AMENDMENT No. 3 TO AGFA/PCA 2002 SALES CONTRACT

Exhibit 10.___

Confidential treatment has been requested for portions of this document. This copy of the document filed as an exhibit omits the confidential information subject to the confidential treatment request. Omissions are designated by three asterisks (***). A complete version of this document is being filed separately with the Securities and Exchange Commission.

AMENDMENT No. 3
TO
AGFA/PCA 2002 SALES CONTRACT

          THIS AMENDMENT, dated as of September 28, 2005 (the “Amendment”), by and among Portrait Corporation of America, Inc, a corporation organized and existing under the laws of the State of Delaware (“Portrait”); PCA International, Inc., a corporation formerly organized and existing under the laws of the State of North Carolina (“PCAT”); PCA LLC, a limited liability company organized and existing under the laws of Delaware (“PCA LLC” and, together with Portrait and PCAI, “PCA”); and AgfaPhoto USA Corporation, a company organized and existing under the laws of the State of Delaware (“AgfaPhoto USA”)

R E C I T A L S:

	A.		As of February 4, 2002, Agfa Corporation, a Delaware corporation (“Agfa Corporation ”), and PCAI entered into the “AGFA/PCA 2002 Sales Contract” (the “2002 Sales Contract”).
	B.		As of April 5, 2002, Agfa Corporation and PCAI entered into “Amendment No 1” to the 2002 Sales Contract (the “First Amendment”)
	C.		As of June 28, 2002, Agfa Corporation, PCAI and PCA LLC entered into “Amendment No 2” to the 2002 Sales Contract (the “Second Amendment”)
	D.		As of June 15, 2005, AgfaPhoto USA and Portrait entered into a letter agreement (the “Letter Agreement”).
	E.		As of the date hereof, PCA and AgfaPhoto USA wish to enter into this “Amendment No 3” to the Sales Contract (the “Third Amendment” and, together with the 2002 Sales Contract, the First Amendment , the Second Amendment and the Letter Agreement, the “Sales Contract”), pursuant to which (1) PCA is placing an order for certain Agfa Products with AgfaPhoto USA for a total purchase price of Four Million Nine Hundred and Fifty-Six Thousand and One Hundred U.S Dollars ($4,956,100.00) (the “Purchase Price”) on the terms and conditions of the Sales Contract, including the amendments thereto hereby provided (the “Order”), (2) PCA is agreeing that AgfaPhoto USA may delegate its obligations to ship said Agfa Products pursuant to the Order to AgfaPhoto GmbH, a German company (“Agfa GmbH”), (3) PCA agrees to make an advance on the Purchase Price of Two Million Six Hundred Fifty One Thousand and Forty One U.S. Dollars and Four Cents (US$2,651,041.04) (the “Advance”) in three installments in the amounts set forth herein (each, an “Installment”) to and for the benefit of AgfaPhoto USA with the understanding that AgfaPhoto USA is immediately assigning the right to receive each installment of the Advance to Agfa GmbH and AgfaPhoto USA hereby directs that PCA pay the Advance on its behalf to Agfa GmbH and (4) PCA agrees to pay the Purchase Price according to the terms herein, minus the Installments actually paid, to AgfaPhoto USA in accordance with the terms of the Sales Contract.

     NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

     1 Definition Unless otherwise defined herein, all capitalized terms herein shall have the meaning ascribed to them in the Sales Contract

     2 Conflicts if there shall be a conflict or inconsistency between the Sales Contract and this Amendment, the terms of this Amendment shall be determinative and shall prevail

     3 Representations and Warranties PCA represents and warrants to AgfaPhoto USA that:

          (a) PCA has the full power, capacity and legal right to make Advance to AgfaPhoto USA

     Each, of the parties to this agreement represents and warrants to the other that:

     (a) Each party has the full power, capacity and legal right to enter into this Agreement

     (b) the execution and delivery of this Agreement, and the performance of its terms, does not and will not constitute a default under the terms of any material agreement, indenture or other instrument, license, judgment, decree, order, law, ordinance or other governmental role or regulation applicable to such party or any of its property;

     (c) this Agreement has been, duly executed and delivered by each party and constitutes a legal, valid and binding obligation of such party enforceable in accordance with its terms, subject only to bankruptcy and similar laws

