any right of subrogation
Guarantor has or may have as against Borrowers with respect to the Guarantied
Obligations; (ii) Guarantor hereby waives and postpones any right to proceed
against Borrowers, any other Guarantor or any of their respective Affiliates,
now or hereafter, for contribution, indemnity, reimbursement, or any other
suretyship rights and claims (irrespective of whether direct or indirect,
liquidated or contingent), with respect to the Guarantied Obligations; and
(iii) each Guarantor also hereby waives and postpones any right to proceed or to
seek recourse against or with respect to any property or asset of Borrowers.
 
(e)  If any of the Guarantied Obligations or the obligations of any Guarantor
under this Guaranty at any time are secured by a mortgage or deed of trust upon
real property, any member of the Lender Group or any Bank Product Provider may
elect, in its sole discretion, upon a default with respect to the Guarantied
Obligations or the obligations of the Guarantors under this Guaranty, to
foreclose such mortgage or deed of trust judicially or nonjudicially in any
manner permitted by law, before or after enforcing this Guaranty, without
diminishing or affecting the liability of such Guarantor hereunder. Each
Guarantor understands that (a) by virtue of the operation of antideficiency law
applicable to nonjudicial foreclosures, an election by any member of the Lender
Group or any Bank Product Provider to nonjudicially foreclose on such a mortgage
or deed of trust probably would have the effect of impairing or destroying
rights of subrogation, reimbursement, contribution, or indemnity of the
Guarantors against Borrowers or other guarantors or sureties, and (b) absent the
waiver given by Guarantors herein, such an election would estop the Lender Group
and the Bank Product Providers from enforcing this Guaranty against Guarantor.
Understanding the foregoing, and understanding that each Guarantor hereby is
relinquishing a defense to the enforceability of this Guaranty, each Guarantor
hereby waives any right to assert against any member of the Lender Group or any
Bank Product Provider any defense to the enforcement of this Guaranty, whether
denominated “estoppel” or otherwise, based on or arising from an election by any
member of the Lender Group or any Bank Product Provider to nonjudicially
foreclose on any such mortgage or deed of trust. Each Guarantor understands that
the effect of the foregoing waiver may be that such Guarantor may have liability
hereunder for amounts with respect to which such Guarantor may be left without
rights of subrogation, reimbursement, contribution, or indemnity against
Borrowers, the Guarantors or other guarantors or sureties.
 
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(f)  Without limiting the generality of any other waiver or other provision set
forth in this Guaranty, to the maximum extent permitted by applicable law, each
Guarantor waives all rights and defenses that such Guarantor may have if all or
part of the Guarantied Obligations are secured by real property. This means,
among other things:
 
(i)  Any member of the Lender Group or any Bank Product Provider may collect
from such Guarantor without first foreclosing on any real or personal property
collateral that may be pledged by such Guarantor, Borrowers, the other
Guarantors or any other guarantor.
 
(ii)  If any member of the Lender Group or any Bank Product Provider forecloses
on any real property collateral that may be pledged by such Guarantor,
Borrowers, the other Guarantors or any other guarantor:
 

(1)  
The amount of the Guarantied Obligations or any obligations of any Guarantor in
respect thereof may be reduced only by the price for which that collateral is
sold at the foreclosure sale, even if the collateral is worth more than the sale
price.

 

(2)  
Agent may collect from such Guarantor even if any member of the Lender Group or
any Bank Product Provider, by foreclosing on the real property collateral, has
destroyed any right such Guarantor may have to collect from Borrowers, the other
Guarantors, or any other guarantor.

 
To the maximum extent permitted by applicable law, this is an unconditional and
irrevocable waiver of any rights and defenses Guarantor may have if all or part
of the Guarantied Obligations are secured by real property.
 
(G)  WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET
FORTH IN THIS GUARNTY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH
GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES
BY ANY MEMBER OF THE LENDER GROUP OR ANY BANK PRODUCT PROVIDER, EVEN THOUGH SUCH
ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY
FOR THE GUARANTIED OBLIGATIONS, HAS DESTROYED SUCH GUARANTOR’S RIGHTS OF
SUBROGATION AND REIMBURSEMENT AGAINST BORROWERS BY THE OPERATION OF APPLICABLE
LAW.
 
