Exhibit 10.2

9,638,554 Shares

Photronics, Inc.

Common Stock (Par Value $0.01 Per Share)

UNDERWRITING AGREEMENT

September 10, 2009

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September 10, 2009

Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036

Ladies and Gentlemen:

Photronics, Inc., a Connecticut corporation (the “Company”), proposes to issue
and sell to the several underwriters named in Schedule I hereto (the
“Underwriters”), for whom you are acting as manager (the “Manager”) 9,638,554
shares of its common stock (par value $0.01 per share), (the “Firm Shares”). The
Company also proposes to issue and sell to the several Underwriters up to an
additional 1,445,783 shares of its common stock (par value $0.01 per share) (the
“Additional Shares”) if and to the extent that you, as the Manager of the
offering, shall have determined to exercise, on behalf of the Underwriters, the
right to purchase such shares of common stock granted to the Underwriters in
Section 2 hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the “Shares.” The shares of common stock (par value
$0.01 per share) of the Company to be outstanding after giving effect to the
sales contemplated hereby are hereinafter referred to as the “Common Stock.”
Concurrently with the offering of the Shares, the Company proposes to issue and
sell $50,000,000 aggregate principal amount of its 5.50% Convertible Senior
Notes Due 2014 (the “Convertible Notes”), and up to an additional $7,500,000
aggregate principal amount of its Convertible Notes if the underwriters exercise
their option to purchase additional notes in full. Neither the offering of the
Shares nor the offering of the Convertible Notes is conditioned upon the
successful completion of the other offering.

The Company has filed with the Securities and Exchange Commission (the
“Commission”) a registration statement (file number 333-160235), including a
prospectus, on Form S-3, relating to securities (the “Shelf Securities”),
including the Shares, to be issued from time to time by the Company and relating
to shares of Common Stock to be sold from time to time by the selling
shareholders named therein. The registration statement as amended to the date of
this Agreement, including the information (if any) deemed to be part of the
registration statement at the time of its effectiveness pursuant to Rule 430A or
Rule 430B under the Securities Act of 1933, as amended (the “Securities Act”),
is hereinafter referred to as the “Registration Statement”, and the related
prospectus covering the Shelf Securities dated June 25, 2009 in the form first
used to confirm sales of the Shares (or in the form first made available to the
Underwriters by the Company to meet requests of purchasers pursuant to Rule

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173 under the Securities Act) is hereinafter referred to as the “Basic
Prospectus.” If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the “Rule 462 Registration Statement”), then any reference
herein to the term “Registration Statement” shall be deemed to include such Rule
462 Registration Statement. The Basic Prospectus, as supplemented by the
prospectus supplement specifically relating to the Shares in the form first used
to confirm sales of the Shares (or in the form first made available to the
Underwriters by the Company to meet requests of purchasers pursuant to Rule 173
under the Securities Act) is hereinafter referred to as the “Prospectus,” and
the term “preliminary prospectus” means any preliminary form of the Prospectus.
For purposes of this Agreement, “free writing prospectus” has the meaning set
forth in Rule 405 under the Securities Act, “Time of Sale Prospectus” means the
Basic Prospectus, as supplemented by the preliminary prospectus supplement dated
September 9, 2009 relating to the Shares in the form first made available to the
Underwriters to offer the Shares, together with the free writing prospectuses,
if any, each identified in Schedule II hereto, and “broadly available road show”
means a “bona fide electronic road show” as defined in Rule 433(h)(5) under the
Securities Act that has been made available without restriction to any person.
As used herein, the terms “Registration Statement,” “Basic Prospectus,”
“preliminary prospectus,” “Time of Sale Prospectus” and “Prospectus” shall
include the documents, if any, incorporated by reference therein as of the date
of this Agreement. The terms “supplement,” “amendment” and “amend” as used
herein with respect to the Registration Statement, the Basic Prospectus, the
Time of Sale Prospectus, any preliminary prospectus or free writing prospectus
shall include all documents subsequently filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), that are deemed to be incorporated by reference therein. The
“Applicable Time” means 5:30 p.m. New York City Time, on September 10, 2009.

1. Representations and Warranties. The Company represents and warrants to and
agrees with each of the Underwriters that:

(a) The Registration Statement has become effective; no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or, to the knowledge of the Company,
threatened by the Commission.

(b) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act
and incorporated by reference in the Time of Sale Prospectus or the Prospectus
complied or will comply when so filed in all material respects with the Exchange
Act and the applicable rules and regulations of the Commission thereunder,
(ii) each part of the Registration Statement, when such part became effective,
did not contain, and each such part, as amended or supplemented, if applicable,
will not

 

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contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement as of the date hereof does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (iv) the Registration Statement and the Prospectus comply, and as
amended or supplemented, if applicable, will comply in all material respects
with the Securities Act and the applicable rules and regulations of the
Commission thereunder, (v) the Time of Sale Prospectus does not, and at the time
of each sale of the Shares in connection with the offering when the Prospectus
is not yet available to prospective purchasers and at the Closing Date (as
defined in Section 4), the Time of Sale Prospectus, as then amended or
supplemented by the Company, if applicable, will not, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, (vi) each broadly available road show, if any, when
considered together with the Time of Sale Prospectus, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading and (vii) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this paragraph do not apply to (A) statements or omissions in the
Registration Statement, the Time of Sale Prospectus or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Manager expressly for use therein or (B) that part
of the Registration Statement that constitutes the Statement of Eligibility
(Form T-1) under the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), of the trustee named therein.

