Document:

EXHIBIT 10.29

ALLEN & OVERY

 

 

EXHIBIT 10.29

EXECUTION COPY

 

 

AMENDED AND RESTATED
GUARANTEE AGREEMENT

 

By

 

PHOTRONICS, INC

 

RELATING TO

 

RMB186,000,000
CREDIT FACILITY

 

FOR

 

PHOTRONICS IMAGING TECHNOLOGIES (SHANGHAI) CO., LTD

 

 

August 23, 2007 

CONTENTS

	Clause 	  	Page 
	1. 	      	Interpretation 	2 
	2. 		Guarantee and indemnity 	12 
	3. 		Taxes 	18 
	4. 		Payments 	19 
	5. 		Representations 	20 
	6. 		Affirmative Covenants 	24 
	7. 		Negative Covenants 	28 
	8. 		Evidence and calculations 	35 
	9. 		Indemnities and break costs 	35 
	10. 	 	Amendments and waivers 	36 
	11. 		Changes to the parties 	36 
	12. 		Disclosure of information 	36 
	13. 		Set-off 	37 
	14. 		enforcement by administrative agent 	37 
	15. 		No marshalling 	38 
	16. 		administrative agent's duties 	38 
	17. 		Severability 	38 
	18. 		Counterparts 	38 
	19. 		Notices 	38 
	20. 		Language 	39 
	21. 		Governing law 	40 
	22. 		Enforcement 	40 
	23. 		Miscellaneous 	41 

	Schedule 			
	 			
	Schedule 1.1 	      	Consolidated EBITDA/Net Income 	44 
	Schedule 7.1 	 	Existing Indebtedness 	45 
	Schedule 7.2 	 	Existing Liens 	46 
	Schedule 7.4 	 	Existing Investments, Loans, Advances, Guarantees and Acquisitions 	47 
	Schedule 7.7 	 	Transactions with Affiliates 	48 
	Schedule 7.8 	 	Existing Restrictions 	49 

THIS AMENDED AND RESTATED GUARANTEE AGREEMENT (this Agreement) is dated as of August 23, 2007

AND MADE BY:

PHOTRONICS, INC as guarantor (the Guarantor)

IN FAVOR OF:

the Administrative Agent (as defined below) for and on behalf of itself and the other Finance Parties from time to time party to the Restated Credit Agreement described below.

BACKGROUND

	1.	      	A revolving credit and term loan facility was established in favor of Photronics Imaging Technologies (Shanghai) Co., Ltd. (the Company) pursuant to the terms of the agreement dated October 10, 2005 (as amended and modified through the date of this Agreement, the Original Credit Agreement) between the Company and the JPMorgan Chase Bank, N.A., Shanghai Branch, as lender (JPM Shanghai).
	 
	2.		The Guarantor and JPM Shanghai entered into a guarantee agreement (the Original Guarantee) dated October 10, 2005 in connection with the Original Credit Agreement.
	 
	3.		On August 6, 2007, “JPMorgan Chase Bank (China) Company Limited, Shanghai Branch” was incorporated pursuant to the People’s Republic of China Regulations on Administration of Foreign Funded Banks (State Council Decree No. 478), and in connection therewith the interests of JPM Shanghai, as lender under the Original Credit Agreement and related loan documents, were transferred to JPMorgan Chase Bank (China) Company Limited, Shanghai Branch (as such successor, the Original Lender).
	 
	4.		The Company, the Original Lender and certain other lenders as assignees of the Original Lender have agreed to amend and restate the Original Credit Agreement on the terms and conditions provided in the amended and restated credit agreement dated August 23, 2007 (the Restated Credit Agreement) among the Company, JPMorgan Chase Bank (China) Company Limited, Shanghai Branch, as administrative agent (in this capacity the Administrative Agent), the Original Lender, and the other Finance Parties party thereto.
	 
	5.		In connection with the entering into of the Restated Credit Agreement, the parties wish to amend and restate the Original Guarantee on the terms and conditions herein.

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IT IS AGREED as follows:

	1.		INTERPRETATION
	 
	1.1		Definitions
	 
	 		In this Agreement:
	 
	 		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.
	 
	 		Applicable Pledge Percentage means 100% but 65% in the case of a pledge by the Guarantor or any Domestic Subsidiary of its Equity Interests in an Affected Foreign Subsidiary.
	 
	 		Banking Services means each and any of the following bank services provided to the Guarantor 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).
	 
	 		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.
	 
	 		Code means the Internal Revenue Code of 1986, as amended 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.
	 
	 		Company means Photronics Imaging Technologies (Shanghai) Co., Ltd.
	 
	 	      	Consolidated EBITDA 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 Guarantor'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 Guarantor 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

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		      	consecutive fiscal quarters (each, a "Reference Period"), (i) if at any time during such Reference Period the Guarantor 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 Guarantor 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 Guarantor 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 Guarantor or any of its Subsidiaries in excess of $10,000,000.
			 
	     		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 Group calculated on a consolidated basis for such period with respect to (a) all outstanding Indebtedness of the Group 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).
			 
			Consolidated Net Income means, with reference to any period, the net income (or loss) of the Group 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 Guarantor) in which the Guarantor or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Guarantor or such Subsidiary in the form of dividends or similar distributions and (b) the undistributed earnings of any Subsidiary of the Guarantor 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 Finance Document as defined in the U.S. Facility
Agreement) 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 1.1.
			 
			Consolidated Senior Indebtedness means at any time Consolidated Total Indebtedness minus the aggregate principal amount of Subordinated Indebtedness of the Group 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 Guarantor and its Subsidiaries calculated in accordance with GAAP on a consolidated basis as of such date.

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	     	      	Consolidated Total Indebtedness means at any time the sum, without duplication, of (a) the aggregate Indebtedness of the Group calculated on a consolidated basis as of such time in accordance with GAAP, (b) the aggregate amount of Indebtedness of the Group 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 Guarantor 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 the meanings correlative thereto.
			 
			Convertible Subordinated Note Indenture means (i) the Indenture dated as of April 15, 2003 from the Guarantor 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 Guarantor 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.
			 
			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.
			 
			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 obligations of the lenders under the U.S. Facility Agreement to make loans thereunder and of the issuing bank under the U.S. Facility Agreement to issue letters of credit thereunder become effective.
			 
			Eligible Foreign Subsidiary means any Foreign Subsidiary that is approved from time to time by the Administrative Agent.
			 
			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.
			 
			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.

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	     	      	ERISA Affiliate means any trade or business (whether or not incorporated) that, together with the Guarantor, 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 Guarantor 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 Guarantor 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 Guarantor or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Guarantor or any of its ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Guarantor or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Guarantor or any ERISA Affiliate of any notice, concerning the imposition upon the Guarantor 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.
			 
			Event of Default means an event specified as such in Clause 17 (Default) of the Restated Credit Agreement.
			 
			Facility means the RMB186,000,000 credit facility provided to the Company pursuant to the Restated Credit Agreement.
			 
			Facility Guarantee Secured Parties means the holders of the Indebtedness and other obligations of the Guarantor under this Agreement and the other Finance Documents from time to time and shall include their respective successors, transferees and assigns.
			 
			Finance Document means:
			 
			(a)		The Restated Credit Agreement;
				      	
			(b)		this Agreement;
			 		
			(c)		the Pledge Agreements;
			 		
			(d)		the Intercreditor Agreement; or
			 		
			(e)		any other document designated as such by the Administrative Agent and the Company.
					 
			Financial Officer means the chief financial officer, any vice president of finance, principal accounting officer, treasurer or controller of the Guarantor.
					 
			Foreign Subsidiary means any Subsidiary that is not a Domestic Subsidiary.

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	     	      	Foreign Subsidiary Borrower means any Eligible Foreign Subsidiary that has been designated as a Foreign Subsidiary Borrower under the U.S. Facility pursuant to Section 2.23 of the U.S. Facility Agreement and that has not ceased to be a Foreign Subsidiary Borrower pursuant to such Section.
			 
			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.
			 
			Group means the Guarantor and its Subsidiaries.
			 
			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.
			 
			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

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	     	      	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.
			 
			Holders of Secured Obligations means the Facility Guarantee Secured Parties and the U.S. Facility Secured Parties.
			 
			Intercreditor Agreement means that certain Intercreditor Agreement dated as of the date hereof and entered into by the Administrative Agent, the Collateral Agent, and JPMorgan Chase Bank, National Association., as the administrative agent under the U.S. Facility, in connection with this Facility and the U.S. Facility, as the same may be amended, restated, supplemented or otherwise modified from time to time.
			 
			Joint Venture means any person that is a corporation, partnership, limited liability company or other legal entity or arrangement in which the Guarantor or any Subsidiary has an equity investment and possession, directly or indirectly, of the power to direct or cause the direction of the management or policies that person, whether through the ability to exercise voting power, by contract or otherwise.
			 
			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.
			 
			Loan Parties means, collectively, the Company, the Guarantor and the Subsidiary Guarantors.
			 
			Material Adverse Effect means a material adverse effect on (a) the business, assets, property or condition (financial or otherwise) of the Company and the Subsidiaries taken as a whole or (b) the ability of the Company, the Guarantor or any other Loan Party to perform any of its obligations under this Agreement or any other Finance Document or (c) the rights of or remedies available to the Lenders under this Agreement or any other Finance Document.
			 
			Material Subsidiary means each Subsidiary (i) which, as of the most recent fiscal year of the Guarantor, for the period of four consecutive fiscal quarters then ended, for which financial statements have been delivered pursuant to Clause 6.1 (Financial Statements and Other Information), contributed greater than ten percent (10%) of the Guarantor's Consolidated EBITDA for such period or (ii) which contributed greater than ten percent (10%) of the Guarantor's Consolidated Total Assets as of such date; provided that, if at any time the aggregate amount of the Guarantor's Consolidated EBITDA or Guarantor's Consolidated Total Assets attributable to Subsidiaries (other than Affected Foreign Subsidiaries) that are not Subsidiary Guarantors exceeds twenty percent (20%) of the Guarantor's Consolidated EBITDA for any such period or twenty percent (20%) of the Guarantor's Consolidated Total Assets as of
the end of any such fiscal year, the Guarantor (or, in the event the Guarantor 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,

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		 	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 Guarantor shall comply with Clause 6.9 (Pledge Agreements).
			 
			Moody's means Moody's Investors Service, Inc.
			 
			Multiemployer Plan means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
			 
			New Mask Shop Obligations means all obligations of the Guarantor 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 Guarantor 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 Guarantor and its Subsidiaries to any of the Lenders and the Administrative Agent, individually or collectively, existing on the Effective Date or arising thereafter, under the Restated Credit Agreement or any of the other Finance 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 reimbursement or other obligations incurred or any of the Letters of Credit 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. For the avoidance of doubt, the Guarantor acknowledges that, without limiting the scope of any provision of this Agreement, the Guarantors' Obligations hereunder include, without limitation, any loss that the Finance Parties may incur on account of prohibitions or limitations that may exist under the laws or regulations of SAFE or other regulatory authorities in the PRC regarding the conversion into RMB of U.S. Dollars that may be paid by the Guarantor to the Finance Parties to satisfy any of its Obligations.
			 
			Party means a party to this Agreement.
			 
			PBGC means the Pension Benefit Guaranty Corporation referred to an 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;

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	      	(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 of the U.S. Facility Agreement; 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 Guarantor 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;

		 
		(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;

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	      	(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 or other entity. 

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 Company 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 to the U.S. Facility Agreement (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 Clause 6.10 (Pledge Agreements) 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. 

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

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

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. 

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. 

Senior Leverage Ratio has the meaning assigned to such term in Clause 7.11(a). 

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Significant Subsidiary of a person means any Subsidiary of such person which, at the date of determination, is a "Significant Subsidiary" of such person as such term is defined in Regulation S-X under the United States Securities Exchange Act of 1934. 

Subordinated Indebtedness of the Guarantor 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 documents and instruments executed and delivered in connection with the U.S. Facility to the written satisfaction of, and the terms and conditions of which are otherwise satisfactory to, the Administrative Agent. 

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 Guarantor. 

Subsidiary Guarantor means a Subsidiary Guarantor as defined in and under the U.S. Facility Agreement. 

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 Guarantor or the Subsidiaries shall be a Swap Agreement. 

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 Clause 7.11(b). 

U.S. Facility means the credit facility provided to the Guarantor and certain of its subsidiaries or affiliates pursuant to the U.S. Facility Agreement. 

U.S. Facility Agreement means the credit agreement dated as of June 6, 2007 by and among the Guarantor, the other borrowers and guarantors party thereto, J.P. Morgan Securities Inc., as sole bookrunner and sole lead arranger, JPMorgan Chase Bank, National Association, as the administrative agent and collateral agent, and the lenders party thereto. 

	      	
 

11 

			
U.S. Facility Secured Parties means the holders of the Obligations (as defined in the U.S. Facility Agreement) from time to time and shall include their respective successors and (in the case of a Lender as defined in and under the U.S. Facility, permitted) transferees and assigns.

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. 

			 
	1.2  		Construction  
			 
	(a)	      	
Capitalized terms defined in the Restated Credit Agreement have, unless expressly defined in this Agreement, the same meaning in this Agreement.

	 
	(b)		
The provisions of clause 1.2 (Construction) of the Restated Credit Agreement apply to this Agreement as though they were set out in full in this Agreement, except that references to the Restated Credit Agreement are to be construed as references to this Agreement.

	 
	(c)		
Includes and including are not limiting; or is not exclusive; and all includes any and any includes all.

	 
	(d)		
The term law includes any law, statute, regulation, regulatory requirement, rule, ordinance, ruling, decision, treaty, directive, order, guideline, regulation, policy, writ, judgment, injunction or request of any court or other governmental, inter-governmental or supranational body, officer or official, fiscal or monetary authority, or other ministry or public entity (and their interpretation, administration and application), whether or not having the force of law. A reference to a law is a reference to that law as amended or re-enacted and to any successor law.

	 
	(e)		
A person includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organization or other entity whether or not having separate legal personality;

	 
	(f)		
A reference to an agreement (including the Restated Credit Agreement) is a reference to that agreement as amended, supplemented, restated or novated.

	 
	(g)		
Clause headings used in this Agreement are for convenience only, and shall not be used in construing this Agreement.

			  
	2. 		GUARANTEE AND INDEMNITY 
			 
	2.1 		Guarantee and indemnity  
			 
			
The Guarantor irrevocably and unconditionally: 

	      	     	(a)	      	
guarantees to each Finance Party punctual payment and performance by the Company of all its obligations under the Finance Documents;

			 
			(b)		
undertakes with each Finance Party that, whenever the Company does not pay any amount when due under or in connection with any Finance Document, it must immediately on written demand by the Administrative Agent pay that amount as if the Guarantor were expressed to be the principal obligor; and

			 

12 

	      	     	(c)	      	
indemnifies each Finance Party immediately on written demand against any loss or liability suffered by such Finance Party if any obligation guaranteed by the Guarantor under this Clause 2 is or becomes unenforceable, invalid or illegal; and the amount of the loss or liability under this indemnity with respect to a Finance Party will be equal to the amount such Finance Party would otherwise have been entitled to recover.

			 
			
The obligations guaranteed by the Guarantor under this Clause and the losses and liabilities against which the Guarantor indemnifies the Finance Parties under this Clause are referred to, collectively, as the Guaranteed Obligations and, in each case, include all amounts that would become due but for the operation of the automatic stay under section 362(a) of the United States Bankruptcy Code of 1978. 

Payment by the Guarantor of any Guaranteed Obligations shall be made to the Administrative Agent within five (5) Business Days after delivery by the Administrative Agent to the Guarantor of a written demand for payment of such Guaranteed Obligation; provided that a failure of the Administrative Agent to deliver such written demand shall not relieve the Guarantor of any of its obligations or liabilities to pay the Guaranteed Obligations under this Agreement; and provided further, however, that a failure of the Company to punctually pay and perform its obligations under the Finance Documents shall not be a default by the Guarantee under this Agreement unless and until a written demand is made on the Guarantor and the Guarantor shall have thereafter failed to pay the demanded amount within the aforesaid five (5) Business Days in accordance with this Agreement. The Finance Parties may apply the amount so collected against and in reduction or settlement of any of
the Guaranteed Obligations.

			  
	2.2 		Continuing guarantee 
			 
			
The guarantee under this Agreement is a continuing guarantee and will remain in full force and effect until the irrevocable and indefeasible payment in full of the ultimate balance of the Guaranteed Obligations (including all sums payable by the Company under the Finance Documents), regardless of any intermediate payment or discharge in whole or in part.

			  
	2.3 		Reinstatement 

	(a)	      	
If, at any time for any reason (including the bankruptcy, insolvency, receivership, reorganization, dissolution or liquidation of the Guarantor or the Company or the appointment of any receiver, intervenor or conservator of, or agent or similar official for, the Guarantor or the Company or any of their respective properties), any payment received by any Finance Party in respect of the Guaranteed Obligations is rescinded or avoided or must otherwise be restored or returned by such Finance Party, this Clause will continue to be effective or will be reinstated, if necessary, as if that payment had not been made.

	 
	(b)		
Each Finance Party may concede or compromise any claim that any payment, security or other disposition is liable to avoidance or restoration.

