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Exhibit 10.27
 
Execution Version
 
CONTRIBUTION AGREEMENT
 
THIS CONTRIBUTION AGREEMENT (this “Agreement”) is made and entered into as of
May 16, 2017, by and between Dai Nippon Printing Co., Ltd., a corporation
organized under the laws of Japan with its principal place of business at 1-1,
Ichigaya Kagacho 1-chome, Shinjuku-ku, Tokyo, Japan (“DNP”), DNP Asia Pacific
Pte. Ltd., a corporation organized under the laws of Singapore with its
principal place of business at 4 Pandan Crescent, Singapore 128475 (“DNP Asia
Pacific”), Photronics, Inc., a corporation organized under the laws of the State
of Connecticut, with its principal place of business at 15 Secor Road,
Brookfield, Connecticut, U.S.A. (“Photronics”), Photronics Singapore Pte. Ltd.,
a corporation organized under the laws of Singapore with its principal place of
business at No. 33, Ubi Avenue 3 #03-09, Vertex Building Singapore 408868
(“Photronics Singapore ”) and Xiamen American Japan Photronics Mask Co., Ltd. a
wholly foreign-owned limited liability company duly organized and existing under
the laws of the People’s Republic of China with its principal place of business
at R203-95, South Building of Torch Square, No. 56-58 Torch Road, Gaoxin
District, Xiamen, Fujian Province ,China (厦门火炬高新区火炬园火炬路56-58号火炬广场南楼203-95)
(“PDMCX” or the “Company”).
Each of DNP, DNP Asia Pacific, Photronics, Photronics Singapore and the Company
is hereinafter referred to as individually a “Party” and collectively the
“Parties”).

WHEREAS, Photronics Singapore formed the Company in October, 2016, and has
contributed [***] as the current registered capital of the Company.  Photronics
and Photronics Singapore desire to have the Company be set up as the legal
entity for a joint venture (the “Joint Venture”) to be owned 50.01% by
Photronics Singapore and 49.99% by DNP Asia Pacific for the purpose of the
Business (as defined in the Operating Agreement) with an initial manufacturing
facility located in Xiamen, China.
 
WHEREAS, Photronics, Photronics Singapore, DNP and DNP Asia Pacific have agreed
to set up the Company as the Joint Venture and entered into the Joint Venture
Operating Agreement as of May 16, 2017 (the “Operating Agreement”) to set forth
the respective rights and obligations of DNP, DNP Asia Pacific, Photronics and
Photronics Singapore with respect to the management and operation of the
Company.  Contemporaneous with the execution of this Agreement, Photronics,
Photronics Singapore, DNP, DNP Asia Pacific, PDMCX and PDMC will enter into the
Transaction Documents, as applicable, as set forth on Schedule A attached
hereto.
 
WHEREAS, Photronics, Photronics Singapore, DNP and DNP Asia Pacific have agreed,
pursuant to the Operating Agreement, that (i) Photronics will, through
Photronics Singapore, consolidate the Joint Venture as long as Photronics
Singapore owns at least 50.01% Percentage Interest of the Company, and (ii)
Photronics, Photronics Singapore, DNP and DNP Asia Pacific will take all actions
with the primary premise that Photronics will, through Photronics Singapore, be
able to consolidate the Joint Venture as long as Photronics Singapore owns at
least 50.01% Percentage Interest of the Company in accordance with the terms and
conditions of the Operating Agreement.
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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WHEREAS, upon the Closing, (i) Photronics Singapore will own 50.01% Percentage
Interest of PDMCX represented by current Shares already owned by Photronics
Singapore and new Shares to be issued to and subscribed by Photronics Singapore
upon its respective Initial Capital Contribution set forth herein, and (ii) DNP
Asia Pacific will own 49.99% Percentage Interest of PDMCX represented by new
Shares to be issued to and subscribed by DNP Asia Pacific upon its respective
Initial Capital Contribution set forth herein.
 
NOW, THEREFORE, in consideration of the promises set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:
 
1.          Definition
 
Unless otherwise defined in this Agreement, terms defined in the Operating
Agreement shall have the same meanings when used in this Agreement.
 
2.          Contribution.
 

  (a)
Contribution Closing.