(h)  Without limiting the generality of any other waiver or other provision set
forth in this Guaranty, each Guarantor hereby agrees as follows:
 
(i)  Agent’s right to enforce this Guaranty is absolute and is not contingent
upon the genuineness, validity or enforceability of any of the Loan Documents.
Each Guarantor agrees that Agent’s rights under this Guaranty shall be
enforceable to the extent any Guarantied Obligations remain outstanding even if
Borrowers had no liability at the time of execution of the Loan Documents or
later ceases to be liable.
 
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(ii)  Guarantor agrees that Agent’s rights under the Loan Documents will remain
enforceable even if the amount secured by the Loan Documents is larger in amount
and more burdensome than that for which Borrowers are responsible. The
enforceability of this Guaranty against each Guarantor shall continue until all
sums due under the Loan Documents have been paid in full and shall not be
limited or affected in any way by any impairment or any diminution or loss of
value of any security or collateral for Borrowers’ obligations under the Loan
Documents, from whatever cause, the failure of any security interest in any such
security or collateral or any disability or other defense of Borrowers, any
other Guarantor, or any other guarantor of Borrowers’ obligations under any
other Loan Document, any pledgor of collateral for any Person’s obligations to
Agent or any other Person in connection with the Loan Documents.
 
(iii)  To the maximum extent permitted by applicable law, each Guarantor waives
the right to require Agent to (A) proceed against Borrowers, any other
Guarantor, or any guarantor of Borrowers’ obligations under any Loan Document,
any other pledgor of collateral for any person’s obligations to Agent or any
other person in connection with the Guarantied Obligations, (B) proceed against
or exhaust any other security or collateral Agent may hold, or (C) pursue any
other right or remedy for such Guarantor’s benefit, and agrees that Agent may
exercise its right under this Guaranty without taking any action against
Borrowers, any other Guarantor or any other guarantor of Borrowers’ obligations
under the Loan Documents, any pledgor of collateral for any Person’s obligations
to Agent or any other Person in connection with the Guarantied Obligations, and
without proceeding against or exhausting any security or collateral Agent holds.
 
(iv)  Each Guarantor’s liability with respect to the Guaranteed Obligations
shall remain in full force and effect without regard to, and shall not be
impaired or affected by, nor shall the Guarantor be exonerated or discharged by,
any acts of any Governmental Authority of or in any jurisdiction affecting
Borrowers, such Guarantor, any other Guarantor, or any other guarantor of
Borrowers’ obligations under the Loan Documents, any pledgor of collateral for
any Person’s obligations to Agent or any other Person, including any
restrictions on the conversion or exchange of currency or repatriation or
control of funds, a declaration of banking moratorium or any suspension of
payments by banks in any jurisdiction or the imposition by any jurisdiction or
any Governmental Authority thereof or therein of any moratorium on, the required
rescheduling or restructuring of, or required approval of payments on, any
indebtedness in such jurisdiction, or any total or partial expropriation,
confiscation, nationalization or requisition of any such Person’s property; any
war (whether or not declared), insurrection, revolution, hostile act, civil
strife or similar events occurring in any jurisdiction; or any economic,
political, regulatory or other events in any jurisdiction
 
7.  Releases. Each Guarantor consents and agrees that, without notice to or by
any Guarantor and without affecting or impairing the obligations of any
Guarantor hereunder, any member of the Lender Group or any Bank Product Provider
may, by action or inaction, compromise or settle, extend the period of duration
or the time for the payment, or discharge the performance of, or may refuse to,
or otherwise not enforce, or may, by action or inaction, release all or any one
or more parties to, any one or more of the terms and provisions of the Credit
Agreement or any other Loan Document or may grant other indulgences to Borrowers
in respect thereof, or may amend or modify in any manner and at any time (or
from time to time) any one or more of the Credit Agreement or any other Loan
Document, or may, by action or inaction, release or substitute any Guarantor or
any other guarantor, if any, of the Guarantied Obligations, or may enforce,
exchange, release, or waive, by action or inaction, any security for the
Guarantied Obligations or any other guaranty of the Guarantied Obligations, or
any portion thereof.
 
