EXECUTION COPY

LOAN AGREEMENT

dated as of

June 8, 2009

among

PHOTRONICS, INC.

The Lenders Party Hereto

and

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
as Administrative Agent and Collateral Agent

_______________________________

J.P. MORGAN SECURITIES INC.,
as Sole Bookrunner and Sole Lead Arranger

 

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TABLE OF CONTENTS

    Page ARTICLE I Definitions   Defined Terms 1 SECTION 1.02. Classification of
Loans and Borrowings 17 SECTION 1.03. Terms Generally 17 SECTION 1.04.
Accounting Terms; GAAP 18   ARTICLE II The Credits 18   SECTION 2.01.
Commitments 18 SECTION 2.02. Loans and Borrowings 18 SECTION 2.03.   Requests
for Borrowings 19 SECTION 2.04. [Intentionally Omitted] 19 SECTION 2.05.
[Intentionally Omitted] 19 SECTION 2.06. [Intentionally Omitted] 19 SECTION
2.07. Funding of Borrowings 19 SECTION 2.08. Interest Elections 20 SECTION 2.09.
Termination of Commitments 21 SECTION 2.10. Repayment of Loans; Evidence of Debt
21 SECTION 2.11. Prepayment of Loans 21 SECTION 2.12. Fees 22 SECTION 2.13.
Interest 22 SECTION 2.14. Alternate Rate of Interest 23 SECTION 2.15. Increased
Costs 23 SECTION 2.16. Break Funding Payments 24 SECTION 2.17. Taxes 24 SECTION
2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs 25 SECTION
2.19. Mitigation Obligations; Replacement of Lenders 27   ARTICLE III
Representations and Warranties 27   SECTION 3.01. Organization; Powers;
Subsidiaries 27 SECTION 3.02. Authorization; Enforceability 28 SECTION 3.03.
Governmental Approvals; No Conflicts 28 SECTION 3.04. Financial Condition; No
Material Adverse Change 28 SECTION 3.05. Properties 28 SECTION 3.06. Litigation
and Environmental Matters 29 SECTION 3.07. Compliance with Laws and Agreements
29 SECTION 3.08. Investment Company Status 29 SECTION 3.09. Taxes 29 SECTION
3.10. ERISA 29 SECTION 3.11. Disclosure 29 SECTION 3.12. Federal Reserve
Regulations 30 SECTION 3.13. Liens 30 SECTION 3.14. No Default 30 SECTION 3.15.
Senior Indebtedness 30 SECTION 3.16. Security Interest in Collateral 30

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Table of Contents
(continued)

    Page ARTICLE IV Conditions 30   SECTION 4.01. Effective Date 30 SECTION
4.02. Each Credit Event 31   ARTICLE V Affirmative Covenants 32   SECTION 5.01.
Financial Statements and Other Information 32 SECTION 5.02.   Notices of
Material Events 33 SECTION 5.03. Existence; Conduct of Business 33 SECTION 5.04.
Payment of Obligations 34 SECTION 5.05. Maintenance of Properties; Insurance 34
SECTION 5.06. Books and Records; Inspection Rights 34 SECTION 5.07. Compliance
with Laws and Material Contractual Obligations 35 SECTION 5.08. Use of Proceeds
35 SECTION 5.09. Subsidiary Guarantors; Pledges; Additional Collateral; Further
Assurances 35 SECTION 5.10. [Intentionally Omitted] 36 SECTION 5.11. Depository
Banks 36 SECTION 5.12. Financial Consultant 37   ARTICLE VI Negative Covenants
37   SECTION 6.01. Indebtedness 37 SECTION 6.02. Liens 38 SECTION 6.03.
Fundamental Changes and Asset Sales 39 SECTION 6.04. Investments, Loans,
Advances, Guarantees and Acquisitions 40 SECTION 6.05. Swap Agreements 41
SECTION 6.06. Restricted Payments 41 SECTION 6.07. Transactions with Affiliates
41 SECTION 6.08. Restrictive Agreements 42 SECTION 6.09. Issuances of Equity
Interests by Subsidiaries 42 SECTION 6.10. Amendment of Material Documents 42
SECTION 6.11. Financial Covenants 42   ARTICLE VII Events of Default 44   
ARTICLE VIII The Administrative Agent and the Collateral Agent 47   ARTICLE IX
Miscellaneous 50   SECTION 9.01. Notices 50 SECTION 9.02. Waivers; Amendments 51
SECTION 9.03. Expenses; Indemnity; Damage Waiver 51 SECTION 9.04. Successors and
Assigns 52 SECTION 9.05. Survival 55 SECTION 9.06. Counterparts; Integration;
Effectiveness 55

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Table of Contents
(continued)

    Page SECTION 9.07.   Severability 55 SECTION 9.08. Right of Setoff 55
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process 56
SECTION 9.10. WAIVER OF JURY TRIAL 56 SECTION 9.11. Headings 56 SECTION 9.12.
Confidentiality 57 SECTION 9.13. USA PATRIOT Act 57 SECTION 9.14. Appointment
for Perfection 57

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Table of Contents
(continued)

    Page SCHEDULES:   Schedule 1.01 -- Consolidated EBITDA/Net Income Schedule
2.01 -- Commitments Schedule 2.02 -- [Intentionally Omitted] Schedule 3.01 --
Subsidiaries Schedule 6.01   -- Existing Indebtedness Schedule 6.02 -- Existing
Liens   Schedule 6.04 -- Existing Investments, Loans and Advances Schedule 6.07
-- Affiliate Transactions Schedule 6.08 -- Existing Restrictions   EXHIBITS:  
Exhibit A -- Form of Assignment and Assumption Exhibit B -- Forms of Opinions of
Loan Parties’ Counsels Exhibit C -- [Intentionally Omitted] Exhibit D --
[Intentionally Omitted] Exhibit E -- List of Closing Documents Exhibit F-1 --
[Intentionally Omitted] Exhibit F-2 -- [Intentionally Omitted] Exhibit G -- Form
of Subsidiary Guaranty Exhibit H -- Form of Pledge Agreement Exhibit I -- Form
of Intercreditor Agreement

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     LOAN AGREEMENT dated as of June 8, 2009 among PHOTRONICS, INC., the LENDERS
from time to time party hereto and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as
Administrative Agent and Collateral Agent.

     The parties hereto agree as follows:

ARTICLE I

Definitions

     Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:

     “ABR”, when used in reference to any Loan or Borrowing, refers to a Loan,
or the Loans comprising such Borrowing, bearing interest at a rate determined by
reference to the Alternate Base Rate.

     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum which is the greater of (1)
2.00% and (2) an interest rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied
by (b) the Statutory Reserve Rate.

     “Administrative Agent” means JPMorgan Chase Bank, National Association, in
its capacity as administrative agent for the Lenders hereunder.

     “Administrative Questionnaire” means an Administrative Questionnaire in a
form supplied by the Administrative Agent.

     “Affected Foreign Subsidiary” means any Foreign Subsidiary to the extent
such Foreign Subsidiary acting as a Subsidiary Guarantor would cause a Deemed
Dividend Problem.

     “Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

     “Agents” means the Administrative Agent and the Collateral Agent.

     “Aggregate Commitment” means the aggregate of the Commitments of all of the
Lenders. As of the Effective Date, the Aggregate Commitment is $27,204,119.

     “Alternate Base Rate” means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate
for a one month Interest Period on such day (or if such day is not a Business
Day, the immediately preceding Business Day) plus a percentage per annum equal
to the then applicable “Eurodollar Spread” on such day as set forth in the
definition of “Applicable Rate”; provided that, for the avoidance of doubt, the
Adjusted LIBO Rate for any day shall be based on the rate appearing on the
Reuters BBA Libor Rates Page 3750 (or on any successor or substitute page of
such page) at approximately 11:00 a.m. London time on such day. Any change in
the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Effective Rate or the Adjusted LIBO Rate shall be effective from and including
the effective date of such change in the Prime Rate, the Federal Funds Effective
Rate or the Adjusted LIBO Rate, respectively.

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     “Applicable Pledge Percentage” means 100% but 65% in the case of a pledge
by the Borrower or any Domestic Subsidiary of its Equity Interests in an
Affected Foreign Subsidiary.

     “Applicable Percentage” means, with respect to any Lender, the percentage
of the Aggregate Commitment represented by such Lender’s Commitment. If the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the percentage obtained by dividing such Lender’s
outstanding Loans by the aggregate outstanding principal amount of all of the
Loans at such time.

     “Applicable Rate” means, for any day, with respect to any Eurodollar Loan
or any ABR Loan, the applicable rate per annum set forth below under the caption
“Eurodollar Spread” or “ABR Spread”:

Eurodollar ABR Spread Spread 6.00% 5.00%

     “Approved Fund” has the meaning assigned to such term in Section 9.04.

     “Assignment and Assumption” means an assignment and assumption agreement
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.

     “Banking Services” means each and any of the following bank services
provided to the Borrower or any Subsidiary by any Lender or any of its
Affiliates: (a) commercial credit cards, (b) stored value cards and (c) treasury
management services (including, without limitation, controlled disbursement,
automated clearinghouse transactions, return items, overdrafts and interstate
depository network services).

     “Banking Services Agreement” means any agreement entered into by the
Borrower or any Subsidiary in connection with Banking Services.

     “Banking Services Obligations” means any and all obligations of the
Borrower or any Subsidiary, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor) in connection
with Banking Services.

     “Board” means the Board of Governors of the Federal Reserve System of the
United States of America.

     “Borrower” means Photronics, Inc., a Connecticut corporation.

     “Borrowing” means Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.

     “Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

     “Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in Dollar deposits in the London interbank market.

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     “Capital Expenditures” means, without duplication, any cash expenditures
for any purchase or other acquisition of any asset which would be classified as
a fixed or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with GAAP.

     “Capital Lease Obligations” of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

     “Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of Equity
Interests representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) nominated by the board
of directors of the Borrower nor (ii) appointed by directors so nominated; or
(c) the acquisition of direct or indirect Control of the Borrower by any Person
or group; or (d) the occurrence of a change in control, or other similar
provision, as defined in any agreement or instrument evidencing any Material
Indebtedness (triggering a default or mandatory prepayment, which default or
mandatory prepayment has not been waived in writing).

     “Change in Law” means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.15(b), by any lending office of such Lender or by such Lender’s
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement.

     “Chinese Credit Facility” means the RMB186,000,000 credit facility
evidenced by that certain Amended and Restated Agreement by and among Photronics
Imaging Technologies (Shanghai) Co., Ltd., JPMorgan Chase Bank (China) Company
Limited Shanghai Branch, as original lender and as administrative agent and the
other financial institutions party thereto.

     “Chinese Facility Sale” means any sale of the Borrower’s direct or indirect
Equity Interests in Photronics China or all or a portion of the assets of
Photronics China (excluding equipment returned by Photronics China to the
Borrower or any Subsidiary).

     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

     “Collateral” means all Pledged Equity, all “Collateral” as defined in the
Security Agreement and all other property pledged in favor of the Collateral
Agent, on behalf of itself and the Holders of Secured Obligations, pursuant to
the Mortgages and any other Collateral Document from time to time.

     “Collateral Agent” means JPMorgan Chase Bank, National Association in its
capacity as Collateral Agent for the Holders of Secured Obligations and any
successor Collateral Agent appointed pursuant to the terms of the Intercreditor
Agreement.

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     “Collateral Documents” means, collectively, the Security Agreement, the
Pledge Agreements, the Mortgages and all other agreements, instruments and
documents executed in connection with this Agreement that are intended to
create, evidence or perfect Liens to secure the Secured Obligations.

     “Commitment” means, with respect to each Lender, the commitment of such
Lender to make Loans on the Effective Date, expressed as an amount representing
the maximum aggregate amount of such Lender’s Loans hereunder. The initial
amount of each Lender’s Commitment is set forth on Schedule 2.01, or in the
Assignment and Assumption pursuant to which such Lender shall have assumed its
Commitment, as applicable.