			 
	2.4 		Nature of Guarantor's obligations 
			 
			
The Guarantor's obligations under this Agreement are independent of any obligation of the Company or any other person, and a separate action or actions may be brought and prosecuted against the Guarantor under this Agreement whether or not any action is brought or prosecuted against the Company or any other person and whether or not the Company or any other person is

13 

			
joined in any action under this Agreement. This is a guarantee of payment and not merely of collection. 

			 
	2.5 		Waiver of defenses 
			  
	(a)	      	
The obligations of the Guarantor under this Agreement will not be affected by, and the Guarantor irrevocably waives any defense it might have by virtue of, any act, omission or thing which, but for this provision, would reduce, release or prejudice any of its obligations under this Agreement (whether or not known to it or any Finance Party), including:

	 
	 		(i)	      	
any time, forbearance, extension or waiver granted to, or composition or compromise with, the Company or any other person;

	 
	 		(ii)		
any release of any person under the terms of any composition or arrangement;

	 
	 		(iii)		
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, the Company or any other person;

	 
	 		(iv)		
any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realize the full value of any security;

	 
	 		(v)		
any disability, incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Company or any other person;

	 
	 		(vi)		
any amendment or variation (however fundamental) or restatement, replacement or novation of a Finance Document or any other document, guarantee or security so that references to that Finance Document in this Agreement shall include each amendment, variation, restatement, replacement and novation;

	 
	 		(vii)		
any unenforceability, illegality, invalidity or non-provability of any obligation of any person under any Finance Document or any other document, guarantee or security, with the intent that the Guarantor's obligations under this Agreement shall remain in full force and be construed accordingly, as if there were no unenforceability, illegality, invalidity or non-provability;

	 
	 		(viii)		
any avoidance, postponement, discharge, reduction, non-provability or other similar circumstance affecting any obligation of any Obligor under a Finance Document resulting from any bankruptcy, insolvency, receivership, liquidation or dissolution proceedings or from any law, regulation or order so that each such obligation will for the purposes of the Guarantor's obligations under this Agreement be construed as if there were no such circumstance; or

	 
	 		(ix)		
the acceptance or taking of other guarantees or security for the Guaranteed Obligations, or the settlement, release or substitution of any guarantee or security or of any endorser, guarantor or other obligor in respect of the Guaranteed Obligations.

	 
	(b)		
The Guarantor unconditionally and irrevocably waives:

	 

14 

	            	(i)	      	
diligence, presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor, notice of the creation or incurring of new or additional indebtedness of the Company to any Finance Party, notice of acceptance of this Agreement and notices of any other kind whatsoever;

		 
		(ii)		
the filing of any claim with any court in the event of a receivership, insolvency or bankruptcy;

		 
		(iii)		
the benefit of any statute of limitations affecting any Obligor's obligations under the Finance Documents or the Guarantor's obligations under this Agreement or the enforcement of this Agreement; and

		 
		(iv)		
any offset or counterclaim or other right, defense, or claim based on, or in the nature of, any obligation now or later owed to the Guarantor by any of the Finance Parties.

		 

	(c)	      	
The Guarantor irrevocably and unconditionally authorizes the Finance Parties to take any action in respect of the Guaranteed Obligations or any collateral or guarantees securing them or any other action that might otherwise be deemed a legal or equitable discharge of a surety, without notice to or the consent of the Guarantor and irrespective of any change in the financial condition of the Guarantor or the Company.

			 
	2.6 		Immediate recourse 

	(a)	       	
The Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or other guarantee or claim payment from the Company or any other person before claiming from the Guarantor under this Agreement.

	 
	(b)		
Without limiting the generality of the foregoing, if an Event of Default occurs under the Restated Credit Agreement, simultaneously therewith a default under this Agreement shall have occurred, entitling the Administrative Agent, by written notice to the Guarantor, to declare that all or part of any amounts outstanding under the Finance Documents is immediately due and payable; and such declaration shall be effective as against the Guarantor for all purposes of this Agreement (including Clause 2.1) whether or not the Administrative Agent has made a similar declaration to the Company under the Restated Credit Agreement, and regardless of whether or not the Administrative Agent is permitted (by any applicable law, legal process, bankruptcy, insolvency or similar proceeding, or otherwise) to declare such amount to be due and payable by the Company pursuant to the Restated Credit Agreement. The Guarantor agrees that the provisions of Clause 17 (Default) of the
Restated Credit Agreement are incorporated by reference in this Agreement and made a part of this Agreement as if expressly set forth herein (and accordingly for purposes of this Agreement such provisions shall be construed in accordance with the laws of the State of New York).

			  
	2.7 		Appropriations 
			 
			
Until all amounts which may be or become payable by the Company under or in connection with the Finance Documents have been irrevocably and indefeasibly paid in full, each Finance Party (or any trustee or agent on its behalf) may without affecting the liability of the Guarantor under this Agreement:

15 

	 		(a)	      	
refrain from applying or enforcing any other moneys, security, guarantees or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts; or 

	 
	 		(b)		
apply and enforce them in such manner and order as it sees fit (whether against those amounts or otherwise) and the Guarantor shall not be entitled to the benefit of the same; and 

	 
	 		(c)		
hold in a suspense account any moneys received from the Guarantor or on account of the Guarantor's liability under this Agreement, without liability to pay interest on those moneys. 

	 
	2.8 	      	Non-competition 
	 
	 		Unless: 
	 
	 		(a)		
all amounts which may be or become payable by the Company under or in connection with the Finance Documents have been irrevocably and indefeasibly paid in full; or 

	 
	 		(b)		
the Administrative Agent otherwise directs, 

	 
	 		
the Guarantor will not, after a claim has been made or by virtue of any payment or performance by it under this Agreement: 

	 
	 		(i)		
be subrogated to any rights, security or moneys held, received or receivable by any Finance Party (or any trustee or agent on its behalf); 

	 
	 		(ii)		
be entitled to any right of contribution or indemnity in respect of any payment made or moneys received on account of the Guarantor's liability under this Agreement; 

	 
	 		(iii)		
claim, rank, prove or vote as a creditor of the Company or its estate in competition with any Finance Party (or any trustee or agent on its behalf); or 

					 
			(iv)		
receive, claim or have the benefit of any payment, distribution or security from or on account of the Company, or exercise any right of set-off as against the Company.

	 
	 		
The Guarantor must hold in trust for and immediately pay or transfer to the Administrative Agent (or as directed by the Administrative Agent) for the account of the Finance Parties any payment or distribution or benefit of security received by it contrary to this Agreement or contrary to any directions given by the Administrative Agent under this Agreement.

	 
	2.9 		Additional security 
	 
	 		
This Agreement is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.

	 
	2.10 		Election of remedies 
	 
	 		
The Guarantor understands that the exercise by the Administrative Agent and the other Finance Parties of certain rights and remedies contained in the Finance Documents may affect or eliminate the Guarantor's right of subrogation and reimbursement against the Company and that the

	 

16 

			
Guarantor may therefore incur a partially or totally non-reimbursable liability under this Agreement. The Guarantor expressly authorizes the Administrative Agent and the other Finance Parties to pursue their respective rights and remedies with respect to the Guaranteed Obligations in any order or fashion they deem appropriate, in their respective sole and absolute discretion, and waives any defense arising out of the absence, impairment, or loss of any or all rights of recourse, reimbursement, contribution, exoneration or subrogation or any other rights or remedies of the Guarantor against the Company, any other person or any security, whether resulting from any election of rights or remedies by the Administrative Agent or any of the other Finance Parties or otherwise.

			 
	2.11 		United States laws 
			  
	(a)	      	
In this Subclause, fraudulent transfer law means any applicable United States bankruptcy and State fraudulent transfer and conveyance statute and any related case law.

	 
	(b)		The Guarantor acknowledges that:
	 
	 		(i)	      	
it will receive valuable direct or indirect benefits as a result of the transactions financed by the Finance Documents;

	 
	 		(ii)		
those benefits will constitute reasonably equivalent value and fair consideration for the purpose of any fraudulent transfer law; and

	 
	 		(iii)		
each of the Finance Parties has acted in good faith in connection with the guarantee given by the Guarantor and the transactions contemplated by the Finance Documents.

	 
	(c)		
Each of the Finance Parties agrees that the Guarantor's liability under this Agreement is limited so that no obligation of, or transfer by, the Guarantor under this Agreement is subject to avoidance and turnover under any fraudulent transfer law.

	 
	(d)		
The Guarantor represents and warrants to the Finance Parties that:

	 
	 		(i)		
the aggregate amount of its debts (including its obligations under the Finance Documents) is less than the aggregate value (being the lesser of fair valuation and present fair saleable value) of its assets;

	  
	 		(ii)		
its capital is not unreasonably small to carry on its business as it is being conducted;

	 
	 		(iii)		
it has not incurred and does not intend to incur debts beyond its ability to pay as they mature; and

	 
	 		(iv)		
it has not made a transfer or incurred any obligation under any Finance Document with the intent to hinder, delay or defraud any of its present or future creditors.

	 
	(e)		
For purposes of this Clause:

	 
	 		(i)		
debt means any liability on a claim;

	 
	 		(ii)		
claim means:

	 

17 

		 		(A)	      	
any right to payment, whether or not that right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or

		 
		 		(B)	      	
any right to an equitable remedy for breach of performance if that breach gives rise to a right to payment, whether or not the right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured; and

		 
	            	(iii)	      	
terms used in this Clause will be construed in accordance with the applicable United States bankruptcy and New York fraudulent conveyance statutes and the related case law.

		 

	(f)	        	
Each representation and warranty in this Subclause:

	 
	 		(i)	      	
is made by the Guarantor on the date of this Agreement;

	 
	 		(ii)		
is deemed to be repeated by the Guarantor on the date of each Request, each Utilisation Date and each Interest Payment Date; and

	 
	 		(iii)		
is, when repeated, applied to the circumstances existing at the time of repetition.

	3. 		TAXES 
			 
	3.1 		Tax gross-up 
			 
	(a)	      	
The Guarantor must make all payments to be made by it under this Agreement without any Tax Deduction, unless a Tax Deduction is required by law.

	 
	(b)		
If the Guarantor or the Administrative Agent is aware that the Guarantor must make a Tax Deduction (or that there is a change in the rate or the basis of a Tax Deduction), it must notify the other Party promptly.

	 
	(c)		
If a Tax Deduction is required by law to be made by the Guarantor, the amount of the payment due from the Guarantor will be increased to an amount which (after making the Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

	 
	(d)		
If the Guarantor is required to make a Tax Deduction, the Guarantor must make the minimum Tax Deduction allowed by law and must make any payment required in connection with that Tax Deduction to the relevant tax authority within the time allowed by law.

	 
	(e)		
Within 30 days of making either a Tax Deduction or a payment required in connection with a Tax Deduction (a Tax Payment), the Guarantor must deliver to the Administrative Agent for the account of the relevant Finance Parties evidence satisfactory to that Administrative Agent (acting reasonably) that the Tax Deduction has been made or (as applicable) the appropriate Tax Payment has been paid to the relevant taxing authority.

	 
	(f)		
If the Guarantor makes a Tax Payment to the relevant taxing authority in respect of a payment made to a Finance Party and that Finance Party (in its absolute discretion) determines that a credit against tax or any relief from tax (or its repayment) (a Tax Credit) is attributable to that Tax

	 

18 

	 	 	Payment and it has used and retained that Tax Credit, then that Finance Party must promptly pay an amount to the Guarantor which that Finance Party determines (in its absolute discretion) will leave that Finance Party (after that payment) in the same after-tax position as it would have been in if that Tax Payment had not been required to be made by the Guarantor; provided, that the Guarantor, upon the request of that Finance Party, must to repay the amount paid over to the Guarantor (plus any penalties, interest or other charges imposed by the relevant taxing authority) to that Finance Party in the event that Finance Party is required to repay such credit to such taxing authority. No term of this Agreement will: (i) interfere with the right of any Finance Party to arrange its affairs (Tax or otherwise) in whatever manner it thinks fit; (ii) obligate any Finance Party to investigate or claim any credit, relief,
remission or repayment available to it in respect of Tax or the extent, order and manner of any claim; or (iii) obligate any Finance Party to disclose any information relating to its affairs (Tax or otherwise) or any computation in respect of Tax.
	 		
	3.2	      	Value added taxes  
	  
	(a)	  	Any amount payable under this Agreement by the Guarantor is exclusive of any value added tax or any other Tax of a similar nature which might be chargeable in connection with that amount. If any such Tax is chargeable in respect of any payment to a Finance Party, the Guarantor must pay to that Finance Party (in addition to and at the same time as paying that amount) an amount equal to the amount of that Tax.
	 		
	(b)	  	Where this Agreement requires the Guarantor to reimburse any Finance Party for any costs or expenses, the Guarantor must also at the same time pay and indemnify that Finance Party against all value added tax or any other Tax of a similar nature incurred by that Finance Party in respect of those costs or expenses but only to the extent that that Finance Party (acting reasonably) determines that it is not entitled to credit or repayment from the relevant tax authority in respect of the Tax.
	  
	4.		PAYMENTS
	  
	4.1	  	Place
	  
		  	All payments by the Guarantor under this Agreement must be made to the Administrative Agent, for the account of the Finance Party entitled thereto, to the Administrative Agent's account at such office or bank as it may notify to the Guarantor for this purpose.
	  
	4.2	  	Currency
	  
	(a)	  	Any amount under this Agreement payable in respect of any other amount payable under the Finance Documents is payable under this Agreement in the same currency as that other amount.
	  
	(b)	  	Each other amount payable under this Agreement is payable in US Dollars.
	  
	4.3	  	No set-off or counterclaim
	  
		  	All payments made by the Guarantor under this Agreement must be made without set-off or counterclaim.

19 

	4.4		Timing of payments
	 		
			If this Agreement does not provide for when a particular payment is due, that payment is due immediately upon written demand by the Administrative Agent or the Finance Party entitled thereto.
	 		
	5.		REPRESENTATIONS
	 		
	5.1		Representations
	 		
			The representations set out in this Clause are made by the Guarantor to each of the Finance Parties.
	  		
	5.2		Status
	 		
	(a)	      	The Guarantor is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of Connecticut.
	 
	(b)		The Guarantor and each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted.
	 		
	5.3		Powers and authority
	 		
			The Guarantor has the power to enter into and perform, and has taken all necessary action to authorize the entry into and performance of, this Agreement and the transactions contemplated by this Agreement.
	 		
	5.4		Legal validity
	 		
			This Agreement is the Guarantor's legally valid and binding obligation, enforceable against it in accordance with its terms.
	 		
	5.5		Non-conflict
	 		
			The entry into and performance by the Guarantor of, and the transactions contemplated by, this Agreement do not conflict with:
	 		
			(a)	      	any law applicable to the Guarantor;
					 
			(b)		the Guarantor's constitutional documents; or
			 		
			(c)		to its knowledge, any material document which is binding upon the Guarantor or any of its assets.
	  		
	5.6		No default
	 		
	(a)		No Default is outstanding or will result from the execution of, or the performance of any transaction contemplated by, this Agreement; and

20 

	(b)	 	no other event is outstanding which constitutes a default under any document which is binding on the Guarantor or any of its assets to an extent or in a manner which has or is reasonably likely to have a Material Adverse Effect.
	  
	5.7	      	Authorizations
	  
	  		All authorizations required by the Guarantor in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, this Agreement have been obtained or effected (as appropriate) and are in full force and effect. For the avoidance of doubt, the Guarantor represents and warrants that the failure of the Company to make foreign debt registration under PRC law following the performance of this Agreement shall have no effect on the Guarantor's obligations to the Finance Parties, or the Finance Parties' rights or remedies, under this Agreement.
	  		
	5.8		Financial statements
	  
	  		The Guarantor's audited financial statements most recently delivered to the Administrative Agent:
	  
	  		(a)	      	have been prepared in accordance with United States generally accepted accounting principles and practices, consistently applied; and
	  
	  		(b)		fairly represent the Guarantor's financial condition (consolidated, if applicable) as at the date to which they were drawn up,
	  
	  		except, in each case, as disclosed to the contrary in those financial statements.
	  
	5.9		Liens
	  
	  		The Guarantor's and its Subsidiaries' respective assets are not subject to any Liens other than Permitted Encumbrances.
	  
	5.10		No material adverse change
	  
	  		There has been no material adverse change in the consolidated financial condition of, or in the business or prospects of, the Guarantor since the date to which the latest audited financial statements were prepared.
	  
	5.11		Litigation
	  
	  		To the best of the Guarantor's knowledge and belief, no litigation, arbitration or administrative proceedings are current, pending, or threatened in writing, which have or, if adversely determined, are reasonably likely to have a Material Adverse Effect.
	  
	5.12		Information
	  
	(a)		All information supplied by an Obligor to the Finance Parties in connection with the Finance Documents is true and accurate in all material respects as at its date or (if appropriate) as at the date (if any) at which it is stated to be given; and
	  
	(b)		no Obligor has omitted to supply any information which, if disclosed, might make the information supplied untrue or misleading in any material respect.

21 

	5.13	      	Taxes on payments
	 		
	  		All amounts payable by the Guarantor under this Agreement may be made without any Tax Deduction.
	  		
	5.14		Stamp duties
	 		
	  		No stamp or registration duty or similar Tax or charge is payable in respect of this Agreement.  
	 		
