THIRD AMENDMENT TO CREDIT AGREEMENT, WAIVER, CONSENT AND FORBEARANCE AGREEMENT
THIRD AMENDMENT TO CREDIT AGREEMENT,
WAIVER, CONSENT AND FORBEARANCE AGREEMENT
WAIVER, CONSENT AND FORBEARANCE AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT, WAIVER, CONSENT AND FORBEARANCE AGREEMENT (this
“Amendment”), dated as of June 20, 2006, is entered into by and among the Lenders signatory
hereto, ▇▇▇▇▇ FARGO FOOTHILL, INC., a California corporation, in its capacity as agent for the
Lenders and Bank Product Providers (in such capacity
“Agent”). PCA LLC, a Delaware limited
liability company (“PCA”). each of PCA’s Subsidiaries identified on the signature pages hereof
(such Subsidiaries, together with PCA, are referred to hereinafter each individually as a
“Borrower”, and individually and collectively, jointly and severally, as the
“Borrowers”). Terms used herein without definition shall have the meanings ascribed to them
in the Credit Agreement defined below.
RECITALS
A. The Lenders signatory thereto, Agent, Borrowers and Parent Guarantor have
previously entered into that certain Credit Agreement dated
July 15, 2005, as amended by that
certain First Amendment to Credit Agreement, dated August 11, 2005, by and among the Agent, the
Borrowers and the Lenders signatory thereto and that certain Second Amendment to Credit Agreement,
dated December 5, 2005 , by and among the Agent, the Borrowers and the Lenders signatory thereto
(as amended, modified and supplemented from time to time, the “Credit Agreement”), pursuant
to which the Lenders have made certain loans and financial accommodations available to Borrowers
and Parent Guarantor, among others, has guaranteed such obligations.
B. Borrowers have failed to deliver to Agent consolidated and consolidating financial
statements of Parent Guarantor and its Subsidiaries for their fiscal year ended January 29, 2006 as
set forth in Schedule 5.3(c) of the Credit Agreement (the “Reporting Event of Default”) and
have advised Agent that such financial statements will be delivered with a “going concern”
qualification (the “Anticipated Qualification Event of Default” and together with the
Reporting Event of Default, the “Financial Statement Defaults”). Borrowers have requested
that Agent and the Lenders waive the Financial Statement Defaults.
C. Borrowers have failed, after the expiration of a thirty-day grace period, to make an
interest payment (the “▇▇▇▇▇▇▇ Payment”) due June 14, 2006 (the “▇▇▇▇▇▇▇ Event of
Default”) to GS Mezzanine Partners II, L.P. and GS Mezzanine Partners II Offshore, L.P.
(collectively, “▇▇▇▇▇▇▇”) in respect of the 13
3/4% Senior Subordinated Notes Due 2010
issued by PCA and guaranteed by certain of the Credit Parties pursuant to that certain Purchase
Agreement, dated as of June 27, 2002 among PCA, Parent Guarantor (as successor in interest to PCA
International Inc., a North Carolina corporation), the Credit Parties named therein, ▇▇▇▇▇▇▇, and
the purchasers named therein (as amended, modified and supplemented from time to time, the
“▇▇▇▇▇▇▇ Purchase Agreement”). Borrowers have requested that Agent and the Lenders
forbear from exercising any remedies under the Loan Documents with respect to the ▇▇▇▇▇▇▇ Event of
Default in order to allow Borrowers to obtain from ▇▇▇▇▇▇▇ a postponement of the ▇▇▇▇▇▇▇ Payment
and waiver of all events of default arising under the ▇▇▇▇▇▇▇ Purchase Agreement as a result of the
failure to timely make the ▇▇▇▇▇▇▇ Payment (any document effecting such a postponement and waiver
being the “▇▇▇▇▇▇▇ Amendment”).