     “Consolidated EBITDA” means, for any period, Consolidated Net Income for
such period, minus the aggregate amount of extraordinary, unusual or
non-recurring income or gains for such period to the extent required to be
separately stated in the Borrower’s financial statements in accordance with
GAAP, plus, without duplication and to the extent deducted from revenues in
determining Consolidated Net Income for such period, the sum of (a) the
aggregate amount of Consolidated Interest Expense for such period, plus (b) the
aggregate amount of income tax expense for such period, plus (c) the aggregate
amount of depreciation and amortization for such period, plus (d) non-cash
expenses related to stock-based compensation, plus (e) any extraordinary or
non-recurring non-cash expenses, write-downs, write-offs, or losses including
impairment or restructuring charges, all as determined on a consolidated basis
with respect to the Borrower and its consolidated Subsidiaries in accordance
with GAAP, minus, to the extent included in determining Consolidated Net Income
for such period, any cash payments made during such period in respect of items
described in clauses (d) and (e) above subsequent to the fiscal quarter in which
the relevant non-cash expense or loss was reflected in a statement of
Consolidated Net Income. For the purposes of calculating Consolidated EBITDA for
any period of four consecutive fiscal quarters (each, a “Reference Period”), (i)
if at any time during such Reference Period the Borrower or any Subsidiary shall
have made any Material Disposition, the Consolidated EBITDA for such Reference
Period shall be reduced by an amount equal to the Consolidated EBITDA (if
positive) attributable to the property that is the subject of such Material
Disposition for such Reference Period or increased by an amount equal to the
Consolidated EBITDA (if negative) attributable thereto for such Reference
Period, and (ii) if during such Reference Period the Borrower or any Subsidiary
shall have made a Material Acquisition, Consolidated EBITDA for such Reference
Period shall be calculated after giving pro forma effect thereto as if such
Material Acquisition occurred on the first day of such Reference Period. As used
in this definition, “Material Acquisition” means any acquisition of property or
series of related acquisitions of property that (a) constitutes (i) assets
comprising all or substantially all or any significant portion of a business or
operating unit of a business, or (ii) all or substantially all of the common
stock or other Equity Interests of a Person, and (b) involves the payment of
consideration by the Borrower and its Subsidiaries in excess of $10,000,000; and
“Material Disposition” means any sale, transfer or disposition of property or
series of related sales, transfers, or dispositions of property that yields
gross proceeds to the Borrower or any of its Subsidiaries in excess of
$10,000,000.

     “Consolidated Fixed Charges” means, with reference to any period, without
duplication, interest payments in cash and scheduled principal payments on
Indebtedness made in cash during such period, plus Taxes paid in cash, all
calculated for the Borrower and its Subsidiaries on a consolidated basis.

     “Consolidated Interest Expense” means, with reference to any period, the
interest expense (including without limitation interest expense under Capital
Lease Obligations that is treated as interest in accordance with GAAP) of the
Borrower and its Subsidiaries calculated on a consolidated basis for such period
with respect to (a) all outstanding Indebtedness of the Borrower and its
Subsidiaries allocable to such period in accordance with GAAP and (b) Swap
Agreements (including, without limitation, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers acceptance
financing and net costs under interest rate Swap Agreements to the extent such
net costs are allocable to such period in accordance with GAAP).

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     “Consolidated Net Income” means, with reference to any period, the net
income (or loss) of the Borrower and its Subsidiaries calculated in accordance
with GAAP on a consolidated basis (without duplication) for such period;
provided that there shall be excluded (a) the income (or deficit) of any Person
(other than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (b) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation (other than under any Loan
Document) or any organizational or governing documents, any law, treaty, rule or
regulation or any determination of an arbitrator or other Governmental
Authority, in each case applicable to such Subsidiary. An example of the
calculation of Consolidated EBITDA and Consolidated Net Income for the fiscal
year ending October 29, 2006 and for the first two (2) fiscal quarters of 2007
is attached hereto as Schedule 1.01.

     “Consolidated Senior Indebtedness” means at any time Consolidated Total
Indebtedness minus the aggregate principal amount of Subordinated Indebtedness
of the Borrower and its Subsidiaries calculated on a consolidated basis as of
such time in accordance with GAAP.

     “Consolidated Total Assets” means, as of the date of any determination
thereof, total assets of the Borrower and its Subsidiaries calculated in
accordance with GAAP on a consolidated basis as of such date.

     “Consolidated Total Indebtedness” means at any time the sum, without
duplication, of (a) the aggregate Indebtedness of the Borrower and its
Subsidiaries calculated on a consolidated basis as of such time in accordance
with GAAP, (b) the aggregate amount of Indebtedness of the Borrower and its
Subsidiaries relating to the maximum drawing amount of all letters of credit
outstanding and bankers acceptances and (c) Indebtedness of the type referred to
in clauses (a) or (b) hereof of another Person guaranteed by the Borrower or any
of its Subsidiaries.

     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

     “Convertible Subordinated Note Indenture” means (i) the Indenture dated as
of April 15, 2003 from the Borrower to The Bank of New York, as Trustee, as in
effect on the Effective Date and (ii) any replacement or additional indenture,
in each case as the same may from time to time be issued, amended, restated or
otherwise modified as permitted herein and pursuant to the which the Borrower
issued the Convertible Subordinated Notes.

     “Convertible Subordinated Notes” means (i) the $150,000,000 21/4%
Convertible Subordinated Notes due 2008, as in effect on the Effective Date and
(ii) any other promissory notes issued pursuant to the Convertible Subordinated
Note Indenture, in each case as the same may from time to time be issued,
amended, restated or otherwise modified as permitted herein and as issued
pursuant to the terms of the Convertible Subordinated Note Indenture.

     “Deemed Dividend Problem” means, with respect to any Foreign Subsidiary,
such Foreign Subsidiary’s accumulated and undistributed earnings and profits
being deemed to be repatriated to the Borrower or the applicable parent Domestic
Subsidiary under Section 956 of the Code or any successor or similar law and the
effect of such repatriation causing or expected to cause adverse tax
consequences in excess of $1,000,000 in the aggregate to the Borrower or such
parent Domestic Subsidiary, in each case as determined by the Borrower in its
commercially reasonable judgment acting in good faith and in consultation with
its legal and tax advisors.

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     “Default” means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

     “Dollars” or “$” refers to lawful money of the United States of America.

     “Domestic Subsidiary” means a Subsidiary organized under the laws of a
jurisdiction located in the United States of America.

     “Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

     “Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.

     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates
from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any ERISA Affiliate of any notice, concerning the imposition upon
the Borrower or any of its ERISA Affiliates of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.

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     “EU” means the European Union.

     “euro” and/or “EUR” means the single currency of the participating member
states of the EU.

     “Eurodollar”, when used in reference to any Loan or Borrowing, mean that
such Loan, or the Loans comprising such Borrowing, bears interest at a rate
determined by reference to the Adjusted LIBO Rate.

     “Event of Default” has the meaning assigned to such term in Article VII.

     “Excluded Taxes” means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.19(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender’s
failure to comply with Section 2.17(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.17(a).

     “Federal Funds Effective Rate” means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

     “Financial Officer” means the chief financial officer, any vice president
of finance, principal accounting officer, treasurer or controller of the
Borrower.

     “First Tier Foreign Subsidiary” means each Foreign Subsidiary and with
respect to which any one or more of the Borrower and its Domestic Subsidiaries
directly owns or controls more than 50% of such Foreign Subsidiary’s Equity
Interests.

     “Fixed Charge Coverage Ratio” has the meaning assigned to such term in
Section 6.12(d).

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     “Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

     “Foreign Subsidiary” means any Subsidiary that is not a Domestic
Subsidiary.

     “GAAP” means generally accepted accounting principles in the United States
of America.

     “Governmental Authority” means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

     “Holders of Secured Obligations” means the Secured Parties and the
Revolving Facility Secured Parties.

     “Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable and accrued expenses incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances, (k)
all obligations of such Person under any Swap Agreement or under any similar
type of agreement and (l) obligations of such Person under Sale and Leaseback
Transactions. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.

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     “Indemnified Taxes” means Taxes other than Excluded Taxes.

     “Intercreditor Agreement” means that certain Amended and Restated
Intercreditor Agreement substantially in the form of Exhibit I and entered into
by the Administrative Agent, the Collateral Agent and JPMorgan Chase Bank,
National Association, as administrative agent under the Revolving Facility in
connection with this Agreement and the Revolving Facility Documents, as the same
may be amended, restated, supplemented or otherwise modified from time to time.

     “Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.08.

     “Interest Payment Date” means (a) with respect to any ABR Loan, the last
day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months’ duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months’ duration
after the first day of such Interest Period.

     “Interest Period” means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made.

     “Joint Venture” means any corporation, partnership, limited liability
company or other legal entity or arrangement in which the Borrower or any
Subsidiary has an equity investment and direct or indirect Control.

     “Lenders” means the Persons listed on Schedule 2.01 and any other Person
that shall have become a Lender hereunder pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption.

     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Reuters BBA Libor Rates Page 3750 (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to deposits in Dollars in the London interbank market)
at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for deposits in Dollars with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which
deposits in Dollars of $5,000,000 and for a maturity comparable to such Interest
Period are offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two (2) Business Days prior to the commencement of such
Interest Period.

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     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.

     “Loans” means the loans made by the Lenders to the Borrower, or otherwise
incurred by the Borrower, pursuant to this Agreement.

     “Loan Documents” means this Agreement, the Subsidiary Guaranty, the
Collateral Documents (including, without limitation, the Pledge Agreements), any
promissory notes executed and delivered pursuant to Section 2.10(e), the
Intercreditor Agreement and any and all other instruments and documents executed
and delivered in connection with any of the foregoing.

     “Loan Parties” means, collectively, the Borrower and the Subsidiary
Guarantors.

     “Manchester Facility” means the real property and buildings owned by the
Borrower or any Subsidiary located in Manchester, England.

     “Material Adverse Effect” means a material adverse effect on (a) the
business, assets, property or condition (financial or otherwise) of the Borrower
and the Subsidiaries taken as a whole or (b) the ability of the Borrower or any
other Loan Party to perform any of its obligations under this Agreement or any
other Loan Document or (c) the rights of or remedies available to the Lenders
under this Agreement or any other Loan Document.

     “Material Indebtedness” means (i) the Indebtedness under any Convertible
Subordinated Note and (ii) any other Indebtedness (other than the Loans), or
obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and its Subsidiaries in an aggregate principal amount exceeding
$5,000,000. For purposes of determining Material Indebtedness, the “principal
amount” of the obligations of the Borrower or any Subsidiary in respect of any
Swap Agreement at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that the Borrower or such Subsidiary would be
required to pay if such Swap Agreement were terminated at such time.

     “Material Subsidiary” means each Subsidiary (i) which, as of the most
recent fiscal year of the Borrower, for the period of four consecutive fiscal
quarters then ended, for which financial statements have been delivered pursuant
to Section 5.01, contributed greater than ten percent (10%) of the Borrower’s
Consolidated EBITDA for such period or (ii) which contributed greater than ten
percent (10%) of the Borrower’s Consolidated Total Assets as of such date;
provided that, if at any time the aggregate amount of the Borrower’s
Consolidated EBITDA or Borrower’s Consolidated Total Assets attributable to
Subsidiaries (other than Affected Foreign Subsidiaries) that are not Subsidiary
Guarantors exceeds twenty percent (20%) of the Borrower’s Consolidated EBITDA
for any such period or twenty percent (20%) of the Borrower’s Consolidated Total
Assets as of the end of any such fiscal year, the Borrower (or, in the event the
Borrower has failed to do so within ten days, the Administrative Agent) shall
designate sufficient Subsidiaries (other than Affected Foreign Subsidiaries) as
“Material Subsidiaries” to eliminate such excess, and such designated
Subsidiaries shall for all purposes of this Agreement constitute Material
Subsidiaries; provided, that, in the case of a Person becoming a Subsidiary
pursuant to an acquisition, the foregoing financial tests shall be applied on a
Pro Forma Basis immediately upon consummation of such acquisition and, assuming
such Subsidiary would constitute a Material Subsidiary on a Pro Forma Basis, the
Borrower shall comply with Section 5.09.

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     “Maturity Date” means January 31, 2011.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Mortgage” means each mortgage, deed of trust or other agreement which
conveys or evidences a Lien in favor of the Collateral Agent, for the benefit of
the Collateral Agent and the Holders of Secured Obligations, on real property of
a Loan Party, including any amendment, restatement, modification or supplement
thereto, each in form and substance reasonably acceptable to the Collateral
Agent and the Borrower.

     “Mortgage Instruments” means such title reports, title insurance, flood
certifications and flood insurance, opinions of counsel, surveys, appraisals and
environmental reports and other similar information and related certifications
as are reasonably requested by, and in form and substance reasonably acceptable
to, the Collateral Agent from time to time.

     “Multiemployer Plan” means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

     “Net Proceeds” means (a) the cash proceeds actually received in respect of
the Chinese Facility Sale or arising from a casualty, condemnation or similar
event in respect of the assets of Photronics China including any cash received
in respect of any non-cash proceeds (including any cash payments received by way
of deferred payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but excluding any interest
payments), but only as and when received, net of (b) the sum of (i) all
reasonable attorneys’ fees, accountants’ fees, investment banking fees, survey
costs, title policy premiums, and related search and recording charges, transfer
taxes, deed or mortgage recording taxes, required payments of other obligations
relating to the applicable event on such asset, other customary expenses and
brokerage, consultant and other customary fees actually incurred in connection
therewith and (ii) the amount of all taxes paid (or reasonably estimated to be
payable) and the amount of any reserves established against any adjustment to
the sale price or to fund contingent liabilities reasonably estimated to be
payable, in each case during the year that such event occurred or the next
succeeding year and that are directly attributable to such event (as determined
reasonably and in good faith by a Financial Officer).