 
Subject to the satisfaction or waiver of the closing conditions set forth in
Article 3 below and the terms of this Agreement, unless otherwise agreed by
Photronics Singapore, DNP Asia Pacific and the Company in writing, the closing
of the contribution transactions provided in Section 2.(b) of this Agreement
(“Closing”) shall take place on the date that is set and determined by the Board
of Directors but shall be no later than ten (10) Business Days after all of the
conditions set forth in Article 3 have been satisfied or waived.
 

  (b)
Capitalization of PDMCX

 
Prior to or at the Closing, PDMCX will increase its registered capital from
[***] to [***], among which Photronics Singapore will hold 50.01% of Percentage
Interest in PDMCX and DNP Asia Pacific will hold 49.99% of Percentage Interest
in PDMCX. Correspondingly, the registered capital in PDMCX’s business license is
[***] at the Closing. For the sake of clarification, (i) Photronics Singapore
has already (previous to the execution of this Agreement) contributed [***] by
cash as the current registered capital and therefore Photronics Singapore will
contribute [***] by cash at the Closing, and (ii) DNP Asia Pacific will
contribute [***] by cash at the Closing (the contributions made by Photronics
Singapore and DNP Asia Pacific at the Closing are hereinafter collectively
referred to as the “Initial Capital Contribution”). The parties agree that PDMCX
shall increase its registered capital to [***] within the [***] following the
date of the Investment Agreement between Xiamen Torch Hi-Tech Industrial
Development Zone Management Committee and Photronics Singapore, and the schedule
of capital increase will be based on the operational needs of PDMCX, and decided
by Photronics Singapore. If DNP[***]. DNP Asia Pacific shall provide any and all
assistances reasonably necessary in accordance with the terms of the Operating
Agreement for the capital increase procedure of PDMCX, regardless of whether DNP
Asia Pacific subscribes the capital increase or not.
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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  (c)
Use of Capital of PDMCX

 
(i)[***]
 
.
 
PDMCX can also use the *** contributed by Photronics Singapore and DNP Asia
Pacific to acquire [***].
 

  (d)
Obligations at the Closing

 
(i)          At the Closing, as part of the formation of the Joint Venture, (u)
Photronics Singapore will contribute to the Company its respective Initial
Capital Contribution as set forth in Section 2.(b)(i) above, and (v) Photronics
and Photronics Singapore will execute all endorsements, assignments and good and
sufficient instruments of conveyance, transfer and assignment as are necessary,
appropriate and effective to vest in the Company all of the right, title and
interest of Photronics or Photronics Singapore in the material contracts listed
in Schedule B (the “Transferred Contracts”), which relate to the Business, free
and clear of all security interests, claims, liens, pledges, and encumbrances,
and charges, to the extent permitted by the contents of the Transferred
Contracts and by Applicable Law.
 
(ii)          At the Closing, as part of the formation of the Joint Venture, DNP
Asia Pacific will contribute to the Company its respective Initial Capital
Contribution as set forth in Section 2.(b)(ii) above.
 

(e)
 Assumption of Liabilities.

 
At the Closing, the Company will assume the obligations to fulfill the
obligations and liabilities provided in the Transferred Contracts, including,
but not limited to, payments required under the construction contracts for the
initial manufacturing facility of the Company which are also listed in Schedule
B.
 
3.          Closing Conditions.
 
(a)          The obligations of Photronics Singapore to consummate the Closing
under Article 2 hereof, unless otherwise waived in writing by the Parties, are
subject to the fulfillment on or before the Closing of each of the following
conditions:
 
(i)          the representations and warranties of DNP and DNP Asia Pacific set
forth in Article 5 hereof shall be true and correct in all material respects at
and as of the date hereof and at and as of the date of Closing (the “Closing
Date”) as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein;
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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(ii)         the agreements and covenants of DNP and DNP Asia Pacific contained
in this Agreement that are required to be performed prior to or on the Closing
Date shall have been performed or satisfied by DNP and DNP Asia Pacific in all
material respects;
 
(iii)        all prior approvals and consents required for the consummation of
formation of the Company as the Joint Venture, or in connection with the
authorization, execution and performance of this Agreement from the relevant
authorities (the "Regulatory Approvals") shall have been duly obtained, made or
given and shall be in full force and effect and shall not impose material
restrictions or other material burdens on the Parties with respect to the
formation of the Joint Venture or the matters contemplated in this Agreement,
the Operating Agreement and the Transaction Documents;
 