D. Pursuant to the terms of the Agfa Contract, Agfa has agreed to forbear (the “Agfa
Forbearance”) from exercising its rights and remedies with respect to outstanding amounts owed
to Agfa (the “Agfa Indebtedness”) by the Borrowers until June 15, 2006 pending the
implementation of a new sales contract between Agfa and the Borrowers. Borrowers have not and do
not anticipate implementing such a contract and have not made payment on the Agfa Indebtedness
which event gives Agfa the right to institute action against the Credit Parties to the extent not
prohibited by the Agfa Subordination Agreement. Borrowers have
informed Agent that they intend to
make arrangements with Agfa to reinstate the Agfa Forbearance.
E. Borrowers have requested that Agent and the Lenders amend the definition of
Consolidated EBITDA in the Credit Agreement on the terms and conditions set forth herein.
F. Borrowers are entering into this Amendment with the understanding and agreement that, except as
specifically provided herein, none of the Lender Group’s rights or remedies as set forth in the
Credit Agreement or any other Loan Document is being waived or modified by the terms of this
Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Amendments to Credit Agreement.
(a) Clause (ii)(E) of the definition of “Consolidated EBITDA” in Schedule 1.1 of the Credit
Agreement is hereby amended and restated to read in its entirety as follows:
“(E) during
periods prior to July 30, 2006, Consolidated Non-Cash Charges of up to $2,320,000 in the
aggregate at any time reported during such periods, minus (or plus),”
(b) Section 11 of the Credit Agreement is hereby amended by replacing the notice party
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP appearing therein with the following notice party:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
2. Waiver of Financial Statement Defaults. Subject to the terms of Section 8
hereof, Agent and the Lenders hereby waive enforcement of the Lender Group’s rights against
Borrowers arising from the Financial Statement Defaults; provided, however, nothing
herein shall be deemed a waiver with respect to any other or future failure of Borrowers to comply
fully with Section 5.3 and Schedule 5.3(c) of the Credit Agreement (as amended or modified by this
Amendment). This waiver shall be effective only for the specific defaults comprising the Financial
Statement Defaults, and in no event shall this waiver be deemed to be a waiver of enforcement of
any of the Lender Group’s rights with respect to any other Defaults or Events of Default now
existing or hereafter arising. Nothing contained in this Amendment nor any communications between
Borrowers and any member of the Lender Group shall be a waiver of any rights or remedies the Lender
Group has or may have against Borrowers, except as specifically provided herein. Except as
specifically provided herein, each member of the Lender Group hereby reserves and preserves all of
its rights and remedies against Borrowers under the Credit Agreement and the other Loan Documents.
3. Agreement to Forbear.
(a) For the Forbearance Term (as defined below), neither Agent nor any Lender shall take any action
or commence any proceedings with respect to the enforcement of any of its rights or remedies under
the Loan Documents as a result of the ▇▇▇▇▇▇▇ Event of Default. The parties agree that neither the
foregoing agreement by Agent and the Lenders nor the acceptance by Agent or any Lender of any of
the payments provided for in the Credit Agreement or any other Loan Document, nor any payment prior
to the date hereof shall, however, (i) excuse any party from any of its obligations under the Loan
Documents, or (ii) toll the running of any time periods applicable to any such rights and remedies,
including, without limitation, any time periods within which any Borrower may cure Defaults under
the Credit Agreement or any other Loan Document or otherwise. Each Borrower agrees that it will not
assert laches, waiver or any other defense to the enforcement of any of the Loan Documents based
upon the foregoing agreement by Agent and the Lenders to
forbear or the acceptance by Agent or any Lender of any of the payments provided for in the
Financing Agreements or any payment prior to the date hereof.
(b) As used herein, “Forbearance Term” shall mean the period commencing upon the
effectiveness of this Amendment and continuing until the earliest to occur of: (i) the institution
of any actions or exercising of any remedies by ▇▇▇▇▇▇▇ or Agfa with respect to any Credit Party or
any of their respective assets or properties or issuance of any notice by ▇▇▇▇▇▇▇ or Agfa of its
intention to do so, (ii) if ▇▇▇▇▇▇▇ shall refuse to enter into the ▇▇▇▇▇▇▇ Amendment or require
that the applicable Credit Parties enter into an amendment to the ▇▇▇▇▇▇▇ Purchase Agreement that
is not on terms satisfactory to Agent, or (iii) any other Default or Event of Default under any of
the Loan Documents, and (iv) July 31, 2006.