     “New Mask Shop Obligations” means all obligations of the Borrower to pay
rent, additional rent and other payments under, or in connection with, the Build
to Suit Lease dated May 5, 2006 by and between the Borrower and Micron
Technology, Inc., including any, extension, amendment, modification,
replacement, substitution or refinancing of such obligations whether with Micron
Technology, Inc. or a third party lender so long as the principal amount of such
obligations is not increased.

     “Obligations” means all indebtedness (including interest accruing during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
obligations and liabilities of any of the Borrower and its Subsidiaries to any
of the Lenders and the Administrative Agent, individually or collectively,
existing on the Effective Date or arising thereafter, under this Loan Agreement
or any of the other Loan Documents or to the Lenders or any of their Affiliates
under any Swap Agreement or any Banking Services Agreement or in respect of any
of the Loans made or other instruments at any time evidencing any thereof,
whether direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise.

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     “Other Taxes” means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.

     “Participant” has the meaning set forth in Section 9.04.

     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

     “Permitted Encumbrances” means:

     (a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04, or as to which the grace period, if
any, related thereto has not expired;

     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than thirty (30) days or are
not in excess of $3,000,000 individually, or $5,000,000 in the aggregate, or are
being contested in compliance with Section 5.04;

     (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations;

     (d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

     (e) judgment liens in respect of judgments that do not constitute an Event
of Default under clause (k) of Article VII; and

     (f) easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business
that do not secure any monetary obligations and do not materially detract from
the value of the affected property or interfere with the ordinary conduct of
business of the Borrower or any Subsidiary;

provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.

     “Permitted Investments” means:

     (a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof; 

     (b) investments in commercial paper maturing within one year from the date
of acquisition thereof and having, at such date of acquisition, the credit
rating of A1 from S&P or P1 from Moody’s;

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     (c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within one year from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000; 

     (d) fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above; 

     (e) investments in taxable or tax exempt obligations of any state of the
United States of America or any municipality thereof maturing within three years
of the date of acquisition thereof and which is rated “A1” or higher by Moody’s
or “AA” or higher by S&P; 

     (f) investments in auction rate securities maturing within one year of the
date of acquisition thereof and which is rated “Aa3” or higher by Moody’s or
“AA-” or higher by S&P; 

     (g) investments in fixed income securities maturing within one year of the
date of acquisition thereof and which are rated “A” or higher by Moody’s or
S&P; 

     (h) to the extent the aggregate amount of such investments does not exceed
10% of Permitted Investments, investments in fixed income securities maturing
within two years of the date of acquisition thereof and which are rated between
“BBB-” and “BBB+” by S&P; 

     (i) investments in money market mutual funds having assets in excess of
$1,000,000,000 whose sole investments are securities described in clauses (a)
through (i) above; and 

     (j) in the case of any Foreign Subsidiary, investments of comparable tenure
and credit quality to those described in the foregoing clauses (a) through (i)
or other high quality short term investments, in each case, customarily utilized
in countries in which such Foreign Subsidiary operates for short term cash
management purposes.

     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

     “Photronics China” means Photronics Imaging Technologies (Shanghai) Co.,
Ltd., a Chinese corporation.

     “PKL” means PKL, Ltd., a Korean corporation.

     “Plan” means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

     “Pledge Agreements” means that certain Pledge Agreement substantially in
the form of Exhibit H (including any and all supplements thereto) and executed
by the relevant Loan Parties, and, in the case of any pledge of Equity Interests
of a Foreign Subsidiary, any other pledge agreements, share mortgages, charges
and comparable instruments and documents from time to time executed pursuant to
the terms of Section 5.09 in favor of the Collateral Agent for the benefit of
the Holders of Secured Obligations as amended, restated, supplemented or
otherwise modified from time to time.

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     “Pledge Subsidiary” means (i) each Domestic Subsidiary and (ii) each First
Tier Foreign Subsidiary that is a Material Subsidiary.

     “Pledged Equity” means all pledged Equity Interests in or upon which a
security interest or Lien is from time to time granted to the Collateral Agent,
for the benefit of the Holders of Secured Obligations, under the Pledge
Agreements.

     “Prepayment Event” means (a) the Chinese Facility Sale and (b) a casualty,
condemnation or similar event in respect of the assets of Photronics China.

     “Prime Rate” means the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank, National Association as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.

     “Pro Forma Basis” means on a basis in accordance with GAAP and Regulation
S-X and otherwise reasonably satisfactory to the Administrative Agent.

     “PSMC” means Photronics Semiconductor Mask Corporation, a Republic of China
corporation.

     “Qualified Asset Sales” means (i) the Chinese Facility Sale and (ii) the
sale, transfer or disposition by the Borrower or any Subsidiary of all or a
portion of the Manchester Facility (in each case excluding sales, transfers or
dispositions from the Borrower or any Subsidiary to the Borrower, any Subsidiary
or any Affiliate thereof).

     “Qualified Unsecured Indebtedness” of the Borrower or any Subsidiary means
unsecured Indebtedness of such Person in an aggregate outstanding principal
amount not in excess of $25,000,000 and on terms and conditions satisfactory to
the Administrative Agent (it being understood and agreed that the limitations
applicable to Subordinated Indebtedness pursuant to Section 6.10 shall also be
applicable, mutatis mutandis, to Qualified Unsecured Indebtedness).

     “Register” has the meaning set forth in Section 9.04.

     “Regulation S-X” means Regulation S-X under the Securities Act of 1933, as
amended.

     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.

     “Required Lenders” means, at any time, Lenders having Loans representing
more than 50% of the sum of the aggregate outstanding principal amount of all of
the Loans at such time.

     “Restricted Payment” means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interests in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests in the Borrower or any option, warrant or other right
to acquire any such Equity Interests in the Borrower.

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     “Revolving Facility” means the revolving credit facility evidenced by the
Revolving Facility Agreement.

     “Revolving Facility Agreement” means that certain Credit Agreement dated as
of June 6, 2007 by and among the Borrower, certain foreign subsidiary borrowers
which may from time to time be party thereto, certain lenders party thereto and
JPMorgan Chase Bank, National Association, as administrative agent, as such
agreement may be amended, modified or replaced from time to time.

     “Revolving Facility Documents” means the Revolving Facility Agreement and
the other instruments and documents related thereto.

     “Revolving Facility Obligations” means the Indebtedness and other
obligations of the “Borrowers” under the Revolving Facility Agreement, and
includes without limitation the “Obligations” as defined in the Revolving
Facility Agreement.

     “Revolving Facility Secured Parties” means the holders of the Revolving
Facility Obligations from time to time and shall include their respective
successors, transferees and assigns.

     “S&P” means Standard & Poor’s.

     “SAFE” means the State Administration of Foreign Exchange of the People’s
Republic of China.

     “Sale and Leaseback Transaction” means any sale or other transfer of
property by any Person with the intent to lease such property as lessee.

     “Secured Obligations” means the Obligations and the Revolving Facility
Obligations.

     “Secured Parties” means the holders of the Obligations from time to time
and shall include (i) each Lender, (ii) the Administrative Agent and the Lenders
in respect of all other present and future obligations and liabilities of the
Borrower and each Subsidiary of every type and description arising under or in
connection with the Loan Agreement or any other Loan Document, (iii) each Lender
and affiliate of such Lender in respect of Swap Agreements and Banking Services
entered into with such Person by the the Borrower or any Subsidiary, (iv) each
indemnified party under Section 9.03 in respect of the obligations and
liabilities of the Borrower to such Person hereunder and under the other Loan
Documents, and (v) their respective successors and (in the case of a Lender,
permitted) transferees and assigns.

     “Security Agreement” means that certain Security Agreement (including any
and all supplements thereto), dated as of December 12, 2008, between the Loan
Parties and the Collateral Agent, for the benefit of the Collateral Agent and
the other Holders of Secured Obligations, as the same may be amended, restated
or otherwise modified from time to time.

     “Senior Leverage Ratio” has the meaning assigned to such term in Section
6.11(a).

     “Specified Chinese Assets” means the site or any buildings located at No.
158, Jin Qiu Road, Shanghai (including, for the avoidance of doubt, both
allocated land and granted land) and any other property (whether real, personal,
tangible, intangible, or mixed) of Photronics China reasonably requested by the
Collateral Agent.

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     “Specified Intercompany Note” means the intercompany note and related loan
agreement (in each case in form and substance acceptable to the Collateral
Agent) payable by Photronics China to the Borrower and evidencing the
intercompany loan from the Borrower (with the proceeds of the Loans hereunder)
to Photronics China to effect the repayment in full of the Chinese Credit
Facility.

     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject, with
respect to the Adjusted LIBO Rate, for eurodollar funding (currently referred to
as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurodollar funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

     “Subordinated Indebtedness” of the Borrower or any Subsidiary means the
Indebtedness under the Convertible Subordinated Notes outstanding on the
Effective Date and any other Indebtedness of such Person the payment of which is
subordinated to payment of the obligations under the Loan Documents to the
written satisfaction of, and the terms and conditions of which are otherwise
satisfactory to, the Administrative Agent.

     “Subordinated Indebtedness Documents” means any document, agreement or
instrument evidencing any Subordinated Indebtedness or entered into in
connection with any Subordinated Indebtedness.

     “subsidiary” means, with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

     “Subsidiary” means any subsidiary of the Borrower. 

     “Subsidiary Guarantor” means each Subsidiary (other than Affected Foreign
Subsidiaries). The Subsidiary Guarantors on the Effective Date are identified as
such in Schedule 3.01 hereto.

     “Subsidiary Guaranty” means that certain Guaranty dated as of the Effective
Date in the form of Exhibit G (including any and all supplements thereto) and
executed by each Subsidiary Guarantor party thereto, and, in the case of any
guaranty by a Foreign Subsidiary, any other guaranty agreements as are requested
by the Administrative Agent and its counsel, in each case as amended, restated,
supplemented or otherwise modified from time to time.

     “Swap Agreement” means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or the Subsidiaries shall be a Swap Agreement.

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     “Swap Obligations” means any and all obligations of the Borrower or any
Subsidiary, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Swap
Agreements permitted hereunder with a Lender or an affiliate of a Lender, and
(b) any and all cancellations, buy backs, reversals, terminations or assignments
of any such Swap Agreement transaction.

     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

     “Total Leverage Ratio” has the meaning assigned to such term in Section
6.11(b).

     “Transactions” means the execution, delivery and performance by the Loan
Parties of this Agreement and the other Loan Documents, the borrowing of Loans
and the use of the proceeds thereof.

     “Type”, when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

     “UCC” means the Uniform Commercial Code as in effect from time to time in
the State of New York or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.

     “Withdrawal Liability” means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

     SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar
Loan”) and Borrowings may also be classified and referred to by Type (e.g., a
“Eurodollar Borrowing”).

     SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any restrictions on
such amendments, restatements, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

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     SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

ARTICLE II

The Credits

     SECTION 2.01. Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower in Dollars on the
Effective Date in an aggregate principal amount that will not result in (a) the
principal amount of such Lender’s Loans exceeding such Lender’s Commitment, (b)
the sum of the aggregate principal amount of the Loans exceeding the Aggregate
Commitment.

     SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of
a Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender’s failure to make Loans as
required.

     (b) Subject to Section 2.14, each Borrowing shall be comprised entirely of
ABR Loans or Eurodollar Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.

     (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $3,000,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $1,000,000. Borrowings of more
than one Type may be outstanding at the same time; provided that there shall not
at any time be more than a total of five (5) Eurodollar Borrowings outstanding.

     (d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Loans other than the initial Loans on the
Effective Date and shall not be entitled to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.

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     SECTION 2.03. Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m. New York City time,
three (3) Business Days before the date of the proposed Borrowing or (b) in the
case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1)
Business Day before the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:

     (i) the aggregate amount of the requested Borrowing; 

     (ii) the date of such Borrowing, which shall be a Business Day; 

     (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; 

     (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and 

     (v) the location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.07.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.

     SECTION 2.04. [Intentionally Omitted].

     SECTION 2.05. [Intentionally Omitted].

     SECTION 2.06. [Intentionally Omitted].

     SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make the Loan to
be made by it hereunder on the Effective Date by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request.

     (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to Borrower
to but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender’s Loan included in such
Borrowing.

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     SECTION 2.08. Interest Elections. (a) Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.