(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Connecticut, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Time of Sale Prospectus and is duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject to
no material liability or disability by reason of the failure to be so qualified
in any such jurisdiction. The Company is not an “ineligible issuer” in
connection with the offering pursuant to Rules 164, 405 and 433 under the
Securities Act.

 

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Any free writing prospectus that the Company is required to file pursuant to
Rule 433(d) under the Securities Act has been, or will be, filed with the
Commission in accordance with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder. Each free writing
prospectus that the Company has filed, or is required to file, pursuant to Rule
433(d) under the Securities Act or that was prepared by or behalf of or used or
referred to by the Company complies or will comply in all material respects with
the requirements of the Securities Act and the applicable rules and regulations
of the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule II hereto forming part of the Time of Sale Prospectus,
and electronic road shows, if any, each furnished to you before first use, the
Company has not prepared, used or referred to, and will not, without your prior
consent, prepare, use or refer to, any free writing prospectus.

(d) Each significant subsidiary of the Company within the meaning of Rule
1-02(w) of Regulation S-X under the Securities Act (each a “Significant
Subsidiary”, collectively the “Significant Subsidiaries”) has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, and has the power and authority
(corporate and other) to own its properties and conduct its business as
described in the Time of Sale Prospectus and is duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so qualified in
any such jurisdiction.

(e) This Agreement has been duly authorized, executed and delivered by the
Company.

(f) The Company has an authorized capitalization as set forth in the Time of
Sale Prospectus and the Prospectus, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable; and all of the issued shares of capital stock of
each wholly-owned subsidiary of the Company, and all of the shares of capital
stock of each other subsidiary that are owned by the Company, have been duly and
validly authorized and issued, are fully paid and non-assessable and (except for
directors’ qualifying shares and except as set forth in the Time of Sale
Prospectus) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims, except in the case of any shares
pledged pursuant to the Credit Agreement, dated as of June 6, 2007, as amended,
among the Company, the foreign subsidiary borrowers party

 

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thereto, the lenders party thereto and JPMorgan Chase Bank, National
Association, as administrative agent, as amended (the “Credit Agreement”), or
the Loan Agreement dated as of June 8, 2009, as amended, among the Company, the
lenders party thereto and JPMorgan Chase Bank, National Association as
administrative agent and collateral agent (the “Loan Agreement”).

(g) The authorized capital stock of the Company conforms as to legal matters to
the description thereof contained in each of the Time of Sale Prospectus and the
Prospectus.

(h) The Shares have been duly and validly authorized and, when issued and
delivered in accordance with the provisions of this Agreement, will be duly and
validly issued, fully paid and non-assessable, and the issuance of the Shares
will not be subject to any preemptive or similar rights.

(i) The issue and sale of the Shares and the compliance by the Company with all
of the provisions of this Agreement and the consummation of the transactions
herein contemplated will not materially conflict with or result in a material
breach or violation of any of the terms or provisions of, or constitute a
material default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any material violation
of any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Shares by the Company or the
consummation by the Company of the transactions contemplated by this Agreement,
except (i) to the extent the failure to obtain such consent, approval,
authorization, order, registration or qualification would not materially
adversely affect the ability of the Company to consummate the transactions
contemplated by this Agreement, or (ii) such as have been obtained or made or
such as may be required under state securities or Blue Sky laws in connection
with the offer and sale of the Shares by the Underwriters.

(j) Neither the Company nor any of its Significant Subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Time of Sale Prospectus any

 

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material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Time of Sale Prospectus; and, since the date as of which
information is given in the Time of Sale Prospectus, there has not been any
material change in the capital stock or long-term debt of the Company or any of
its Significant Subsidiaries or any material adverse change, except for the sale
of the Shares and the sale by the Company of the Convertible Notes or any
development involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders’ equity or results
of operations of the Company and its subsidiaries taken as a whole.

(k) The Company and its subsidiaries have good and marketable title in fee
simple to all material real property and good and marketable title to all
material personal property owned by them, in each case free and clear of all
liens, encumbrances and defects, except such as are described in the Time of
Sale Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.

(l) There are no legal or governmental proceedings pending or, to the knowledge
of the Company, threatened to which the Company or any of its subsidiaries is a
party or to which any of the properties of the Company or any of its
subsidiaries is subject (i) other than proceedings accurately described in all
material respects in the Time of Sale Prospectus and proceedings that would not
have a material adverse effect on the Company and its subsidiaries, taken as a
whole, or on the power or ability of the Company to perform its obligations
under this Agreement or to consummate the transactions contemplated by the Time
of Sale Prospectus or (ii) that are required to be described in the Registration
Statement or the Prospectus and are not so described; and there are no statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.

(m) Each preliminary prospectus filed as part of the registration statement as
originally filed or as part of any amendment thereto, or filed pursuant to Rule
424 under the Securities Act, complied when so filed in all material respects
with the Securities Act and the applicable rules and regulations of the
Commission thereunder.

 

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(n) The Company is not, and after giving effect to the offering and sale of the
Shares, will not be, an “investment company” or an entity “controlled” by an
“investment company” as such terms are defined in the Investment Company Act of
1940, as amended.

(o) The Company and its Significant Subsidiaries and, to the Company’s
knowledge, its other subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment, hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, individually or in the aggregate, have a material adverse effect on
the consolidated financial position, shareholders’ equity or results of
operations of the Company and its subsidiaries taken as a whole.