4. Termination of Agreement to Forbear. Each Borrower acknowledges and agrees
that upon the termination of Lender’s agreement to forbear as provided in Section 3 hereof, Agent
and the Lenders shall be entitled to exercise any or all of their remedies under the Loan Documents
including, without limitation, the appointment of a receiver, the acceleration of the Obligations
and the enforcement of Agent’s Liens, as a result of the ▇▇▇▇▇▇▇ Event of Default, and at any time
Agent and the Lenders shall be entitled to exercise any or all of their remedies under the Loan
Documents as a result of any other Default or Event of Default.
5. Release: Covenant Not to ▇▇▇.
(a) Each Borrower hereby absolutely and unconditionally releases and forever
discharges the Lender Group, and any and all of their respective participants, parent corporations,
subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns
thereof, together with all of the present and former directors, officers, agents and employees of
any of the foregoing (each a “Released Party”), from any and all claims, demands or causes
of action of any kind, nature or description, whether arising in law or equity or upon contract or
tort or under any state or federal law or otherwise, which such Borrower has had, now has or has
made claim to have against any such person for or by reason of any act, omission, matter, cause or
thing whatsoever arising from the beginning of time to and including the date of this Amendment,
whether such claims, demands and causes of action are matured or unmatured or known or unknown. It
is the intention of Borrowers in providing this release that the same shall be effective as a bar
to each and every claim, demand and cause of action specified, and in furtherance of this intention
it waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the
State of California (or any comparable provision of any other applicable law), which provides:
“A general release does not extend to claims which the creditor does not know or suspect to exist
in his favor at the time of executing the release, which if known by him might have materially
affected his settlement with the debtor.”
Each Borrower acknowledges that it may hereafter discover facts different from or in addition to
those now known or believed to be true with respect to such claims, demands, or causes of action
and agree that this instrument shall be and remain effective in all respects notwithstanding any
such differences or additional facts. Each Borrower understands, acknowledges and agrees that the
release set forth above may be pleaded as a full and complete defense and may be used as a basis
for an injunction against any action, suit or other proceeding which may be instituted, prosecuted
or attempted in breach of the provisions of such release.
(b) Each Borrower, on behalf of itself and its successors, assigns, and other legal
representatives, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and
in favor of each Released Party above that it will not ▇▇▇ (at law, in equity, in any regulatory
proceeding or otherwise) any Released Party on the basis of any claim released, remised and
discharged by such Borrower pursuant to the above release. If any Borrower or any of its
successors, assigns or other legal representations violates the foregoing covenant, such Borrower,
for itself and its successors, assigns and legal representatives, agrees to pay, in addition to
such other damages as any Released Party may sustain as a result of such violation, all attorneys’
fees and costs incurred by such Released Party as a result of such violation.
6. Amendment Fee. In consideration of the agreements set forth herein, Borrowers
hereby agree to pay to Agent an amendment fee in the amount of
$25,000 (the “Amendment Fee”), which
fee is non-refundable when paid and is fully-earned as of and due and payable on the date of this
Amendment.
7. Effectiveness of this Amendment. Agent must have received the following items
and/or the following items shall have been satisfied, in form and content acceptable to Agent,
before this Amendment, and the waivers provided for herein are effective.
(a) Amendment; Acknowledgements and Releases. This Amendment and the attached
Acknowledgement and Release by Guarantors each fully executed in a sufficient number of
counterparts for distribution to all parties.
(b) Amendment Fee. The Amendment Fee, which may be paid as a charge to Borrowers’
Loan Account.
(c) Representations and Warranties. The representations and warranties set forth herein and
in the Credit Agreement must be true and correct.
(d) Other Required Documentation. All other documents and legal matters in connection with
the transactions contemplated by this Amendment shall have been delivered or executed or recorded,
as required by Agent.