     (b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
Notwithstanding any contrary provision herein, this Section shall not be
construed to permit the Borrower to elect an Interest Period for Eurodollar
Loans that does not comply with Section 2.02(d).

     (c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

     (i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing); 

     (ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day; 

     (iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and 

     (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
Interest Period shall be a period contemplated by the definition of the term
“Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

     (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

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     (e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.

     SECTION 2.09. Termination of Commitments. The Commitments shall terminate
on the Effective Date upon the funding of the Loans in accordance with Section
4.01.

     SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) The Borrower shall
repay the Loans as follows: (i) $9,068,039.67 of the unpaid principal amount of
the Loans shall be paid in cash on January 31, 2010 and (ii) to the extent not
previously prepaid, all unpaid Loans shall be paid in full in cash by the
Borrower on the Maturity Date.

     (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

     (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.

     (d) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.

     (e) Any Lender may request that Loans made by it to the Borrower be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).

     SECTION 2.11. Prepayment of Loans.

     (a) The Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part, subject to prior notice in accordance
with the provisions of this Section 2.11(a). The Borrower shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 11:00 a.m., New York City time, three Business Days before the date of
prepayment and (ii) in the case of prepayment of an ABR Borrowing, not later
than 11:00 a.m., New York City time, one Business Day before the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof.

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     (b) Each prepayment of a Borrowing pursuant to Section 2.11(a) shall be
applied to prepay the Loans ratably in accordance with the then outstanding
amounts thereof. Prepayments shall be accompanied by (i) accrued interest to the
extent required by Section 2.13 and (ii) break funding payments pursuant to
Section 2.16.

     (c) In the event and on each occasion that any Net Proceeds are received by
or on behalf of the Borrower or any of its Subsidiaries in respect of any
Prepayment Event, the Borrower shall, within three (3) Business Days after such
Net Proceeds are received by the Borrower or any Subsidiary, prepay the Loans in
an aggregate amount equal to 100% of such Net Proceeds received by the Borrower
or any Subsidiary; provided that the Net Proceeds in respect of the Chinese
Facility Sale (and Net Proceeds arising from a casualty, condemnation or similar
event in respect of the assets of Photronics China) shall be applied to prepay
the Loans, as described above.

     SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Administrative
Agent, for its own account, fees payable in the amounts and at the times
separately agreed upon between the Borrower and the Administrative Agent.

     (b) All fees payable hereunder shall be paid on the dates due, in Dollars
and immediately available funds, to the Administrative Agent and shall not be
refundable under any circumstances.

     SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Rate.

     (b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Rate.

     (c) In addition to the foregoing, the Loans shall bear additional interest
on the unpaid principal amount thereof at the rate of 0.5% per annum, such rate
to increase to 1.0% per annum at the commencement of the Borrower’s fiscal
quarter ending on or about November 1, 2009, to 1.5% per annum at the
commencement of the Borrower’s fiscal quarter ending on or about January 31,
2010, to 2.0% per annum at the commencement of the Borrower’s fiscal quarter
ending on or about May 2, 2010 and to 2.5% per annum at the commencement of the
Borrower’s fiscal quarter ending on or about August 1, 2010 (the interest set
forth in this Section 2.13(c) being referred to herein as the “PIK Interest”).
The Borrower shall have the option to pay all or part of the PIK Interest in
cash on each Interest Payment Date. Any PIK Interest not paid in cash on the
applicable Interest Payment Date shall on such date be capitalized and added to
the aggregate principal amount of the Loans. Amounts representing any accrued
but unpaid PIK Interest that has been capitalized and added to the aggregate
principal amount of the Loans as set forth herein shall thereafter bear interest
in accordance with this Section 2.13.

     (d) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

     (e) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided that (i) interest accrued pursuant
to paragraph (d) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan, accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior
to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion.

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     (f) All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate, Adjusted
LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

     SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:

     (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable,
for such Interest Period; or 

     (b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, any Interest Election
Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing shall be ineffective; provided that if the
circumstances giving rise to such notice affect only one Type of Borrowings,
then the other Type of Borrowings shall be permitted.

     SECTION 2.15. Increased Costs. (a) If any Change in Law shall:

     (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate); or 

     (ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or
participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan or of maintaining its
obligation to make any such Loan or to reduce the amount of any sum received or
receivable by such Lender hereunder, whether of principal, interest or
otherwise, then the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.

     (b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender’s capital or on the capital of such Lender’s holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender to a level
below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s
policies and the policies of such Lender’s holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered.

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     (c) A certificate of a Lender setting forth the amount or amounts necessary
to compensate such Lender or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

     (d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.

     SECTION 2.16. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default or as a
result of any prepayment pursuant to Section 2.11), (b) the conversion of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.11(b) and is revoked in
accordance therewith) or (d) the assignment of any Eurodollar Loan other than on
the last day of the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such
event. Such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for deposits in the
relevant currency of a comparable amount and period from other banks in the
eurodollar market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall
be delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within thirty (30) days after receipt thereof.

     SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

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     (b) In addition, the Borrower shall pay any Other Taxes related to the
Borrower and imposed on or incurred by the Administrative Agent or a Lender to
the relevant Governmental Authority in accordance with applicable law.

     (c) The Borrower shall indemnify the Administrative Agent and each Lender,
within ten (10) days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender or by the Administrative Agent on its own behalf or
on behalf of a Lender shall be conclusive absent manifest error.

     (d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

     (e) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

     (f) If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.17, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.17 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, that the Borrower, upon the request of
the Administrative Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This Section shall not be construed to
require the Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes which it deems confidential) to
the Borrower or any other Person.

     SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

     (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees, or of amounts payable under
Section 2.15, 2.16 or 2.17, or otherwise) prior to 12:00 noon, New York City
time on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York 10017, except that payments pursuant to Sections
2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments denominated
in the same currency received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in Dollars.

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     (b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied, subject to the terms of the
Intercreditor Agreement, (i) first, towards payment of interest and fees then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal then due to such parties.

     (c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Loans; provided
that (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply). The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

     (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders, as the case may be, the amount due. In
such event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.

     (e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.07(b), 2.18(d) or 9.03(c), then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid.

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     SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.15, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.

     (b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under the Loan
Documents to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.15 or payments required to be made pursuant to
Section 2.17, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

ARTICLE III

Representations and Warranties

     The Borrower represents and warrants to the Lenders that:

     SECTION 3.01. Organization; Powers; Subsidiaries. Each of the Borrower and
its Subsidiaries is duly organized, validly existing and in good standing (to
the extent such concept is applicable in the relevant jurisdiction) under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing (to the extent such concept is applicable) in, every
jurisdiction where such qualification is required. Schedule 3.01 hereto (as
supplemented from time to time) identifies each Subsidiary, if such Subsidiary
is a Material Subsidiary, the jurisdiction of its incorporation or organization,
as the case may be, the percentage of issued and outstanding shares of each
class of its capital stock or other equity interests owned by the Borrower and
the other Subsidiaries and, if such percentage is not 100% (excluding directors’
qualifying shares as required by law), a description of each class issued and
outstanding. All of the outstanding shares of capital stock and other equity
interests of each Subsidiary are validly issued and outstanding and fully paid
and nonassessable and all such shares and other equity interests indicated on
Schedule 3.01 as owned by the Borrower or another Subsidiary are owned,
beneficially and of record, by the Borrower or any Subsidiary free and clear of
all Liens, other than Liens created under the Loan Documents. Except as set
forth in Schedule 3.01, there are no outstanding commitments or other
obligations of the Borrower or any Subsidiary to issue, and no options, warrants
or other rights of any Person to acquire, any shares of any class of capital
stock or other equity interests of the Borrower or any Subsidiary.

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     SECTION 3.02. Authorization; Enforceability. The Transactions are within
each Loan Party’s corporate powers and have been duly authorized by all
necessary corporate and, if required, shareholder action. The Loan Documents to
which each Loan Party is a party have been duly executed and delivered by such
Loan Party and constitute a legal, valid and binding obligation of such Loan
Party, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

     SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect, and except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, (b) will not violate any applicable law or regulation
or the charter, by-laws or other organizational documents of the Borrower or any
of its Subsidiaries or any order of any Governmental Authority, except for
violations, individually or in the aggregate, which could not reasonably be
expected to result in a Material Adverse Effect, (c) will not violate or result
in a default under any indenture, agreement or other instrument binding upon the
Borrower or any of its Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries, except for violations or defaults, individually or in the
aggregate, which could not reasonably be expected to result in a Material
Adverse Effect, and (d) will not result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries, other than Liens
created under the Loan Documents.

     SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and for
the fiscal year ended November 2, 2008 reported on by Deloitte & Touche LLP,
independent public accountants and (ii) as of and for the fiscal quarter ended
February 1, 2009, certified by its chief financial officer. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Borrower and its consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above.

     (b) Since November 2, 2008, there has been no material adverse change in
the business, assets, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries, taken as a whole.

     SECTION 3.05. Properties. (a) Each of the Borrower and its Subsidiaries has
good title to, or valid leasehold interests in, all its real and personal
property material to its business, except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes. There are no Liens on any
of the real or personal properties of the Borrower or any Subsidiary except for
Liens permitted by Section 6.02.

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     (b) Each of the Borrower and its Subsidiaries owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

     SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits, proceedings or investigations by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of its Subsidiaries (i) as
to which there is a reasonable possibility of an adverse determination and that,
if adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve this
Agreement or the Transactions. There are no labor controversies pending against
or, to the knowledge of the Borrower, threatened against or affecting the
Borrower or any of its Subsidiaries (i) which could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect, or
(ii) that involve this Agreement or the Transactions.

     (b) Except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.

     (c) Neither the Borrower nor any Subsidiary is party or subject to any law,
regulation, rule or order, or any obligation under any agreement or instrument,
that has a Material Adverse Effect.

     SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower and
its Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

     SECTION 3.08. Investment Company Status. Neither the Borrower nor any of
its Subsidiaries is an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940.

     SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.

     SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.

     SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other informationn furnished by or on behalf of the Borrower or any
Subsidiary to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

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     SECTION 3.12. Federal Reserve Regulations. No part of the proceeds of any
Loan have been used or will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.

     SECTION 3.13. Liens. There are no Liens on any of the real or personal
properties of the Borrower or any Subsidiary except for Liens permitted by
Section 6.02.

     SECTION 3.14. No Default. The Borrower is in full compliance with this
Agreement and no Default or Event of Default has occurred and is continuing.

     SECTION 3.15. Senior Indebtedness. The Obligations constitute “Senior
Indebtedness” under and as defined in the Convertible Subordinated Note
Indenture.

     SECTION 3.16. Security Interest in Collateral. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral covered thereby in favor of the Collateral Agent, for the benefit of
the Holders of Secured Obligations, and (i) when all appropriate filings,
recordings, registrations, stampings or notifications are made and (ii) upon the
taking of possession or control by the Collateral Agent of such Collateral with
respect to which a security interest may be perfected only by possession or
control, such Liens shall constitute perfected and continuing Liens on the
Collateral, securing the Secured Obligations, and having priority over all other
Liens on the Collateral except in the case of (a) Permitted Encumbrances, to the
extent any such Permitted Encumbrances would have priority over the Liens in
favor of the Collateral Agent pursuant to any applicable law and (b) Liens
perfected only by possession (including possession of any certificate of title)
to the extent the Collateral Agent has not obtained or does not maintain
possession of such Collateral.

ARTICLE IV

Conditions

     SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):

     (a) The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.

     (b) The Administrative Agent shall have received the favorable written
opinions (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of Shearman & Sterling LLP and Richelle E. Burr, counsels for
the initial Loan Parties, substantially in the form of Exhibit B, and covering
such other matters relating to the Loan Parties, the Loan Documents or the
Transactions as the Administrative Agent shall reasonably request. The Borrower
hereby requests such counsel to deliver such opinions.

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     (c) (i) The Administrative Agent shall have received evidence of approval
from SAFE, in a form satisfactory to the Administrative Agent, permitting the
prepayment of loans and related obligations under the Chinese Credit Facility or
(ii) the Borrower shall have received a written demand for payment from the
Administrative Agent under the Chinese Credit Facility in accordance with
Section 2.1 of the Second Amended and Restated Guarantee Agreement under the
Chinese Credit Facility and the Borrower shall have requested the Lenders to
make the Loans hereunder in order to pay or prepay the loans and related
obligations under the Chinese Credit Facility.

     (d) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the initial Loan
Parties, the authorization of the Transactions and any other legal matters
relating to such Loan Parties, the Loan Documents or the Transactions, all in
form and substance satisfactory to the Administrative Agent and its counsel and
as further described in the list of closing documents attached as Exhibit E.

     (e) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.