(p) There are no contracts, agreements or understandings between the Company and
any person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement, except the
Registration Rights Agreement dated as of May 15, 2009 (the “Registration Rights
Agreement”) among the Company and the Holders named therein.

(q) There is and has been no failure on the part of the Company or any of the
Company’s directors or officers, in their capacities as such, to comply in all
material respects with any applicable provision of the Sarbanes-Oxley Act of
2002, as amended, and the rules and regulations promulgated in connection
therewith, including Section 402 related to loans and Sections 302 and 906
related to certifications.

(r) Neither the Company nor any of the Significant Subsidiaries or affiliates of
the Company, nor, any director, officer, employee, nor, to the Company’s
knowledge, any agent or representative of the Company nor any director, officer,
employee, agent or representative of the Significant Subsidiaries or the
Company’s affiliates,

 

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has taken or will take any action in furtherance of an offer, payment, promise
to pay, or authorization or approval of the payment or giving of money,
property, gifts or anything else of value, directly or indirectly, to any
“government official” (including any officer or employee of a government or
government-owned or controlled entity or of a public international organization,
or any person acting in an official capacity for or on behalf of any of the
foregoing, or any political party or party official or candidate for political
office) to influence official action or secure an improper advantage; and the
Company and the Significant Subsidiaries and, to the knowledge of the Company,
its affiliates, have conducted their businesses in compliance with applicable
anti-corruption laws and have instituted and maintain and will continue to
maintain policies and procedures designed to promote and achieve compliance with
such laws and with the representation and warranty contained herein.

(s) The operations of the Company and the Significant Subsidiaries are in
material compliance with all applicable financial recordkeeping and reporting
requirements, including those of the Bank Secrecy Act, as amended by Title III
of the Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the
applicable anti-money laundering statutes of jurisdictions where the Company and
the Significant Subsidiaries conduct business, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the
“Anti-Money Laundering Laws”), and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving
the Company or any of the Significant Subsidiaries with respect to the
Anti-Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.

(t) (i) Neither the Company nor any of the Significant Subsidiaries
(collectively, the “Entity”), nor, any director, officer or, to the knowledge of
the Company, any employee, agent, affiliate or representative of the Company,
nor, to the knowledge of the Company, any director, officer, employee, agent,
affiliate or representative of the Significant Subsidiaries, is an individual or
entity (“Person”) that is, or is owned or controlled by a Person that is:

(A) the subject of any sanctions administered or enforced by the U.S. Department
of Treasury’s Office of Foreign Assets Control (“OFAC”) or the United Nations
Security Council (“UNSC”) (collectively, “Sanctions”), nor

 

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(B) located, organized or resident in a country or territory that is the subject
of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North
Korea, Sudan and Syria).

(ii) The Entity represents and covenants that it will not, directly or
indirectly, use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
Person:

(A) to fund or facilitate any activities or business of or with any Person or in
any country or territory that, at the time of such funding or facilitation, is
the subject of Sanctions; or

(B) in any other manner that will result in a violation of Sanctions by any
Person (including any Person participating in the offering, whether as
underwriter, advisor, investor or otherwise).

(iii) The Entity represents and covenants that, for the past 3 years, it has not
knowingly engaged in, is not now knowingly engaged in, and will not engage in,
any dealings or transactions with any Person, or in any country or territory,
that at the time of the dealing or transaction is or was the subject of
Sanctions.

2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the
several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective number of Firm Shares set forth in Schedule I hereto
opposite its name at $3.92694 a share (the “Purchase Price”).

On the basis of the representations and warranties contained in this Agreement,
and subject to its terms and conditions, the Company agrees to sell to the
Underwriters the Additional Shares, and the Underwriters shall have the right to
purchase, severally and not jointly, up to 1,445,783 Additional Shares at the
Purchase Price. You may exercise this right on behalf of the Underwriters in
whole or from time to time in part by giving written notice not later than 30
days after the date of this Agreement. Any exercise notice shall specify the
number of Additional Shares to be purchased by the Underwriters and the date on
which such shares are to be purchased. Each purchase date must be at least one
business day after the written notice is given and may not be earlier than the
closing date for the Firm Shares nor later than ten business days after the date
of such notice.

 

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Additional Shares may be purchased as provided in Section 4 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. On each day, if any, that Additional Shares are to be purchased
(an “Option Closing Date”), each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased on such Option Closing
Date as the number of Firm Shares set forth in Schedule I hereto opposite the
name of such Underwriter bears to the total number of Firm Shares.

The Company hereby agrees that, without the prior written consent of the
Manager, it will not, during the period ending 90 days after the date of the
Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the Securities Act with respect to any of the foregoing or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the sale of the Shares
under this Agreement, (B) the issuance or sale of Common Stock or the grant of
options to purchase Common Stock by the Company in connection with employee
benefit plans as in effect at the date of the Prospectus, (C) the Convertible
Notes or any shares of Common Stock issuable upon conversion of the Convertible
Notes, (D) the filing of a registration statement under the Registration Rights
Agreement, (E) the issuance of warrants to purchase up to 750,000 shares of
Common Stock or the Common Stock issuable upon exercise of the warrants in
connection with a technology alliance or (F) the issuance by the Company of any
shares of common stock upon the exercise of an option or warrant, or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised.

Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day
restricted period, the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (2) prior to the expiration of
the 90-day restricted period, the Company announces that it will release
earnings results or becomes aware that material news or a material event will
occur during the 16-day period beginning on the last day of the 90-day
restricted period, the restrictions imposed by this paragraph shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event, as
applicable.