8. Conditions Subsequent.
(a) Borrowers’ failure to deliver to Agent consolidated and consolidating financial
statements of Parent Guarantor and its Subsidiaries for their fiscal year ended January 29, 2006
(as audited by independent certified public accounts reasonably acceptable to Agent and certified,
without any qualifications (except for the “going concern” qualification) by such accountants to
have been prepared in accordance with GAAP) by June 23, 2006 shall constitute an Event of Default
under the Credit Agreement.
(b) If Borrowers shall fail, prior to the termination of the Forbearance Term, to procure
the reinstatement of the Agfa Forbearance for a period satisfactory to Agent, then such event shall
constitute an Event of Default under the Credit Agreement.
9. Consent. Agent and the Lenders hereby consent to the applicable Credit Parties
entering into the ▇▇▇▇▇▇▇ Amendment to the extent the ▇▇▇▇▇▇▇ Amendment (a) postpones the ▇▇▇▇▇▇▇
Payment to a date satisfactory to Agent, (b) waives all events of default arising under the ▇▇▇▇▇▇▇
Purchase Agreement as a result of the applicable Credit Parties’ failure to timely make the ▇▇▇▇▇▇▇
Payment and (c) is otherwise satisfactory to Agent in form and substance.
10. Representations and Warranties. Each Borrower represents and warrants as
follows:
(a) Authority. Each Borrower has the requisite corporate power and authority
to execute and deliver this Amendment, and to perform its obligations hereunder and under the Loan
Documents (as amended or modified hereby) to which it is a party. The execution, delivery and
performance by each Borrower of this Amendment have been duly approved by all necessary corporate
action and no other corporate proceedings are necessary to consummate such transactions.
(b) Enforceability. This Amendment has been duly executed and delivered by each
Borrower. This Amendment and each Loan Document (as amended or modified hereby) is the legal, valid
and binding obligation of each Borrower, enforceable against each Borrower in accordance with its
terms, and is in full force and effect.
(c) Representations and Warranties. The representations and warranties contained in each
Loan Document (other than any such representations or warranties that, by their terms, are
specifically made as of a date other than the date hereof) are correct on and as of the date hereof
as though made on and as of the date hereof.
(d) Due Execution. The execution, delivery and performance of this Amendment are
within the power of each Borrower, have been duly authorized by all necessary corporate action,
have received all necessary governmental approval, if any, and do not contravene any law or any
contractual restrictions binding on any Borrower.
(e) No Default. After giving effect to the waiver contained in this Amendment, no
event has occurred and is continuing that constitutes a Default or an
Event of Default.
(f) No Duress. This Amendment has been entered into without force or duress, of the
free will of each Borrower. Each Borrower’s decision to enter into this Amendment is a fully
informed decision and such Borrower is aware of all legal and other ramifications of such decision.
(g) Counsel. Each Borrower has read and understands this Amendment, has consulted
with and been represented by legal counsel in connection herewith, and has been advised by its
counsel of its rights and obligations hereunder and thereunder.
11. Choice of Law, etc. This Amendment is a Loan Document. The validity of this
Amendment, 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.
12. Counterparts. This Amendment may be executed in any number of counterparts and
by different parties and separate counterparts, each of which when so executed and delivered, shall
be deemed an original, and all of which, when taken together, shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this Amendment by
telefacsimile or other similar method of electronic transmission shall be effective as delivery of
a manually executed counterpart of this Amendment.
13. Reference to and Effect on the Loan Documents.
(a) Upon and after the effectiveness of this Amendment, each reference in the Credit
Agreement to “this Agreement”, “hereunder”,
“hereof” or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to
“the Credit Agreement”, “thereof” or
words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit
Agreement as modified and amended hereby.
(b) Except as specifically amended above, the Credit Agreement and all other Loan Documents,
are and shall continue to be in full force and effect and are hereby in all respects ratified and
confirmed and shall constitute the legal, valid, binding and enforceable obligations of the Credit
Parties to the Lender Group.