8.  No Election. The Lender Group and the Bank Product Providers shall have the
right to seek recourse against each Guarantor to the fullest extent provided for
herein and no election by any member of the Lender Group or any Bank Product
Provider to proceed in one form of action or proceeding, or against any party,
or on any obligation, shall constitute a waiver of the Lender Group’s or any
Bank Product Provider’s right to proceed in any other form of action or
proceeding or against other parties unless Agent, on behalf of the Lender Group
or the Bank Product Providers, has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action or
proceeding by the Lender Group or the Bank Product Providers under any document
or instrument evidencing the Guarantied Obligations shall serve to diminish the
liability of any Guarantor under this Guaranty except to the extent that the
Lender Group and the Bank Product Providers finally and unconditionally shall
have realized payment in full of the Guarantied Obligations by such action or
proceeding.
 
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9.  Revival and Reinstatement. If the incurrence or payment of the Guarantied
Obligations or the obligations of any Guarantor under this Guaranty by such
Guarantor or the transfer by such Guarantor to Agent of any property of such
Guarantor should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a “Voidable Transfer”), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of each
Guarantor automatically shall be revived, reinstated, and restored and shall
exist as though such Voidable Transfer had never been made.
 
10.  Financial Condition of Borrowers. Each Guarantor represents and warrants to
the Lender Group and the Bank Product Providers that it is currently informed of
the financial condition of Borrowers and of all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of nonpayment of the
Guarantied Obligations. Each Guarantor further represents and warrants to the
Lender Group and the Bank Product Providers that it has read and understands the
terms and conditions of the Credit Agreement and each other Loan Document. Each
Guarantor hereby covenants that it will continue to keep itself informed of
Borrowers’ financial condition, the financial condition of other Guarantors and
guarantors, if any, and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Guarantied Obligations.
 
11.  Payments; Application. All payments to be made hereunder by any Guarantor
shall be made in Dollars, in immediately available funds, and without deduction
(whether for taxes or otherwise) or offset and shall be applied to the
Guarantied Obligations in accordance with the terms of the Credit Agreement.
 
12.  Attorneys Fees and Costs. Subject to any limitation on expense
reimbursement contained in the Credit Agreement, each Guarantor jointly and
severally agrees to pay, on demand, all attorneys fees and all other costs and
expenses which may be incurred by Agent or the Lender Group in connection with
the protection, assertion, or enforcement of this Guaranty or in any way arising
out of, or consequential to, the protection, assertion, or enforcement of the
Guarantied Obligations (or any security therefor), irrespective of whether suit
is brought.
 
13.  Notices. All notices and other communications hereunder to Agent shall be
in writing and shall be mailed, sent, or delivered in accordance Section 11 of
the Credit Agreement. All notices and other communications hereunder to
Guarantors shall be in writing and shall be mailed, sent, or delivered in care
of Borrowers in accordance with Section 11 of the Credit Agreement.
 
14.  Cumulative Remedies. No remedy under this Guaranty, under the Credit
Agreement, or any other Loan Document is intended to be exclusive of any other
remedy, but each and every remedy shall be cumulative and in addition to any and
every other remedy given under this Guaranty, under the Credit Agreement, or any
other Loan Document, and those provided by law. No failure on the part of the
Lender Group or Agent on behalf thereof to exercise, and no delay in exercising,
any right under this Guaranty shall operate as a waiver thereof; nor shall any
single or partial exercise of any right under this Guaranty preclude any other
or further exercise thereof or the exercise of any other right.
 
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15.  Severability of Provisions. If any provision of this Guaranty is held to be
illegal, invalid or unenforceable under present or future laws, the legality,
validity and enforceability of the remaining provisions of this Guaranty shall
not be affected thereby.
 