 

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3. Terms of Public Offering. The Company is advised by you that the Underwriters
propose to make a public offering of their respective portions of the Firm
Shares as soon after the Registration Statement and this Agreement have become
effective as in your judgment is advisable. The Company is further advised by
you that the Shares are to be offered to the public upon the terms set forth in
the Prospectus.

4. Payment and Delivery. Payment for the Firm Shares shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m. New York City time, on September 16, 2009, or at such
other time on the same or such other date, not later than September 23, 2009, as
the Manager and the Company agree upon in writing. The time and date of such
payment are hereinafter referred to as the “Closing Date.”

Payment for any Additional Shares shall be made to the Company in Federal or
other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the corresponding
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than ten business days after the date of such
notice, as shall be designated in writing by you.

The Firm Shares and Additional Shares shall be registered in such names and in
such denominations as you shall request in writing not later than one full
business day prior to the Closing Date or the applicable Option Closing Date, as
the case may be. The Firm Shares and Additional Shares shall be delivered to you
on the Closing Date or an Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.

5. Conditions to the Underwriters’ Obligations. The obligations of the Company
to sell the Shares to the Underwriters and the several obligations of the
Underwriters to purchase and pay for the Shares on the Closing Date are subject
to the following conditions: (i) the Registration Statement shall have become
effective, and the Underwriters shall have received notice thereof, not later
than 5:00 p.m., New York City time, on the date hereof; (ii) no order suspending
the effectiveness of the Registration Statement shall be in effect, and no
proceeding for such purpose shall be pending before or, to the Company’s
knowledge, threatened by the Commission; and (iii) the Prospectus shall have
been timely filed with the Commission under the Securities Act.

 

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The several obligations of the Underwriters are subject to the following further
conditions:

(a) Subsequent to the execution and delivery of this Agreement and prior to the
Closing Date:

(i) there shall not have occurred any downgrading, nor shall any notice have
been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in
the rating accorded any of the Company’s securities by any “nationally
recognized statistical rating organization,” as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act; and

(ii) there shall not have occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Time of Sale Prospectus as of the date of this
Agreement that, in your judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Shares on the terms and in the manner
contemplated in the Time of Sale Prospectus.

(b) The Underwriters shall have received on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of the Company, to the
effect set forth in Section 5(a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date, and that the Company has complied in
all material respects with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before the
Closing Date.

The officer signing and delivering such certificate may rely upon the best of
his or her knowledge as to proceedings threatened.

(c) The Underwriters shall have received on the Closing Date an opinion of
Shearman & Sterling LLP, New York counsel for the Company, dated the Closing
Date, to the effect that:

(i) the statements in the Time of Sale Prospectus and the Prospectus under the
caption “United States Federal Tax Considerations For Non-U.S. Holders”, insofar
as such statements constitute summaries of legal matters referred to therein,
fairly summarize in all material respects the legal matters referred to therein;

(ii) no authorization, approval or other action by, and no notice to or filing
with, any New York governmental authority

 

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or regulatory body, is required for the due execution, delivery or performance
by the Company of this Agreement, except as may be required under the securities
or blue sky laws of any jurisdiction in the United States in connection with the
offer and sale of the Securities, by the Financial Industry Regulatory Authority
or where the failure to obtain such authorization or approval, undertake such
action, provide such notice or make such filing would have no more than an
incidental effect on the transactions contemplated by this Agreement;

(iii) in the opinion of such counsel, (A) each of the documents incorporated by
reference in the Prospectus (other than the financial statements and other
financial or statistical data contained therein or omitted therefrom, as to
which such counsel need express no opinion), at the time it was filed with the
Commission, appears on its face to have been appropriately responsive in all
material respects to the requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder, and (B) each of the
Registration Statement and the Prospectus (other than the financial statements
and other financial or statistical data contained therein or omitted therefrom
and the Trustee’s Statement of Eligibility on Form T-1, as to which such counsel
need express no opinion) appears on its face to be appropriately responsive in
all material respects to the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder;

(iv) no facts have come to such counsel’s attention that caused such counsel to
believe that (A) the Registration Statement (other than the financial statements
and other financial or statistical data contained therein or omitted therefrom
and the Trustee’s Statement of Eligibility on Form T-1, as to which such counsel
has not been requested to comment), as of the date of the Applicable Time,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (B) the Time of Sale Prospectus (other than the financial
statements and other financial or statistical data contained therein or omitted
therefrom, as to which such counsel has not been requested to comment), as of
the Applicable Time contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; or
(C) the Prospectus (other than the financial statements and other financial or
statistical data contained therein or omitted

 

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therefrom, as to which such counsel has not been requested to comment), as of
the date of this Agreement or the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and

(v) the Company is not required to register as an investment company under the
Investment Company Act of 1940, as amended.