	5.15		Immunity  
			 
	(a)		The execution by the Guarantor of this Agreement constitutes, and the exercise by it of its rights and performance of its obligations under this Agreement will constitute, private and commercial acts performed for private and commercial purposes; and
	  		
	(b)		the Guarantor will not be entitled to claim immunity from suit, execution, attachment or other legal process in any proceedings taken in its jurisdiction of incorporation in relation to this Agreement.
	   		
	5.16		Jurisdiction/governing law
			 
	(a)		The Guarantor's:
			 
	  		(i)	      	irrevocable submission under this Agreement to the jurisdiction of the courts of New York;
	  		  		
	  		(ii)		agreement that this Agreement is governed by New York law; and
	 				
	  		(iii)		agreement not to claim any immunity to which the Guarantor or its assets may be entitled,
	  		  		
	  		are legal, valid and binding under the laws of its jurisdiction of incorporation; and
	 		
	(b)		any judgment obtained in New York will be recognized and be enforceable by the courts of the Guarantor's jurisdiction of incorporation to the maximum extent permitted by law.
	  		
	5.17		United States laws
	 		
	(a)		In this Subclause:
	 		
	  		Anti-Terrorism Law means each of:
	 		
	  		(i)		Executive Order No. 13224 on Terrorist Financing: Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism issued September 23, 2001, as amended by Order 13268 (as so amended, the Executive Order);
	  		  		
	  		(ii)		the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (commonly known as the USA Patriot Act);

22 

	 	      	(iii)	      	the Money Laundering Control Act of 1986, 18 U.S.C. sect. 1956; and
	 				
	  		(iv)		any similar law enacted in the United States of America subsequent to the date of this Agreement.
	  		  		
	  		investment company has the meaning given to it in the United States Investment Company Act of 1940.
	  		
	  		public utility has the meaning given to it in the United States Federal Power Act of 1920.
			 
	  		Restricted Party means any person listed:
			 
	  		(i)		in the Annex to the Executive Order;
	 				
	  		(ii)		on the "Specially Designated Nationals and Blocked Persons" list maintained by the Office of Foreign Assets Control of the United States Department of the Treasury; or
	  		  		
	  		(iii)		in any successor list to either of the foregoing.
	 				
	(b)		The Guarantor is not:  
	 		
	  		(i)		a public utility or subject to regulation under the United States Federal Power Act of 1920;
	  		  		
	  		(ii)		an investment company or subject to regulation under the United States Investment Company Act of 1940; or
	  		  		
	  		(iii)		subject to regulation under any United States Federal or State law or regulation that limits the Guarantor's ability to incur or guarantee indebtedness.
	  		  		
	(c)		To the best of the Guarantor's knowledge, neither it nor any of its Affiliates:
	 		
	  		(i)		is, or is controlled by, a Restricted Party;
	 				
	  		(ii)		has received funds or other property from a Restricted Party; or
	 				
	  		(iii)		is in breach of or is the subject of any action or investigation under any Anti-Terrorism Law.
	   		  		
	(d)		The Guarantor and each of its Affiliates have taken reasonable measures to ensure compliance with the Anti-Terrorism Laws.
	  		
	5.18		U.S. Facility Agreement Representations
	 		
	  		The representations and warranties set forth in Article III of the U.S. Facility Agreement are true and correct on and as of the date hereof.
	  		
	5.19		Times for making representations
	 		
	(a)		The representations set out in this Clause are made by the Guarantor on the date of this Agreement.

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	(b)	      	Unless a representation is expressed to be given at a specific date, each representation is deemed to be repeated by the Guarantor on the date of each Request, each Utilisation Date and each Interest Payment Date.
	  
	(c)	  	When the representation and warranty in Clause 5.6 (No default) is repeated on a Request for a Rollover Loan or an Interest Payment Date for a Term Loan, the reference to a Default will be construed as a reference to an Event of Default.
	  
	(d)	  	When a representation is repeated, it is applied to the circumstances existing at the time of repetition.
		  	
	6.		AFFIRMATIVE COVENANTS
	  
		  	Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable under the Finance Documents shall have been paid in full, the Guarantor covenants and agrees with the Lenders that:
	  
	6.1	  	Financial Statements and Other Information
	  
		  	The Guarantor will furnish to the Administrative Agent with sufficient copies 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 Guarantor, 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 Guarantor and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
	 				
		  	(b)		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 Guarantor, 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 Guarantor 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;
	 				
		  	(c)  		concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Guarantor (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

24 

	 		calculations demonstrating compliance with Clause 7.11 (Finance Covenants) 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 of the U.S. Facility Agreement and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;
	 
	 		(d)		within 90 days of the commencement of each fiscal year of the Guarantor, projected consolidated balance sheets, income statements and cash flow statements of the Guarantor 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 Guarantor 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 Guarantor 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 Guarantor 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 Clause 6.1 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Guarantor posts such documents, or provides a link thereto on the Guarantor's website on the Internet at the website address <www.photronics.com>; (ii) on which such documents are posted on the Guarantor's behalf on IntraLinksTM 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 Guarantor 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 Guarantor shall be required to provide paper copies of the compliance certificates required by clause (c) of this Clause 6.1 to the Administrative Agent.
	 		
	6.2	      	Notices of Material Events
	 
	 		The Guarantor 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 Guarantor 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

25 

	 	      	(d)	      	any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.
	 
	 		Each notice delivered under this Clause shall be accompanied by a statement of a Financial Officer or other executive officer of the Guarantor setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
	 
	6.3	      	Existence; Conduct of Business
	 
	 		The Guarantor 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 Clause 7.3 (Fundamental Changes and Asset Sales).
	 
	6.4		Payment of Obligations
	 
	 		The Guarantor 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 Guarantor 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.
	 
	6.5		Maintenance of Properties; Insurance
	 
	 		The Guarantor will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.
	 
	6.6		Books and Records; Inspection Rights
	 
	 		The Guarantor 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 Guarantor 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, 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.
	 
	6.7		Compliance with Laws and Material Contractual Obligations
	 
	 		The Guarantor 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

26 

	 		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.
	 
	6.8	      	Use of Proceeds
	 
	 		The proceeds of the Loans will be used only to repay certain existing Indebtedness, finance the working capital needs, and for general corporate purposes, of the Guarantor and its Subsidiaries in the ordinary course of business. 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.
	 
	6.9		Pledge Agreements
	 
	 		The Guarantor and its Subsidiaries shall execute or cause to be executed, by no later than sixty days (or such later date as is agreed to by the Collateral Agent in its reasonable discretion) after the date on which any Material Subsidiary would qualify or be designated by the Guarantor as a Subsidiary Guarantor under the U.S. Facility, a Pledge Agreement in favor of the Collateral Agent for the benefit of the Holders of Secured Obligations with respect to the Applicable Pledge Percentage of all of the outstanding Equity Interests of such Material Subsidiary; 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. The Company further agrees to deliver, or cause the other borrowers under the U.S. Facility to deliver, to the Collateral Agent all such Pledge Agreements, together with appropriate corporate resolutions and other documentation (including legal opinions, the stock certificates representing the Equity Interests subject to such pledge, stock powers with respect thereto executed in blank, and such other documents as shall be reasonably requested to perfect the Lien of such pledge) in each case in form and substance reasonably satisfactory to the Collateral Agent, and in a manner that the Collateral Agent shall be reasonably satisfied that it has a first priority perfected pledge of or charge over the Pledged Equity related thereto. Notwithstanding the foregoing, the parties hereto acknowledge and agree that no Pledge Agreement in respect of the pledge of Equity Interests of a Material Subsidiary which is a Foreign
Subsidiary shall be required until August 6, 2007 (or such later date as is agreed to by the Collateral Agent in its reasonable discretion).
	 
	6.10		Difference of Total Investment and Registered Capital
	 
	 		For the purpose of the foreign debt registration with SAFE arising from the performance of the Guarantee by the Guarantor, the Guarantor shall, and shall cause the Company to, ensure that the total amount of (a) the aggregated long or medium-term loans borrowed by the Company as foreign debt, (b) the balance of the Company’s short-term foreign borrowings and (c) any foreign debt incurred by the Company as a result of the performance of guarantees provided by any offshore entity or individual, is not in excess of the difference of the Company’s total investment and registered capital.

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	7.	      	NEGATIVE COVENANTS
	 
	 		Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable under the Finance Documents have been paid in full, the Guarantor covenants and agrees with the Lenders that:
	 
	7.1		Indebtedness
	 
	 		The Guarantor will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:
	 
	 		(a)	      	the Obligations and any other Indebtedness created under the Finance Documents and Indebtedness created under the Facility;
	 
	 		(b)		the Obligations and any other Indebtedness created under the U.S. Facility Agreement and the related finance documents and Indebtedness created under the U.S. Facility;
	 
	 		(c)		Indebtedness existing on the date hereof and set forth in Schedule 7.1 and extensions, renewals and replacements of any such Indebtedness with Indebtedness of a similar type that does not increase the outstanding principal amount thereof;
	 
	 		(d)		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;
	 
	 		(e)		Guarantees by the Guarantor of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the Guarantor or any other Subsidiary;
	 
	 		(f)		Indebtedness of the Guarantor 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 $35,000,000 at any time outstanding;
	 
	 		(g)		Subordinated Indebtedness so long as, after giving effect to the incurrence thereof, no Default shall have occurred and be continuing and the Company shall be in compliance, on a pro forma basis after giving effect to such incurrence, with the covenants contained in Clause 7.11 (Financial Covenants) recomputed as if such incurrence had occurred on the first day of the period for testing such compliance;
	 
	 		(h)		Indebtedness of the Guarantor or any Subsidiary as an account party in respect of trade letters of credit;
	 
	 		(i)		(i) Indebtedness of the Guarantor or any Subsidiary under any Swap Agreement otherwise permitted under Clause 7.5 (Swap Agreements), (ii) the Guarantee of any Loan Party of any such Indebtedness and (iii) the Guarantee of any Loan Party of the

28 

					obligations of PSMC, PKL or any of their respective subsidiaries under any Swap Agreement entered into in the ordinary course of business;
					 
	 	      	(j)		the New Mask Shop Obligations; and
	 
	 		(k)	      	unsecured Indebtedness in an aggregate principal amount not exceeding $25,000,000 at any time outstanding; provided that the aggregate principal amount of Indebtedness of the Guarantor's Subsidiaries other than Company permitted by this clause (j) shall not exceed $15,000,000 at any time outstanding.
	 
	7.2		Liens
	 
	 		The Guarantor 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 and Liens created under the Pledge Agreements;
	 
	 		(b)		any Lien on any property or asset of the Guarantor or any Subsidiary existing on the date hereof and set forth in Schedule 7.2; provided that (i) such Lien shall not apply to any other property or asset of the Guarantor 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 Guarantor 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 Guarantor 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 Guarantor or any Subsidiary; provided that (i) such security interests secure Indebtedness permitted by clause (e) of Clause 7.1 (Indebtedness), (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 Guarantor or any Subsidiary; and
	 
	 		(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

29 

	 	      	(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 Guarantor to the extent required by GAAP.
	 
	7.3		Fundamental Changes and Asset Sales
	 
	 		(a)		The Guarantor 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 Guarantor in a transaction in which the Guarantor 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 Guarantor must result in the Guarantor as the surviving
entity), (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to a Loan Party and (iv) the Guarantor 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 Guarantor'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) so long as the Guarantor will continue to own and Control more than 50% of the ordinary voting and economic power of PSMC and Company, sales of shares of the common stock or other equity interests of PSMC or Company (as equitably adjusted for stock splits, stock dividends and the like), 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 Guarantor and its Subsidiaries previously leased, sold or disposed of as permitted by this clause (E) during any fiscal year of the Guarantor, does not exceed 10% of Consolidated Total Assets (as reflected in the most recent consolidated balance sheet of the Guarantor delivered to the Lenders) and (vi) any Subsidiary (other than a Foreign Subsidiary Borrower) may liquidate or dissolve if the Guarantor determines in good faith that such liquidation or dissolution is in the best interests of the Guarantor 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 Clause 7.4 (Investments, Loans, Advances, Guarantees and Acquisitions).
	 
	 		(b)		The Guarantor 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 Guarantor and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto, including semi-conductor application processes.

30 

	 		(c)		The Guarantor 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.
	 
	7.4		Investments, Loans, Advances, Guarantees and Acquisitions
	 
	 	      	The Guarantor 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 Guarantor and the Subsidiaries to or in their respective subsidiaries;
	 
	 		(d)		investments, loans or advances made by the Guarantor in or to any Subsidiary and made by any Subsidiary to the Guarantor (provided that not more than $25,000,000 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).
	 
	 		(e)		Guarantees constituting Indebtedness permitted by Clause 7.1 (Indebtedness) and Guarantees by the Guarantor 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 Clause 7.3 (Fundamental Changes and Asset Sales) to the extent of the non-cash consideration received by the Guarantor or a Subsidiary;
	 
	 		(h)		Permitted Acquisitions;
	 
	 		(i)		investments by the Guarantor or any Subsidiary existing on the date hereof and set forth in Schedule 7.4;

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	 		(j)		investments by the Guarantor or any Subsidiary after the Effective Date in Joint Ventures that do not exceed $50,000,000 in the aggregate at any time outstanding; 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 $10,000,000 during the term of this Agreement.
	 
	7.5		Swap Agreements
	 
	 	      	The Guarantor 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 Guarantor or any Subsidiary has actual exposure (other than those in respect of Equity Interests of the Guarantor 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 Guarantor or any Subsidiary.
	 
	7.6		Restricted Payments
	 
	 		(a)		The Guarantor 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 Guarantor 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 Guarantor may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Guarantor and its Subsidiaries and (iv) the Guarantor may make any other Restricted Payment so long as (1) no Default or Event of Default has occurred and is continuing prior to making such Restricted Payment or would arise after giving effect (including pro forma effect) thereto and (2) the aggregate amount of such Restricted Payments paid by the Guarantor or any Subsidiary does not exceed
$10,000,000 during any fiscal year of the Guarantor unless the Guarantor and the Subsidiaries are in compliance on a pro forma basis reasonably acceptable to the Administrative Agent after giving effect to such Restricted Payment with a maximum Senior Leverage Ratio of 1.5 to 1.0 and a maximum Total Leverage Ratio of 3.0 to 1.0.
	 
	 		(b)		The Guarantor 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 Finance 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) prepayment at the consummation of a Permitted Acquisition of Indebtedness assumed in connection with such Permitted Acquisition; (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

32 

			(including mandatorily redeemable Equity Interests of the Guarantor) 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.
			 
	7.7		Transactions with Affiliates
	 
	 	      	The Guarantor 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 Guarantor or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (b) transactions between or among the Guarantor and its wholly owned Subsidiaries not involving any other Affiliate, (c) in addition to transactions set forth in Schedule 7.7, transactions with Related Parties not exceeding $6,000,000 in the aggregate, (d) Indebtedness permitted by Clauses 7.1(b) and 7.1(c), investments permitted by Clause 7.4 (Investments, Loans, Advances, Guarantees and Acquisitions) and fundamental changes permitted by Clause 7.3
(Fundamental Changes and Asset Sales) so long as each such transaction is at a price and on terms and conditions not less favorable to the Guarantor or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (e) any Restricted Payment permitted by Clause 7.6 (Restricted Payments), (f) transactions existing on the date hereof and set forth in Schedule 7.7 and (g) any Affiliate who is an individual may serve as a director, officer or employee of the Guarantor or such Subsidiary and receive compensation (including stock options) for his or her services in such capacity.
	 
	7.8		Restrictive Agreements
	 
	 		The Guarantor 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 Guarantor 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 Guarantor or any other Subsidiary or to Guarantee Indebtedness of the Guarantor or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 7.8 (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

33 

			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 Clause 7.4(j). 
			 
	7.9		Issuances of Equity Interests by Subsidiaries
	 
	 	      	The Guarantor will not permit any Subsidiary to issue any additional shares of its Equity Interests other than (a) to the Guarantor or a wholly-owned Subsidiary, (b) any such issuance that does not change the Guarantor's direct or indirect percentage ownership interest in such Subsidiary, (c) any such issuance that is permitted pursuant to Clause 7.3 or 7.4 and (d) any such issuance by PKL, PSMC, Company or PKLT Co., Ltd., a Taiwanese corporation, so long as the Guarantor continues to own and control more than 50% of the voting and economic power of such Subsidiary.
	 
	7.10		Amendment of Material Documents
	 
	 		The Guarantor 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 Clause 7.10(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").
	 
	7.11		Financial Covenants
	 
	 		(a)	      	Maximum Senior Leverage Ratio. The Guarantor will not permit the ratio (the Senior Leverage Ratio), determined as of the end of each of its fiscal quarters ending on and after April 29, 2007, 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 Guarantor and its Subsidiaries on a consolidated basis, to be greater than 2.00 to 1.00.
	 
	 		(b)		Total Leverage Ratio. The Guarantor will not permit the ratio (the Total Leverage Ratio), determined as of the end of each of its fiscal quarters ending on and after April 29, 2007, 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 Guarantor and its Subsidiaries on a consolidated basis, to be greater than 3.50 to 1.00.
	 
