EMPLOYMENT AND NONCOMPETE AGREEMENT


         THIS  EMPLOYMENT  AND  NONCOMPETE  AGREEMENT  ("Agreement"),  made  and
entered  into as of the 14th day of  September,  1996,  by and between  James O.
Mattox, an individual resident of Charlotte,  North Carolina  ("Employee"),  and
AMERICAN  STUDIOS,  INC.,  a  North  Carolina  corporation  with  its  principal
executive offices located in Charlotte, North Carolina (the "Company").

                               W I T N E S S E T H

         WHEREAS,  the Company  desires to employ  Employee as an Executive Vice
President -  Operations  and  Employee  desires to be employed by the Company in
this position.

         NOW,  THEREFORE,  in  consideration  of the  promises  and  the  mutual
covenants  contained herein and specifically the increase in severance  pursuant
to section 5, below,  over that provided in Employee's  prior Agreement with the
Company, the parties hereto agree as follows:

         1. Employment.  Subject to the terms and conditions stated herein,  and
in  consideration  of Employee's  obligations and covenants,  including  without
limitation,  those obligations and covenants set forth in Section 9 hereof,  the
Company agrees to employ Employee on an active and full-time basis, and Employee
accepts such  employment,  as Executive Vice President - Operations,  subject to
the order,  supervision  and  direction of the Board of Directors of the Company
(the "Board of Directors") and the Chief  Executive  Officer of the Company (the
"CEO").

         2. Duties. Employee shall serve the Company as Executive Vice President
- Operations and shall devote his full business time,  skill and best efforts to
the   business  of  the  Company  and   faithfully   perform   such   executive,
administrative  and  supervisory  duties  as may be  prescribed  by the Board of
Directors  or the CEO.  Employee  shall act at all times in  compliance,  in all
material respects,  with all policies,  rules and decisions adopted from time to
time by the Board of Directors of which  Employee  shall have  received  written
notice.  The Board of Directors and the CEO shall deal with the Employee in good
faith and shall not require that Employee be required to relocate his residence,
travel to the  extent  that he must spend  more  nights  away from home than are
reasonably  required to further the Company's  business,  or perform tasks which
would be demeaning or degrading to one in his position.

         3. Term of Employment. The term of Employee's employment by the Company
hereunder  shall  commence as of the date hereof and shall continue for a period
of three (3) years after such commencement date (the "Term of Employment").


<PAGE>

         4. Base Compensation.  The base annual  compensation rate to be paid to
Employee for the services to be rendered  hereunder ("Base Rate") throughout the
Term of Employment,  except to the extent adjusted as provided  below,  shall be
One Hundred and Twenty-Five  Thousand  Dollars  ($125,000.00),  payable in equal
biweekly installments, subject to applicable federal and state income and social
security tax withholding requirements. Employee's Base Rate may be reviewed from
time to time by the CEO and the Board of  Directors  or a committee  thereof and
adjusted  upward as Employee's  performance,  the performance of the Company and
other pertinent factors warrant.

         5.  Termination  Without  Cause.  The Board of Directors or the CEO may
terminate Employee's  employment at any time, without cause, but in the event of
a termination  other than a Termination for Cause, as hereinafter  defined,  the
Company will pay, either in a lump sum or in 26 equal bi-weekly payments, at the
option of the  Company,  an amount  equal to the then Base Rate to  Employee  as
additional  compensation.  In the event the Company does not offer to renew this
Agreement at the end of the Term of Employment upon the same or better terms and
conditions,  such termination of this Agreement and Employee's  employment shall
be deemed a termination other than a Termination for Cause.

If Employee's  employment  with ASI is terminated  within two years  following a
Change in Control Event, as defined below, or if Employee's employment by ASI is
terminated  prior to a Change in Control Event at the request of any  individual
or entity acquiring  ownership and control of ASI, Employee shall be entitled to
receive, in a lump sum payable within ten (10) days of such termination, two (2)
times the Employee's then Base Rate as additional compensation.