(d) The Underwriters shall have received on the Closing Date an opinion of
Brenner, Saltzman and Wallman LLP, Connecticut counsel for the Company, dated
the Closing Date, to the effect that:

(i) the Company is a corporation, duly organized and validly existing under the
laws of the State of Connecticut;

(ii) the Company has the requisite general power and authority to own and hold
its property and conduct its business as such business has been described in the
Time of Sale Prospectus and the Prospectus;

(iii) the Company has the right, power and authority to enter into, execute and
deliver and perform its obligations under this Agreement;

(iv) the execution and delivery by the Company of this Agreement, and the
performance by the Company, of its obligations hereunder, has been duly
authorized by all requisite corporate action of the Company;

(v) this Agreement has been duly executed and delivered by the Company;

(vi) the authorized capital stock of the Company conforms in all material
respects to the descriptions thereof and the statements made with respect
thereto in the Time of Sale Prospectus and the Prospectus under the caption
“Description of Common Stock and Preferred Stock”;

(vii) the statements relating to Connecticut law, the Company’s Certificate of
Incorporation and the Company’s By-laws included in the Registration Statement
in Item 15 fairly summarize the matters referred to therein;

 

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(viii) the Shares have been duly authorized and, when issued and delivered
against payment therefor in accordance with the terms of this Agreement, the
Shares will have been validly issued, fully paid and non-assessable and will
not, to such counsel’s knowledge, be subject to any preemptive or similar right
known to such counsel;

(ix) neither the issue and sale of the Shares, nor the compliance by the Company
with the terms of this Agreement, will conflict with, or result in a breach or
violation of the Certificate of Incorporation or By-laws of the Company;

(x) no consent, approval, authorization or order of any Connecticut court or
governmental agency or body of which such counsel has knowledge is required for
issue and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except such as may be required
under state securities or the “blue sky” laws of any jurisdiction in connection
with the purchase and distribution of the Shares, by Federal and state
securities laws with respect to the Company’s obligations under the Registration
Rights Agreement or by FINRA, or where the failure to obtain such consent,
approval, authorization or order would have no more than an incidental effect on
the transactions contemplated by this Agreement; and

(xi) there is no pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries other than such as are disclosed in the Time
of Sale Prospectus or the Prospectus or such as are not likely to have a
material adverse effect on the Company.

(e) The Underwriters shall have received on the Closing Date an opinion of
Richelle E. Burr, Associate General Counsel for the Company, dated the Closing
Date, to the effect that:

(i) the Company is duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole;

(ii) each Significant Subsidiary has been duly organized, is validly existing
and is in good standing under the

 

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laws of the jurisdiction of its organization, has all requisite power and
authority to own or lease its property and to carry on its business, is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required;

(iii) neither the issue and sale of the Shares, nor the compliance by the
Company with the terms of this Agreement, will conflict with, or result in a
breach or violation of, or constitute a default under (a) the terms of any
agreement, contract, indenture, lease or other instrument known to such counsel
to which the Company is a party or by which the Company is bound or to which any
of the property or assets of the Company is subject; or (b) any law, statute,
rule or regulation, or any judgment, order, consent or memorandum of
understanding known to such counsel of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction over
the Company or any of its properties;

(iv) no consent, approval, authorization or order of any court or governmental
agency or body of which such counsel has knowledge is required for the
consummation by the Company of the transactions contemplated by this Agreement,
except such as may be required under state securities or the “blue sky” laws of
any jurisdiction in connection with the offer and sale of the Shares, by the
Financial Industry Regulatory Authority (“FINRA”) or where the failure to obtain
such consent, approval, authorization or order would have no more than an
incidental effect on the transactions contemplated by this Agreement;

(v) after due inquiry, such counsel does not know of any actions, suits or
proceedings pending or threatened before any court or governmental agency,
authority or body or any arbitrator to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.

(f) The Underwriters shall have received on the Closing Date an opinion of Davis
Polk & Wardwell LLP, counsel for the Underwriters, dated the Closing Date,
covering the matters referred to in Section 5(c)(i) (but only as to the
statements in each of the Time of Sale Prospectus and the Prospectus under the
caption “Underwriting”) and clauses (c)(ii)(B) and c(iii) of Section 5.

 

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With respect to Section 5(c)(iii) above, Shearman & Sterling LLP may state that
their beliefs are based upon their participation in the preparation of the
Registration Statement, the Time of Sale Prospectus, the Prospectus and any
amendments or supplements thereto (other than the documents incorporated therein
by reference) and review and discussion of the contents thereof (including
documents incorporated by reference), but are without independent check or
verification, except as specified. With respect to clauses c(ii)(B) and c(iii)
of Section 5 above, Davis Polk & Wardwell LLP may state that their beliefs are
based upon their participation in the preparation of the Time of Sale Prospectus
and the prospectus supplement and any amendments or supplements thereto (other
than the documents incorporated by reference) and upon review and discussion of
the contents of the Registration Statement, the Time of Sale Prospectus and the
Prospectus (including documents incorporated by reference), but are without
independent check or verification, except as specified.

With respect to Section 5(d)(ii) above, Brenner, Saltzman & Wallman LLP may
state that such opinion is intended to address the power and authority of
corporations generally and no opinion is expressed or intended as to the power
or authority of the Company to conduct any business or activity where such
business or activity is subject to the requirement that it be specially
licensed, authorized or permitted under the laws, rules or regulations of the
State of Connecticut or the United States of America or agencies or subdivisions
thereof.

With respect to Section 5(e)(iii) above, Richelle E. Burr may state that such
opinion is subject to exception for violations, breaches or defaults with
respect to which consents, waivers or approvals have heretofore been obtained.

The opinions of Shearman & Sterling LLP, Brenner, Saltzman and Wallman LLP and
Richelle E. Burr described in Sections 5(c), 5(d) and 5(e), respectively, above
shall be rendered to the Underwriters at the request of the Company and shall so
state therein.

(g) The Underwriters shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to the Underwriters, from Deloitte &
Touche LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants’ “comfort letters” to
underwriters with respect to

 

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the financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement, the Time of Sale
Prospectus and the Prospectus; provided that the letter delivered on the Closing
Date shall use a “cut-off date” not earlier than the date hereof.