(iv)        in addition to the above Section 3(a)(iii), consummation of the
transactions contemplated hereby and by the Operating Agreement and the
Transaction Documents shall not have been restrained, enjoined or otherwise
prohibited by Applicable Law or order of judgment or any Governmental Authority;
 
(v)         the Parties shall have entered into the Operating Agreement and the
Transaction Documents, and such agreements shall be in full force and effect;
and
 
(vi)        [***] Business Days before the Closing Date and after receipt of the
Regulatory Approvals, DNP Asia Pacific shall complete all necessary procedures
for its respective Initial Capital Contribution with the Governmental
Authorities, if any.
 
(b)       The obligations of DNP Asia Pacific to consummate the Closing under
Article 2 hereof, unless otherwise waived in writing by the Parties, are subject
to the fulfillment on or before the Closing of each of the following conditions:
 
(i)          the representations and warranties of Photronics and Photronics
Singapore set forth in Article 4 hereof shall be true and correct in all
material respects at and as of the date hereof and at and as of the Closing Date
as though then made, except to the extent of changes caused by the transactions
expressly contemplated herein;
 
(ii)         the agreements and covenants of Photronics and Photronics Singapore
contained in this Agreement that are required to be performed prior to or on the
Closing Date shall have been performed or satisfied by Photronics and Photronics
Singapore in all material respects;
 
(iii)        the Company shall have received the Transferred Contracts from
Photronics and Photronics Singapore;
 
(iv)        the Regulatory Approvals shall have been duly obtained, made or
given and shall be in full force and effect and shall not impose material
restrictions or other material burdens on the Parties with respect to the
formation of the Joint Venture or the matters contemplated in this Agreement,
the Operating Agreement and the Transaction Agreements;
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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(v)         in addition to the above Section 3(b)(iv), consummation of the
transactions contemplated hereby and by the Operating Agreement and the
Transaction Documents shall not have been restrained, enjoined or otherwise
prohibited by Applicable Law or order of judgment or any Governmental Authority;
 
(vi)        the Parties shall have entered into the Operating Agreement and the
Transaction Documents, and such agreements shall be in full force and effect;
 
(vii)       within *** Business Days before the Closing Date and after receipt
of the Regulatory Approvals, Photronics and Photronics Singapore shall require
and ensure the Company obtain a new business license reflecting the change of
shareholder as contemplated hereby, file the new Articles of Association of the
Company and complete all other necessary procedures including but not limited to
the registration procedures for the Initial Capital Contribution with the PRC
administration of industry and commerce and other government authorities, and
 
(viii)          within *** Business Days before the Closing Date and after
receipt of the Regulatory Approvals, Photronics Singapore shall complete all
necessary procedures for its respective Initial Capital Contribution with the
Governmental Authorities, if any.
 
4.          Representations and Warranties of Photronics and Photronics
Singapore.
 
Photronics and Photronics Singapore hereby jointly and severally acknowledge,
represent and warrant to DNP and DNP Asia Pacific as follows:
 
(a) Organization.  Each of Photronics, Photronics Singapore and the Company is
duly organized, validly existing and in good standing (to the extent such
concept exists under Applicable Law) under the laws of its jurisdiction of
formation.  Photronics and Photronics Singapore have all legal and corporate
power and authority required to conduct its business as currently conducted and
to own and lease its properties and operate its business as currently owned,
leased and operated.  The Company has all legal and corporate power and
authority required to conduct its business as currently conducted and to own and
lease its properties and operate its business as currently owned, leased and
operated.  Each of Photronics, Photronics Singapore and the Company is duly
qualified to do business and is in good standing (to the extent such concept
exists under Applicable Law) as a foreign corporation or limited liability
company, as applicable, in each jurisdiction where the character of the property
owned or leased or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
or in good standing is not reasonably likely to result in a Material Adverse
Effect on  Photronics, Photronics Singapore or the Company, as applicable.  A
“Material Adverse Effect” on a Person or business shall mean any facts or
circumstances that, individually or in the aggregate, would, or might reasonably
be expected to, result in a material adverse effect on the business, financial
condition or results of operations of such Person or business.
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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(b) Ownership.  Immediately prior to the Closing, all of the equity interests of
the Company are owned by Photronics Singapore, and Photronics Singapore has good
and marketable title to such equity interests free and clear of all security
interests, claims, liens, pledges, options, encumbrances, charges, agreements,
voting trusts, proxies and other arrangements or restrictions whatsoever.  Prior
to the execution of this Agreement, Photronics Singapore has fully contributed
[***] by cash as the capital of the Company.  Upon the Closing, DNP Asia Pacific
will acquire good and valid title to its Percentage Interest in the Company,
free and clear of all security interests, claims, liens, pledges, options,
encumbrances, charges, agreements, voting trusts, proxies and other arrangements
or restrictions whatsoever.
 