(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of the Lender Group under any of
the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
(d) To the extent that any terms and conditions in any of the Loan Documents shall contradict or be
in conflict with any terms or conditions of the Credit Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect
the terms and conditions of the Credit Agreement as modified or amended hereby.
14. Ratification and Reaffirmation. Each Borrower hereby restates, ratifies and
reaffirms each and every term and condition set forth in the Credit Agreement, as amended hereby,
and the Loan Documents effective as of the date hereof. Each Borrower hereby acknowledges that
the Loan Documents and the Obligations constitute the valid and binding obligations of Borrowers
enforceable against Borrowers in accordance with their respective terms, and each Borrower hereby
reaffirms its obligations under the Loan Documents. Agent’s and the Lenders’ entry into this
Amendment or any of the documents referenced herein, negotiations with any party with respect to
any Loan Document, conduct of any analysis or investigation of any Collateral, acceptance of any
payment from any Borrower or any other party of any payments made prior to the date hereof, or any
other action or failure to act on the part of Agent or any Lender shall not constitute, except to
the extent of the specific amendments contained in this Amendment, (a) a modification of any Loan
Document, or (b) a waiver of any Default or Event of Default under any Loan Document.
15. Integration. This Amendment, together with the other Loan Documents,
incorporates all negotiations of the parties hereto with respect to the subject matter hereof and
is the final expression and agreement of the parties hereto with respect to the subject matter
hereof.
16. Severability. In case any provision in this Amendment shall be invalid,
illegal or unenforceable, such provision shall be severable from the remainder of this Amendment
and the validity, legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
17. Incorporation of Recitals. The recitals to this Amendment are hereby
incorporated herein by this reference and represented by the Borrowers to be true and correct.
18. Submission of Amendment. The submission of this Amendment to the parties or
their agents or attorneys for review or signature does not constitute a commitment by Agent or the
Lenders to waive any of the Lender Group’s rights and remedies under the Loan Documents, and this
Amendment shall have no binding force or effect until all of the conditions to the effectiveness of
this Amendment have been satisfied as set forth herein.
[signature pages follow]
IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above
written.
| BORROWERS: | PCA LLC, | |||||
| a Delaware limited liability company | ||||||
| By: | /s/ [ILLEGIBLE] | |||||
| Its: | EVP & Secretary | |||||
| AMERICAN STUDIOS, INC., | ||||||
| a North Carolina corporation | ||||||
| By: | /s/ [ILLEGIBLE] | |||||
| Its: | EVP & Secretary | |||||
| PCA PHOTO CORPORATION OF CANADA, INC., | ||||||
| a North Carolina corporation | ||||||
| By: | /s/ [ILLEGIBLE] | |||||
| Its: | EVP & Secretary | |||||
| PCA NATIONAL LLC, | ||||||
| a Delaware limited liability company | ||||||
| By: | /s/ [ILLEGIBLE] | |||||
| Its: | EVP & Secretary | |||||
| HOMETOWN THREADS LLC, | ||||||
| a Delaware limited liability company | ||||||
| By: | /s/ [ILLEGIBLE] | |||||
| Its: | EVP & Secretary | |||||
| PCA NATIONAL OF TEXAS L.P., | ||||||||
| a Texas limited partnership | ||||||||
| By: | PCA NATIONAL LLC, | |||||||
| a Delaware limited liability company | ||||||||
| Its: | General Partner | |||||||
| By: | /s/ [ILLEGIBLE] | |||||||
| Its: | EVP & Secretary | |||||||
| AGENT AND A LENDER: | ▇▇▇▇▇ FARGO FOOTHILL, INC., | |||||
| a California corporation | ||||||
| By: | ||||||
| Its: | ||||||
| HOMETOWN THREA DS LLC, | ||||||
| a Delaware limited liability company | ||||||
| By: | ||||||
| Its: | ||||||
| PCA NATIONAL OF TEXAS L.P., | ||||||||
| a Texas limited partnership | ||||||||
| By: | PCA NATIONAL LLC, | |||||||
| a Delaware limited liability company | ||||||||
| Its: | General Partner | |||||||
| By: | ||||||||
| Its: | ||||||||
| AGENT AND A LENDER: | ▇▇▇▇▇ FARGO FOOTHILL, INC., | |||||
| a California corporation | ||||||
| By: | /s/ [ILLEGIBLE] | |||||
| Its: | Vice President | |||||