Each of the following events shall constitute a Change in Control Event:

  o       Any  person  or  entity  of  whatsoever   nature,   including  without
         limitation an individual,  corporation,  partnership, limited liability
         company or trust,  either  singly or  together  with that  person's  or
         entity's  affiliates or associates (as  "affiliate" or "associate"  are
         defined in connection with Rule 12b-2 of the Securities Exchange Act of
         1934) is or  becomes  the  beneficial  owner (as  defined in Rule 13d-3
         under the Securities Exchange Act of 1934), directly or indirectly,  of
         securities  of ASI  representing  fifty  percent  or more  of the  then
         outstanding securities entitled to vote in the election of directors of
         ASI and in any  filing  made  under  Section  13(d)  of the  Securities
         Exchange  Act of 1934 or  otherwise  states an  intention to acquire or
         exercise
                                       2
<PAGE>

         control of ASI or to otherwise influence management.

  o       A public  announcement  is made of a tender or  exchange  offer by any
         person or entity, including without limitation an individual,  company,
         corporation, partnership, limited liability company or trust, for fifty
         percent or more of the  outstanding  shares of ASI  entitled to vote in
         the election of directors, and the Board of Directors approves or fails
         to oppose that tender or exchange  offer in its  statements in Schedule
         14D-9 under the Exchange Act.

  o       The  stockholders of ASI approve a merger or consolidation of ASI with
         any other  corporation  or  partnership  (or,  if no such  approval  is
         required,  the  consummation of such a merger or consolidation of ASI),
         other  than  a  merger  or  consolidation  that  would  result  in  the
         securities  of ASI  entitled  to  vote  in the  election  of  directors
         outstanding  immediately before the consummation  thereof continuing to
         represent  (either by remaining  outstanding or by being converted into
         voting shares of the  surviving  entity or of a parent of the surviving
         entity)  fifty  percent  or more of the  combined  voting  power of the
         voting  shares of the  surviving  entity  (or its  parent)  outstanding
         immediately after that merger or consolidation.

         6.       Termination for Cause.

                  (a) The Board of  Directors or the CEO shall have the right at
any time, without advance notice, to terminate Employee's  employment for cause,
as hereinafter defined ("Termination for Cause").

                  (b)  Termination for Cause shall mean  termination  because of
Employee's  death,  inability  to perform his duties  hereunder,  theft from the
Company,  embezzlement of the Company's  funds,  falsification  of the Company's
records, fraud committed against the Company, commission of a felonious criminal
act involving the Company or while engaged in conduct of the Company's business,
incompetence  due to the use of or  reporting  to work  under the  influence  of
alcohol,  narcotics,  other  unlawful  drugs  or  controlled  substances,  legal
incapacity,  insanity, act or acts involving dishonesty or misconduct which have
or may reasonably be expected to have a material  adverse effect on the business
or reputation of the Company,  breach of fiduciary duty to the Company,  willful
and  substantial  failure to perform  stated duties or lawful  directives of the
Board of Directors,  the CEO or other  officer of the Company  designated by the
CEO, or material  breach of any provision of this Agreement,  including  without
limitation voluntary termination of this Agreement.

                                       3
<PAGE>

                  (c) In the event of a Termination  for Cause,  Employee  shall
have no right  thereafter to receive any compensation or other benefits from the
Company, except for COBRA, rights under stock option grants.

                  (d) The  provisions  of Section 9 hereof shall  continue to be
binding on the parties hereto  notwithstanding  the termination without cause or
Termination for Cause of Employee.


         7. Fringe  Benefits.  Employee shall be entitled to receive such fringe
benefits,  including  vacation and employee  benefit  plans,  if any, as are set
forth on Exhibit A hereto.

         8. Expenses.  The Company shall  reimburse  Employee for those expenses
that are incurred by him in connection  with the performance of his duties under
this Agreement,  are reasonably  related to the business of the Company and have
been approved, generally or specifically, verbally or in writing, by the CEO.

         9.       Noncompetition, Secrecy and Inventions.

                  (a)  Employee  specifically  acknowledges  and agrees that his
employment with the Company will bring him in personal contact with accounts and
customers of the Company, and will enable him to acquire valuable information as
to the nature and character of the business of the Company and the  requirements
of the accounts and customers of the Company.  Employee  acknowledges and agrees
that in the event he were to become employed by some other employer or enter the
same or similar business as the Company on his own or in conjunction with others
in competition with the Company,  such personal  contacts with the customers and
accounts of the Company and the  knowledge of such  valuable  information  would
give to Employee an unfair competitive advantage.

                  Throughout  the Term of Employment and for a period of two (2)
years  thereafter  (Employee's  Term  of  Employment  and  the  two-year  period
thereafter, together, the "Term of the Covenants"), Employee shall not, directly
or indirectly, as principal,  agent, manager,  employee,  partner,  shareholder,
director,  officer,  consultant  or otherwise,  participate  in or engage in the
Lines of Business, as hereinafter defined; provided,  however, that Employee may
own up to one percent  (1%) of the  outstanding  securities  of any  corporation
which is engaged in the Lines of Business, so long as such securities are traded
on a national securities exchange or are included in the National Association of
Securities  Dealers Quotation  System.  "Lines of Business" for purposes of this
Section 9 shall mean the  provision  of portrait  photography  services  through
itinerant or traveling
 
                                        4
<PAGE>

operations  or permanent  studios or any other  portrait
photography  service,  the  processing  or developing  of  photographic  film in
connection  with such  provision  and any other  lines of  business in which the
Company may engage during the Term of Employment.