(c) Authorization.  Each of Photronics, Photronics Singapore and the Company has
all requisite legal and corporate power and corporate authority to execute and
deliver this Agreement, to perform all of its obligations and undertakings
hereunder and to consummate the transactions contemplated hereby.  The execution
and performance of this Agreement have been duly authorized by all necessary
action on the part of Photronics, Photronics Singapore and the Company, as
applicable, and this Agreement has been duly authorized, executed and delivered
by each of Photronics, Photronics Singapore and the Company and constitutes a
valid and legally binding obligation of Photronics, Photronics Singapore and the
Company, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and general equitable principles.
 
(d) Conflicts.  The execution, delivery and performance of this Agreement by
Photronics, Photronics Singapore and the Company does not conflict with, violate
or result in the breach of, or create any lien or encumbrance upon the Company
pursuant to any charter, agreement, instrument, order, judgment, decree, law or
governmental regulation to which Photronics, Photronics Singapore or the Company
is a party or is subject to.  Except for the Regulatory Approvals, the execution
and delivery of this Agreement does not and will not require any governmental or
other third party consents or filings on the part of Photronics, Photronics
Singapore or the Company.
 
(e) Transferred Assets.  The Company will have good and valid leasehold or
interest in the equipment and/or other assets transferred by Photronics and
Photronics Singapore before the Closing Date. All of such assets transferred by
Photronics or Photronics Singapore are in good operating condition and repair,
ordinary wear and tear expected.
 
(f) Contracts.  All material contracts or other material agreements executed by
the Company before the Closing, or already or to be assigned to the Company by
Photronics and Photronics Singapore solely in connection with the Business and
the transactions contemplated by this Agreement, including but not limited to
the Transferred Contracts are in full force and effect and constitute the valid
and legally binding effect on Photronics, Photronics Singapore and/or the
Company, enforceable in accordance with their terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles.  Neither
Photronics, Photronics Singapore or the Company are in material default under,
and to Photronics’s and Photronics Singapore’s Knowledge, no other party is in
material default under, any of such contracts and agreements.
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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For the purpose of this Agreement, “Knowledge” means with respect to any of the
representation and warranties, the actual knowledge of its chief executive
officer, chief financial officer, general counsel and directors of any of
Photronics and/or Photronics Singapore, DNP and/or DNP Asia Pacific, as
applicable, after making such due inquiry and exercising such due diligence as a
prudent business person would have made or exercised in the management of
his/her business affairs, including but not limited to due inquiry of all
officers, directors, employees, consultants and professional advisers (including
attorneys, accountants and auditors) of such Person who could reasonably be
expected to have knowledge of the matters in question, and where any statement
in the representations and warranties hereunder is expressed to be given or made
to a Person’s Knowledge, or so far as a Person is aware, or is qualified in some
other manner having a similar effect, the statement shall be deemed to be
supplemented by the additional statement that such Person has made such due
inquiry and due diligence.
 
(g) Undisclosed Liabilities, etc.  To Photronics’s and Photronics Singapore’s
Knowledge, PDMCX is not subject to any material liability, whether absolute,
contingent, accrued or otherwise, which is not shown or which is in excess of
amounts shown or reserved for in the unaudited balance sheet of PDMCX dated as
of the date hereof and the Closing Date and provided to, DNP and DNP Asia
Pacific on the date hereof and the Closing, which balance sheet has been
prepared from, and is consistent with, the books and records of Photronics
and/or Photronics Singapore.  There is no action, suit, arbitration or
administrative or other proceeding or investigation pending or, to Photronics’s
and Photronics Singapore’s Knowledge, threatened, against or affecting the
Company or any of its properties that, if determined or resolved adversely to
the Company, would reasonably be expected to have, individually or in the
aggregate, Material Adverse Effect.
 