     (f) The Administrative Agent shall have received all fees and other amounts
due and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.

     (g) The Administrative Agent shall have received evidence reasonably
satisfactory to it that all governmental and third party approvals necessary or,
in the discretion of the Administrative Agent, advisable in connection with the
Transactions have been obtained and are in full force and effect.

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.

     SECTION 4.02. Each Credit Event. The obligation of each Lender to make the
Loan on the Effective Date is subject to the satisfaction of the following
conditions:

     (a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct on and as of the date of such Loan.

     (b) At the time of and immediately after giving effect to such Loan, no
Default shall have occurred and be continuing.

     (c) No law or regulation shall prohibit, and no order, judgment or decree
of any Governmental Authority shall enjoin, prohibit or restrain, any Lender
from making the requested Loan.

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ARTICLE V

Affirmative Covenants

     Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full, the Borrower covenants and agrees with the Lenders that:

     SECTION 5.01. Financial Statements and Other Information. The Borrower will
furnish to the Administrative Agent for distribution to each Lender:

     (a) as soon as the same is available but in any event within ninety (90)
days after the end of each fiscal year of the Borrower, its audited consolidated
balance sheet and related statements of operations, stockholders’ equity and
cash flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
Deloitte & Touche LLP or other independent public accountants of recognized
national standing (without a “going concern” or like qualification or exception
and without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;

     (b) (i) as soon as the same is available but in any event within forty five
(45) days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower, its consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes, (ii) as soon as
available but in any event within ten (10) Business Days after the end of each
fiscal month of the Borrower, a report (organized and detailed on a per
jurisdiction basis) reflecting the amount of unrestricted cash balances and
Permitted Investments maintained by the Borrower and its Subsidiaries in each
such jurisdiction as of the end of such month and (iii) as soon as the same is
available but in any event within forty five (45) days after the end of each
fiscal quarter of each fiscal year of the Borrower, projections of the cash
flows for the following fiscal quarter of the Borrower, in a form reasonably
satisfactory to the Administrative Agent;

     (c) concurrently with any delivery of financial statements under clause (a)
or (b) above, a certificate of a Financial Officer of the Borrower (i)
certifying as to whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be taken with
respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 6.11 and (iii) stating whether any change
in GAAP or in the application thereof has occurred since the date of the audited
financial statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate;

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     (d) within 90 days of the commencement of each fiscal year of the Borrower,
projected consolidated balance sheets, income statements and cash flow
statements of the Borrower and its consolidated Subsidiaries for such fiscal
year;

     (e) promptly after the same become publicly available, copies of all 10-Ks,
10-Qs and 8-Ks filed by the Borrower or any Subsidiary with the U.S. Securities
and Exchange Commission, or any Governmental Authority succeeding to any or all
of the functions of said Commission, or with any national securities exchange,
or distributed by the Borrower to its shareholders generally, as the case may
be; and

     (f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender may reasonably request.

Documents required to be delivered pursuant to clauses (a), (b), (d) or (e) of
this Section 5.01 may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) on which the Borrower posts such
documents, or provides a link thereto on the Borrower’s website on the Internet
at the website address <www.photronics.com>; (ii) on which such documents are
posted on the Borrower’s behalf on IntraLinks™ or a substantially similar
electronic platform, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); or (iii) on which such documents are filed for public
availability on the U.S. Securities and Exchange Commission’s Electronic Data
Gathering and Retrieval System; provided that the Borrower shall notify (which
may be by facsimile or electronic mail) the Administrative Agent of the posting
of any such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents. Notwithstanding
anything contained herein, in every instance the Borrower shall be required to
provide paper copies of the compliance certificates required by clause (c) of
this Section 5.01 to the Administrative Agent.

     SECTION 5.02. Notices of Material Events. The Borrower will furnish to the
Administrative Agent prompt written notice of the following:

     (a) the occurrence of any Default;

     (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;

     (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect; and

     (d) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

     SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will
cause each of its Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03.

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     SECTION 5.04. Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay its obligations, including Tax liabilities,
that, if not paid, could result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

     SECTION 5.05. Maintenance of Properties; Insurance.

     (a) The Borrower will, and will cause each of its Subsidiaries to, (i) keep
and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted, and (ii) maintain
with financially sound and reputable carriers (1) insurance in such amounts
(with no greater risk retention) and against such risks (including loss or
damage by fire and loss in transit; theft, burglary, pilferage, larceny,
embezzlement, and other criminal activities; business interruption; and general
liability) and such other hazards, as is customarily maintained by companies of
established repute engaged in the same or similar businesses operating in the
same or similar locations and (2) all insurance required pursuant to the
Collateral Documents. The Borrower will furnish to the Lenders, upon request of
the Collateral Agent, information in reasonable detail as to the insurance so
maintained.

     (b) The Borrower shall deliver to the Collateral Agent endorsements (x) to
all “All Risk” physical damage insurance policies on the Loan Parties’ tangible
personal property and assets located in the United States of America and
business interruption insurance policies naming the Collateral Agent as lender
loss payee, and (y) to all general liability and other liability policies naming
the Collateral Agent an additional insured. Each policy for liability insurance
shall provide for all losses to be paid on behalf of the Collateral Agent and
the Borrower or its Subsidiaries as their interests may appear. In the event the
Borrower or any of its Subsidiaries at any time or times hereafter shall fail to
obtain or maintain any of the policies or insurance required herein or to pay
any premium in whole or in part relating thereto, then the Collateral Agent,
without waiving or releasing any obligations or resulting Default hereunder, may
at any time or times thereafter (but shall be under no obligation to do so)
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect thereto which the Collateral Agent deems
advisable. All sums so disbursed by the Collateral Agent shall constitute part
of the Obligations, payable as provided in this Agreement. The Borrower will
furnish to the Collateral Agent prompt written notice of any casualty or other
insured damage to any material portion of the Collateral or the commencement of
any action or proceeding for the taking of any material portion of the
Collateral or interest therein under power of eminent domain or by condemnation
or similar proceeding.

     (c) So long as no Event of Default shall have occurred and be continuing,
all insurance payments received by the Collateral Agent in connection with any
loss, damage or destruction of any property of the Borrower or any of its
Subsidiaries will be released by the Collateral Agent to the Borrower or such
Subsidiary for the repair, replacement or restoration thereof, subject to the
prepayment requirements under Section 2.11(c) and subject to such other terms
and conditions with respect to the release thereof as the Collateral Agent may
reasonably require.

     SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which entries that are full, true and correct in all material respects are
made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Administrative Agent or any Lender,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its relevant books and records, including environmental
assessment reports and Phase I or Phase II studies, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested. The Borrower
acknowledges that the Administrative Agent, after exercising its rights of
inspection, may prepare and distribute to the Lenders certain reports pertaining
to the Borrower and its Subsidiaries’ assets for internal use by the
Administrative Agent and the Lenders.

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     SECTION 5.07. Compliance with Laws and Material Contractual Obligations.
The Borrower will, and will cause each of its Subsidiaries to, (i) comply with
all laws, rules, regulations and orders of any Governmental Authority applicable
to it or its property (including without limitation Environmental Laws) and (ii)
perform in all material respects its obligations under material agreements to
which it is a party, in each case except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

     SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used only
to repay Indebtedness, and prepay the obligations, under the Chinese Credit
Facility on the Effective Date. No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations T, U and X.

     SECTION 5.09. Subsidiary Guarantors; Pledges; Additional Collateral;
Further Assurances

     (a) As promptly as possible but in any event within thirty (30) days (or
such later date as may be agreed upon by the Administrative Agent) after any
Person becomes a Subsidiary or any Subsidiary qualifies independently as, or is
designated by the Borrower or the Administrative Agent as, a Subsidiary
Guarantor pursuant to the definition of “Subsidiary Guarantor”, the Borrower
shall provide the Administrative Agent with written notice thereof setting forth
information in reasonable detail describing the earnings and material assets of
such Person and shall cause each such Subsidiary which also qualifies as a
Subsidiary Guarantor to deliver to the Administrative Agent a joinder to the
Subsidiary Guaranty and the Security Agreement (in each case in the form
contemplated thereby) pursuant to which such Subsidiary agrees to be bound by
the terms and provisions of thereof, such Subsidiary Guaranty to be accompanied
by appropriate corporate resolutions, other corporate documentation and legal
and joinder opinions in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.

     (b) The Borrower will cause, and will cause each other Subsidiary
qualifying as a Loan Party to cause, within the time periods set forth below
with respect to real property, all of its owned property (whether real,
personal, tangible, intangible, or mixed) to be subject at all times to first
priority and perfected (subject in each case to the qualifications specified in
Section 3.16 with respect to priority and perfection) Liens in favor of the
Collateral Agent for the benefit of the Holders of Secured Obligations to secure
the Secured Obligations in accordance with the terms and conditions of the
Collateral Documents, subject in any case to Liens permitted by Section 6.02.
Without limiting the generality of the foregoing, the Borrower (i) will cause
the Applicable Pledge Percentage of the issued and outstanding Equity Interests
of each Pledge Subsidiary directly owned by the Borrower or any other Subsidiary
qualifying as a Loan Party to be subject at all times to a first priority and
perfected (subject in each case to the qualifications specified in Section 3.16
with respect to priority and perfection) Lien in favor of the Collateral Agent
to secure the Secured Obligations in accordance with the terms and conditions of
the Collateral Documents; provided that no such pledge of the Equity Interests
of a Foreign Subsidiary shall be required hereunder to the extent such pledge is
prohibited by applicable law or the Collateral Agent and its counsel reasonably
determine that, in light of the cost and expense associated therewith, such
pledge would be unduly burdensome or not provide material Pledged Equity for the
benefit of the Holders of Secured Obligations pursuant to legally binding, valid
and enforceable Pledge Agreements, (ii) will, and will cause each other
Subsidiary qualifying as a Loan Party to, deliver Mortgages and Mortgage
Instruments with respect to real property owned by the Borrower or such
Subsidiary to the extent, and within such time period as is, reasonably required
by the Collateral Agent and (iii) will (A) cause the intercompany note under the
Specified Intercompany Note (and accompanying allonge in form and substance
satisfactory to the Collateral Agent) to be delivered to the Collateral Agent by
no later than five (5) days after the repayment of the Chinese Credit Facility
(or such later date as the Collateral Agent may agree in the exercise of its
reasonable discretion with respect thereto), (B) cause the Specified
Intercompany Note to be secured, pursuant to such documentation as is reasonably
acceptable to the Collateral Agent, by the Specified Chinese Assets by no later
than the date that is sixty (60) days following the Effective Date (or such
later date as the Collateral Agent may agree in the exercise of its reasonable
discretion with respect thereto) and will not permit such security (and the
indebtedness and obligations evidenced by the Specified Intercompany Note) to be
released or otherwise terminated without the prior written consent of the
Collateral Agent, (C) duly complete the foreign debt registration with SAFE in
respect of the Specified Intercompany Note, duly register the security
documentation in respect of the Specified Intercompany Note as first ranking
mortgages on the Specified Chinese Assets in favor of the Borrower with the
relevant government agency or authority, duly complete the external security
registration with SAFE, in each case to the extent, and within such time period,
as is reasonably required by the Collateral Agent and (D) obtain all approvals
and take all actions that are necessary for the creation, registration and
perfection of the security granted to secure the obligations under the Specified
Intercompany Note, in each case to the extent, and within such time period, as
is reasonably required by the Collateral Agent.

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     (c) Without limiting the foregoing, the Borrower will, and will cause each
Subsidiary to, execute and deliver, or cause to be executed and delivered, to
the Collateral Agent such documents, agreements and instruments, and will take
or cause to be taken such further actions (including the filing and recording of
financing statements, fixture filings, mortgages, deeds of trust and other
documents and such other actions or deliveries of the type required by Section
4.01, as applicable), which may be required by law or which the Collateral Agent
may, from time to time, reasonably request to carry out the terms and conditions
of this Agreement and the other Loan Documents and to ensure perfection and
priority of the Liens created or intended to be created by the Collateral
Documents, all at the expense of the Borrower.

     (d) If any real property or improvements thereto or any interests therein
are acquired by a Loan Party after December 12, 2008 (other than assets already
constituting Collateral under the Security Agreement or any Mortgage), the
Borrower will notify the Collateral Agent thereof, and, if requested by the
Collateral Agent, the Borrower will cause such assets to be subjected to a Lien
securing the Secured Obligations and will take, and cause the other Loan Parties
to take, such actions as shall be necessary or reasonably requested by the
Collateral Agent to grant and perfect such Liens, including actions described in
paragraph (c) of this Section, all at the expense of the Borrower.

     SECTION 5.10. [Intentionally Omitted].