                  (b) In  performing  the  covenants set forth in this Section 9
(all of the  covenants of Employee set forth in this  Section 9,  together,  the
"Covenants Not to Compete"),  Employee shall not, without limitation, during the
Term of the Covenants engage in the Lines of Business with any of the following:

      1.  any client,  account or customer of the Company,  or any subsidiary or
          affiliate of the Company,  that has done  business with the Company or
          such  affiliate or subsidiary  within two (2) years of the date of any
          alleged competitive act by Employee;
      2.  any client,  account or customer of the Company,  or any subsidiary or
          any affiliate of the Company,  that has  transacted  any business with
          the  Company  within  the  twelve  months  preceding  the date of this
          Agreement;
      3.  Wal-Mart Stores, Inc.;
      4.  any affiliate of Wal-Mart Stores,  Inc.,  including without limitation
          Sam's  Wholesale  Club,   HYPERMART*USA   and  Wal-Mart   SuperCenters
          ("Wal-Mart Affiliate");
      5.  PCA International, Inc.;
      6.  CPI Corp.;
      7.  Lifetouch National School Studios, Inc.;
      8.  any Wal-Mart  Stores,  Inc.  store that does business with the Company
          during the Term of the Covenants;
      9.  any  Wal-Mart  Affiliate  store that does  business  with the  Company
          during the Term of the Covenants;
      10. any  Wal-Mart  Stores,  Inc.  store with which the Board of  Directors
          reasonably expects to do business during the Term of the Covenants;
      11. any  Wal-Mart  Affiliate  store  with  which  the  Board of  Directors
          reasonably expects to do business during the Term of the Covenants;
      12. the Wal-Mart  Stores,  Inc. stores and Wal-Mart  Affiliate stores with
          which the Company is doing business as of the date of this Agreement;
      13. Cifra, S.A. de C.V.;
      14. Aurrera, S.A. de C.V., a subsidiary of Cifra, S.A. de C.V.;
      15. any other subsidiary of Cifra, S.A. de C.V.;
      16. any employee or former employee of the Company,  whose employment with
          the Company  terminated  less than two (2) years  prior to  Employee's
          association with such employee or former  employee,  within a ten-mile
          radius of any Wal-Mart  Stores,  Inc.  store or 
                                       5
<PAGE>
          any store in which the Company  has  engaged in the Lines of  Business
          within six (6) months prior to Employee's engaging in the Lines of 
          Business; or

      17. any person or entity in the geographic areas listed in paragraph 10(c)
          hereinbelow.

                  (c) In performing the Covenants Not to Compete, Employee shall
not, without limitation, during the Term of the Covenants engage in the Lines of
Business in any of the following geographic areas:

                  1.   The United States of America;
                  2.   The State of Alabama;
                  3.   The State of Arizona;
                  4.   The State of Arkansas;
                  5.   The State of California;
                  6.   The State of Colorado;
                  7.   The State of Connecticut;
                  8.   The State of Delaware;
                  9.   The District of Columbia;
                  10.  The State of Florida;
                  11.  The State of Georgia;
                  12.  The State of Idaho
                  13.  The State of Illinois;
                  14.  The State of Indiana;
                  15.  The State of Iowa;
                  16.  The State of Kansas;
                  17.  The State of Kentucky;
                  18.  The State of Louisiana;
                  19.  The State of Maine;
                  20.  The State of Maryland;
                  21.  The State of Massachusetts;
                  22.  The State of Michigan;
                  23.  The State of Minnesota;
                  24.  The State of Mississippi;
                  25.  The State of Missouri;
                  26.  The State of Montana
                  27.  The State of Nebraska;
                  28.  The State of Nevada
                  29.  The State of New Hampshire;
                  30.  The State of New Jersey;
                  31.  The State of New Mexico
                  32.  The State of New York;
                  33.  The State of North Carolina;
                  34.  The State of North Dakota;
                  35.  The State of Ohio;
                  36.  The State of Oklahoma;
                  37.  The State of Oregon;
                  38.  The State of Pennsylvania;
                  39.  The Commonwealth of Puerto Rico;
                  40.  The State of Rhode Island;

                                       6
<PAGE>

                  41.  The State of South Carolina;
                  42.  The State of South Dakota;
                  43.  The State of Tennessee;
                  44.  The State of Texas;
                  45.  The State of Utah
                  46.  The State of Vermont;
                  47.  The State of Virginia;
                  48.  The State of Washington;
                  49.  The State of West Virginia;
                  50.  The State of Wisconsin;
                  51.  The State of Wyoming;
                  52.  Mexico; or
                  53.  Counties in each State of the United States where the
                       Company has customers.

