General Continuing Guaranty Among Guarantors and Wells Fargo Foothill

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.

     

    
      
        7

      

      
        
        

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        8

      

      
        
        

        
          

        

      

      
        
        

      

    

    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]

     

    



    
      
        
          9

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    



    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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