(h) Title; Properties.  The Company has good and valid title to, or a valid
leasehold interest in, all of their assets on the date hereof and will have on
the Closing Date, whether real, or personal, purported to be owned by it
(including but not limited to all such assets reflected in the financial
statements), free and clear of any interests, claims, liens, pledges, options,
and any other kind of encumbrances.
 
(i) Labor and Employment Matters.  The Company is not a party to any contracts
with any union or guild, and there are no labor unions, works council or other
organizations representing any employee of the Company.  No employee of the
Company is owed any back wages or other compensation for services rendered.
There is no, and there has not been any action relating to the violation or
alleged violation of any Applicable Law by the Company pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee.  The Company has complied in all material respects with Applicable Law
relating to employment, wages, hours, overtime, working conditions, benefits,
retirement, termination, taxes, and health and safety.  The Company is in
compliance relating to its provision of any form of social insurance and housing
fund, and has paid, or made provision for the payment of, all social insurance
and housing fund contributions required under Applicable Law.  There has not
been, and there is not now any pending or, to the Knowledge of Photronics,
Photronics Singapore and the Company, threatened strike, union organization
activity, lockout, slowdown, picketing, or work stoppage with respect to the
employees of the Company or any unfair labor practice charge against the
Company.  There is no pending internal investigation related to any employee or
consultant of the Company.
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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(j) Tax Matters.  The Company (a) has timely filed all tax returns that are
required to have been filed by it with any Governmental Authority, and (b) has
timely paid all taxes owed by it which are due and payable (whether or not shown
on any “Tax Return”) and withheld and remitted to the appropriate Governmental
Authority all taxes which it is obligated to withhold and remit from amounts
owing to any employee, creditor, customer or third party.
 
5           Representations and Warranties of DNP and DNP Asia Pacific.
 
DNP and DNP Asia Pacific hereby jointly and severally acknowledge, represent and
warrant to Photronics and Photronics Singapore as follows:
 
(a) Organization.  Each of DNP and DNP Asia Pacific is duly organized, validly
existing and in good standing (to the extent such concept exists under
Applicable Law) under the laws of its jurisdiction of formation.  Each of DNP
and DNP Asia Pacific has all legal and corporate power and authority required to
conduct its business as currently conducted and to own and lease its properties
and operate its business as currently owned, leased and operated.  Each of DNP
and DNP Asia Pacific is duly qualified to do business and is in good standing
(to the extent such concept exists under Applicable Law) as a foreign
corporation or limited liability company, as applicable, in each jurisdiction
where the character of the property owned or leased or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified or in good standing is not reasonably
likely to result in a Material Adverse Effect on DNP or DNP Asia Pacific.
 
(b) Authorization.  Each of DNP and DNP Asia Pacific has all requisite legal and
corporate power and corporate authority to execute and deliver this Agreement,
to perform all of its obligations and undertakings hereunder and to consummate
the transactions contemplated hereby.  The execution and performance of this
Agreement have been duly authorized by all necessary action on the part of DNP
and DNP Asia Pacific, and this Agreement has been duly authorized, executed and
delivered by each of DNP and DNP Asia Pacific, as applicable, and constitutes a
valid and legally binding obligation of both DNP and DNP Asia Pacific,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors’ rights generally and
general equitable principles.
 
(c) Conflicts.  The execution, delivery and performance of this Agreement by DNP
and DNP Asia Pacific does not conflict with, violate or result in the breach of
any charter, agreement, instrument, order, judgment, decree, law or governmental
regulation to which DNP or DNP Asia Pacific is a party or is subject to.  Except
for the Regulatory Approvals, the execution and delivery of this Agreement does
not and will not require any governmental or other third party consents or
filings either on the part of DNP and DNP Asia Pacific.
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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(d) Joint Engineering Agreements.  To DNP’s and DNP Asia Pacific’s Knowledge,
all currently effective joint engineering agreements, which relate to the
Business and are executed with the customer in the Territory, has been disclosed
to Photronics.
 