     4. Order PCA herewith places an order for the goods described in Exhibit A (the “Agfa Products”) and agrees to make payment of the Purchase Price as set forth on Exhibit A on the terms and conditions set forth herein PCA acknowledges and agrees that AgfaPhoto USA may delegate its obligation to manufacture and deliver the Agfa Products to Agfa GmbH Except as set forth herein, the Purchase Price shall be payable by PCA to AgfaPhoto USA in accordance with the terms of the Sales Contract The Agfa Products shall be delivered to PCA by Agfa GmbH from time to time in accordance with the schedule set forth in Exhibit A Notwithstanding any provision of this Agreement or the Sales Contract to the contrary, in the event the Agfa Products are delivered to PCA prior to the delivery times indicated on Exhibit A, PCA shall not be required to pay any balance owed for such Agfa Products to Agfa Photo USA until the delivery date indicated on Exhibit A for such Agfa Products.

     5. Advance Installment Payments; Shipments

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     (a) Advance on the Purchase Price PCA agrees to pay the Advance to Agfa GmbH on behalf of AgfaPhoto USA in three Installments as set forth in this Section 5. PCA agrees to pay the Purchase Price to AgfaPhoto USA in accordance with the terms of the Sales Contract, minus all Installments paid to Agfa. GmbH, regardless of the Order numbers to which the installments relate

     (b) First Installment. PCA herewith acknowledges and agrees that, in respect of the Order No.s US_01512, 01513, 01547, 01550 and 01621 (the “First Installment Products”), PCA shall, following execution of this Agreement and Verification as provided in (h) below, as a first Installment toward the Purchase Price, pay an amount of One Million Three Hundred Sixty Three Thousand Seven Hundred Sixteen Dollars and Sixty One Cents ($1,363,716 61) to the order of Agfa GmbH (the “ First Installment Payment). Upon receipt by Agfa GmbH of the First Installment Payment, title to the goods of the orders comprising the First Installment Products shall transfer to PCA Upon the completion of the First Installment Products, Agfa GmbH shall deliver the First Installment Products to PCA.

     (c) Second Installment. PCA herewith acknowledges and agrees that, in respect of the Order No. s US_01779, 01780, 01781, 01782 and 01925 (the “Second Installment Products”), PCA shall, on or before October 10, 2005, as a second Installment toward the Purchase Price pay an amount of Four Hundred and Eight Thousand Eight Hundred and Six Dollars and Forty Five Cents ($408, 806 45) to the order of Agfa GmbH (the “Second Installment Payment”), provided Agfa GmbH provides to PCA, on or before October 10, 2005, invoices from the suppliers of paper base or emulsions to be used to manufacture the Second Installment Products Upon receipt by Agfa GmbH of the Second Installment Payment, Agfa GmbH shall use the Second Installment Payment to purchase paper base or emulsions to be used to manufacture the Second Installment Products, and title to the goods comprising the Second Installment Products shall transfer to PCA Upon the completion of the Second Installment Products, Agfa GmbH shall deliver the Second Installment Products to PCA.

     (d) Third Installment PCA herewith acknowledges and agrees that, in respect of the following Order No. s US 01630, 01776 and 01778, (the “Shipment Installment Products”). PCA shall, upon receipt of a “Ready for shipment note” or other evidence that all of the Third Installment Products are ready for shipment, as a third Installment toward the Purchase Price pay an amount of in total Eight Hundred Seventy Eight Thousand Five Hundred Seventeen Dollars and Ninety Eight Cents ($878,517 98) to the order of Agfa GmbH (the “Third Installment Payment”) Upon receipt by Agfa GmbH of the Third Installment Payment, title to the goods comprising the Third Installment Products shall transfer to PCA. Upon receipt of the Third Installment Payment, Agfa GmbH shall deliver the Third Installment Products to PCA. It is recognized that AgfaPhoto USA has filed to deliver film pursuant to an order of PCA for which PCA has paid. In the event all of the film has not been delivered at the time of the Third Installment, PCA may withhold such amount of the Third Installment as represents its purchase price for such undelivered film and shall pay such amount of the Third Installment at such time as such undelivered film is delivered.