(h) The “lock-up” agreements, each substantially in the form of Exhibit A
hereto, between you and the parties listed on Schedule III hereto relating to
sales and certain other dispositions of shares of Common Stock or certain other
securities, delivered to you on or before the date hereof, shall be in full
force and effect on the Closing Date.

The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request, including with respect to
the good standing of the Company, the due authorization and issuance of the
Additional Shares to be sold on such Option Closing Date and other matters
related to the issuance of such Additional Shares.

6. Covenants of the Company. In further consideration of the agreements of the
Underwriters herein contained, the Company covenants with each Underwriter as
follows:

(a) To furnish to you, without charge, two signed copies of the Registration
Statement (including exhibits thereto and documents incorporated by reference)
and for delivery to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto but including documents incorporated by
reference) and to furnish to you in New York City, without charge, during the
period mentioned in Section 6(e) or 6(f) below, as many copies of the Time of
Sale Prospectus, the Prospectus, any documents incorporated therein by reference
and any supplements and amendments thereto or to the Registration Statement as
you may reasonably request.

(b) Before amending or supplementing the Registration Statement, the Time of
Sale Prospectus or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object except that the foregoing shall not
apply to any documents required to be filed by the Company with the Commission
pursuant to the Exchange Act, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.

(c) To furnish to you a copy of each proposed free writing prospectus to be
prepared by or on behalf of, used by, or referred to by the Company and not to
use or refer to any proposed free writing prospectus to which you reasonably
object.

 

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(d) Not to take any action that would result in an Underwriter or the Company
being required to file with the Commission pursuant to Rule 433(d) under the
Securities Act a free writing prospectus prepared by or on behalf of the
Underwriter that the Underwriter otherwise would not have been required to file
thereunder.

(e) If the Time of Sale Prospectus is being used to solicit offers to buy the
Shares at a time when the Prospectus is not yet available to prospective
purchasers and any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Time of Sale Prospectus in order to make
the statements therein, in the light of the circumstances, not misleading, or if
any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration
Statement then on file, or if, in the opinion of counsel for the Underwriters,
it is necessary to amend or supplement the Time of Sale Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to any dealer upon request, either
amendments or supplements to the Time of Sale Prospectus so that the statements
in the Time of Sale Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Time of Sale Prospectus is delivered to a
prospective purchaser, be misleading or so that the Time of Sale Prospectus, as
amended or supplemented, will no longer conflict with the Registration
Statement, or so that the Time of Sale Prospectus, as amended or supplemented,
will comply with applicable law.

(f) If, during such period after the first date of the public offering of the
Shares as in the opinion of counsel for the Underwriters and counsel for the
Company the Prospectus (or in lieu thereof the notice referred to in Rule 173(a)
of the Securities Act) is required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in order
to make the statements therein, in the light of the circumstances when the
Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the
Securities Act) is delivered to a purchaser, not misleading, or if, in the
opinion of counsel for the Underwriters and counsel for the Company, it is
necessary to amend or supplement the Prospectus to comply with applicable law,
forthwith to prepare, file with the Commission and furnish, at its own expense,
to the Underwriters and to the dealers (whose names and addresses you will
furnish to the Company) to which Shares may have been sold by you on

 

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behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus (or in lieu thereof the notice referred to in
Rule 173(a) of the Securities Act) is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with applicable
law.

(g) To endeavor to qualify the Shares for offer and sale under the securities or
Blue Sky laws of such jurisdictions as you shall reasonably request; provided
that the Company shall not be required to qualify as a foreign corporation or to
take any action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation.

(h) To make generally available to the Company’s security holders and to you as
soon as practicable an earning statement covering the twelve-month period ending
on or around October 31, 2010 that satisfies the provisions of Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder.

(i) To prepare a final term sheet relating to the offering of the Shares,
containing only information that describes the final terms of the offering in a
form consented to by the Manager, and to file such final term sheet within the
period required by Rule 433(d)(5)(ii) under the Securities Act following the
date the final terms have been established for the offering of the Shares.

7. Expenses. Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company agrees to pay or cause
to be paid all expenses incident to the performance of its obligations under
this Agreement, including: (i) the fees, disbursements and expenses of the
Company’s counsel and the Company’s accountants in connection with the
registration and delivery of the Shares under the Securities Act and all other
fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Time of Sale Prospectus,
the Prospectus, any free writing prospectus prepared by or on behalf of, used
by, or referred to by the Company and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other similar taxes payable thereon, (iii) the cost of printing or producing
any Blue Sky or Legal Investment memorandum in connection with the offer and
sale of the

 

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Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 6(g) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by FINRA, (v) all costs and expenses
incident to listing the Shares on The Nasdaq Global Select Market, (vi) the
cost, if any, of printing certificates representing the Shares, (vii) the costs
and charges of any transfer agent, registrar or depositary, (viii) the costs and
expenses of the Company relating to investor presentations on any “road show”
undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the preparation or
dissemination of any electronic road show, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show, and (ix) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section. It
is understood, however, that except as provided in this Section, Section 9
entitled “Indemnity and Contribution”, and the last paragraph of Section 11
below, the Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, stock transfer taxes payable on resale of
any of the Shares by them and any advertising expenses connected with any offers
they may make.