6.          Other Arrangements
 
(a) Additional Capital Contribution.  The Parties anticipate that total
investment by equity to be made in the Company for [***] from the Closing will
be, no more than, [***] and additional capital contribution(s) in excess of the
Initial Capital Contributions will be made in accordance with the Operating
Agreement.
 
(b) License from DNP.  DNP agrees to license the Company by way of [***], a
non-exclusive, non-sublicensable, non-transferable and non-assignable right in
accordance with the provisions and only within extent of the *** to be executed
by and between [***] (the “Amended and Restated License Agreement”).  Under the
Amended and Restated License Agreement, the Company will [***] to DNP, and DNP
will receive from the Company [***] pursuant to the terms and conditions of the
[***]on an arm’s-length basis; [***] and the *** will be paid by the Company
only during *** as set forth in Section 2.1.(c) of the Amended and Restated
License Agreement.  DNP hereby agrees that all amounts actually received by DNP
(i.e. the amount of the Royalty minus withholding tax (net of applicable
withholding tax) to be levied on the Royalty payment by Governmental Authority)
will be re-invested into the Company as capital contribution(s), provided that
the timing of such capital contribution(s) will be (i) discussed between
Photronics and DNP first, (ii) subject to the resolution and approval of the
Board of Directors and shareholders’ meeting of the Company, and (iii)
consistent with the terms and conditions of the Operating Agreement.
 
(c) Commission.  Photronics has negotiated and entered into an agreement with
[***], and, prior to the Closing, the [***] will be transferred to the Company. 
As the consideration for transfer of the [***], the Company will pay, and
Photronics will receive, a commission for every product manufactured and sold
for [***] (the “Commission”) on an arm’s-length basis under the terms and
conditions of a *** to be entered into by and between the Company and
Photronics; provided however that the aggregate amount of the Commission is
capped at [***] and the Commission will be paid only during *** years in
accordance with such commission agreement; provided further that, considering
the fact that products for [***] are to be manufactured by the Company using
[***], the timing for payment of the Commission and the Royalty shall be
simultaneous.  Photronics hereby agrees that all amount of the Commission
received by Photronics will be re-invested into the Company as capital
contribution(s), provided that the timing of such capital contribution(s) will
be (i) discussed between Photronics and DNP first, (ii) subject to the
resolution and approval of the Board of Directors and shareholders’ meeting of
the Company, and (iii) consistent with the terms and conditions of the Operating
Agreement.
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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(d) Sale of Used Equipment.  If requested by PDMCX, to the extent permitted by
Applicable Law, Photronics and DNP of its Affiliates will respectively sell its
respective used equipment to the Company under the terms and conditions of
separate agreement between the related Parties and in accordance with Section
2.(c)(i) hereof.
 
7.          Covenants.
 
(a) Diligence in Pursuit of Closing.  Each of the Parties hereto shall use all
commercially reasonable efforts to fulfill their respective obligations
hereunder and under the other Transaction Documents, and shall reasonably
cooperate with the other Parties in regard to the same in order to effect the
Closing.
 
(b) Survival of Representations and Warranties.  All representations and
warranties contained herein or made in writing by any Party in connection
herewith shall survive the execution and delivery of this Agreement and the
Closing hereunder for a period of *** years following the Closing Date.
 
8.          Indemnification.
 
(a) Agreement to Indemnify.
 
(i) DNP and DNP Asia Pacific agree to jointly and severally indemnify and hold
harmless Photronics and Photronics Singapore and each of its representatives and
affiliates (including the Company) (each a “Photronics Indemnified Party”)
against any and all liabilities, claims, demands or losses, including reasonable
attorneys’ fees incurred by any Photronics Indemnified Party arising out of, or
resulting from, (u) any breach of any representation or warranty made by DNP or
DNP Asia Pacific in this Agreement or any other certificate delivered by DNP or
DNP Asia Pacific pursuant to this Agreement, (v) any breach of any covenant made
by DNP or DNP Asia Pacific in this Agreement or any other certificate delivered
by DNP or DNP Asia Pacific pursuant to this Agreement.
 