                  (d) As  applied  to  the  categories  of  persons,  firms  and
entities and  geographic  areas  covered by the  Covenants  Not to Compete,  the
provisions  of  paragraphs  10(b) and 10(c),  respectively,  shall be completely
severable and  independent,  and any invalidity or  unenforceability  thereof as
applied to any of such persons,  firms or entities or geographic areas shall not
affect the validity or  enforceability  thereof as applied to any one or more of
the other persons, firms or entities or geographic areas.

                  (e) Throughout  the Term of the Covenants,  Employee shall not
directly or indirectly cause or attempt to cause any supplier or customer of the
Company,  or any of its subsidiaries or affiliates,  or any governmental body or
public  agency,  not to do  business  with the  Company  or such  subsidiary  or
affiliate or to transfer all or part of its business  from the Company,  or such
subsidiary or affiliate, or otherwise interfere or attempt to interfere with any
business  relationship  between  the  Company,  or any of  its  subsidiaries  or
affiliates,  and any of such suppliers,  customers,  government bodies or public
agencies, unless directed by the Board of Directors of the Company to so do.

                  (f) Employee  acknowledges that irreparable injury will result
to the Company from any breach of the  Covenants  Not to Compete and there is no
adequate remedy at law to redress a breach or threatened breach of the Covenants
Not to Compete.  As a result of the foregoing,  Employee agrees that the parties
seeking to enforce any of such provisions  shall be entitled to an injunction or
other equitable  relief against  Employee to restrain him from such breach,  and
Employee  waives any claim or defense that the Company has an adequate remedy at
law for any such breach; provided,  however, that nothing contained herein shall
prohibit  the Company,  or any  subsidiary  or  affiliate  of the Company,  from
pursuing any other remedy it may have, including without limiting the generality
of the foregoing the recovery of


                                       7
<PAGE>

damages.

                  (g) If any court determines that any provision of this Section
9, or any part  thereof,  is invalid or  unenforceable,  the  remainder  of this
Section 9 shall not thereby be affected and shall be given full effect,  without
regard to the invalid  portions.  If any court  determines that any provision of
this Section 9, or any part thereof, is unenforceable because of the duration or
geographic scope of such provision, the parties agree that such court shall have
the power to reduce the duration or scope of such provision, as the case may be,
and the parties agree to request the court to exercise  such power,  and, in its
reduced form,  such provision  shall then be enforceable  and shall be enforced.
The  provisions  of  this  Section  9  shall  survive  the  termination  of this
Agreement, for whatever reason.

                  (h) At all times, both during and after the termination of his
employment,  Employee shall keep and retain in confidence and shall not, without
the prior  written  consent of the  Company,  disclose to any  persons,  firm or
corporation  or otherwise  use for his own benefit or the benefit of another any
of the proprietary,  confidential or secret  information or trade secrets of the
Company.  Further, Employee and the Company agree to keep confidential the terms
and conditions of this Agreement  except for such  disclosure as may be required
(i) in the event of a breach of this Agreement,  (ii) compulsion by law or court
order, or (iii) as may be required by any applicable provision of law.

                  (i) In consideration of employment,  and the compensation paid
to Employee as an employee of the Company,  Employee  hereby  recognizes  as the
exclusive  property  of, and  assigns,  transfers  and  conveys  to, the Company
without  further   consideration   each  invention,   discovery  or  improvement
(hereinafter   collectively   referred  to  as  "inventions")  made,  conceived,
developed  or first  reduced to practice by Employee  (whether  alone or jointly
with others)  during the Term of  Employment  or within one (1) year  thereafter
which  relates  in any  way to  Employee's  work  at the  Company  or any of its
subsidiaries  or affiliates.  Employee will  communicate to the Company  current
written  records of all such  inventions,  which records shall be and remain the
property of the Company. Upon request by the Company,  Employee will at any time
execute documents assigning to the Company, or its designees, any such invention
or any patent  application  or patent  granted  therefor,  and will  execute any
papers relating  thereto.  Employee also will give all reasonable  assistance to
the Company,  or its  designee,  regarding  any  litigation  or  controversy  in
connection with his inventions,  patent  applications,  or patents, all expenses
incident thereto to be assumed by the Company.