	 		(c)		Minimum Unrestricted Cash Balances. The Guarantor will not permit the aggregate amount of unrestricted cash balances and Permitted Investments maintained by the Guarantor and its Subsidiaries to be less than $50,000,000. For the avoidance of doubt, any cash deposited with the Collateral Agent pursuant to the terms of the Pledge Agreements shall be deemed to be unrestricted cash.

34 

	8.	      	EVIDENCE AND CALCULATIONS
	 
	8.1		Accounts
	 
	 		Accounts maintained by any Administrative Agent in connection with this Agreement are prima facie evidence of the matters to which they relate for the purpose of any litigation or arbitration proceedings.
	 
	8.2		Certificates and determinations
	 
	 		Any certification or determination by the Administrative Agent of a rate or amount under the Finance Documents will be, in the absence of manifest error, conclusive evidence of the matters to which it relates.
	 
	9.		INDEMNITIES AND BREAK COSTS
	 
	9.1		Indemnity
			 
	(a)	      	The Guarantor agrees to indemnify each Finance Party and its respective affiliates, directors, officers, representatives and agents from and against all claims, liabilities, obligations, losses, damages, penalties, judgments, costs and expenses of any kind which may be imposed on, incurred by or asserted against any of them by any person (including any Finance Party) in any way relating to or arising out of this Agreement or any default under or breach of this Agreement by the Guarantor, but the Guarantor will not be liable to an indemnified party to the extent any liability results from that indemnified party's gross negligence or wilful misconduct.
	 
	(b)		Payment by an indemnified party will not be a condition precedent to the obligations of the Guarantor under this indemnity.
	 
	(c)		This Subclause will survive the initial Utilisation Date, the making and repayment of the Loans, any novation, transfer or assignment of the Loans and the termination of this Agreement.
	 
	9.2		Currency indemnity
	 
	(a)		The Guarantor must, as an independent obligation, indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of:

	 
	      	      	(i)	      	that Finance Party receiving an amount in respect of an Obligor's liability under the Finance Documents; or
	 
			(ii)		that liability being converted into a claim, proof, judgment or order,
	 

			
in a currency other than the currency in which the amount is expressed to be payable under the relevant Finance Document.

		      	 
	(b)		Notwithstanding any other provision in this Agreement, any Finance Party may convert any amount which it receives under Clause 4.2(b) into RMB and the Guarantor must indemnify that Finance Party against any loss or liability that Finance Party incurs in respect of such conversion.

35 

	(c)		Unless otherwise required by law, the Guarantor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable.
	 
	10.		AMENDMENTS AND WAIVERS
	 
	10.1		Procedure
	 
	 	      	Except as provided in this Clause, any term of this Agreement may only be amended or waived with the agreement of the Guarantor and the Administrative Agent acting on behalf of the Majority Lenders. The Administrative Agent may effect, on behalf of any Finance Party, an amendment or waiver allowed under this Clause.
	 
	10.2		Change of currency
	 
	 		If a change in any currency of a country occurs (including where there is more than one currency or currency unit recognized at the same time as the lawful currency of a country), the Finance Documents will be amended to the extent the Administrative Agent (acting reasonably and after consultation with the Guarantor) determines is necessary to reflect the change.
	 
	10.3		Waivers and remedies cumulative
	 
	 		The rights of the Administrative Agent and the other Finance Parties under the Finance Documents:
	 
	 		(a)	      	may be exercised as often as necessary;
	 
	 		(b)		are cumulative and not exclusive of their rights under other guarantees or agreements or the general law; and
	 
	 		(c)		may be waived only in writing and specifically.
	 
	 		Delay in exercising or non-exercise of any right is not a waiver of that right.
	 
	11.		CHANGES TO THE PARTIES
	 
	11.1		Assignments and transfers by the Guarantor
	 
	 		The Guarantor may not assign or transfer any of its rights and obligations under this Agreement without the prior consent of the Administrative Agent.
	 
	11.2		Assignments and transfers by Finance Parties
	 
	 		The Guarantor consents to any assignment, transfer or novation made by any Finance Party under the Restated Credit Agreement.
	 
	12.		DISCLOSURE OF INFORMATION
	 
	(a)		Each Finance Party must keep confidential any information supplied to it by or on behalf of the Guarantor in connection with this Agreement. However, each Finance Party is entitled to disclose information:

36 

			(i)		which is publicly available, other than as a result of a breach by such Finance Party of this Clause:
					 
			(ii)		in connection with any legal or arbitration proceedings:
					 
			(iii)		if required to do so under any law or regulation;
					 
			(iv)		to a governmental, banking, taxation or other regulatory authority;
					 
			(v)		to its professional advisers;
					 
			(vi)		to any rating agency;
					 
			(vii)		to the extent allowed under paragraph (b) below:
					 
			(viii)		to the Company; or
					 
			(ix)	 	with the agreement of the Guarantor.
			 
	(b)		Any Finance Party may disclose to an Affiliate or any person with whom it may enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement (a participant);
	 
	 		(i)	      	a copy of this Agreement; and
	 
	 		(ii)		any information which that Finance Party has acquired under or in connection with this Agreement.
	 
	 		However, before a participant may receive any confidential information, it must agree with that Finance Party to keep that information confidential on the terms of paragraph (a) above.
	 
	(c)	      	This Clause 12 supersedes any previous confidentiality undertaking given by any Finance Party in connection with this Agreement prior to it becoming a Party.
	 

	13.		SET-OFF
	 
	 	      	A Finance Party may set off any matured obligation owed to it by the Guarantor under this Agreement (to the extent beneficially owned by that Finance Party) against any obligation (whether or not matured) owed by that Finance Party to the Guarantor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. If either obligation is unliquidated or unascertained, the Finance Party may set off in an amount estimated by it in good faith to be the amount of that obligation.
	 
	14.		ENFORCEMENT BY ADMINISTRATIVE AGENT
	 
	 		The Guarantor agrees that the Administrative Agent may enforce this Guaranty for and on behalf of the Finance Parties.

37 

	15.		NO MARSHALLING
	 
	 	      	Except to the extent required by applicable law, neither the Administrative Agent nor any other Finance Party will be required to marshal any collateral securing, or any guarantees of, the Guaranteed Obligations, or to resort to any item of collateral or any guarantee in any particular order, and the Finance Parties' rights with respect to any collateral and guarantees will be cumulative and in addition to all other rights, however existing or arising. To the extent permitted by applicable law, the Guarantor irrevocably waives, and agrees that it will not invoke or assert, any law requiring or relating to the marshaling of collateral or guarantees or any other law which might cause a delay in or impede the enforcement of the Finance Parties' rights under this Agreement or any other agreement.
	 
	16.		ADMINISTRATIVE AGENT'S DUTIES
	 
	 		The grant to the Administrative Agent under this Agreement of any right or power does not impose upon the Administrative Agent any duty to exercise that right or power.
	 
	17.		SEVERABILITY
	 
	 		If a term of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, that will not affect:
	 
	 		(a)	      	the legality, validity or enforceability in that jurisdiction of any other term of this Agreement; or
	 
	 		(b)		the legality, validity or enforceability in other jurisdictions of that or any other term of this Agreement.
	 
	18.		COUNTERPARTS
	 
	 		This Agreement may be executed in any number of counterparts. This has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
	 
	19.		NOTICES
	 
	19.1		In writing
	 

	(a)	      	Any communication in connection with this Agreement must be in writing and, unless otherwise stated, may be given in person, by post or fax.
	 
	(b)		Unless it is agreed to the contrary, any direction, consent or agreement required under this Agreement must be given in writing.
	 
	19.2		Contact details
	 
	(a)		The contact details of the Guarantor for purposes of this Agreement are:
	 

	            	Address:  	      	Photronics, Inc.  
			15 Secor Road 
		  		Brookfield, Connecticut 06804  
		Fax number:  	 	+1 203 775 5601  

38 

			Attention:     	      	 Treasurer, David Callen 
			 
	(b)	       	The contact details of the Administrative Agent for purposes of this Agreement are:
	 

	             	Address:  		31F, HSBC Building  
			 	1000 Liujiazui Ring Road  
		  	      	Shanghai 200120  
		  		People's Republic of China  
		Fax number:  		+8621 61602707  
		Attention:  		Christine Lin/Carol CZ Cai/Betty Wang.  

	(c)	      	Any Party may change its contact details by giving five Business Days' notice to the other Party.
			 
	19.3		Communications
			 
	(a)		Any communication given to the Company in connection with a Finance Document will be deemed to have been given also to the Guarantor.
	  		 
	(b)		The Finance Parties may assume that any communication made by the Company is made with the knowledge and consent of the Guarantor.
			 
	19.4		Effectiveness
			 
	(a)		Except as provided below, any communication in connection with this Agreement will be deemed to be given as follows:
	  		 
	  		(i)		if delivered in person, at the time of delivery;
			 		
	  		(ii)		if mailed, five days after being deposited in the mail, postage prepaid, in a correctly addressed envelope; and
	  		   		
	  		(iii)		if by fax, when sent with confirmation of transmission.
			 		
	(b)		A communication given under paragraph (a) above but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place.
	   	 	 
	(c)		A communication to any Finance Party will only be effective on actual receipt by it.
			   
	20.		LANGUAGE
			   
	(a)		Any notice given in connection with this Agreement must be in English.
			   
	(b)		Any other document provided in connection with a Finance Document must be:
			 
	  		(i) 		in English; or
					 
	  		(ii)	      	(unless the Administrative Agent otherwise agrees) accompanied by a certified English translation. In this case, the English translation prevails unless the document is a statutory or other official document.

39

	21.		GOVERNING LAW
	 
	 		This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
	 
	22.		ENFORCEMENT
	 
	22.1		Jurisdiction
	 
	(a)		For the benefit of the Administrative Agent and each of the other Finance Parties, the Guarantor agrees that any New York State court or Federal court sitting in the City and County of New York has jurisdiction to settle any disputes in connection with this Agreement and accordingly submits to the jurisdiction of those courts.
	 
	(b)		The Guarantor acknowledges and agrees that New York courts are the most appropriate and convenient courts to settle any such dispute.
	 
	(c)		To the extent allowed by law, the Administrative Agent or any other Finance Party may take:
	 
	 		(i)	 	proceedings in any other court; and
	 
	 		(ii)	      	concurrent proceedings in any number of jurisdictions.
	 
	22.2		Service of process
	 
	 		Without prejudice to any other mode of service, the Guarantor irrevocably consents to the service of process relating to any proceedings by a notice given in accordance with Clause 17 (Notices) above. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
	 
	22.3		Forum convenience and enforcement abroad
	 
	 		The Guarantor:
	 
	 		(a)		waives objection to the New York State and Federal courts on grounds of personal jurisdiction, inconvenient forum or otherwise as regards proceedings in connection with this Agreement; and
	 
	 		(b)	      	agrees that a judgment or order of a New York State or Federal court in connection with this Agreement is conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction.
	 
	22.4	      	Waiver of immunity
	 
	 		The Guarantor irrevocably and unconditionally:
	 
	 		(a)	      	agrees not to claim any immunity from proceedings brought by a Finance Party against it in relation to a Finance Document and to ensure that no such claim is made on its behalf;
	 
	 		(b)		consents generally to the giving of any relief or the issue of any process in connection with those proceedings; and

40 

			(c)	      	 waives all rights of immunity in respect of it or its assets.
	 
	22.5	      	Waiver of trial by jury
	 
	 		
THE GUARANTOR AND THE ADMINISTRATIVE AGENT BY SIGNING BELOW (ON BEHALF OF ITSELF AND THE OTHER FINANCE PARTIES) WAIVE ANY RIGHT THEY MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH ANY FINANCE DOCUMENT OR ANY TRANSACTION CONTEMPLATED BY ANY FINANCE DOCUMENT. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY COURT.

	    
	23.		MISCELLANEOUS
	 
	23.1		Successors and assigns
	 
	 		This Agreement will be binding upon and inure to the benefit of the Guarantor, the Administrative Agent, the other Finance Parties and their respective successors and assigns, except that the Guarantor may not assign its obligations under this Agreement, and any purported assignment by the Guarantor shall be void and of no effect.
	 
	23.2		Integration
	 
	 		This Agreement contains the complete agreement between the Finance Parties and the Guarantor with respect to the matters to which it relates and supersedes all prior agreements and understandings, whether written or oral, with respect to those matters.
	 
	23.3		Confirmations of Guarantor
	 
	 		(a)		The Guarantor confirms that it has consented to the execution, delivery and performance of the Restated Credit Agreement by the Company, to the terms and conditions of the Restated Credit Agreement, and to the transactions contemplated by the Restated Credit Agreement.
	 
	 		(b)	      	The Guarantor confirms, reaffirms and ratifies the Original Guarantee and acknowledges and agrees that the Original Guarantee, as amended and restated and substituted by this Agreement, is, and shall remain, the valid and enforceable obligation of the Guarantor.
	 
	 		(c)		The Guarantor confirms and agrees that it has no defenses, counterclaims or set-offs to its obligations under the Original Guarantee, as amended and restated by this Agreement, in respect of the Original Credit Agreement as amended and restated by the Restated Credit Agreement, and hereby waives any such defense, counterclaim or set-off.
	 
	 		(d)		The Guarantor represents, warrants and confirms that immediately prior to the effectiveness of this Agreement there was not outstanding any default under, or breach of, the terms of the Original Guarantee.
	 
	 		(e)		The Guarantor acknowledges that the Finance Parties are entering into the Restated Credit Agreement and this Agreement in reliance on the foregoing confirmations.
	 

41 

	23.4	      	Several Obligations
	 
	 		Any obligations of the Finance Parties under or in respect of this Agreement are several, and not joint.

42 

This Agreement has been entered into on the date stated at the beginning of this Agreement. 

     SIGNATORIES 

Guarantor 

PHOTRONICS, INC 

By: 

 

Administrative Agent 

JPMORGAN CHASE BANK (CHINA) COMPANY LIMITED, SHANGHAI BRANCH, for and on behalf of itself and each other Finance Party 

By: 

43 

Schedule 1.1 

Consolidated EBITDA/Net Income 

See attached. 

44 

Schedule 7.1 

Existing Indebtedness 

	  	  	  	  	  	  	INTEREST  	  	MATURITY  
	US DEBT  	 	CURRENCY  	 	USD BALANCE  	 	RATE  	 	DATE  
	
Convertible Debt  

		USD  		$150,000,000  		2 1⁄4 %  		
April 15, 2008  

45 

Schedule 7.2 

Existing Liens 

PHOTRONICS, INC. (as of 4/30/07) 

	File Date  	   	File #:  	   	Type  	   	Lienholder  	   	Subject  
	7/29/03  		0002217285  		UCC-1  		CitiCapital Technology Finance Inc.  		(Oracle Equipment)  
	 								
	8/4/03  		0002217700  	 	UCC-1  		CitiCapital Technology Finance Inc.  		(Oracle Equipment)  
	 								
	6/17/04  		0002273831  		UCC-1  		CitiCapital Technology Finance Inc.  		(Oracle Equipment)  
	 								
	6/18/04  	 	0002274294  		UCC-1  		CitiCapital Technology Finance Inc.  	 	(Oracle Equipment)  
	 								
	5/2/06  		0002390284  		UCC-1  	 	IOS Capital  		(IKON Copier Lease)  
	 								
	12/22/06  		0002431461  		UCC-1  		IOS Capital  		(IKON Copier Lease)  
	 								
	3/29/07  		0002447168  		UCC-1  		IOS Capital  		(IKON Copier Lease)  

A complaint was filed against Photronics, Inc. in the Superior Court of Arizona in connection with a long term lease agreement that Photronics Arizona executed. Photronics, Inc. guaranteed Photronics Arizona's performance of the lease. The Complaint alleges that Photronics Inc. and Photronics Arizona are in default of the lease for failure to pay to the rent required under the lease. Photronics has answered the Complaint and continues to contest this matter in good faith. Photronics has established a reserve for this claim. 

46 

Schedule 7.4 

Existing Investments, Loans, Advances, Guarantees and Acquisitions 

See attached. 

47 

Schedule 7.7 

Transactions with Affiliates 

The Guarantor is a party to a long-term service contract entered into in 2002 pursuant to which it outsources the administration of its global wide area network and related communication services to RagingWire Enterprise Solutions, Inc. ("RagingWire"), a supplier of secure data center facilities and managed information technology services, located in Sacramento, California. Constantine Macricostas is a founder, majority shareholder and the Chairman of the Board of Directors of RagingWire, and his son, George Macricostas is the director, Chief Executive Officer, Vice Chairman of the Board, and a founder of RagingWire. Since 2002, based on the Guarantor's needs, it has entered into additional contracts with RagingWire ranging from 12 months to 52 months to provide additional services. The decision to pursue an outsourced solution to satisfy the Guarantor's network and communications needs was made by management, and the Guarantor obtained bids from and reviewed
the service offerings of six other global and regional vendors before RagingWire was selected as the most favorably priced solution for its service offerings. During the 2006 fiscal year, the Guarantor incurred expenses of $4.3 million for services provided to the Guarantor by RagingWire. In fiscal 2006, the Guarantor signed a new 3 year service contract with Raging Wire for $2.5 million per year. 