     SECTION 5.11. Depository Banks. The Borrower and each Subsidiary will, by
no later than January 12, 2009, maintain one or more of the Lenders (or their
subsidiaries or affiliates) as its principal depository bank, including for the
maintenance of operating, administrative, cash management, collection activity,
and other deposit accounts for the conduct of its business. In the event that
any Lender ceases to be a Lender hereunder, the Borrower and its applicable
Subsidiaries shall have 30 days, or such longer period as may be agreed by the
Collateral Agent in its reasonable discretion, to move its accounts to one or
more of the other Lenders (or their subsidiaries or affiliates).

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     SECTION 5.12. Financial Consultant. The Borrower shall retain the services
of a financial consultant selected by the Borrower from a list of consultants
provided to the Borrower by the Administrative Agent (the “Financial
Consultant”) on terms (including scope of engagement) reasonably acceptable to
the Administrative Agent by no later than January 15, 2009. The Borrower shall
cause the Financial Consultant to (i) provide a report (in form and scope
reasonably acceptable to the Administrative Agent) to the Administrative Agent
and the Lenders covering the 2009 business plan, cash flow projections and
liquidity, capital expenditures and foreign activities, in each case in respect
of the Borrower and its Subsidiaries, by no later than March 31, 2009 and (ii)
provide such services from time to time as are requested by the Administrative
Agent. It is understood and agreed that the Financial Consultant shall be and
remain the agent of the Borrower and not of the Agents or the Lenders and shall
not have any authority to act for, or on behalf of, the Agents or the Lenders in
any matter whatsoever; provided that the Financial Consultant will be permitted
to hold direct conversations with the Agents and the Lenders.

ARTICLE VI

Negative Covenants

     Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full, the
Borrower covenants and agrees with the Lenders that:

     SECTION 6.01. Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:

     (a) (i) the Obligations and any other Indebtedness created under the Loan
Documents, (ii) Indebtedness created under the Revolving Facility and (iii) the
Specified Intercompany Note;

     (b) Indebtedness existing on the date hereof and set forth in Schedule 6.01
and, other than with respect to the Chinese Credit Facility, extensions,
renewals and replacements of any such Indebtedness with Indebtedness of a
similar type that does not increase the outstanding principal amount thereof;

     (c) Indebtedness of (i) any Loan Party to any other Loan Party, (ii) any
Subsidiary to any Loan Party and (iii) any Subsidiary that is not a Loan Party
to any other Subsidiary that is not a Loan Party;

     (d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary;

     (e) Indebtedness of the Borrower or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof; provided that (i) such Indebtedness is incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement and (ii) the aggregate principal amount of Indebtedness permitted by
this clause (e) shall not exceed $5,000,000 at any time outstanding;

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     (f) Subordinated Indebtedness and Qualified Unsecured Indebtedness, in each
case so long as, after giving effect to the incurrence thereof, no Default shall
have occurred and be continuing and the Borrower shall be in compliance, on a
pro forma basis after giving effect to such incurrence, with the covenants
contained in Section 6.11 recomputed as if such incurrence had occurred on the
first day of the period for testing such compliance;

     (g) Indebtedness of the Borrower or any Subsidiary as an account party in
respect of trade letters of credit;

     (h) (i) Indebtedness of the Borrower or any Subsidiary under any Swap
Agreement otherwise permitted under Section 6.05, (ii) the Guarantee of any Loan
Party of any such Indebtedness and (iii) the Guarantee of any Loan Party of the
obligations of PSMC, PKL or any of their respective subsidiaries under any Swap
Agreement entered into in the ordinary course of business;

     (i) the New Mask Shop Obligations; and

     (j) unsecured Indebtedness in an aggregate principal amount not exceeding
$1,000,000 at any time outstanding.

     SECTION 6.02. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:

     (a) Permitted Encumbrances, Liens created under any Loan Document and Liens
on the Specified Chinese Assets securing the Specified Intercompany Note;

     (b) any Lien on any property or asset of the Borrower or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02; provided that (i)
such Lien shall not apply to any other property or asset of the Borrower or any
Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;

     (c) any Lien existing on any property or asset prior to the acquisition
thereof by the Borrower or any Subsidiary or existing on any property or asset
of any Person that becomes a Subsidiary after the date hereof prior to the time
such Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof;

     (d) Liens on fixed or capital assets acquired, constructed or improved by
the Borrower or any Subsidiary; provided that (i) such security interests secure
Indebtedness permitted by clause (e) of Section 6.01, (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or within
ninety (90) days after such acquisition or the completion of such construction
or improvement, (iii) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring, constructing or improving such fixed or capital assets
and (iv) such security interests shall not apply to any other property or assets
of the Borrower or any Subsidiary; and

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     (e) customary bankers’ Liens and rights of setoff arising by operation of
law and incurred on deposits made in the ordinary course of business;

     (f) Liens on certain real property located in Boise, Idaho securing the New
Mask Shop Obligations; and

     (g) attachments, appeal bonds, judgments and other similar Liens, for sums
not exceeding $1,000,000 in the aggregate arising in connection with court
proceedings; provided, that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being contested in good
faith and by appropriate proceedings and adequate reserves in respect thereof
have been established on the books of the Borrower to the extent required by
GAAP.

     SECTION 6.03. Fundamental Changes and Asset Sales. (a) The Borrower will
not, and will not permit any Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) any of its assets, (including pursuant to a Sale and
Leaseback Transaction), or all or any of the Equity Interests of any of its
Subsidiaries (in each case, whether now owned or hereafter acquired), or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (i) any
Person may merge into the Borrower in a transaction in which the Borrower is the
surviving corporation, (ii) any Subsidiary may merge into a Loan Party in a
transaction in which the surviving entity is such Loan Party (provided that any
such merger involving the Borrower must result in the Borrower as the surviving
entity), (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of
its assets to, or otherwise dissolve into, a Loan Party and (iv) the Borrower
and its Subsidiaries may (A) sell inventory, used or surplus equipment and
Permitted Investments in the ordinary course of business and real estate located
in Dresden, Germany not currently used in the operation of the Borrower’s
business, (B) effect sales, trade-ins or dispositions of used equipment for
value in the ordinary course of business consistent with past practice, (C)
enter into licenses of technology in the ordinary course of business, (D) enter
into Qualified Asset Sales so long as the Net Proceeds resulting thereof are
applied in accordance with Section 2.11(c) and in accordance with the Revolving
Facility Agreement and (E) make any other sales, transfers, leases or
dispositions of assets with an aggregate book value that, together with the
aggregate book value of all other assets of the Borrower and its Subsidiaries
previously leased, sold or disposed of as permitted by this clause (E) during
any fiscal year of the Borrower, does not exceed 1% of Consolidated Total Assets
(as reflected in the most recent consolidated balance sheet of the Borrower
delivered to the Lenders) or as otherwise approved in writing by the
Administrative Agent and (v) any Subsidiary (other than a Material Subsidiary)
may liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Section 6.04.

     (b) The Borrower will not, and will not permit any of its Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto, including semi-conductor
application processes.

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     (c) The Borrower will not change its fiscal year from the annual period
which ends on the Sunday closest to October 29 or its fiscal quarters which,
during the term of this Agreement, consist of four equal 13 week periods.

     SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.
The Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any Person or any
assets of any other Person constituting a business unit, except

     (a) Permitted Investments;

     (b) with respect to any Foreign Subsidiary, direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the government of the country in which such Foreign Subsidiary is
organized or has its principal place of business, in each case maturing within
one year from the date of acquisition thereof, so long as the aggregate amount
of all such obligations for all Foreign Subsidiaries does not exceed $5,000,000
in the aggregate at any time outstanding;

     (c) loans, advances or investments existing on the date hereof by the
Borrower and the Subsidiaries to or in their respective subsidiaries;

     (d) investments, loans or advances made by the Borrower in or to any
Subsidiary and made by any Subsidiary to the Borrower or any other Subsidiary
(provided that not more than $1,000,000 in investments, loans or advances or
capital contributions may be made and remain outstanding, during the term of
this Agreement, by any Loan Party to a Subsidiary which is not a Loan Party but
provided further that investments, loans, advances or capital contributions made
to (i) prepay the obligations under the Chinese Credit Facility on the Effective
Date with the proceeds of the Loans and (ii) fund the operating expenses of
Photronics China in the ordinary course of business consistent with past
practice, in each case shall not be subject to the foregoing proviso);

     (e) Guarantees constituting Indebtedness permitted by Section 6.01 and
Guarantees by the Borrower of rental obligations or accounts payable of any
Subsidiary;

     (f) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

     (g) investments made in connection with a sale of assets permitted by
Section 6.03 to the extent of the non-cash consideration received by the
Borrower or a Subsidiary;

     (h) [intentionally omitted];

     (i) investments, loans and advances by the Borrower or any Subsidiary
existing on the date hereof and set forth in Schedule 6.04;

     (j) [intentionally omitted]; and

     (k) any other investment (other than acquisitions), loan or advance
(including investments made to meet minimum capital requirements of foreign
jurisdictions) so long as the aggregate amount of all such investments does not
exceed $1,000,000 during the term of this Agreement.

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     SECTION 6.05. Swap Agreements. The Borrower will not, and will not permit
any of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap
Agreements entered into to hedge or mitigate risks to which the Borrower or any
Subsidiary has actual exposure (other than those in respect of Equity Interests
of the Borrower or any of its Subsidiaries), and (b) Swap Agreements entered
into in order to effectively cap, collar or exchange interest rates (from fixed
to floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary.

     SECTION 6.06. Restricted Payments. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except (i) the Borrower may
declare and pay dividends with respect to its Equity Interests payable solely in
additional shares of its common stock, (ii) Subsidiaries may declare and pay
dividends ratably with respect to their Equity Interests, (iii) the Borrower may
make Restricted Payments pursuant to and in accordance with stock option plans
or other benefit plans for management or employees of the Borrower and its
Subsidiaries, and (iv) PSMC may make dividends to its shareholders.

     (b) The Borrower will not, and will not permit any Subsidiary to, make or
agree to pay or make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal of
or interest on any Indebtedness, or any payment or other distribution (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any Indebtedness, except: (i) payment of
Indebtedness created under the Loan Documents; (ii) payment of regularly
scheduled interest and principal payments as and when due in respect of any
Indebtedness (subject to any subordination provisions thereof); (iii) payments
in respect of the Revolving Facility, and in respect of the Chinese Credit
Facility on the Effective Date; (iv) prepayment, purchase, redemption,
retirement or other acquisition of the Convertible Subordinated Notes by
exchange for or out of the proceeds received from a substantially concurrent
issue of new shares of its non-mandatorily redeemable Equity Interests or from a
substantially concurrent incurrence of Subordinated Indebtedness (including
mandatorily redeemable Equity Interests of the Borrower) within 90 days of such
issuance or incurrence (provided that the foregoing 90 day requirement shall not
apply to any prepayment, purchase, redemption, retirement or other acquisition
of the Convertible Subordinated Notes outstanding on the Effective Date); (v) so
long as at the time thereof and immediately after giving effect (including pro
forma effect) thereto no Default shall have occurred and be continuing,
prepayment, purchase, redemption, retirement or other acquisition in cash of the
Convertible Subordinated Notes outstanding on the Effective Date; and (vi)
payment of secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness.

     SECTION 6.07. Transactions with Affiliates. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm’s-length basis from unrelated third parties, (b)
transactions between or among the Borrower and its wholly owned Subsidiaries not
involving any other Affiliate, (c) in addition to transactions set forth in
Schedule 6.07, transactions with Related Parties not exceeding $6,000,000 in the
aggregate, (d) Indebtedness permitted by Sections 6.01(b) and 6.01(c),
investments permitted by Section 6.04 and fundamental changes permitted by
Section 6.03 so long as each such transaction is at a price and on terms and
conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties, (e) any
Restricted Payment permitted by Section 6.06, (f) transactions existing on the
date hereof and set forth in Schedule 6.07 and (g) any Affiliate who is an
individual may serve as a director, officer or employee of the Borrower or such
Subsidiary and receive compensation (including stock options) for his or her
services in such capacity.

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     SECTION 6.08. Restrictive Agreements. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to holders of its Equity Interests or to make or repay loans or advances
to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Subsidiary; provided that (i) the foregoing shall not
apply to restrictions and conditions imposed by law or by this Agreement or by
the Revolving Facility Agreement, (ii) the foregoing shall not apply to
restrictions and conditions existing on the date hereof identified on Schedule
6.08 (but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be sold
and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness, (v) clause (a)
of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof and (vi) clause (b) of the
foregoing shall not apply to restrictions or conditions imposed by the
organizational documents of any Joint Venture to the extent that an investment
in such Joint Venture is permitted by Section 6.04(j).