ACKNOWLEDGEMENT AND RELEASE BY GUARANTORS
In connection with the foregoing Third Amendment to Credit Agreement, Waiver, Consent and
Forbearance Agreement (the “Amendment”), each of the undersigned, being a Guarantor (as defined in
the Credit Agreement referenced in the Amendment) under their respective Guaranties (as defined in
the Credit Agreement referenced in the Amendment), hereby acknowledges and agrees to the Amendment
and confirms and agrees that its Guaranty is and shall continue to be, in full force and effect and
is hereby ratified and confirmed in all respects except that, upon the effectiveness of, and on and
after the date of the Amendment, each reference in such Guaranty to the Credit Agreement (as
defined in the Amendment), “thereunder”, “thereof” or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement as amended or modified by the
Amendment. Although Agent and the Lenders have informed Guarantors of the matters set forth above,
and Guarantors have acknowledged the same, each Guarantor understands and agrees that neither the
Lender Group nor the Bank Product Providers have any duty under the Credit Agreement, any Guaranty
or any other agreement with any Guarantor to so notify any Guarantor or to seek such an
acknowledgement, and nothing contained herein is intended to or shall create such a duty as to any
transaction hereafter.
Each Guarantor hereby absolutely and unconditionally releases and forever discharges each Released
Party (as defined in the Amendment), from any and all claims, demands or causes of action of any
kind, nature or description, whether arising in law or equity or upon contract or tort or under any
state or federal law or otherwise, which such Guarantor has had, now has or has made claim to have
against any such person for or by reason of any act, omission, matter, cause or thing whatsoever
arising from the beginning of time to and including the date hereof, whether such claims, demands
and causes of action are matured or unmatured or known or unknown. It is the intention of each
Guarantor in providing this release that the same shall be effective as a bar to each and every
claim, demand and cause of action specified[, and in furtherance of this intention it waives and
relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of
California (or any comparable provision of any other applicable law), which provides:
“A general release does not extend to claims which the creditor does not know or suspect to exist
in his favor at the time of executing the release, which if known by him might have materially
affected his settlement with the debtor.”
Each Guarantor acknowledges that it may hereafter discover facts different from or in addition to
those now known or believed to be true with respect to such claims, demands, or causes of action
and agree that this instrument shall be and remain effective in all respects notwithstanding any
such differences or additional facts. Each Guarantor understands, acknowledges and agrees that the
release set forth above may be pleaded as a full and complete defense and may be used as a basis
for an injunction against any action, suit or other proceeding which may be instituted, prosecuted
or attempted in breach of the provisions of such release. Each Guarantor, on behalf of itself and
its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each Released Party above that it will not
▇▇▇ (at law, in equity, in any regulatory proceeding or otherwise) any Released Party on the basis
of any claim released, remised and discharged by such Guarantor pursuant to the above release. If
any Guarantor or any of its successors, assigns or other legal representations violates the
foregoing covenant, such Guarantor, for itself and its successors, assigns and legal
representatives, agrees to pay, in addition to such other damages as any Released Party may sustain
as a result of such violation, all attorneys’ fees and costs incurred by such Released Party as a
result of such violation.
| PORTRAIT CORPORATION OF AMERICA, INC., | ||||||
| a Delaware corporation | ||||||
| By: | /s/ [ILLEGIBLE] | |||||
| Its: | EVP & Secretary | |||||
| PCA FINANCE CORP., | ||||||
| a Delaware corporation | ||||||
| By: | /s/ [ILLEGIBLE] | |||||
| Its: | EVP & Secretary | |||||
| PHOTO CORPORATION OF AMERICA, | ||||||
| a North Carolina corporation | ||||||
| By: | /s/ [ILLEGIBLE] | |||||
| Its: | EVP & Secretary | |||||