8. Covenants of the Underwriters. Each Underwriter severally covenants with the
Company not to take any action that would result in the Company being required
to file with the Commission under Rule 433(d) a free writing prospectus prepared
by or on behalf of such Underwriter that otherwise would not be required to be
filed by the Company thereunder, but for the action of the Underwriter.

9. Indemnity and Contribution. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, and each affiliate of any Underwriter within the meaning of
Rule 405 under the Securities Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus, the Time of Sale Prospectus, any issuer
free

 

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writing prospectus as defined in Rule 433(h) under the Securities Act, any
Company information that the Company has filed, or is required to file, pursuant
to Rule 433(d) under the Securities Act, or the Prospectus or any amendment or
supplement thereto, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter expressly
for use therein.

(b) Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, the directors of the Company and the officers of the
Company who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Underwriter, but only with reference to
information relating to such Underwriter furnished to the Company in writing by
such Underwriter expressly for use in the Registration Statement, any
preliminary prospectus, the Time of Sale Prospectus, any issuer free writing
prospectus or the Prospectus or any amendment or supplement thereto.

(c) In case any proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may be sought
pursuant to Section 9(a) or 9(b) such person (the “indemnified party”) shall
promptly notify the person against whom such indemnity may be sought (the
“indemnifying party”) in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act or who are affiliates of any
Underwriter within the meaning of Rule 405 under the Securities

 

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Act, and (ii) the fees and expenses of more than one separate firm (in addition
to any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, and that all such fees and expenses shall be reimbursed as they
are incurred. In the case of any such separate firm for the Underwriters and
such control persons and affiliates of any Underwriters, such firm shall be
designated by the Manager. In the case of any such separate firm for the
Company, and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for reasonable fees and expenses of counsel as contemplated by the second and
third sentences of this paragraph (after having provided a reasonably detailed
invoice of such fees and expenses to such indemnifying party), the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into more
than 30 days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.

(d) To the extent the indemnification provided for in Section 9(a) or 9(b) is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party or parties on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause 9(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
9(d)(i) above but also the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as

 

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any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Underwriters on the other hand in connection
with the offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate initial public
offering price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters’ respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.

(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 9(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 9 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.

(f) The indemnity and contribution provisions contained in this Section 9 and
the representations, warranties and other statements of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter, any person controlling any Underwriter or any
affiliate of any Underwriter or by or on behalf of the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Shares.

 

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10. Termination. The Underwriters may terminate this Agreement by notice given
by you to the Company, if after the execution and delivery of this Agreement and
prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on, or by, as the case may be, any of the New York Stock
Exchange or The Nasdaq Stock Market, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over the counter
market, (iii) a material disruption in securities settlement, payment or
clearance services in the United States shall have occurred, (iv) any moratorium
on commercial banking activities shall have been declared by Federal or New York
State authorities or (v) there shall have occurred any outbreak or escalation of
hostilities, or any change in financial markets or any calamity or crisis that,
in your judgment, is material and adverse and which, singly or together with any
other event specified in this clause (v), makes it, in your judgment,
impracticable or inadvisable to proceed with the offer, sale or delivery of the
Shares on the terms and in the manner contemplated in the Time of Sale
Prospectus or the Prospectus.

11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.

If, on the Closing Date or an Option Closing Date, as the case may be, any one
or more of the Underwriters shall fail or refuse to purchase Shares that it has
or they have agreed to purchase hereunder on such date, and the aggregate number
of Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of the
Shares to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the number of Firm Shares set forth opposite
their respective names in Schedule I bears to the aggregate number of Firm
Shares set forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as you may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the number of Shares that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 11 by an amount in excess of one-ninth of such number
of Shares without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm
Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to
be purchased on such date, and arrangements satisfactory to you and the Company
for the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either you or the
Company shall

 

25

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have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement, in the Time of Sale Prospectus, in the Prospectus or in any other
documents or arrangements may be effected. If, on an Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.

If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.

12. Entire Agreement. (a) This Agreement, together with any contemporaneous
written agreements and any prior written agreements (to the extent not
superseded by this Agreement) that relate to the offering of the Shares,
represents the entire agreement between the Company and the Underwriters with
respect to the preparation of any preliminary prospectus, the Time of Sale
Prospectus, the Prospectus, the conduct of the offering, and the purchase and
sale of the Shares.

(b) The Company acknowledges that in connection with the offering of the Shares:
(i) the Underwriters have acted at arms length, are not agents of, and owe no
fiduciary duties to, the Company or any other person, (ii) the Underwriters owe
the Company only those duties and obligations set forth in this Agreement and
prior written agreements (to the extent not superseded by this Agreement), if
any, and (iii) the Underwriters may have interests that differ from those of the
Company. The Company waives to the full extent permitted by applicable law any
claims it may have against the Underwriters arising from an alleged breach of
fiduciary duty in connection with the offering of the Shares.

 

26

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13. Counterparts. This Agreement may be signed in two or more counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

14. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.

15. Headings. The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed a part of this
Agreement.

16. Notices. All communications hereunder shall be in writing and effective only
upon receipt and if to the Underwriters shall be delivered, mailed or sent to
you in care of Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New
York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal
Department; and if to the Company shall be delivered, mailed or sent to
Photronics, Inc., 15 Secor Road, Brookfield, Connecticut 06804, Attention:
Richelle E. Burr, Associate General Counsel.

 

27

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Very truly yours, PHOTRONICS, INC. By:  

/s/ Sean T. Smith

Name:   Sean T. Smith Title:   Senior Vice President and Chief Financial Officer

Underwriting Agreement: Equity

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Accepted as of the date hereof

 

Morgan Stanley & Co. Incorporated Acting severally on behalf of itself and the
several Underwriters named in Schedule I hereto.