     SECTION 6.09. Issuances of Equity Interests by Subsidiaries. The Borrower
will not permit any Subsidiary to issue any additional shares of its Equity
Interests other than (a) to the Borrower or a wholly-owned Subsidiary, (b) any
such issuance that does not change the Borrower’s direct or indirect percentage
ownership interest in such Subsidiary, (c) any such issuance that is permitted
pursuant to Section 6.03 or 6.04 and (d) any such issuance by PKL, PSMC,
Photronics China or PKLT Co., Ltd., a Taiwanese corporation, so long as the
Borrower continues to own and control more than 50% of the voting and economic
power of such Subsidiary.

     SECTION 6.10. Amendment of Material Documents. The Borrower will not, and
will not permit any Subsidiary to, amend, modify or waive (a) any of its rights
under its certificate of incorporation, by-laws or other organizational
documents, in each case in any respect adverse to the Lenders or (b) any of the
terms of any Subordinated Indebtedness (including, without limitation, the terms
contained in any Convertible Subordinated Note Indenture and any Convertible
Subordinated Notes), in each case in any respect adverse to the Lenders (for the
purposes of this Section 6.10(b) and without limitation of the scope of the
definition of “adverse”, any amendment to increase the principal amount, the
interest rate or fees or other amounts payable, to advance the dates upon which
payments are made or to alter any subordination provision (or any definition
related thereto) shall be deemed to be “adverse”).

    SECTION 6.11. Financial Covenants.

     (a) Maximum Senior Leverage Ratio. The Borrower will not permit the ratio
(the “Senior Leverage Ratio”), determined as of the end of each of its fiscal
quarters set forth below, of (i) Consolidated Senior Indebtedness to (ii)
Consolidated EBITDA for the period of 4 consecutive fiscal  quarters ending with
the end of such fiscal quarter, all calculated for the Borrower and its
Subsidiaries on a consolidated basis, to be greater than the ratio set forth
opposite such fiscal quarter: 

Fiscal Quarter Ending On or About           Maximum Senior Leverage Ratio 
February 1, 2009     2.25 to 1.00 May 3, 2009   2.75 to 1.00 August 2, 2009   
 3.00 to 1.00 November 1, 2009   3.00 to 1.00 January 31, 2010     2.50 to 1.00
May 2, 2010   2.25 to 1.00 August 1, 2010     2.00 to 1.00 October 31, 2010 
 1.75 to 1.00 January 30, 2011 and each Fiscal Quarter     1.25 to 1.00 ending
thereafter   

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     (b) Total Leverage Ratio. The Borrower will not permit the ratio (the
“Total Leverage Ratio”), determined as of the end of each of its fiscal quarters
set forth below, of (i) Consolidated Total Indebtedness to (ii) Consolidated
EBITDA for the period of 4 consecutive fiscal quarters ending with the end of
such fiscal quarter, all calculated for the Borrower and its Subsidiaries on a
consolidated basis, to be greater than the ratio set forth opposite such fiscal
quarter:

Fiscal Quarter Ending On or About           Maximum Total Leverage Ratio 
February 1, 2009    2.50 to 1.00 May 3, 2009  3.00 to 1.00 August 2, 2009   
3.25 to 1.00 November 1, 2009  3.25 to 1.00 January 31, 2010    2.75 to 1.00 May
2, 2010  2.50 to 1.00 August 1, 2010    2.25 to 1.00 October 31, 2010  2.00
to 1.00 January 30, 2011 and each Fiscal Quarter    1.50 to 1.00 ending
thereafter   

     (c) Minimum Unrestricted Cash Balances. The Borrower will not permit the
aggregate amount of unrestricted cash balances and Permitted Investments
maintained by the Borrower and its Subsidiaries to be less than $50,000,000
(provided that, during the Borrower’s fiscal quarter ending on or about January
31, 2010, such amount shall not be less than $45,000,000). For the avoidance of
doubt, any cash deposited with the Collateral Agent pursuant to the terms of the
Collateral Documents shall be deemed to be unrestricted cash.

     (d) Minimum Fixed Charge Coverage Ratio. The Borrower will not permit the
ratio (the “Fixed Charge Coverage Ratio”), determined as of the end of each of
its fiscal quarters set forth below, of (i) Consolidated EBITDA to (ii)
Consolidated Fixed Charges, in each case for the period of four (4) consecutive
fiscal quarters ending with the end of such fiscal quarter, all calculated for
the Borrower and its Subsidiaries on a consolidated basis, to be less than the
ratio set forth opposite such fiscal quarter:

Fiscal Quarter Ending On or About           Minimum Fixed Charge Coverage Ratio
May 3, 2009   2.00 to 1.00 August 2, 2009   1.85 to 1.00 November 1, 2009   1.75
to 1.00 January 31, 2010   1.50 to 1.00 May 2, 2010   1.75 to 1.00 August 1,
2010   2.00 to 1.00 October 31, 2010 and each Fiscal Quarter   2.25 to 1.00
ending thereafter   

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     (e) Minimum EBITDA. The Borrower will not permit Consolidated EBITDA for
the period of six consecutive fiscal months ending at the end of each fiscal
quarter on or about the dates set forth below to be less than the corresponding
amount set forth opposite such fiscal quarter:

Minimum Consolidated EBITDA  Fiscal Quarter Ending On or About          
(Trailing 6 Months)  February 1, 2009    $40,000,000  May 3, 2009  $27,500,000 
August 2, 2009    $32,000,000  November 1, 2009  $40,000,000  January 31, 2010 
  $42,500,000  May 2, 2010  $45,000,000  August 1, 2010    $50,000,000  October
31, 2010 and each Fiscal Quarter  $55,000,000  ending thereafter   

     (f) Maximum Capital Expenditures. The Borrower will not, nor will it permit
any Subsidiary to, make Capital Expenditures in an amount (in the aggregate for
the Borrower and its Subsidiaries) during the period of 4 consecutive fiscal
quarters ending as of the end of each of its fiscal quarters set forth below in
excess of the corresponding amount set forth opposite such fiscal quarter:

Fiscal Quarter Ending On or About           Maximum Capital Expenditures 
February 1, 2009  $65,000,000  May 3, 2009  $57,500,000  August 2, 2009 
$55,000,000  November 1, 2009  $52,500,000  January 31, 2010  $52,500,000  May
2, 2010  $47,500,000  August 1, 2010  $47,500,000  October 31, 2010 
$52,500,000  January 30, 2011 and each Fiscal Quarter  $65,000,000  ending
thereafter   

ARTICLE VII

Events of Default

     If any of the following events (“Events of Default”) shall occur:

     (a) the Borrower shall fail to pay any principal of any Loan when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;

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     (b) the Borrower shall fail to pay any interest on any Loan or any fee or
any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three (3)
Business Days;

     (c) any representation or warranty made or deemed made by the Borrower or
any Subsidiary in or in connection with this Agreement or any other Loan
Document or any amendment or modification thereof or waiver thereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any other Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to have
been incorrect in any material respect when made or deemed made;

     (d) (i) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.03 (with respect to the
Borrower’s existence), 5.08, 5.09, 5.10, 5.11 or 5.12, in Article VI or in
Article X or (ii) any Loan Document shall for any reason not be or shall cease
to be in full force and effect or is declared to be null and void, or the
Borrower or any Subsidiary takes any action for the purpose of terminating,
repudiating or rescinding any Loan Document or any of its obligations
thereunder;

     (e) the Borrower or any Subsidiary Guarantor, as applicable, shall fail to
observe or perform any covenant, condition or agreement contained in this
Agreement (other than those specified in clause (a), (b) or (d) of this Article)
or any other Loan Document, and such failure shall continue unremedied for a
period of thirty (30) days after notice thereof from the Administrative Agent to
the Borrower (which notice will be given at the request of any Lender);

     (f) the Borrower or any Subsidiary shall fail to make any payment (whether
of principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable;

     (g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;

     (h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any Subsidiary or its debts, or of a substantial part
of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered;

     (i) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing;

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     (j) the Borrower or any Subsidiary shall become unable, admit in writing
its inability or fail generally to pay its debts as they become due;

     (k) one or more judgments for the payment of money in an aggregate amount
in excess of $1,000,000 shall be rendered against the Borrower, any Subsidiary
or any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to attach or levy
upon any assets of the Borrower or any Subsidiary to enforce any such judgment;

     (l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;

     (m) a Change in Control shall occur;

     (n) within 90 days prior to the Maturity Date, the sum of (i) the
“Available Revolving Commitment” defined in the Revolving Facility Agreement and
(ii) the aggregate amount of unrestricted cash balances and Permitted
Investments maintained by the Borrower and its Subsidiaries shall be less than
the aggregate principal amount of the Indebtedness then outstanding under the
Convertible Subordinated Notes; or

     (o) any Collateral Document shall for any reason fail to create a valid and
perfected first priority security interest in any material portion of the
Collateral purported to be covered thereby, except as permitted by the terms of
any Loan Document;

then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other Obligations of the Borrower accrued hereunder and under the other
Loan Documents, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and in case of any event with respect to the Borrower described in
clause (h) or (i) of this Article, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other Obligations accrued hereunder and under the other
Loan Documents, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.

     Any proceeds of Collateral received by the Administrative Agent after an
Event of Default has occurred and is continuing and the Administrative Agent so
elects or the Required Lenders so direct, such funds shall be applied, subject
to the terms of the Intercreditor Agreement, ratably first, to pay any
reasonable out-of-pocket fees, indemnities, or expense reimbursements including
amounts then due to the Administrative Agent from the Loan Parties, second, to
pay any fees or expense reimbursements then due to the Lenders from the Loan
Parties, third, to pay interest then due and payable on the Loans ratably,
fourth, on a ratable basis, to prepay principal on the Loans, to payment of any
amounts owing with respect to Banking Services Obligations and Swap Obligations,
and fifth, to the payment of any other Obligation due to the Administrative
Agent or any Lender by the Loan Parties. The Administrative Agent and the
Lenders shall have the continuing and exclusive right to apply and reverse and
reapply any and all such proceeds and payments to any portion of the
Obligations.

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     Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent may, in accordance with the terms of the Intercreditor
Agreement, exercise any rights and remedies provided to the Collateral Agent
under the Loan Documents or at law or equity, including all remedies provided
under the UCC.

ARTICLE VIII

The Administrative Agent and the Collateral Agent

     Each of the Lenders hereby irrevocably appoints JPMorgan Chase Bank,
National Association as Administrative Agent and Collateral Agent hereunder and
under each other Loan Document, and each of the Lenders authorizes each of the
Agents to enter into the Intercreditor Agreement on behalf of such Lender (each
Lender hereby agreeing to be bound by the terms of the Intercreditor Agreement
as if it were a party thereto) and to take such actions on its behalf and to
exercise such powers as are delegated to the Agents by the terms hereof and the
terms of the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto.

     The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.

     No Agent shall have any duties or obligations except those expressly set
forth herein. Without limiting the generality of the foregoing, (a) no Agent
shall be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing, (b) no Agent shall have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that such Agent is
required to exercise in writing as directed by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, no Agent shall have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Borrower or any of
its Subsidiaries that is communicated to or obtained by the bank serving as
either Agent or any of its Affiliates in any capacity. No Agent shall be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or willful misconduct. No Agent shall be
deemed to have knowledge of any Default unless and until written notice thereof
is given to such Agent by the Borrower or a Lender, and neither Agent shall be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement, (ii)
the contents of any certificate, report or other document delivered hereunder or
in connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, (v) the satisfaction of any condition
set forth in Article IV or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to such Agent or (vi) the creation,
perfection or priority of Liens on the Collateral or the existence of the
Collateral.

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     The Agents shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Agents also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. The Agents may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

     Either Agent may perform any and all its duties and exercise its rights and
powers by or through any one or more sub-agents appointed by such Agent. The
Agents and any such sub-agent may perform any and all its duties and exercise
its rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Agents and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as an Agent.

     Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

     Each Lender acknowledges that it has, independently and without reliance
upon either Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon either Agent or any other Lender
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.