Dr. Soo Hong Jeong, Chief Operating Officer of the Guarantor, who also serves as the Chairman, Chief Executive Officer and President of the Guarantor's majority held subsidiary in Korea, PK, Ltd. ("PKL") is also a significant shareholder of S&S Tech which serves as a supplier of photomask blanks to the Guarantor. In fiscal 2006, the Guarantor purchased $16.8 million of photomask blanks from S&S Tech. 

48 

Schedule 7.8 

Existing Restrictions 

None. 

49BUSINESS SERVICE AGREEMENT

                                     Between

                            INTEGRAMED AMERICA, INC.

                                       And

                     CENTER FOR REPRODUCTIVE MEDICINE, P.A.

         THIS BUSINESS SERVICE AGREEMENT ("Agreement") is dated August 30, 2007
with an effective date of September 1, 2007 ("Effective Date") by and between
IntegraMed America, Inc., a Delaware corporation, with its principal place of
business at Two Manhattanville Road, Purchase, New York 10577 ("IntegraMed") and
Center for Reproductive Medicine, P.A., a Florida professional association, with
its principal place of business at 3435 Pinehurst Avenue, Orlando, Florida 32804
("CRM"). IntegraMed and CRM are individually referred to herein as a "Party" and
jointly, as "Parties."

                                    RECITALS:

         CRM  specializes  in   gynecological   services,   treatment  of  human
infertility  encompassing  the  provision  of in vitro  fertilization  and other
assisted   reproductive   services   ("Infertility   Services").   CRM  provides
Infertility  Services  through Gary W. DeVane,  M.D.  Sharon B. Jaffe,  M.D. and
Randall A. Loy, M.D., the  shareholders of CRM. Drs.  DeVane,  Jaffe and Loy are
collectively  referred  to as  "Physicians."  CRM  also  contemplates  providing
Infertility Services through other physician employees.  Physicians have entered
or will  enter  into  employment  agreements  with CRM on or  about  the date of
execution of this Agreement.

         IntegraMed is in the business of making available to medical providers
such as CRM certain assets (principally, facilities and equipment) and support
services, primarily consisting of (i) financial management; (ii) administrative
systems; (iii) clinical and laboratory organization and function; (iv) marketing
and (v) operations management. Such support services and the provision of
certain fixed assets are collectively referred to as "Business Services."

         CRM believes the Business Services will benefit its medical practice
and desires IntegraMed's assistance with various aspects of CRM's medical
practice through the utilization of the Business Services as more particularly
set forth herein. CRM acknowledges and agrees that the Business Services being
made available to CRM require CRM's cooperation and collaboration, and that
IntegraMed, in making the Business Services available, makes no warranty or
representation that the Business Services will achieve CRM's desired goals and
objectives except as expressly provided in this Agreement.

         In addition, CRM desires access to capital for funding its growth and
development, and IntegraMed desires to provide such capital or access to capital
as provided herein.

<PAGE>

         NOW THEREFORE, in consideration of the above recitals which the parties
incorporate into this Agreement, the mutual covenants and agreements herein
contained and other good and valuable consideration, CRM hereby agrees to
purchase from IntegraMed the Business Services and IntegraMed agrees to provide
the Business Services to CRM on the terms and conditions provided herein.

                                    ARTICLE 1

                                   DEFINITIONS

         1.1  DEFINITIONS.  For the purposes of this  Agreement,  the  following
definitions shall apply:

                  1.1.1 "Adjustments" shall mean adjustments for refunds,
         discounts, contractual adjustments, professional courtesies, and other
         activities that do not generate a collectible fee as reasonably
         determined by IntegraMed and CRM. Adjustments shall not include Bad
         Debt.

                  1.1.2 "Additional Service Fee" shall mean a monthly fee paid
         by CRM to IntegraMed in an amount equal to a percentage of CRM's
         monthly PDE.

                  1.1.3 "Assets" shall mean those fixed assets utilized in
         connection with the operation of CRM's medical practice, including, but
         not limited to, fixed assets and leasehold improvements.

                  1.1.4 "Bad Debt" shall mean all or a portion of an account,
         loan or note receivable considered to be uncollectible in accordance
         with Generally Accepted Accounting Principles ("GAAP"),

                  1.1.5 "Base Service Fee" shall mean a monthly fee paid by CRM
         to IntegraMed in an amount equal to a percentage of CRM's monthly
         Physician and Other Professional Revenues.

                  1.1.6 "Business Services" shall mean IntegraMed making
         available certain personnel and assets (including, without limitation,
         all facilities and equipment necessary to operate CRM's medical
         practice for the provision of Infertility Business Services) and
         support services, primarily consisting of (i) financial management;
         (ii) administrative systems; (iii) clinical and laboratory organization
         and function; (iv) marketing and (v) operations management, all as more
         fully set forth in Article 3.

                  1.1.7 "Cost of  Services"  shall have the meaning set forth in
         Article 2.

                  1.1.8 "Facilities" shall mean the medical offices and clinical
         spaces of CRM, including any satellite locations, related businesses
         and all medical group business operations of CRM, which are utilized by
         CRM in its medical practice.

                                  Page 2 of 31
<PAGE>

                  1.1.9 "Fiscal Year" shall mean the 12-month  period  beginning
         January 1 and ending December 31 of each year.

                  1.1.10 "Infertility Services" shall mean gynecological
         services, treatment of human infertility encompassing the provision of
         in vitro fertilization and other assisted reproductive services
         provided by CRM or any Physician Employee and Other Professional
         Employee.

                  1.1.11 "IntegraMed Overhead" shall mean salaries, bonuses,
         payroll taxes and benefits for IntegraMed corporate office employees,
         rent and expenses related to the operation of the IntegraMed corporate
         office, travel and entertainment expenses for corporate employees.

                  1.1.12 "Other Professional Employee" shall mean a
         non-physician individual who provides services, including nurse
         anesthetists, physician assistants, nurse practitioners, psychologists,
         and other such professional employees who generate professional
         charges, but shall not include Technical Employees.

                  1.1.13 "Physician-Employee" shall mean an individual,
         including any CRM physician owner and any other physician who is an
         employee of CRM or is under contract with CRM, including physicians
         employed by entities with whom CRM has contracted, to provide
         Infertility Services to CRM's patients and is duly licensed as a
         physician in the where CRM provides Infertility Services.

                  1.1.14 "Physician and Other Professional Revenues" shall mean
         all fees, whether received or accrued, and actually recorded each month
         (net of Adjustments) by or on behalf of CRM as a result of professional
         medical and laboratory services furnished to patients by Physicians and
         Physician-Employees and Other Professional Employees and, except as
         described in the next succeeding sentence, other fees or income earned
         in their capacity as professionals, whether rendered in an inpatient or
         outpatient setting, including but not limited to, medical director fees
         or technical fees from medical ancillary services, consulting fees,
         ultrasound fees from businesses owned or operated by Physicians and,
         including, but not limited to, contributions by pharmaceutical and
         other companies for marketing and research activities). Physician and
         Other Professional Revenues shall not include (i) board attendance fees
         and other compensation in connection with board memberships; provided,
         the compensation for board related activities does not exceed $5,000 in
         the aggregate, annually, per Physician and (ii) other services where
         Physician does not provide professional medical services such as
         testimony and consultation for litigation-related proceedings,
         lectures, passive investments, fundraising, or writing ("Permitted
         Services"; the compensation from Permitted Services may be retained by
         a Physician or Physician-Employee without limit, subject to Section
         4.7.5 hereof. Physician and Other Professional Revenues are sometimes
         referred to herein as "Revenues."

                  1.1.15 "Pre-distribution Earnings" ("PDE") shall mean (i)
         Physician and Other Professional Revenues, less (ii) Cost of Services
         and the Base Service Fee.

                                  Page 3 of 31
<PAGE>

                  1.1.16 "Receivables" shall mean and include all rights to
         payment for services rendered or goods sold, including, without
         limitation, accounts receivables, contract rights, chattel paper,
         documents, instruments and other evidence of patient indebtedness to
         CRM, policies and certificates of insurance relating to any of the
         foregoing, and all rights to payment, reimbursement or settlement or
         insurance or other medical benefit payments assigned to CRM by patients
         or pursuant to any Preferred Provider, HMO, capitated payment
         agreements or other agreements between CRM and a payer, recorded each
         month (net of Adjustments).

                  1.1.17 "Technical Employees" shall mean embryologists and
         other laboratory personnel, ultrasonographers, phlebotomists and
         technicians who provide services to CRM.

                                    ARTICLE 2

                                COST OF SERVICES

         2.1 "Cost of Services" shall mean all ordinary and necessary expenses
of CRM and all direct ordinary and necessary operating expenses, without
mark-up, of IntegraMed, exclusive of IntegraMed Overhead, incurred in connection
with products and/or services that are specific to CRM or customized for CRM or
that are related to volume-based usage by CRM, including, without limitation,
the following costs and expenses, whether incurred by IntegraMed or CRM:

                  2.1.1 Salaries and fringe benefits of all IntegraMed and other
         employees employed at CRM Facilities, along with payroll taxes or all
         other taxes and charges now or hereafter applicable to such personnel,
         and services of independent contractors;

                  2.1.2 Marketing expenses incurred by or on behalf of CRM, such
         as costs of printing marketing materials, media placements, and
         consumer seminars;

                  2.1.3 Any sales and use taxes assessed  against CRM related to
         the operation of CRM's medical practice;

                  2.1.4 Lease payments, depreciation expense (determined
         according to GAAP), taxes and interest directly relating to the
         Facilities and equipment, and other expenses of the Facilities
         described in Section 3.2 below;

                  2.1.5 Legal fees paid by IntegraMed or CRM to outside counsel
         in connection with matters specific to the operation of CRM such as
         regulatory approvals required as a result of the parties entering into
         this Agreement; provided, however, legal fees incurred by the parties
         relative to the execution or performance of this Agreement or as a
         result of a dispute between the parties under this Agreement shall be
         borne by each party and shall not be considered a Cost of Services; and
         provided, further any cost related to disputes between or among
         Physicians shall not be considered Cost of Services and are outside the
         scope of this Agreement.

                                  Page 4 of 31
<PAGE>

                  2.1.6 Health benefits provided to Physicians and
         Physician-Employees, including health and life insurance and long-term
         disability;

                  2.1.7 All insurance necessary to operate CRM including fire,
         theft, general liability professional liability and malpractice
         insurance for Physicians and Physician-Employees of CRM, and Other
         Professional and Technical Employees provided by IntegraMed;

                  2.1.8 Professional licensure fees and board certification fees
         of Physician- Employees, and Other Professional Employees rendering
         Infertility Services on behalf of CRM;

                  2.1.9 Membership in professional associations and continuing
         professional education for Physicians and Physician-Employees and Other
         Professional Employees;

                  2.1.10  Risk  Management  Program  described  in  Section  3.8
         herein;

                  2.1.11 Cost of filing fictitious name permits pursuant to this
         Agreement;

                  2.1.12 Cost of supplies, medical and administrative, and all
         direct general and administrative expenses, including but not limited
         to travel and entertainment expenses, dues and subscriptions, and other
         business related expenses, such as cellular telephone, relative to CRM;
         and

                  2.1.13 Such other costs and expenses directly incurred by
         IntegraMed related to CRM's operations which are included in the annual
         operation budget referred to in Section 5.2.1 or otherwise approved by
         CRM in writing.

                  2.1.14 Cost incurred by IntegraMed with respect to specific
         requests for services from CRM that are outside those provided for in
         this Agreement. For such requested services, IntegraMed and CRM will
         mutually determine how such specific requests will be carried out, as
         well as how charges and costs, including, but not limited to travel,
         will be applied.

                  2.1.15   CRM's Bad Debt.

                  2.1.16 Costs incurred by IntegraMed with respect to Business
         Services related to a specific activity requested by CRM that are in
         excess of those Business Services typically provided to other medical
         providers for the same activity, including, but not limited to
         additional travel and staffing.

                  2.1.17 Such costs charged by third-party vendors that are, in
         turn, allocated among network practices. For example, and not by way of
         limitation, costs to install and maintain telecommunication lines
         linking CRM to the IntegraMed data center; annual software license
         maintenance fees and hardware maintenance fees related to MISYS Optimum

                                  Page 5 of 31
<PAGE>

         and software license and maintenance fees associated with all other
         software applications utilized by CRM, including but not limited to
         HRIS/ON-core, Goldmine, MAS500, Centrix, HelpSTAR, Secure ID/RSA token
         and spam reduction services provided by IntegraMed; insurance premiums
         for professional liability and other insurance coverages, and; any
         other cost or expense that is allocated among the network practices
         based on volume usage.

                  2.1.18 Such additional training that CRM may request from
         IntegraMed beyond basic training for such applications as ARTworks or
         in connection with basic Marketing and Sales training.

                  2.1.19 Base salary up to $250,000 for two years for two new
         physicians employed by CRM ; provided, however, each such new hire must
         be approved by the Practice Management Board and provided, further, (i)
         "new physician" shall mean a physician whose hiring is not to replace a
         physician who has left CRM within 12 months prior to the employment of
         the new physician, but whose hiring increases CRM's full-time
         equivalent ("FTE") physicians to a number greater than CRM's FTE
         physicians for the previous 12 months; and (ii) "new physician" shall
         not mean a physician providing Infertility Services to patients in
         "Territory" during the 12 month period immediately preceding employment
         by CRM. No more than one of the two new physician shall qualify for
         this Cost of Services treatment at the same time.

         2.2 Notwithstanding  anything to the contrary contained herein, Cost of
Services shall not include costs of the following:

                  2.2.1 Any federal or state income  taxes of CRM or  IntegraMed
         other than as provided above;

                  2.2.3    The Base Service Fee;

                  2.2.4 Except as set forth in Section 2.1.19, any amount paid
         to or on behalf of any Physician or Physician-Employee including
         salary, payroll taxes, draw or pension contributions (all of which come
         out of CRM's share of PDE);

                  2.2.5 IntegraMed's cash outlay to acquire capital assets for
         which depreciation expense is to be charged as a Cost of Services under
         Section 2.1.4.

                  2.2.6    IntegraMed Overhead;

                                  Page 6 of 31
<PAGE>

                                    ARTICLE 3

                    DUTIES AND RESPONSIBILITIES OF INTEGRAMED

         3.1      BUSINESS SERVICES AND ADMINISTRATION.

                  3.1.1 CRM hereby engages IntegraMed to provide the Business
         Services within the Counties of Orange, Lake, Volusia, Osceola,
         Seminole and Brevard in the state of Florida (the "Territory"), and CRM
         agrees to limit its use of the Business Services to the Territory,
         without prior written consent from IntegraMed. None of the Business
         Services made available to CRM include any physician medical functions.

                  3.1.2 IntegraMed will, on behalf of CRM and as directed by
         CRM, bill patients timely and collect professional fees for Infertility
         Business Services rendered by CRM at the Facilities, outside the
         Facilities for CRM's hospitalized patients, and for all other
         Infertility Business Services rendered by any Physician- Employee or
         Other Professional Employees. CRM hereby appoints IntegraMed for the
         term hereof to be its true and lawful attorney-in-fact, for the
         following purposes: (i) bill patients in CRM's name and on its behalf;
         (ii) collect Receivables resulting from such billings in CRM's name and
         on its behalf (recognizing that successfully collecting Receivables may
         be dependent on CRM's participation and cooperation, CRM will
         reasonably cooperate with respect to IntegraMed's collection efforts,
         and policies and procedures established by the Practice Management
         Board governing the collection of Receivables); (iii) receive payments
         from insurance companies, prepayments from health care plans, and all
         other third-party payers; (iv) take possession of and endorse in the
         name of CRM (and/or in the name of any Physician Employee or Other
         Professional Employee rendering Infertility Business Services to
         patients of CRM) any notes, checks, money orders, and other instruments
         received in payment of Receivables; and (v) at CRM's request, initiate
         the institution of legal proceedings in the name of CRM, with CRM's
         cooperation, to collect any accounts and monies owed to CRM, to enforce
         the rights of CRM as creditor under any contract or in connection with
         the rendering of any service by CRM, and to contest adjustments and
         denials by governmental agencies (or its fiscal intermediaries) as
         third-party payers.

                  3.1.3 IntegraMed will provide the administrative services
         function of supervising and maintaining (on behalf of CRM) all files
         and records relating to the operations of the Facilities, including but
         not limited to accounting and billing records, including for billing
         purposes, patient medical records, and collection records. Patient
         medical records shall at all times be and remain the property of CRM
         and shall be located at the Facilities and be readily accessible for
         patient care. IntegraMed's management of all files and records shall
         comply with all applicable state and federal laws and regulations,
         including without limitation, those pertaining to confidentiality of
         patient records. The medical records of each patient shall be expressly
         deemed confidential and shall not be made available to any third party
         except in compliance with all applicable laws, rules and regulations.
         IntegraMed shall have access to such records in order to provide the
         Business Services hereunder, to perform billing functions, and to

                                  Page 7 of 31
<PAGE>

         prepare for the defense of any lawsuit in which those records may be
         relevant. The obligation to maintain the confidentiality of such
         records shall survive termination of this Agreement. CRM shall have
         unrestricted access to all of its records at all times.

                  3.1.4 IntegraMed will provide, as requested by CRM, all
         reasonably necessary clerical, accounting, bookkeeping and computer
         services, printing, postage and duplication services, medical
         transcribing services, and any other necessary or appropriate
         administrative services reasonably necessary for the efficient
         operation of CRM's medical practice at the Facilities.