     (e) Objection; Cure; Dispute. If goods delivered by Agfa GmbH pursuant to the Order do not comply with the terms of the Sales Contract, PCA may deliver a written notice to AgfaPhoto USA, identifying the goods which do not so comply and describing in sufficient

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detail the relevant defects (the “Objection Notice”) Upon receipt of any Objection Notice, AgfaPhoto USA shall provide such Objection Notice to Agfa GmbH and, in its discretion, either cure the defects identified in the Objection Notice, replace the defective goods or obtain from Agfa GmbH a refund the relevant portion of the Advance, or, if AgfaPhoto USA disagrees with the existence or extent of such defect, deliver a written notice to PCA (the “Dispute Notice”) Upon the delivery of a Dispute Notice, PCA and AgfaPhoto USA shall in good faith negotiate a settlement of the dispute. If no settlement shall be forthcoming within thirty (30) days of the delivery of the relevant goods, either PCA or AgfaPhoto USA may initiate legal proceedings in accordance with Section 9.3 Upon the resolution of the dispute, whether upon the manual agreement of the parties or a final non-appealable judgment of a court with jurisdiction over the matter, the amounts (if any) shall he disbursed by Agfa GmbH in accordance with such settlement or judgment, or deemed a credit against any other orders or monies owing from PCA to AgfaPhoto USA.

     (f) Delivery Dates; Partial Refund If a shipment shall not be made within five (5) days of the relevant shipment delivery date set forth in Exhibit A or such later date as shall be due to a delay caused by PCA or a force majeure, then the amount payable in respect of such shipment as set forth on Exhibit A shall be immediately refunded to PCA by Agfa GmbH, however, if such amount is not refunded by Agfa GmbH, such amount shall be deemed a credit against any other orders or monies owing from PCA to AgfaPhoto USA.

     (g) Approval by Receiver. Agfa GmbH shall provide an acceptance of this Agreement by the Receiver in Bankruptcy for Agfa GmbH

     (h) Verification PCA shall, from time to time, send its representative, Xxxx Xxxxxxxxxx, to Agfa GmbH to verify the existence of the undelivered Agfa Products. The first of such visits shall take place on “Wednesday, October 5, 2005, for the purpose of verifying the First Installment Products and the Shipment Installment Products as well as purchase orders or invoices for the Second Installment Products and photographic film related to other orders placed by PCA. Upon each visit, Agfa GmbH will make available to PCA’s representative all relevant product and supporting documents.

     (i) Pursuant to the Assignment and Delegation of Advance and Order entered into between AgfaPhoto USA and Agfa GmbH, AgfaPhoto USA has delegated its obligation to deliver the Agfa Products to PCA and assigned to Agfa GmbH its right to receive the Installments and has directed PCA to pay such Installments directly to Agfa GmbH Agfa GmbH joins in this Agreement pursuant to its execution of the Acceptance and Acknowledgement below, for the purpose of confirming to PCA its acceptance of this Agreement; its obligations to produce, deliver and supply the Agfa Products pursuant to the order and the Sales Contract and its agreement to perform all of its obligations to PCA as set forth in this Agreement

     6 Modifications The Sales Contract shall be amended as follows:

     (a) The provisions of Sections 6 (advertising allowance) and 7(a) (rolling forecast) shall not apply to the Order.

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     (b) The first sentence of Section 14(e) shall be amended to provide for the laws of the State of New York (rather than New Jersey) and the second sentence of Section 14(e) shall provide for the City of New York (rather than New Jersey).

     (c) Section 14(f) shall be revised to read: “The prevailing party in any legal action based this Agreement shall be entitled to reimbursement for all coste and expenses incurred by or on behalf of it in connection with any dispute hereunder, including the fees and disbursements of its attorneys and other experts ”

     7. Confidentiality. To supplement the provisions of Section 11 of the 2002 Sales Contract, the parties agree that, unless otherwise required by applicable law (including, without limitation, the securities laws of the United States and rules and regulations thereunder; it being understood that PCA is a public filer under the United States securities laws), the terms and provisions of this Agreement shall be held in strict confidence Without limiting the generality of the foregoing, no oral and written disclosure or announcement to the press or the public shall be made without the prior written approval of all of the parties hereto. PCA may, however, make disclosures to its lenders pursuant to its loan agreements.

     8. Confirmation. Except as expressly set forth herein, the parties hereto confirm the terms and provisions of the Agreement. All sections of the Agreement regarding the interpretation of the Agreement shall also apply to the interpretation of this Amendment.