                                       8
<PAGE>


         10. Governing Law. This Agreement shall be construed and governed under
the laws of the State of North Carolina.

         11. Binding Nature. Except as expressly provided herein, this Agreement
shall be binding  upon and inure to the benefit of the parties  hereto and their
respective  heirs,  successors  and assigns.  The  obligations  and covenants of
Employee are personal in nature and, as such, are not assignable by him.

         12. Entire Agreement;  Prior Oral Agreement;  Amendment. This Agreement
contains  the entire  agreement  of the parties  with respect to the matters set
forth herein and supersedes all prior written and prior or contemporaneous  oral
agreements or understandings of the parties hereto.  This Agreement confirms and
sets  forth  the  prior  oral  agreement  of the  parties  as to the  terms  and
conditions of  Employee's  employment by the Company  stated  herein,  including
without  limitation,  the  obligations  and  covenants  of Employee set forth in
Section 9 hereof,  and Employee's  agreement to enter into a written  employment
agreement  with  the  Company,  as of the  date his  employment  by the  Company
commenced,  stating such terms and conditions.  This Agreement may be changed or
amended only by an agreement in writing signed by both parties hereto.

         13.  Severability,  Invalidity or  Unenforceability.  The severability,
invalidity or  unenforceability of any paragraph or part of any paragraph herein
shall  not in any  way  affect  the  validity  or  enforceability  of any  other
paragraph or any part of any other paragraph.

         14.  Prior  Agreements  and  Covenants  of  Employee.  Employee  hereby
warrants  and  represents  that he is not a party to any  agreement  or  binding
obligation,  oral or written,  that would prevent his employment by the Company,
and Employee's execution of this Agreement and his fulfillment of his duties and
obligations  hereunder  do not  and  will  not  violate  the  provisions  of any
agreement, contract, loan document or other binding written or oral obligation.

         15. Notices. Any notice,  offer,  acceptance or other document required
or permitted to be given pursuant to any  provisions of this Agreement  shall be
in  writing,  signed by or on  behalf of the  person  giving  the same,  and (as
elected by the person  giving such  notice)  delivered  by hand or mailed to the
parties at the  following  addresses by registered  or certified  mail,  postage
prepaid,  return receipt requested,  or by a third party company or governmental
entity  providing  delivery  services in the ordinary course of business,  which
guarantees delivery on a specified date:

                                       9
<PAGE>

         If to Employee:       James O. Mattox
                               2200 Trapper court
                               Charlotte, NC 28270

         If to the Company:    American Studios, Inc.
                               11001 Park Charlotte Blvd.
                               Charlotte, North Carolina 28273
                               Attention: J. Robert Wren, Jr.

         With copies to:      Elizabeth G. Wren
                              PETREE STOCKTON, L.L.P.
                              3500 One First Union Center
                              Charlotte, North Carolina 28202

or to such other address as any party hereto may designate by complying with the
provisions of this Section 15.

         Such  notice  shall  be  deemed  given  (i) as of the  date of  written
acknowledgment  by Employee or an officer of the Company if  delivered  by hand,
(ii)  seventy-two  (72) hours  after  deposit in United  States  mail if sent by
registered  or certified  mail or (iii) on the delivery  date  guaranteed by the
third party delivery service if sent by such service.

         Rejection or other refusal to accept or inability to deliver because of
changed  address of which no notice has been received  shall not affect the date
upon  which  the  notice  is  deemed  to  have  been  given   pursuant   hereto.
Notwithstanding the foregoing, no notice of change of address shall be effective
until the date of receipt hereof.

         IN WITNESS  WHEREOF,  James O.  Mattox has set his hand and seal hereto
and American  Studios,  Inc. has caused this Agreement to be executed and sealed
in its name by its duly authorized  officials as of the day and year first above
written.

                                    Employee:

                                    /s/ James O. Mattox (SEAL)
                                    -------------------------------
                                    JAMES O. MATTOX

                                    Company:
                                    AMERICAN STUDIOS, INC.


                                    By:  /s/ J. Robert Wren, Jr.
                                       -----------------------------
                                             J.   Robert Wren, Jr.
                                             CEO

                                       10
<PAGE>


                                    EXHIBIT A

                                 FRINGE BENEFITS


         1. Employee shall be entitled to twenty (20) days paid vacation  during
the first year of  employment  and twenty (20) days paid  vacation  each year of
employment thereafter. Vacation time is not cumulative.

         2.  Employee  shall be  entitled to sick leave in  accordance  with the
plans and procedures established by the Board of Directors.

         3. Employee  shall be entitled to such life  insurance  and  disability
insurance or other disability  benefits,  if any, as are provided by the Company
to its employees from time to time.

         4.  Employee  shall be entitled to receive  benefits as are afforded to
other similarly situated employees.