                  3.1.5 With CRM' cooperation, and participation IntegraMed will
         design and assist with implementing an appropriate marketing program
         for CRM. CRM's participation is essential in developing such marketing
         program and accordingly, will designate one or more physicians to work
         with IntegraMed in designing and implementing such marketing program.

                  3.1.6 IntegraMed, upon request of CRM, will assist CRM in
         recruiting additional physicians, including IntegraMed providing such
         administrative functions as advertising for and identifying potential
         candidates, checking credentials, and arranging interviews; provided,
         however, CRM shall interview and make the ultimate decision as to the
         suitability of any physician to become associated with CRM. All
         physicians recruited by IntegraMed and accepted by CRM shall be
         employees of or independent contractors to CRM.

                  3.1.7 IntegraMed will assist CRM in negotiating any managed
         care contracts to which CRM desires to become a party. IntegraMed will
         provide administrative assistance to CRM in fulfilling its obligations
         under any such contract.

                  3.1.8 IntegraMed will arrange, in consultation with CRM, for
         legal and accounting services as may otherwise be reasonably required
         in the ordinary course of CRM's operation.

         3.2 FACILITIES. CRM shall determine the nature and extent of the
facilities reasonably needed for CRM' medical practice and IntegraMed will
assist CRM in obtaining such Facilities, including providing administrative
support, effort and resources in obtaining the Facilities, including all
furniture, equipment and furnishings necessary for the Facilities, all repairs,
maintenance and improvements thereto, utility (telephone, electric, gas, water)
services, customary janitorial services, refuse disposal and all other services
reasonably necessary in conducting CRM's medical practice at the Facilities.
IntegraMed will arrange for the cleaning of the Facilities, and timely
maintenance and cleanliness of the equipment, furniture and furnishings located
therein. IntegraMed will advise, counsel and collaborate with CRM regarding the
condition, use and needs for the Facilities, the improvements thereto, equipment
and services.

                                  Page 8 of 31
<PAGE>

         3.3      EXECUTIVE DIRECTOR AND OTHER PERSONNEL.

                  3.3.1 EXECUTIVE DIRECTOR. IntegraMed will employ an Executive
         Director, approved by the Practice Management Board, as defined in
         Section 5.1, to manage and administer all of the day-to-day business
         functions of the Facilities. The Executive Director's compensation and
         benefits shall be approved by Practice Management Board. CRM agrees not
         to offer any compensation or benefits to the Executive Director other
         than those approved by the Practice Management Board.

                  3.3.2 PERSONNEL. IntegraMed will provide, as requested by CRM,
         Other Professional Employees, Technical Employees, support and
         administrative personnel, clerical, secretarial, bookkeeping and
         collection personnel reasonably necessary for the efficient operation
         of CRM at the Facilities. Such personnel must be approved by CRM, but
         will be under the direction and supervision of the Executive Director,
         except that Technical Employees and Other Professional Employees
         subject to the professional supervision of CRM. The compensation of
         such personnel shall be approved by CRM and CRM may request that any of
         such personnel be terminated in its reasonable discretion and in such
         event, all cost and expenses associated with such termination shall be
         a Cost of Services.

         3.4 FINANCIAL PLANNING AND GOALS. IntegraMed, in collaboration with
CRM, will prepare, for the approval of the Practice Management Board, an annual
capital and operating budget (the "Budget") reflecting the anticipated Revenues
and Cost of Services, sources and uses of capital for growth of CRM' practice
and for the provision of Infertility Services at the Facilities. IntegraMed will
present the Budget to the Practice Management Board for its approval at least
thirty (30) days prior to the commencement of the Fiscal Year. If the Practice
Management Board can not agree on the Budget for any Fiscal Year during the term
of this Agreement, the Budget for the preceding Fiscal Year will serve as the
Budget until such time as a new Budget is approved.

         3.5 FINANCIAL STATEMENTS. IntegraMed will deliver to CRM monthly
financial statements ("Financial Statements") within thirty (30) days after the
end of each calendar month. Such Financial Statements will comprise, on a
monthly and year-to-date basis, a statement of CRM' Revenues and Cost of
Services and PDE, as hereinafter defined.

         3.6 TAX PLANNING AND TAX RETURNS. IntegraMed will not be responsible
for any tax planning or tax return preparation for CRM, but will provide support
documentation in connection with the same. Such support documentation will not
be destroyed without CRM' consent.

         3.7 INVENTORY AND SUPPLIES. For the account of CRM, IntegraMed shall
order and purchase inventory and supplies, and such other materials which are
requested by CRM to enable CRM to deliver Infertility Services in a
cost-effective quality manner.

                                  Page 9 of 31
<PAGE>

         3.8 RISK MANAGEMENT.  IntegraMed shall assist CRM in the development of
a Risk Management Program and in meeting the standards of such Program.

         3.9 PERSONNEL POLICIES AND PROCEDURES. IntegraMed shall develop, in
cooperation with CRM, personnel policies, procedures and guidelines, governing
office behavior, protocol and procedures which will aid in compliance with
applicable laws and guidelines related to employment and human resources
management.

         3.10 LICENSES AND PERMITS. IntegraMed will coordinate and assist CRM in
its application for and efforts to obtain and maintain all federal, state and
local licenses, certifications and regulatory permits required for or in
connection with the operations of CRM and equipment located at the Facilities,
other than those relating to the practice of medicine or the administration of
drugs by Physicians and Physician-Employees.

         3.11 SUBCONTRACTED BUSINESS SERVICES. Subject to prior approval of CRM,
which approval shall not be unreasonably withheld, IntegraMed is expressly
authorized to subcontract with other persons or entities for any of the services
that IntegraMed is required to perform pursuant to this Agreement ("Authorized
Subcontractors"). Provided, however, that IntegraMed shall disclose any term of
this Agreement to any subcontractor or potential subcontractor of IntegraMed who
does or will perform services to CRM to the extent the subcontractor or
potential subcontractor will perform significant or continuing functions for CRM
which are specific obligations of IntegraMed hereunder and shall incorporate
such terms into such subcontract, including but not limited to the restrictive
provisions of Section 3.1.1 hereof. No such subcontract will limit the overall
responsibility of IntegraMed for compliance with the terms and provisions of
this Agreement unless CRM specifically agrees in writing. Nothing in this
Section 3.11 shall apply to contracts entered into by IntegraMed that relate to
services not required to be performed directly by IntegraMed such as payroll
services.

         3.12 ACCESS TO PROTECTED HEALTH INFORMATION. In connection with the
Business Services provided by IntegraMed pursuant to this Agreement, IntegraMed
and its employees, representatives and agents will have access to protected
health information ("PHI") maintained by CRM. In connection with such PHI,
IntegraMed contemporaneous with entering into this Agreement will enter into a
Business Associate Agreement with CRM, substantially in the form of Exhibit
3.12, in accordance with the regulations promulgated under the Health Insurance
Portability & Accountability Act of 1996.

                                    ARTICLE 4

                       DUTIES AND RESPONSIBILITIES OF CRM

         4.1 TIMELY PERFORMANCE. CRM, in engaging IntegraMed to provide the
Business Services described in this Agreement, acknowledges that CRM's timely
performance of its duties and responsibilities as delineated in this Article 4
are material to this Agreement and to IntegraMed's interest.

                                 Page 10 of 31
<PAGE>

         4.2 PROFESSIONAL SERVICES. CRM shall use its best efforts to cause its
Physicians and Physician-Employees to provide Infertility Services to CRM'
patients in compliance at all times with ethical standards, laws and regulations
applying to the practice of medicine in the applicable jurisdiction which such
Physician or Physician-Employee provides Infertility Services on behalf of CRM.
CRM shall ensure that each Physician, Physician-Employee, any Other Professional
Employee employed by CRM, and any other professional provider associated with
CRM is duly licensed to provide the Infertility Services being rendered within
the scope of such provider's practice. In addition, CRM shall require each
Physician and Physician-Employee to maintain a DEA number and appropriate
medical staff privileges as determined by CRM during the term of this Agreement.
In the event that any disciplinary actions or medical malpractice actions are
initiated against any Physician, Physician-Employee or other professional
provider, CRM shall promptly inform the Executive Director and provide the
underlying facts and circumstances of such action, and the proposed course of
action to resolve the matter. Periodic updates, but not less than monthly, shall
be provided to IntegraMed.

         4.3 MEDICAL PRACTICE. CRM shall use and occupy the Facilities
exclusively for the purpose of providing Gynecology, Infertility Services, and
related services and activities and shall use its best efforts to comply with
all applicable laws and regulations and all applicable standards of medical
care, including, but not limited to, those established by the American Society
of Reproductive Medicine. The medical practice conducted at the Facilities shall
be conducted solely by Physicians employed by CRM and Physician-Employees
employed by or serving as independent contractors to CRM, and Other Professional
Employees employed by CRM. No other physician or medical practitioner shall be
permitted to use or occupy the Facilities without the prior written consent of
IntegraMed, except in the case of a medical emergency, in which event,
notification shall be provided to IntegraMed as soon after such use or occupancy
as possible.

         4.4 EMPLOYMENT OF PHYSICIAN AND OTHER PROFESSIONAL EMPLOYEES. In the
event CRM shall determine that additional physicians are necessary, CRM shall
undertake and use its best efforts to select physicians who, in CRM's judgment,
possess the credentials and expertise necessary to enable such physician
candidates to become affiliated with CRM for the purpose of providing
Infertility Services. CRM shall cause each Physician-Employee to enter into an
employment or service agreement with CRM or their respective professional
association which is a partner of CRM ("Physician Employment Agreement") in such
form as is mutually and reasonably acceptable to CRM and IntegraMed. Upon CRM'
request, IntegraMed shall consult with and advise CRM respecting the hiring,
compensation, supervision, evaluation and termination of Physician-Employees.

         4.5 CONTINUING MEDICAL EDUCATION CRM shall require its
Physician-Employees to participate in such continuing medical education as CRM
deems to be reasonably necessary for such physicians to remain current in the
provision of Infertility Services.

         4.6      PROFESSIONAL INSURANCE.

                  4.6.1 CRM shall maintain professional liability coverage at
         all times during the Term, in limits of not less than $250,000.00 per
         occurrence, $750,000.00 in the aggregate. If possible, under the terms

                                 Page 11 of 31
<PAGE>

         of the insurance coverage, CRM shall use its best efforts to cause
         IntegraMed to be named an additional named insured to the extent
         reasonably available at no additional cost or expense. Upon request of
         IntegraMed, evidence of such coverage shall be provided to IntegraMed.

                  4.6.2 IntegraMed, in conjunction with practices in the
         IntegraMed network, maintains a malpractice captive insurance company,
         ARTIC, Ltd. ("ARTIC"). As a member of the IntegraMed network, in lieu
         of maintaining professional liability coverage as provided for in
         Section 4.6.1, CRM is eligible to become a member of ARTIC provided it
         meets the underwriting requirements and pays applicable premiums and
         fees. As an ARTIC member, CRM is required to participate in the
         IntegraMed Risk Management Program.

         4.7 DIRECTION OF PRACTICE CRM, as a continuing condition of
IntegraMed's obligations under this Agreement, shall at all time during the Term
be and remain legally organized and operated to provide Infertility Services in
a manner consistent with state and federal laws. CRM, through its physicians, is
expected to provide leadership in its market area and reasonably cooperate with
IntegraMed in IntegraMed's efforts to make the Business Services available to
CRM. In furtherance of which:

                  4.7.1 CRM shall operate and maintain at the Facilities a
         full-time practice of medicine specializing in the provision of
         Infertility Services and shall maintain and enforce the Physician
         Employment Agreements or in such other form as is mutually and
         reasonably agreed to by CRM and IntegraMed in writing. CRM covenants
         that it shall not employ any physician, or have any physician as a
         shareholder, unless said physician shall sign the Physician Employment
         Agreement prior to assuming the status as employee and/or shareholder.
         CRM covenants that should a physician become a shareholder of CRM, that
         a condition precedent to the issuance of the shares shall be the
         ratification of this Service Agreement. The relationship between CRM
         and physicians who independently contract with CRM to provide services
         shall be in such other form as is mutually and reasonably agreed to by
         CRM and IntegraMed in writing.

                  4.7.2 CRM shall not terminate the Physician Employment
         Agreement(s) of any Physician, except in accordance with the Physician
         Employment Agreement(s). CRM shall not amend or modify the Physician
         Employment Agreements in any material manner, nor waive any material
         rights of CRM thereunder without the prior written approval of
         IntegraMed, which approval will not be unreasonably withheld, and it
         shall be deemed unreasonable for IntegraMed to withhold consent of an
         amendment or modification mandated by the necessity of compliance with
         applicable law. CRM covenants to enforce the terms of each Physician
         Employment Agreement, including but not limited to any terms confirming
         a Physician-Employee's commitment to practice medicine solely through
         CRM for a specified number of years.

                  4.7.3 Recognizing that IntegraMed would not have entered into
         this Agreement but for CRM's covenant to maintain and enforce the
         Physician Employment Agreements with any physician now employed or
         physicians who may hereafter become employees of CRM, and in reliance

                                 Page 12 of 31
<PAGE>

         upon such Physician-Employee's observance and performance of all of the
         obligations under the Physician Employment Agreements, any damages,
         liquidated damages, compensation, payment or settlement received by CRM
         from a physician whose employment is terminated, shall be considered to
         be Physician and Other Professional Revenues.

                  4.7.4 CRM shall retain that number of Physician-Employees as
         are reasonably necessary and appropriate for the provision of
         Infertility Services. Each Physician-Employee shall hold and maintain a
         valid and unrestricted license to practice medicine in the applicable
         jurisdiction where such Physician-Employee provides Infertility
         Services on behalf of CRM, and all full-time Physician-Employees shall
         be board eligible in the practice of gynecology, with training in the
         subspecialty of infertility and assisted reproductive medicine. CRM
         shall be responsible for paying the compensation and benefits, as
         applicable, for all Physician-Employees, and for withholding, as
         required by law, any sums for income tax, unemployment insurance,
         social security, or any other withholding required by applicable law.
         IntegraMed, at the request of CRM, will establish and administer the
         compensation with respect to such Physician-Employees in accordance
         with the written agreement between CRM and each Physician Employee.
         IntegraMed shall neither control nor direct any Physician in the
         performance of Infertility Services for patients, and IntegraMed will
         not unreasonably interfere with the employer-employee relationship
         between CRM and its Physician-Employees.

                  4.7.5 CRM and its Physician-Employees shall provide patient
         care and clinical backup as required for the proper provision of
         Infertility Services to patients of CRM at CRM' Facilities. CRM shall
         require that its full-time Physician-Employees devote substantially all
         of their professional time, effort and ability to CRM's practice,
         including the provision of Infertility Services and the development of
         such practice, and that Permitted Services, of any Physician-Employee
         do not interfere with such Physician-Employees full time practice of
         Infertility Services at CRM' Facilities.

                  4.7.6 CRM shall obtain and maintain necessary licenses and
         operate its clinical laboratory and tissue bank services in accordance
         with all applicable laws and regulations. CRM agrees that the Medical
         Director or Tissue Bank Director, if applicable, shall be
         Physician-Employees or Other Professional Employees, if applicable, of
         CRM who meet the qualifications required by applicable State law or
         regulation, and that should there be a vacancy in any such position,
         CRM will cause another Physician-Employee or Other Professional
         Employee, if applicable, to fill such vacancy in accordance with
         applicable State law.

                  4.7.7 CRM acknowledges that it bears all medical obligations
         to patients treated at the Facilities and covenants that it is
         responsible for all tissue, specimens, embryos or biological material
         ("Biological Materials") kept at the Facilities on behalf of the
         patients (or former patients) of CRM, except for the negligence,
         willful or intentional misconduct of IntegraMed's employees; provided,
         however, this shall not apply to circumstances where an IntegraMed
         employee is acting under the direction or supervision of a
         Physician-Employee. In the event of a termination or dissolution of

                                 Page 13 of 31
<PAGE>

         CRM, or the termination of this Agreement for any reason, CRM and the
         Physicians will have the obligation to account to patients and to
         arrange for the storage or disposal of such Biological Materials in
         accordance with patient consent and the ethical guidelines of the
         American Society of Reproductive Medicine ("Relocation Program").
         IntegraMed, in such event, will, at the request of CRM, assist in the
         administrative details of such a Relocation Program for so long as CRM
         shall request and an appropriate fee shall be paid during that time.
         These obligations shall survive the termination of this Agreement.

                  4.7.8 CRM will designate certain physicians to (i) work with
         IntegraMed in designing and implementing marketing plans, (ii)
         participate in marketing strategy sessions, and (iii) identify targeted
         referral sources and managed care opportunities.