(ii) Photronics and Photronics Singapore agree to jointly and severally
indemnify and hold harmless DNP and DNP Asia Pacific and each of its
representatives and affiliates (including the Company) (each a “DNP Indemnified
Party”) against any and all liabilities, claims, demands or losses, including
reasonably attorneys’ fees, incurred by any DNP Indemnified Party arising out
of, or resulting from, (u) any breach of any representation or warranty made by
Photronics, Photronics Singapore or the Company in this Agreement or any other
certificate delivered by Photronics or Photronics Singapore pursuant to this
Agreement or (v) any breach of any covenant made by Photronics or Photronics
Singapore in this Agreement or any other certificate delivered by Photronics or
Photronics Singapore pursuant to this Agreement.
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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(b) Sole Remedy.  After the Closing Date, with respect to any matter as to which
indemnification is provided pursuant to this Section 8, such indemnification
shall be the sole remedy available to a Photronics Indemnified Party or DNP
Indemnified Party, as the case may be; provided, however, that this Section 8
shall not limit any Party’s rights to bring a claim, action or suit for fraud or
bad faith.
 
(c) Indemnification Procedures.  In the event a Photronics Indemnified Party or
a DNP Indemnified Party intends to make a claim for indemnification hereunder on
behalf of himself or any Photronics Indemnified Party or DNP Indemnified Party,
respectively (an “Indemnitee”), such Indemnitee shall notify whichever of
Photronics, Photronics Singapore, DNP or DNP Asia Pacific against whom indemnity
is being sought (the “Indemnitor”) of the claim in writing promptly (but in no
event later than thirty (30) days) after receiving written notice of any action,
lawsuit, proceeding, investigation or other claim against the Indemnitee (if by
a third party) or discovering the liability, obligation or facts giving rise to
such claim for indemnification, describing the claim, the amount thereof (if
known and quantifiable), and the basis thereof, provided that the failure to so
notify the Indemnitor shall not relieve the Indemnitor of its obligations
hereunder except to the extent such failure shall have actually prejudiced the
Indemnitor.  The Indemnitor shall be entitled to assume and control (with
counsel of its choice) the defense of the action, lawsuit, proceeding,
investigation or other claim giving rise to Indemnitee’s claim for
indemnification at the option and expense of the Indemnitor by sending written
notice of its election to do so within fifteen (15) days after receiving written
notice of such claim from the Indemnitee as aforesaid; provided, however, that:
 
(i) The Indemnitee shall be entitled to participate in the defense of such claim
and to employ counsel of its choice for such purpose, the fees and expenses of
such separate counsel which shall be borne by the Indemnitee;
 
(ii) If the Indemnitor elects to assume the defense of any such claim, the
Indemnitor shall be entitled to compromise or settle such claim so long as
either (x) such settlement provides an unconditional release of all Indemnitees
with respect to such claim and requires the payment of monetary damages only or
(y) the Indemnitor obtains the prior written consent of the Indemnitee (which
consent shall not be unreasonably withheld or delayed); and
 
(iii) If the Indemnitor does not elect to assumed the defense of such claim
within the fifteen-day period set forth above, the Indemnitee may assume the
defense of such action, lawsuit, proceeding, investigation or such other claim
with counsel selected by the Indemnitee (which counsel shall be reasonably
acceptable to the Indemnitor) at the expense of the Indemnitor, provided that
the Indemnitee shall under no circumstances settle or compromise such claim
without the prior written consent of the Indemnitor (which consent shall not be
unreasonably withheld or delayed).
 
9.          Further Assurances.
 
After the Closing, as and when requested by DNP or DNP Asia Pacific, Photronics
and Photronics Singapore shall execute and deliver all such instruments of
conveyance and transfer and shall take such further actions as DNP or DNP Asia
Pacific may deem reasonably necessary to carry out fulfill the provisions and
purposes of this Agreement.  After the Closing, as and when requested by
Photronics or Photronics Singapore, DNP and DNP Asia Pacific shall take such
further actions as Photronics or Photronics Singapore may deem reasonably
necessary to carry out fully the provisions and purposes of this Agreement.
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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10.        Miscellaneous.
 