By:  

/s/ John D. Tyree

Name:   John D. Tyree Title:   Managing Director

Underwriting Agreement: Equity

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SCHEDULE I

 

Underwriter

   Number of Firm Shares
To Be Purchased

Morgan Stanley & Co. Incorporated

   6,746,989

Needham & Company, LLC

   963,855

D.A. Davidson & Co.

   963,855

Stifel, Nicolaus & Company, Incorporated

   963,855     

Total Firm Shares:

   9,638,554     

 

I-1

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SCHEDULE II

Time of Sale Prospectus

 

1. Basic Prospectus dated June 25, 2009 relating to the Shelf Securities

 

2. The preliminary prospectus supplement dated September 9, 2009 relating to the
Shares

 

3. Free Writing Prospectus dated September 10, 2009

 

II-1

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SCHEDULE III

Lock-Up Signatories

Constantine S. Macricostas, General Partner, Macricostas Partners, LP

Constantine S. Macricostas

George C. Macricostas

Walter M. Fiederowicz

Mitchell G. Tyson

Soo Hong Jeong

Sean T. Smith

Christopher J. Progler

Peter S. Kirlin

Willem D. Maris

Joseph A. Fiorita, Jr.

 

III-1

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EXHIBIT A

[FORM OF LOCK-UP LETTER]

            , 2009

Morgan Stanley & Co. Incorporated

1585 Broadway

New York, NY 10036

Ladies and Gentlemen:

The undersigned understands that Morgan Stanley & Co. Incorporated (“Morgan
Stanley”) proposes to enter into (i) an Underwriting Agreement (the “Equity
Underwriting Agreement”) with Photronics, Inc., a Connecticut corporation (the
“Company”), providing for the offering (the “Equity Offering”) by the
Underwriters named therein (the “Underwriters”) of shares of Common Stock, $0.01
par value per share, of the Company (the “Common Stock”) and (ii) an
Underwriting Agreement (the “Debt Underwriting Agreement”) with the Company,
providing for the concurrent offering (the “Debt Offering”) by the Underwriters
of the Company’s 5.50% Convertible Senior Notes due 2014. The Equity Offering
and the Debt Offering are referred to herein as the “Offerings.” Neither the
Equity Offering nor the Debt Offering is conditioned upon the successful
completion of the other offering.

To induce the Underwriters to continue their efforts in connection with the
Offerings, the undersigned hereby agrees that, without the prior written consent
of Morgan Stanley on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 90 days after (i) in the case of the
Equity Offering, the date of the Equity Underwriting Agreement, and (ii) in the
case of the Debt Offering, the date of the Debt Underwriting Agreement (the
“Lock-Up Period”) (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file, or cause to be
filed, any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other

 

A-1

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securities, in cash or otherwise. The foregoing restrictions shall not apply to
(a) transactions relating to shares of Common Stock or other securities acquired
in open market transactions after the completion of the Offerings,
(b) transactions under a trading plan established pursuant to Rule 10b5-1 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in
existence as of the date of this letter, (c) transfers of Common Stock by gift,
will or intestacy, including without limitation transfers by gift, will or
intestacy to family members of the undersigned or to a settlement or trust
established under the laws of any country, provided that in the event of any
transfer pursuant to clause (c), (i) each transferee shall enter into a lock-up
agreement substantially in the form of this agreement covering the remainder of
the restricted period referred to herein and (ii) no filing under Section 16(a)
of the Exchange Act, reporting a reduction in beneficial ownership of shares of
Common Stock, shall be required or shall be voluntarily made during the
restricted period referred to in the preceding sentence. In addition the
undersigned agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, the undersigned will not, during the Lock-Up Period,
make any demand for, or exercise any right with respect to, the registration of
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company’s transfer agent and
registrar against the transfer of the undersigned’s shares of Common Stock
except in compliance with the foregoing restrictions.

Notwithstanding the foregoing, if:

(1) during the last 17 days of the 90-day lock-up period, the Company issues an
earnings release or material news or a material event relating to the Company
occurs; or

(2) prior to the expiration of the 90-day lock-up period, the Company announces
that it will release earnings results or becomes aware that material news or a
material event will occur during the 16-day period beginning on the last day of
the 90-day lock-up period, the restrictions imposed by this agreement shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event, as applicable, unless Morgan Stanley on behalf of the
Underwriters waives, in writing, such extension.

The undersigned shall not engage in any transaction that may be restricted by
this agreement during the 34-day period beginning on the last day of the initial
restricted period unless the undersigned requests and receives prior written
confirmation from the Company or Morgan Stanley on behalf of the Underwriters,
that the restrictions imposed by this agreement have expired.

 

A-2

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The undersigned understands that the Company and the Underwriters are relying
upon this agreement in proceeding toward consummation of each Offering. The
undersigned further understands that this agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representatives, successors and
assigns.

Whether or not the Offerings actually occur depends on a number of factors,
including market conditions. Any Offering will only be made pursuant to an
Underwriting Agreement, the terms of which are subject to negotiation between
the Company and Underwriters.

 

Very truly yours, [For individuals signing the lock-up:] Signature:  

 

Print Name:  

 

[For stockholders signing the lock-up that are not individuals:]

 

Macricostas Partners, L.P. By:  

 

Name:   Title:  

 

A-3