     9. Miscellaneous.

     9.1 No Waiver. No failure on the part of Agfa GmbH, or its respective agents, to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; not shall any single or partial exercise by Agfa GmbH, or any of its respective agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other light, power of remedy. The remedies herein cumulative and are not exclusive of any remedies provided by law.

     9.2 Governing Law. This Agreement shall be governed by, and construed in accordance with the law of the State of New York, without reference to principles of conflicts of law

     9.3 Dispute Resolution All disputes arising out of this Agreement and the transactions contemplated thereby, including those concerning the validity, interpretation, performance and remination thereof, shall be settled exclusively in the courts located in New York City. The prevailing party shall be entitled to reimbursement of its costs and expenses of enforcing this Agreement, including, without limitation, its attorneys and experts’ fees and expenses

     9.4 Notices. Any notice or other communication under this Agreement shall be in writing and shall be given by certified mail, return receipt requested or by reputable overnight courier (e. g, UPS, FedEx or DHL) addressed to the following addresses (or at such other address for a party as such party shall from time to time specify by like notice);

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If to PCA, to:

PCA LLC
000 Xxxxxxxx-Xxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxx

If to AgfaPhoto USA, to:
AgfaPhoto USA Corporation
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000-0000
Attention: Xx. Xxxx Xxxxx

With a copy to:
Xxxxxx & Bird LLP
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.

     9.5 Waivers. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed by the parties hereto.

     9.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns, except that PCA shall not assign its duties hereunder without the prior written consent of Agfa GmbH and AgfaPhoto USA.

     9.7 Counterparts. This Agreement may be execured in any number of counterparts, all of which together shall constitute one and the same instrument and any party hereto may execute this Agreement by signing any such counterpart.

     9.8 Severability. If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be construed in order to carry out the intentions of the parties hereto as nearly as may be possible and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.

     9.9 Entire Agreement. This Agreement (including the documents and the instruments referred to herein and the schedule hereto) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the signatories hereto with respect to the subject matter hereof. The Sales Contract shall not be superseded by this Agreement.

     9.10 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement, each non-breaching party would be irreparably and immediately harmed and could not be made whole by monetary

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damages. It is accordingly agreed that such parties shall be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to compel specific performance of this Agreement.

     9.11 Headings. Headings of the Sections of this Agreement are for convenience of the signatories only and shall be given no substantive or interpretative effect whatsoever.

     9.12 Further Assurances. The parties agree that, from time to time upon the written request of either party, the other party will execute and deliver such further documents and do such other acts and things as the other party may request in order fully to effect the purposes of this Agreement.

[Signatures on next page]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year fast above written

		Portrait Corporation of America Inc.
		By		/s/ [ILLEGIBLE]
		Name:		[ILLEGIBLE]
		Title:		Chairman, President & CEO
		PCA LLC
		By		/s/ [ILLEGIBLE]
		Name:		[ILLEGIBLE]
		Title:		Chairman, President & CEO
		AgfaPhoto USA Corporation
		By		/s/ [ILLEGIBLE]
		Name:		[ILLEGIBLE]
		Title:		President & CEO
		Agreed and Accepted this 5 day of October, 2005
		AgfaPhoto GmbH
		By		/s/ [ILLEGIBLE]
		Name:
		Title:

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Exhibit A

Agfa Products & Delivery Schedule

Order

Order

Sq. Meters

Number

Quantity

of Paper

Delivery Date

Purchase Price

US-01547

2,000 rolls

92,964

October 12, 2005

*

**

US-01512

3,000 rolls

278,892

October 12, 2005

*

**

US-01550

2,000 rolls

92,964

October 19, 2005

*

**

US-01513

3,000 rolls

278,892

October 19, 2005

*

**

US-01621

3,000 lolls

278,892

October 19. 2005

*

**

US-01630

3,000 rolls

278,892

November 2, 2005

*

**

US-01776

2,000 rolls

92,964

November 2, 2005

*

**

US-01778

3,000 rolls

278,892

November 2, 2005

*

**

US-01779

2,000 rolls

92,964

November 23, 2005

*

**

US-01780

3,000 rolls

278,892

November 23, 2005

*

**

US-01781

2,000 rolls

92,964

November 30, 2005

*

**

US-01782

3,000 rolls

278,892

November 30, 2005

*

**

US-01925

3,000 tolls

278,892

November 30, 2005

*

**

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