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     In its capacity, the Collateral Agent is a “representative” of the Holders
of Secured Obligations within the meaning of the term “secured party” as defined
in the New York Uniform Commercial Code. Each Lender authorizes the Collateral
Agent to enter into each of the Collateral Documents to which it is a party and
to take all action contemplated by such documents. Each Lender agrees that no
Holder of Secured Obligations (other than the Collateral Agent) shall have the
right individually to seek to realize upon the security granted by any
Collateral Document, it being understood and agreed that such rights and
remedies may be exercised solely by the Collateral Agent for the benefit of the
Holders of Secured Obligations upon the terms of the Collateral Documents. In
the event that any Collateral is hereafter pledged by any Person as collateral
security for the Obligations, the Collateral Agent is hereby authorized, and
hereby granted a power of attorney, to execute and deliver on behalf of the
Holders of Secured Obligations any Loan Documents necessary or appropriate to
grant and perfect a Lien on such Collateral in favor of the Collateral Agent on
behalf of the Holders of Secured Obligations. The Lenders hereby authorize the
Collateral Agent, at its option and in its discretion, to release any Lien
granted to or held by the Collateral Agent upon any Collateral (i) as described
in Section 9.02(b); (ii) as permitted by, but only in accordance with, the terms
of the applicable Loan Document; or (iii) if approved, authorized or ratified in
writing by the Required Lenders, unless such release is required to be approved
by all of the Lenders hereunder. Upon request by the Collateral Agent at any
time, the Lenders will confirm in writing the Collateral Agent’s authority to
release particular types or items of Collateral pursuant hereto. Upon any sale
or transfer of assets constituting Collateral which is permitted pursuant to the
terms of any Loan Document, or consented to in writing by the Required Lenders
or all of the Lenders, as applicable, and upon at least five Business Days’
prior written request by the Borrower to the Collateral Agent, the Collateral
Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Liens granted
to the Collateral Agent for the benefit of the Holders of Secured Obligations
herein or pursuant hereto upon the Collateral that was sold or transferred;
provided, however, that (i) the Collateral Agent shall not be required to
execute any such document on terms which, in the Collateral Agent’s opinion,
would expose the Collateral Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of the Borrower or any
Subsidiary in respect of) all interests retained by the Borrower or any
Subsidiary, including (without limitation) the proceeds of the sale, all of
which shall continue to constitute part of the Collateral.

     The Borrower, on its behalf and on behalf of its Subsidiaries, and each
Lender, on its behalf and on the behalf of its affiliated Holders of Secured
Obligations, hereby irrevocably constitute the Collateral Agent as the holder of
an irrevocable power of attorney (fondé de pouvoir within the meaning of Article
2692 of the Civil Code of Québec) in order to hold hypothecs and security
granted by the Borrower or any Subsidiary on property pursuant to the laws of
the Province of Quebec to secure obligations of the Borrower or any Subsidiary
under any bond, debenture or similar title of indebtedness issued by the
Borrower or any Subsidiary in connection with this Agreement, and agree that the
Collateral Agent may act as the bondholder and mandatary with respect to any
bond, debenture or similar title of indebtedness that may be issued by the
Borrower or any Subsidiary and pledged in favor of the Holder of Secured
Obligations in connection with this Agreement. Notwithstanding the provisions of
Section 32 of the An Act respecting the special powers of legal persons
(Quebec), JPMorgan Chase Bank, National Association as Collateral Agent may
acquire and be the holder of any bond issued by the Borrower or any Subsidiary
in connection with this Agreement (i.e., the fondé de pouvoir may acquire and
hold the first bond issued under any deed of hypothec by the Borrower or any
Subsidiary).

     The Collateral Agent is hereby authorized to execute and deliver any
documents necessary or appropriate to create and perfect the rights of pledge
for the benefit of the Holders of Secured Obligations including a right of
pledge with respect to the entitlements to profits, the balance left after
winding up and the voting rights of the Borrower as ultimate parent of any
subsidiary of the Borrower which is organized under the laws of the Netherlands
and the Equity Interests of which are pledged in connection herewith (a “Dutch
Pledge”). Without prejudice to the provisions of this Agreement and the other
Loan Documents, the parties hereto acknowledge and agree with the creation of
parallel debt obligations of the Borrower or any relevant Subsidiary as will be
described in any Dutch Pledge (the “Parallel Debt”), including that any payment
received by the Collateral Agent in respect of the Parallel Debt will -
conditionally upon such payment not subsequently being avoided or reduced by
virtue of any provisions or enactments relating to bankruptcy, insolvency,
preference, liquidation or similar laws of general application - be deemed a
satisfaction of a pro rata portion of the corresponding amounts of the
Obligations, and any payment to the Holders of Secured Obligations in
satisfaction of the Obligations shall - conditionally upon such payment not
subsequently being avoided or reduced by virtue of any provisions or enactments
relating to bankruptcy, insolvency, preference, liquidation or similar laws of
general application - be deemed as satisfaction of the corresponding amount of
the Parallel Debt. The parties hereto acknowledge and agree that, for purposes
of a Dutch Pledge, any resignation by the Collateral Agent is not effective
until its rights under the Parallel Debt are assigned to the successor
Collateral Agent.

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     The parties hereto acknowledge and agree for the purposes of taking and
ensuring the continuing validity of German law governed pledges (Pfandrechte)
with the creation of parallel debt obligations of the Borrower as will be
further described in a separate German law governed parallel debt undertaking.
The Collateral Agent shall (i) hold such parallel debt undertaking as fiduciary
agent (Treuhaender) and (ii) administer and hold as fiduciary agent
(Treuhaender) any pledge created under a German law governed Collateral Document
which is created in favor of any Holder of the Secured Obligations or
transferred to any Holder of the Secured Obligations due to its accessory nature
(Akzessorietaet), in each case in its own name and for the account of the
Holders of the Secured Obligations. Each Lender, on its own behalf and on behalf
of its affiliated Holders of Secured Obligations, hereby authorizes the
Collateral Agent to enter as its agent in its name and on its behalf into any
German law governed Collateral Document, to accept as its agent in its name and
on its behalf any pledge under such Collateral Document and to agree to and
execute as agent its in its name and on its behalf any amendments, supplements
and other alterations to any such Collateral Document and to release any such
Collateral Document and any pledge created under any such Collateral Document in
accordance with the provisions herein and/or the provisions in any such
Collateral Document.

ARTICLE IX

Miscellaneous

     SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:

     (i) if to the Borrower, to Photronics, Inc., 15 Secor Road, Brookfield,
Connecticut 06804, Attention of Sean T. Smith (Telecopy No. (203) 775-5601;
Telephone No. (203) 740-5671), with a copy (in the case of notices of Default)
to Attention of Richelle Burr (Telecopy No. (203) 775-5601; Telephone No. (203)
740-5285);

     (ii) if to the Administrative Agent or Collateral Agent, to JPMorgan Chase
Bank, National Association, 10 South Dearborn Street, 7th Floor, Chicago,
Illinois 60603, Attention of Anthony Catron (Telecopy No. (312) 385-7096), with
a copy to JPMorgan Chase Bank, National Association, 277 Park Avenue, New York,
New York, Attention of Anne Biancardi (Telecopy No. (646) 534-3078); and

     (iii) if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.

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     (b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

     (c) Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

     SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent and the Lenders hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender may have had
notice or knowledge of such Default at the time.

     (b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender directly affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan, or
any interest thereon, or any fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender directly affected
thereby, (iv) change Section 2.18(b) or (c) in a manner that would alter the pro
rata sharing of payments required thereby, without the written consent of each
Lender, (v) change any of the provisions of this Section or the definition of
“Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender or (vi) release the Borrower or all or substantially all
of the Subsidiary Guarantors from their obligations under Article X or the
Subsidiary Guaranty or release all or substantially all of the Pledged Equity,
as applicable, without the written consent of each Lender; provided further that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent or the Collateral Agent hereunder without the prior
written consent of the Administrative Agent or the Collateral Agent.

     SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Agents and their
Affiliates, including the reasonable fees, charges and disbursements of counsel
for each Agent, in connection with the syndication of the credit facilities
provided for herein, the preparation and administration of this Agreement and
the other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the Agents or any Lender, including the fees, charges and
disbursements of any counsel for either Agent or any Lender, in connection with
the enforcement or protection of its rights in connection with the Loan
Documents, including its rights under this Section, or in connection with the
Loans made hereunder, including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans.

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     (b) The Borrower shall indemnify the Agents and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of the Loan Documents or any agreement
or instrument contemplated hereby or thereby, the performance by the parties
hereto of their respective obligations hereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan or the
use of the proceeds therefrom, (iii) any actual or alleged presence or release
of Hazardous Materials on or from any property owned or operated by the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or from the breach of such
Indemnitee’s obligations under the Loan Documents.

     (c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Agents under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the relevant Agent such Lender’s Applicable
Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount (it being understood that
the Borrower’s failure to pay any such amount shall not relieve the Borrower of
any default in the payment thereof); provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the relevant Agent in its capacity as
such.

     (d) To the extent permitted by applicable law, the Borrower shall not
assert, and the Borrower hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or the use
of the proceeds thereof.

     (e) All amounts due under this Section shall be payable not later than
fifteen (15) days after written demand therefor.

     SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

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     (b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:

     (A) the Borrower, provided that no consent of the Borrower shall be
required for an assignment to a Lender, an Affiliate of a Lender, an Approved
Fund or, if an Event of Default has occurred and is continuing, any other
assignee; and

     (B) the Administrative Agent.

(ii) Assignments shall be subject to the following additional conditions:

     (A) except in the case of an assignment to a Lender or an Affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining amount of
the assigning Lender’s Commitment or Loans, the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 unless
each of the Borrower and the Administrative Agent otherwise consent, provided
that no such consent of the Borrower shall be required if an Event of Default
has occurred and is continuing;

     (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement;

     (C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

     (D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

     For the purposes of this Section 9.04(b), the term “Approved Fund” has the
following meaning:

     “Approved Fund” means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

     (iii) Subject to acceptance and recording thereof pursuant to paragraph
(b)(iv) of this Section, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.04
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

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     (iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrower,
the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

     (v) Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.07(b), 2.18(d) or
9.03(c), the Administrative Agent shall have no obligation to accept such
Assignment and Assumption and record the information therein in the Register
unless and until such payment shall have been made in full, together with all
accrued interest thereon. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.

     (c) (i) Any Lender may, without the consent of the Borrower and the
Administrative Agent, sell participations to one or more banks or other entities
(a “Participant”) in all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (A) such Lender’s obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(c) as though it were a Lender.

     (ii) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as
though it were a Lender.

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     (d) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

     SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any other
Loan Document or any provision hereof or thereof.

     SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.

     SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

     SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final and in whatever currency denominated) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Borrower against any of and all the obligations of
the Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.

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     SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

     (b) The Borrower hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Administrative Agent or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement against the Borrower or its properties in the courts of any
jurisdiction.

     (c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

     (d) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.

     SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

     SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

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     SECTION 9.12. Confidentiality. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Administrative Agent or any Lender on a nonconfidential
basis from a source other than the Borrower or any of its Subsidiaries. For the
purposes of this Section, “Information” means all information received from the
Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrower; provided that, in the
case of information received from the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

     SECTION 9.13. USA PATRIOT Act. Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies the Borrower that pursuant to
the requirements of the Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender to
identify the Borrower in accordance with the Act.

     SECTION 9.14. Appointment for Perfection. Each Lender hereby appoints each
other Lender as its agent for the purpose of perfecting Liens, for the benefit
of the Collateral Agent and the Holders of Secured Obligations, in assets which,
in accordance with Article 9 of the UCC or any other applicable law can be
perfected only by possession. Should any Lender (other than the Collateral
Agent) obtain possession of any such Collateral, such Lender shall notify the
Collateral Agent thereof, and, promptly upon the Collateral Agent’s request
therefor shall deliver such Collateral to the Collateral Agent or otherwise deal
with such Collateral in accordance with the Collateral Agent’s instructions.

[Signature Pages Follow]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the day and year
first above written.

PHOTRONICS, INC., as the Borrower    By      Name: Title:

 

 

 

 

 

Signature Page to Loan Agreement
Photronics, Inc.

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JPMORGAN CHASE BANK, NATIONAL  ASSOCIATION, individually as a Lender and as 
Administrative Agent    By      Name:  Title:     JPMORGAN CHASE BANK, NATIONAL 
ASSOCIATION, as Collateral Agent    By      Name: Title:

 

 

 

 

 

Signature Page to Loan Agreement
Photronics, Inc.

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HSBC BANK USA, NATIONAL  ASSOCIATION, as a Lender      By      Name:  Title: 

 

 

 

 

 

Signature Page to Loan Agreement
Photronics, Inc.

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CITIBANK, N.A., as a Lender      By      Name:  Title: 

 

 

 

 

 

Signature Page to Loan Agreement
Photronics, Inc.

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BANK OF AMERICA, N.A., as a Lender      By      Name:  Title: 

 

 

 

 

 

Signature Page to Loan Agreement
Photronics, Inc.

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SCHEDULE 2.01

COMMITMENTS

LENDER        COMMITMENT   JPMORGAN CHASE BANK, NATIONAL ASSOCIATION   
$8,161,235.70    HSBC BANK USA, NATIONAL ASSOCIATION    $8,161,235.70   
CITIBANK, N.A.    $5,440,823.80    BANK OF AMERICA, N.A.    $5,440,823.80   
AGGREGATE COMMITMENT    $27,204,119.00 

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