(a) Successors and Assigns.  This Agreement is intended to bind and inure to the
benefit of and be enforceable by DNP, DNP Asia Pacific, Photronics and
Photronics Singapore and their respective successors and assigns.  This
Agreement may not be assigned by either Party hereto without the prior written
consent of the other Parties to this Agreement, which consent shall not be
unreasonably withheld.
 
(b) Amendment.  This Agreement may be amended only through a writing signed by
all Parties hereto.
 
(c) Entire Agreement and Modification.  This Agreement and all agreements
between DNP, DNP Asia Pacific Photronics and Photronics Singapore entered into
concurrently herewith, including the Operating Agreement and the other
Transaction Documents, constitute and contain the entire agreement of the
Parties and supersede and preempt any and all prior negotiations,
correspondence, understandings, agreements and representations, written or oral,
which may have related to the subject matter hereof.
 
(d) Choice of Law.  All questions concerning the construction, interpretation
and validity of this Agreement and all claims or causes of action (whether in
contract or tort) that may be based upon, arise out of or relate to this
Agreement or the negotiation, execution or performance of this Agreement will be
governed by and construed in accordance with the laws of the People’s Republic
of China (without reference to any choice or conflicts of laws rules or
principles that would require the application of the laws of any other
jurisdiction).
 
(e) Dispute Resolution.  Any disputes arising from or in connection with this
Agreement shall be submitted to *** for arbitration which shall be conducted in
accordance with the CIETAC’s arbitration rules in effect at the time of applying
for arbitration.  The seat of arbitration shall be Beijing.  The arbitral award
is final and binding upon the Parties.
 
(f) Enforcement.  If any portion of this Agreement shall be determined to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the Parties to the extent possible. 
In any event, all other provisions of this Agreement shall be valid and
enforceable to the maximum extent possible.
 
(g) Headings.  The headings appearing in this Agreement have been inserted for
identification and reference purposes and shall not by themselves determine the
construction or interpretation of this Agreement.
 
(h) Notices.  Unless otherwise provided herein, all notices, requests,
instructions or consents required or permitted under this Agreement shall be in
writing and will be deemed given:  (a) when delivered personally; (b) when sent
by confirmed facsimile; (c) ten (10) business days after having been sent by
registered or certified mail, return receipt requested, postage prepaid; or (d)
three (3) business days after deposit with an internationally recognized
commercial overnight carrier specifying next day delivery, with written
verification of receipt.  All communications will be sent to the addresses set
forth in Schedule C of the Operating Agreement (or to such other address or
facsimile number as may be designated by a Party giving written notice to the
other Parties pursuant to Section 12.5 of the Operating Agreement).
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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(i) Confidentiality.  Section 12.17 of the Operating Agreement shall be
incorporated by reference into and form an integral part of this Agreement,
mutatis mutandis.  Each Party shall comply with such Section.
 
(j) Counterparts.  This Agreement may be executed in five (5) or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
 
(k) Expenses.  Except as otherwise provided herein, each Party shall pay all
costs and expenses that it incurs with respect to the negotiation, execution,
delivery, performance and consummation of this Agreement, except that the
Company shall pay any transfer Taxes, recording and filing fees, and other
charges with respect to the transfer of the Transferred Assets at the
Contribution Closing.
 
(l) Effectiveness.  This Agreement shall become effective upon the execution of
this Agreement by duly authorized representatives of all Parties.
 
(signature page follows)
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
13

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.
 

 
PHOTRONICS, INC.
           
By:
     
Name:
     
Title:
             
PHOTRONICS SINGAPORE PTE LTD.
           
By:
     
Name:
     
Title:
             
DAI NIPPON PRINTING CO., LTD.
           
By:
     
Name:
     
Title:
             
DNP ASIA PACIFIC PTE. LTD.
           
By:
     
Name:
     
Title:
             
XIAMEN AMERICAN JAPAN PHOTRONICS MASK CO., LTD.
           
By:
     
Name:
     
Title:
   

 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
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Schedule A

Operating Agreement
Outsource Agreement
Amended and Restated License Agreement
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
1

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Schedule B Photronics and Photronics Singapore contracts
 
 
*** Confidential treatment has been requested by Photronics, Inc. for redacted
portions of this exhibit. This copy omits the information subject to the
confidentiality request. Omissions are designated as [***]. A complete version
of this exhibit has been provided separately to the Securities and Exchange
Commission.
2

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