         4.8 PRACTICE  DEVELOPMENT,  COLLECTION EFFORTS AND NETWORK INVOLVEMENT.
CRM agrees that during the term of this Agreement,  CRM covenants for itself and
will use reasonable efforts to cause its Physician-Employees to:

                  4.8.1 Execute such documents and take such steps reasonably
         necessary to assist billing and collecting for patient services
         rendered by CRM and its Physician-Employees;

                  4.8.2  Promote  CRM's  medical  practice  and  participate  in
         marketing efforts developed by IntegraMed and approved by CRM;

                  4.8.3  Reasonably   cooperate  with  respect  to  IntegraMed's
         collection   efforts,   and  policies  and  procedures   governing  the
         collection of Receivables; and

                  4.8.4  Comply  with  all  applicable  laws  and   regulations,
         federal, state and local.

                  4.8.5 Participate in IntegraMed network activities and
         programs, including, but not limited to, the Council of Physicians and
         Scientists, using best efforts in offering IntegraMed Pharmaceutical
         Services and the IntegraMed Shared Risk(R) Refund Program to patients
         and participating in other product and service offerings IntegraMed has
         in effect from time to time.

                                    ARTICLE 5

                        JOINT DUTIES AND RESPONSIBILITIES

         5.1 FORMATION AND OPERATION OF PRACTICE MANAGEMENT BOARD. IntegraMed
and CRM will establish a practice management board ("Practice Management
Board"), which will be responsible, to assist CRM, in developing management and
administrative policies for the overall operation of CRM. The Practice
Management Board will consist of designated representatives from IntegraMed as
determined by IntegraMed, designated representatives of CRM as determined by
CRM, the Executive Director and the Medical Director. It is the intent and
objective of IntegraMed and CRM that they agree on the overall provision of the
Business Services to CRM. In the case of any matter requiring a formal vote, CRM

                                 Page 14 of 31
<PAGE>

shall have one (1) vote and IntegraMed shall have one (1) vote; provided,
however, the determination with respect to adding Shareholders, or hiring or
firing of Physician-Employees shall be determined solely by CRM. The desire is
that IntegraMed and CRM agree on matters of operations and that, if they
disagree, they will have to work cooperatively to resolve any disagreement. The
Practice Management Board shall meet at least three (3) times per calendar year
and will maintain minutes of all meetings, which minutes shall, among other
things, reflect all decisions of the Practice Management Board.

         5.2 DUTIES AND RESPONSIBILITIES OF THE PRACTICE MANAGEMENT Board. With
the assistance of IntegraMed, the Practice Management Board shall have, among
others, the following duties and responsibilities:

                  5.2.1 ANNUAL BUDGETS AND PROFITABILITY. Review and approve
         annual capital and operation budgets prepared by IntegraMed. The
         parties covenant and agree to use their respective best efforts to
         assist the Practice Management Board in achieving the projected
         budgets. CRM and IntegraMed agree that, recognizing changes in
         circumstances, annual budgets and forecast are subject to revisions.
         Accordingly, the Practice Management Board may, from time to time,
         propose to modify the annual budgets, as needed, including without
         limitation, staff reductions, so that CRM operates in a profitable mode
         which means that PDE is positive on a monthly basis. CRM's approval of
         such modifications shall not be unreasonably withheld and shall become
         part of the Budget. Further, CRM agrees that in the event CRM incurs
         operational losses at any point during the term of this Agreement,
         nothing herein shall obligate IntegraMed to incur losses under this
         Agreement in order to sustain CRM's operations. For example, IntegraMed
         may take appropriate steps to reduce its Cost of Services in order to
         avoid negative PDE at any point.

                  5.2.2 CAPITAL IMPROVEMENTS AND EXPANSION.Except as otherwise
         provided herein, any renovation and expansion plans, and capital
         equipment expenditures with respect to CRM shall be reviewed and
         approved by the Practice Management Board and shall be based upon the
         best interests of CRM, and shall take into account capital priorities,
         economic feasibility, physician support, productivity and then current
         market and regulatory conditions.

                  5.2.3 MARKETING BUDGET.CRM shall assist in the development of
         an annual marketing budget and plan prepared by IntegraMed for approval
         by the Practice Management Board. All annual advertising and other
         marketing budgets prepared by IntegraMed shall be subject to the
         review, amendment, approval and disapproval of the Practice Management
         Board.

                  5.2.4 STRATEGIC PLANNING.  The Practice Management Board shall
         develop long-term strategic plans.

                  5.2.5 PHYSICIAN HIRING.Make recommendations regarding the
         number and type of physicians required for the efficient operation of
         CRM; provided, the final determination on physician hiring shall be
         made by CRM.

                                 Page 15 of 31
<PAGE>

                  5.2.6 EXECUTIVE DIRECTOR. The Practice Management Board will
         direct the day-to-day functions of the Executive Director in
         implementing the policies agreed by the Practice Management Board. The
         Executive Director shall meet with the Medical Director on a regular
         basis as reasonably requested by either party to discuss issues
         pertaining to CRM. Salary and fringe benefits paid to the Executive
         Director shall be approved by the Practice Management Board. The
         Practice Management Board will conduct an annual evaluation of such
         individual's performance.
                           .
                                    ARTICLE 6

                             FINANCIAL ARRANGEMENTS

         6.1 COMPENSATION. The compensation set forth in this Article 6 is being
paid to IntegraMed in consideration of the substantial commitment made, capital
provided and services to be rendered by IntegraMed hereunder and is fair and
reasonable. IntegraMed shall be paid the following amounts (collectively
"Compensation"):

                  6.1.1 an amount reflecting all Cost of Services (whether
         incurred by IntegraMed or CRM) paid or accrued by IntegraMed pursuant
         to the terms of this Agreement.

                  6.1.2 during each year of this Agreement commencing with the
         Effective Date , a Base Service Fee, paid monthly but reconciled to
         annual Revenues, of an amount equal to six percent (6%) of the first
         $8.0 million of CRM' Revenues; five percent (5%) of CRM' Revenues over
         $8.0 million, but less than $12 million; and four percent (4%) of CRM'
         Revenues of $12 million or more.

                  6.1.3 commencing with the Effective Date, an additional
         service fee ("Additional Service Fee") paid monthly but reconciled to
         Fiscal Year operating results of CRM, equal to fifteen percent (15%) of
         PDE.

                  It is understood and agreed that the Additional Service Fee is
         paid to IntegraMed in the event CRM achieves positive PDE. Nothing
         herein shall be interpreted to mean that if PDE is negative, IntegraMed
         makes a contribution to CRM to cover any such operating losses.

         6.2      ACCOUNTS RECEIVABLE.

                  6.2.1 On or before the 20th business day of each month,
         commencing with the first month following the Effective Date,
         IntegraMed shall reconcile the Receivables of CRM arising during the
         previous calendar month. Subject to the terms and conditions of this
         Agreement, CRM hereby sells and assigns to IntegraMed as absolute
         owner, and IntegraMed hereby purchases from CRM all Receivables
         hereafter owned by or arising in favor of CRM on or before the 20th
         business day of each month. IntegraMed shall transfer or pay such
         amount of funds to CRM equal to the Receivables less Compensation due
         IntegraMed pursuant to Section 6.1. CRM shall cooperate with IntegraMed

                                 Page 16 of 31
<PAGE>

         and execute all necessary documents in connection with the purchase and
         assignment of such Receivables to IntegraMed or at IntegraMed's option,
         to its lenders. All collections in respect of such Receivables shall be
         deposited in a bank account at a bank designated by IntegraMed. To the
         extent CRM comes into possession of any payments in respect of such
         Receivables, CRM shall direct such payments to IntegraMed for deposit
         in bank accounts designated by IntegraMed.

                  6.2.2 Any Medicare or Medicaid Receivables due to CRM shall be
         excluded from the operation of Section 6.2.1 hereof. Any such
         Receivables shall be subject to agreement of CRM and IntegraMed with
         respect to the collection thereof.

                  6.2.3 Commencing March 1, 2008, CRM will be charged monthly
         interest at an annualized rate of prime plus 2% on Receivables with
         average days sales outstanding ("DSO") greater than 60 days for a
         trailing three-month period. For example, if prime is 6% and CRM'
         Revenues are $1,385,000 for a three-month period, the average Revenues
         per day (assuming 90 days in such three-month period) equals $15,389.
         If on the last day of that same three-month period CRM' Receivables are
         $1.5 million, then CRM' DSO equal 97 days ($1.5 million divided by
         $15,389), resulting in interest being charged for the month on
         $569,393.00 of CRM' Receivables ($15,389 times 37 days) at a rate of
         0.67% ( 6% prime plus 2% divided by 12), or a $3,814.93 interest
         charge. Any application of this Section 6.2.3 shall exclude Bad Debt
         from the determination of Receivables subject to an interest payment.

                  6.2.4 On or before the 20th business day of each month,
         commencing with the month following the Effective Date, IntegraMed
         shall remit to CRM the PDE generated for the previous calendar month.

                  6.3 ADVANCES. IntegraMed may advance necessary funds for CRM
to meet Cost of Services and, to meet Physician distributions (through their
respective professional associations), and Physician-Employee salaries;
provided, however, nothing herein shall obligate IntegraMed to incur Cost of
Services and Physician salary Advances in excess of Revenues under this
Agreement in order to sustain CRM' operations. As security for such Advances,
CRM shall deliver to IntegraMed with the execution of this Agreement a Security
Agreement in the form of Exhibit 6.3 hereto giving IntegraMed a collateral
interest in all Receivables of CRM and PDE payable to CRM Shareholders.
IntegraMed shall, in its sole discretion, be entitled to take any and all
necessary action to prevent financial losses, in the form of Cost of Services on
behalf of CRM, to IntegraMed in the event CRM's Cost of Services exceed CRM'
Revenues at any point during the Term of this Agreement. Notwithstanding
anything herein to the contrary, no Advances will be made by IntegraMed to
satisfy Physician-Employee draws, salaries or pension contributions, unless
requested by CRM.

                  6.3.1 Any Advance hereunder shall be a debt owed to IntegraMed
         by CRM and shall be repaid in twelve equal installments plus accrued
         interest on the first day of each month following any Advance. To the
         extent PDE is available for distribution to Physicians for a particular
         month; IntegraMed is authorized to deduct any outstanding Advance from
         the PDE prior to distribution to the Physicians to pay any installment
         then due.

                                 Page 17 of 31
<PAGE>

                  6.3.2 Interest expense will be charged on an Advance and will
         be computed at the Prime Rate plus 2% used by IntegraMed's primary
         bank.

         6.4      BUILD OUT AND CAPITAL COMMITMENT.

         IntegraMed agrees to invest sufficient capital to build, equip and
supply appropriate office and laboratory space for CRM to conduct its medical
practice at the Facilities. As an expression of IntegraMed's commitment to the
growth of CRM' practice, IntegraMed agrees to maintain, during the term of this
Agreement, an on-going investment in the Facilities and equipment, of an amount
up to $1 million ("Capital Commitment") at an interest rate equal to the prime
rate charged by IntegraMed's primary bank. Any amount invested by IntegraMed in
CRM's medical Facilities in excess of $1 million will be charged to CRM as a
capital cost at an interest rated of prime, plus two percent (2%) charged by
IntegraMed's primary bank.

                                    ARTICLE 7

              TERM, SERVICE RIGHTS, PAYMENTS, AND OTHER COMMITMENTS

         7.1 This Agreement shall begin on the Effective Date and shall continue
for twenty-five years (the "Term"), with automatic successive twenty-five year
terms (each, a "Renewal Term"), unless sooner terminated as herein provided. In
the event either party elects not to renew this Agreement at the expiration of
the Term or a Renewal Term, said party shall give the other not less than one
(1) year's prior written notice of its intention not to renew at the expiration
of the Term or a Renewal Term.

         7.2 In consideration of the considerable investment of time and
resources in CRM expected by IntegraMed, CRM grants to IntegraMed the exclusive
right to provide the Business Services to CRM in consideration of the payment of
$2.150 Million Dollars ("Exclusive Right to Service Fee").

                                    ARTICLE 8

                          TERMINATION OF THE AGREEMENT

         8.1      TERMINATION

                  This Agreement may be terminated by either party in the event
of the following:

                  8.1.1 INSOLVENCY. If a receiver, liquidator or trustee of any
party shall be appointed by court order, or a petition to reorganize shall be
filed against any party under any bankruptcy, reorganization or insolvency law,
and shall not be dismissed within 90 days, or any party shall file a voluntary

                                 Page 18 of 31
<PAGE>

petition in bankruptcy or make assignment for the benefit of creditors, then
either of the other parties may terminate this Agreement upon 10 days prior
written notice to the other parties.

                  8.1.2 MATERIAL BREACH. If either party believes that the other
party has materially breached its obligations hereunder, then the non-breaching
party ("Accuser") shall give notice ("Breach Notice") to the breaching party
("Accused"), setting forth in detail the basis for the belief ("Accusation") and
indicating that the Accused must cure said breach within 30 days ("Cure
Period").

                  (a) If the Accused, in good faith denies the Accusation, then
the Accused shall give notice within the Cure Period to the Accuser demanding an
arbitration of whether there has been a material breach of this Agreement. Such
arbitration shall be conducted in accordance with Section 11.7 hereof and the
parties agree, in good faith, to commence the arbitration within 60 days of the
Breach Notice and participate in the arbitration in a "time is the essence of
the arbitration" basis.

                  (b) If the Accused agrees with the Breach Notice and cures the
Material Breach within the Cure Period, no further action will be required by
either party.

                  (c) If the Accused agrees with the Breach Notice, but the
breach is not curable within the Cure Period and the Accused is making diligent
efforts to cure the breach during the Cure Period ("Good Faith Cure Efforts"),
the parties shall continue to operate under the terms and conditions of this
Agreement. If after the exercise of such Good Faith Cure Efforts, the Accused
shall be unable to cure the breach within 60 days from the Breach Notice, the
Accuser shall, in good faith, extend the time in which to cure the breach, upon
request of the Accused. In the event the Accuser does not extend the time in
which to cure the breach, the Accused shall be entitled to arbitrate pursuant to
Section 11.7 whether the Accused is entitled to an extension in order to cure
the breach.

                  (d) It is the intent of the parties that in the event of a
material breach hereunder, the Accused shall the have the opportunity to a full
determination of whether there was a material breach, before this Agreement
terminates. If as a result of arbitration, there is a finding ("Finding") of a
material breach, the Accuser shall be entitled to terminate this Agreement and
the applicable section of Article 9 shall govern.

         8.2 TERMINATION BY INTEGRAMED FOR PROFESSIONAL DISCIPLINARY ACTIONS.
CRM shall be obligated to suspend a physician whose authorization to practice
medicine is suspended, revoked or not renewed. IntegraMed may terminate this
Agreement upon 10 days prior written notice to CRM if a Physician's
authorization to practice medicine is suspended, revoked or not renewed and CRM
has failed to suspend such physician; provided, however, such action may not be
taken until CRM has been given 30 days to resolve such physician's authorization
to practice medicine. CRM shall notify IntegraMed within five (5) days of a
notice that a physician's authorization to practice medicine is suspended,
revoked or not renewed or that formal disciplinary action has been taken against
a physician which could reasonably lead to a suspension, revocation or
non-renewal of a physician's license.

                                 Page 19 of 31
<PAGE>

         8.3 TERMINATION AT THE EXPIRATION OF A TERM OR RENEWAL TERM. In the
event either party gives not less than one (1) year's prior written notice of
its intent not to renew at the expiration of the Term or a Renewal Term, this
Agreement shall automatically expire at the end of the Term or Renewal Term.

                                                     ARTICLE   9

                                    PURCHASE OF ASSETS - OBLIGATIONS AND OPTIONS

         9.1 TERMINATION BY INTEGRAMED. If IntegraMed terminates this Agreement
due to the insolvency of CRM (Section 8.1.1), or for a Finding of material
breach by CRM (Section 8.1.2), or CRM fails to suspend a physician whose license
is suspended, revoked or not renewed (Section 8.2), the following shall apply:

                  9.1.1 On the closing date (the "Closing Date") for purposes of
consummating the termination, CRM shall:

                  (a) Pay to IntegraMed in immediately available funds, an
         amount equal to the net book value (in accordance with GAAP) of all
         IntegraMed Assets at all Facilities made available to CRM by
         IntegraMed;

                  (b) Pay to IntegraMed in immediately available funds, an
         amount equal to the uncollected accounts receivable purchased from CRM
         immediately prior to the Closing Date which have not been charged to
         CRM as a Bad Debt under Cost of Services;

                  (c) Pay to IntegraMed, in immediately available funds, an
         amount equal to the to the Exclusive Right to Service Fee specified in
         Section 7.2.

                  (d) Provide to IntegraMed a Consent to Assignment from each
         landlord of real estate leased by IntegraMed for the benefit of CRM to
         the extent each landlord is willing to provide such consent. The
         parties shall endeavor to obtain a consent that includes a release of
         IntegraMed from any further obligations or liability under the leases
         as of the Closing Date, except for liabilities accruing prior to the
         Closing Date, and shall satisfy any requirements provided for in the
         assignment provisions of the applicable leases;

                  (e) Hire all IntegraMed employees working at the Facilities or
         make provision for their termination, without liability to IntegraMed
         after the Closing Date.

                  (f) Pay to IntegraMed in immediately available funds any
         outstanding liabilities under this Agreement, including any and all
         loans or Advances

                  (g) Execute  such  documents  and perform  such acts as may be
         reasonably necessary to accomplish the transactions  required to effect
         the termination.

                                 Page 20 of 31
<PAGE>

         For purposes of Sections 9.1, 9.2 9.3 and 9.4 the Closing Date shall
mean 90 days following termination of this Agreement.