16.  Entire Agreement; Amendments. This Guaranty constitutes the entire
agreement among the Guarantors and the Lender Group pertaining to the subject
matter contained herein. This Guaranty may not be altered, amended, or modified,
nor may any provision hereof be waived or noncompliance therewith consented to,
except by means of a writing executed by each Guarantor and Agent, on behalf of
the Lender Group. Any such alteration, amendment, modification, waiver, or
consent shall be effective only to the extent specified therein and for the
specific purpose for which given. No course of dealing and no delay or waiver of
any right or default under this Guaranty shall be deemed a waiver of any other,
similar or dissimilar, right or default or otherwise prejudice the rights and
remedies hereunder.
 
17.  Successors and Assigns. This Guaranty shall be binding upon each Guarantor
and its successors and assigns and shall inure to the benefit of the successors
and permitted assigns of the Lender Group and the Bank Product Providers;
provided, however, that no Guarantor may assign this Guaranty or delegate any of
its duties hereunder without Agent’s prior written consent and any unconsented
to assignment shall be absolutely void. In the event of any assignment or other
transfer of rights by the Lender Group (in accordance with the terms of the
Credit Agreement) or the Bank Product Providers, the rights and benefits herein
conferred upon the Lender Group and the Bank Product Providers shall
automatically extend to and be vested in such permitted assignee or other
permitted transferee.
 
18.  No Third Party Beneficiary. This Guaranty is solely for the benefit of each
member of the Lender Group, each Bank Product Provider, and each of their
successors and assigns and may not be relied on by any other Person.
 
19.  Choice of Law and Venue; Jury Trial Waiver.
 
THE VALIDITY OF THIS GUARANTY, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
 
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS GUARANTY SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE BOROUGH OF MANAHTTAN,
COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GUARANTOR
AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 19.
 
EACH GUARANTOR AND EACH MEMBER OF THE LENDER GROUP (BY ITS ACCEPTANCE HEREOF)
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH GUARANTOR AND EACH
MEMBER OF THE LENDER GROUP (BY ITS ACCEPTANCE HEREOF) REPRESENTS THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
 
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20.  Counterparts; Telefacsimile Execution. This Guaranty may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Guaranty. Delivery of an executed counterpart of this Guaranty by telefacsimile
shall be equally as effective as delivery of an original executed counterpart of
this Guaranty. Any party delivering an executed counterpart of this Guaranty by
telefacsimile also shall deliver an original executed counterpart of this
Guaranty but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Guaranty.
 
21.  Agreement to be Bound. Each Guarantor hereby agrees to be bound by each and
all of the terms and provisions of the Credit Agreement. Without limiting the
generality of the foregoing, by its execution and delivery of this Guaranty,
each Guarantor that is a Subsidiary of Parent Guarantor hereby: (a) makes to the
Lender Group each of the representations and warranties set forth in the Credit
Agreement applicable to such Guarantor fully as though such Guarantor were a
party thereto, and such representations and warranties are incorporated herein
by this reference, mutatis mutandis; and (b) agrees and covenants (i) to do each
of the things set forth in the Credit Agreement that Parent Guarantor and
Borrowers agree and covenant to cause their respective Subsidiaries to do, and
(ii) to not do each of the things set forth in the Credit Agreement that Parent
Guarantor and/or Borrowers agree and covenant to cause their Subsidiaries not to
do, in each case, fully as though such Guarantor was a party thereto, and such
agreements and covenants are incorporated herein by this reference, mutatis
mutandis.
 
[Signature page to follow]
 

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IN WITNESS WHEREOF, the undersigned has executed and delivered this Guaranty as
of the date first written above.
 
PORTRAIT CORPORATION OF AMERICA, INC.,
a Delaware corporation
   
By: /s/ Donald Norsworthy___________
Name: Donald Norsworthy
Title: Executive Vice President and Chief Financial Officer
 
PCA FINANCE CORP.,
a Delaware corporation
   
By: /s/ Donald Norsworthy___________
Name: Donald Norsworthy
Title: Executive Vice President and Chief Financial Officer
 
PHOTO CORPORATION OF AMERICA,
a North Carolina corporation
   
By: /s/ Donald Norsworthy___________
Name: Donald Norsworthy
Title: Executive Vice President and Chief Financial Officer
 
WELLS FARGO FOOTHILL, INC.,
a California corporation,
as Agent
   
By: /s/ Cheri MacDonald______________
Name: Cheri MacDonald
Title: Vice President
 

 
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