                  9.2 TERMINATION BY CRM In the event this Agreement is
terminated by CRM as a result of the insolvency of IntegraMed (8.1.1) or a
Finding of a material breach by IntegraMed (8.1.2), the following shall apply:

                  9.2.1 On the Closing  Date for  purposes of  consummating  the
         termination, CRM shall:

                  (a) Pay to IntegraMed in immediately available funds, an
         amount equal to the net book value (in accordance with GAAP) of all
         IntegraMed Assets at all Facilities made available to CRM by
         IntegraMed, in the event CRM opts to acquire the Assets;

                  (b) Pay to IntegraMed in immediately available funds, an
         amount equal to the uncollected accounts receivable purchased from CRM
         immediately prior to the Closing Date which have not been charged to
         Reproductive CRM as a Bad Debt under Cost of Services;

                  (c) Have the option of assuming leases for office and
         equipment used directly for the operation of CRM' business. In such
         event, a Consent to Assignment from each landlord of real estate leased
         by IntegraMed for the benefit of CRM to the extent each landlord is
         willing to provide such consent shall be obtained. CRM shall endeavor
         to obtain a consent that include a release of IntegraMed from any
         further obligations or liability under the leases as of the Closing
         Date, except for liabilities accruing prior to the Closing Date and
         shall satisfy any requirements provided for in the assignment
         provisions of the applicable leases ;

                  (d) Hire all IntegraMed employees working at the Facilities or
         make provision for their termination, without liability to IntegraMed
         after the Closing Date.

                  (e) Pay to IntegraMed in immediately available funds any
         outstanding liabilities under this Agreement, including any and all
         loans or Advances

                  (f) Execute such documents and perform such acts as may be
         reasonably necessary to accomplish the transactions required to effect
         the termination.

         9.3  EXPIRATION  OF THE  TERM OR A  RENEWAL  TERM.  In the  event  this
Agreement  expires at the end of the Term or a Renewal Term, the following shall
apply:

                  9.3.1 On the last day of the Term, CRM shall:

                  (a) Pay to IntegraMed in immediately available funds, an
         amount equal to the net book value (in accordance with GAAP) of all
         IntegraMed Assets at all Facilities made available to CRM by
         IntegraMed;

                                 Page 21 of 31
<PAGE>

                  (b) Pay to IntegraMed in immediately available funds, an
         amount equal to the uncollected accounts receivable purchased from CRM
         immediately prior to the Closing Date which have not been charged to
         CRM as a Bad Debt under Cost of Services;

                  (c) Pay to IntegraMed, in immediately available funds, an
         amount equal to the to the Exclusive Right to Service Fee specified in
         Section 7.2.

                  (d) Provide to IntegraMed a Consent to Assignment from each
         landlord of real estate leased by IntegraMed for the benefit of CRM to
         the extent each landlord is willing to provide such consent. The
         parties shall endeavor to obtain a consent that include a release of
         IntegraMed from any further obligations or liability under the leases
         as of the Closing Date, except for liabilities accruing prior to the
         Closing Date, and shall satisfy any requirements provided for in the
         assignment provisions of the applicable leases;

                  (e) Hire all IntegraMed employees working at the Facilities or
         make provision for their termination, without liability to IntegraMed
         after the Closing Date.

                  (f) Pay to IntegraMed in immediately available funds any
         outstanding liabilities under this Agreement, including any and all
         loans or Advances

                  (g) Execute  such  documents  and perform  such acts as may be
         reasonably necessary to accomplish the transactions  required to effect
         the termination.

         9.4      TRANSFER OF OWNERSHIP

         Upon receipt of payments due under this Article 9 and other payments
due, IntegraMed shall transfer ownership and possession of the Assets, and
assign all right, title and interest in and to and obligations under the
Lease(s) to CRM and return to CRM all security deposits. CRM shall have the
option of receiving full credit on the payments due under this Article 9 for all
liens, encumbrances or security interest, or of having IntegraMed transfer
ownership of the Assets free and clear of all liens, encumbrances or security
interests thereon.

                                   ARTICLE 10

                                    INSURANCE

         10.1 CRM shall carry professional liability insurance, covering itself
and its employees providing Infertility Services under this Agreement in
accordance with Section 4.6 hereof.

         10.2 IntegraMed, through ARTIC, maintains professional liability
insurance, covering itself and its employees providing patient care under this
Agreement in the minimum amount of $1 million per incident, $3 million in the
aggregate, which shall be a Cost of Services as provided for in Section 2.1.7.
IntegraMed shall also carry a policy of public liability and property damage
insurance, which shall be a Cost of Services as provided for in Section 2.1.7,
with respect to the Facilities under which the insurer agrees to indemnify
IntegraMed and CRM against all cost, expense and/or liability arising out of or

                                 Page 22 of 31
<PAGE>

based upon any and all claims, accidents, injuries and damages customarily
included within the coverage of such policies of insurance available for
IntegraMed. The minimum limits of liability of such insurance shall be $1
million combined single limit covering bodily injury and property damage.
IntegraMed shall obtain and maintain in full force and effect during the term of
this Agreement, appropriate workers' compensation insurance coverage on all
employees of IntegraMed, to the extent required by law. Certificates of
Insurance evidencing such policies and additional insured status shall be
presented to CRM upon request of CRM.

         10.3 CRM and IntegraMed shall provide written notice to the other at
least thirty (30) days in advance of the effective date of any reduction,
cancellation or termination of the insurance required to be carried by each
hereunder.

                                   ARTICLE 11

                                  MISCELLANEOUS

         11.1  INDEPENDENT  CONTRACTOR.   IntegraMed  and  CRM  are  independent
contracting parties. In this regard, the parties agree that:

                  11.1.1 The relationship between IntegraMed and CRM is that of
         an independent supplier of non-medical services and a medical practice,
         respectively, and, unless otherwise provided herein, nothing in this
         Agreement shall be construed to create a principal-agent,
         employer-employee, or master-servant relationship between IntegraMed
         and CRM;

                  11.1.2 Notwithstanding the authority granted to IntegraMed
         herein, IntegraMed and CRM agree that CRM shall retain the full
         authority to direct all of the medical, professional, and ethical
         aspects of its medical practices;

                  11.1.3 Any powers of CRM not specifically vested in IntegraMed
         by the terms of this Agreement shall remain with CRM;

                  11.1.4 CRM shall, at all times, be the sole employer of the
         Physician-Employees, the Other Professional Employees required by law
         to be employees of CRM and all other professional personnel engaged by
         CRM in connection with the operation of its medical practice at the
         Facilities, and shall be solely responsible for the payment of all
         applicable federal, state or local withholding or similar taxes and
         provision of workers' compensation and disability insurance for such
         professional personnel that are employees of CRM;

                  11.1.5 No party shall have the right to participate in any
         benefits, employment programs or plans sponsored by the other party on
         behalf of the other party's employees, including, but not limited to,
         workers' compensation, unemployment insurance, tax withholding, health
         insurance, life insurance, pension plans or any profit sharing
         arrangement;

                                 Page 23 of 31
<PAGE>

                  11.1.6 In no event shall any party be liable for the debts or
         obligations of any other party except as otherwise specifically
         provided in this Agreement; and

                  11.1.7 Matters involving the internal agreements and finances
         of CRM, including but not limited to the distribution of professional
         fee income among Physician Employees and, if applicable, Other
         Professional Employees who are providing professional services to
         patients of CRM, and other employees of CRM, disposition of CRM
         property and stock, accounting, tax preparation, tax planning, and
         pension and investment planning, hiring and firing of physicians,
         decisions and contents of reports to regulatory authorities governing
         CRM and licensing, shall remain the sole responsibility of CRM and the
         individual Physicians.

         11.2 FORCE MAJEURE. No party shall be liable to the other parties for
failure to perform any of the services required under this Agreement in the
event of a strike, lockout, calamity, act of God, unavailability of supplies, or
other event over which such party has no control, for so long as such event
continues and for a reasonable period of time thereafter, and in no event shall
such party be liable for consequential, indirect, incidental or like damages
caused thereby.

         11.3 EQUITABLE RELIEF. Without limiting other possible remedies
available to a non-breaching party for the breach of the covenants contained
herein, including the right of IntegraMed to cause CRM to enforce any and all
provisions of the Physician Employment Agreements described in Section 4.3
hereof, injunctive or other equitable relief shall be available to enforce those
covenants, such relief to be without the necessity of posting bond, cash or
otherwise. If any restriction contained in said covenants is held by any court
to be unenforceable or unreasonable, a lesser restriction shall be enforced in
its place and remaining restrictions therein shall be enforced independently of
each other.

         11.4 PRIOR AGREEMENTS; AMENDMENTS. This Agreement supersedes all prior
agreements and understandings between the parties as to the subject matter
covered hereunder including the Former Agreement, and this Agreement may not be
amended, altered, changed or terminated orally. No amendment, alteration, change
or attempted waiver of any of the provisions hereof shall be binding without the
written consent of all parties, and such amendment, alteration, change,
termination or waiver shall in no way affect the other terms and conditions of
this Agreement, which in all other respects shall remain in full force.

         11.5 ASSIGNMENT; BINDING EFFECT. This Agreement and the rights and
obligations hereunder may not be assigned without the prior written consent of
all of the parties, and any attempted assignment without such consent shall be
void and of no force and effect, except that IntegraMed may assign this
Agreement to any affiliate, which for purposes of this Agreement, shall include
any parent or subsidiary of IntegraMed, without the consent of CRM, provided
IntegraMed shall remain liable for its obligations hereunder. The provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties' respective heirs, legal representatives, successors and permitted
assigns.

                                 Page 24 of 31
<PAGE>

         11.6 WAIVER OF BREACH. The failure to insist upon strict compliance
with any of the terms, covenants or conditions herein shall not be deemed a
waiver of such terms, covenants or conditions, nor shall any waiver or
relinquishment of any right at any one or more times be deemed a waiver or
relinquishment of such right at any other time or times.

         11.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York irrespective of the
principal place of business of the parties hereto. Any and all claims, disputes,
or controversies arising under, out of, or in connection with this Agreement or
any beach thereof, except for equitable relief sought pursuant to Section 11.3
hereof, shall be determined by binding arbitration in the State of Florida, City
of Orlando (hereinafter "Arbitration"). The party seeking determination shall
subject any such dispute, claim or controversy to the American Arbitration
Association, and the rules of commercial arbitration thereof shall govern. The
Arbitration shall be conducted and decided by a single arbitrator, unless the
parties mutually agree, in writing at the time of the Arbitration, to three
arbitrators. In reaching a decision, the arbitrator(s) shall have no authority
to change or modify any provision of this Agreement, including any liquidated
damages provision. Each party shall bear its own expenses and one-half the
expenses and costs of the arbitrator(s). Any application to compel Arbitration,
confirm or vacate an arbitral award or otherwise enforce this Section 11.7 shall
be brought in the Courts of the State of Florida or the United States District
Court for the Middle District of Florida, to whose jurisdiction for such
purposes CRM and IntegraMed hereby irrevocably consent and submit.

         11.8 SEPARABILITY. If any portion of the provisions hereof shall to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such portion or provisions in circumstances other than those in
which it is held invalid or unenforceable, shall not be affected thereby, and
each portion or provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law, but only to the extent the same continues to
reflect fairly the intent and understanding of the parties expressed by this
Agreement taken as a whole.

         11.9 HEADINGS. Section and paragraph headings are not part of this
Agreement and are included solely for convenience and are not intended to be
full or accurate descriptions of the contents thereof.

         11.10 NOTICES. Any notice or other communication required by or which
may be given pursuant to this Agreement shall be in writing and mailed,
certified or registered mail, postage prepaid, return receipt requested, or
overnight delivery service, such as FedEx or DHL Express, prepaid, and shall be
deemed given when received. Any such notice or communication shall be sent to
the address set forth below:

                  11.10.1  If for IntegraMed:

                           Jay Higham., President & CEO
                           IntegraMed America, Inc.
                           Two Manhattanville Road
                           Purchase, New York 10577
                                    With a copy to:

                           Claude E. White, General Counsel
                           IntegraMed America, Inc.
                           Two Manhattanville Road
                           Purchase, New York 10577

                                 Page 25 of 31
<PAGE>

                  11.10.2  If for CRM:

                           Randall A. Loy, President
                           Center for Reproductive Medicine, P.A.
                           3435 Pinehurst Avenue
                           Orlando, Florida 32804

                                    With a copy to:

                           Richard H. Breit, Esq.
                           Richard H. Breit, P.A.
                           8551 West Sunrise Boulevard
                           Suite 300
                           Plantation, FL 33322-4007

         Any party hereto, by like notice to the other parties, may designate
such other address or addresses to which notice must be sent.

         11.11 ENTIRE AGREEMENT. This Agreement and all attachments hereto
represent the entire understanding of the parties hereto with respect to the
subject matter hereof and thereof, and cancel and supersede all prior agreements
and understandings among the parties hereto, including the Former Agreement,
whether oral or written, with respect to such subject matter.

         11.12 NO MEDICAL PRACTICE BY INTEGRAMED. IntegraMed will not engage in
any activity that constitutes the practice of medicine, and nothing contained in
this Agreement is intended to authorize IntegraMed to engage in the practice of
medicine or any other licensed profession.

         11.13    CONFIDENTIAL INFORMATION.

                  11.13.1 During the initial term and any renewal term(s) of
         this Agreement, the parties may have access to or become acquainted
         with each other's trade secrets and other confidential or proprietary
         knowledge or information concerning the conduct and details of each
         party's business ("Confidential Information"). At all times during and
         after the termination of this Agreement, no party shall directly or
         indirectly, communicate, disclose, divulge, publish or otherwise
         express to any individual or governmental or non-governmental entity or
         authority (individually and collectively referred to as "Person") or

                                 Page 26 of 31
<PAGE>

         use for its own benefit, except in connection with the performance or
         enforcement of this Agreement, or the benefit of any Person any
         Confidential Information, no matter how or when acquired, of another
         party. Each party shall cause each of its employees to be advised of
         the confidential nature of such Confidential Information and to agree
         to abide by the confidentiality terms of this Agreement. No party shall
         photocopy or otherwise duplicate any Confidential Information of
         another party without the prior express written consent of the such
         other party except as is required to perform services under this
         Agreement. All such Confidential Information shall remain the exclusive
         property of the proprietor and shall be returned to the proprietor
         immediately upon any termination of this Agreement.

                  11.13.2 Confidential Information shall not include information
         which (i) is or becomes known through no fault of a party hereto; (ii)
         is learned by a party from a third-party legally entitled to disclose
         such information; or (iii) was already known to a party at the time of
         disclosure by the disclosing party.

                  11.13.3 In order to minimize any misunderstanding regarding
         what information is considered to be Confidential Information,
         IntegraMed or CRM will designate at each others request the specific
         information which IntegraMed or CRM considers to be Confidential
         Information.

         11.14    INDEMNIFICATION.

                  11.14.1 IntegraMed agrees to indemnify and hold harmless CRM,
         its directors, officers, employees and servants from any suits, claims,
         actions, losses, liabilities or expenses (including reasonable
         attorney's fees) arising out of or in connection with any act or
         failure to act by IntegraMed related to the performance of its duties
         and responsibilities under this Agreement. The obligations contained in
         this Section 11.14.1 shall survive termination of this Agreement. This
         indemnification provision shall apply to both third-party claims and
         second-party claims, including, but not limited to, claims, actions,
         damages, losses, expenses, or costs (including, but not limited to,
         reasonable attorneys' fees and court costs) incurred by one party to
         this Agreement as a result of an act, or omission to act, on the part
         of the other party, its agents, or employees pursuant to this Agreement

                  11.14.2 CRM agrees to indemnify and hold harmless IntegraMed,
         its shareholders, directors, officers, employees and servants from any
         suits, claims, actions, losses, liabilities or expenses (including
         reasonable attorney's fees) arising out of or in connection with any
         act or failure to act by CRM related to the performance of its duties
         and responsibilities under this Agreement. The obligations contained in
         this Section 11.14.2 shall survive termination of this Agreement. This
         indemnification provision shall apply to both third-party claims and
         second-party claims, including, but not limited to, claims, actions,
         damages, losses, expenses, or costs (including, but not limited to,
         reasonable attorneys' fees and court costs) incurred by one party to
         this Agreement as a result of an act, or omission to act, on the part
         of the other party, its agents, or employees pursuant to this Agreement

                                 Page 27 of 31
<PAGE>

                  11.14.3 In the event of any claims or suits in which
         IntegraMed and/or CRM and/or their directors, officers, employees and
         servants are named, each of IntegraMed and CRM for their respective
         directors, officers, employees agree to cooperate in the defense of
         such suit or claim; such cooperation shall include, by way of example
         but not limitation, meeting with defense counsel (to be selected by the
         respective party hereto), the production of any documents in his/her
         possession for review, response to subpoenas and the coordination of
         any individual defense with counsel for the respective parties hereto.
         The respective party shall, as soon as practicable, deliver to the
         other copies of any summonses, complaints, suit letters, subpoenas or
         legal papers of any kind, served upon such party, for which such party
         seeks indemnification hereunder. This obligation to cooperate in the
         defense of any such claims or suits shall survive the termination, for
         whatever reason, of this Agreement.

                         [Signatures on Following Page]

                                 Page 28 of 31
<PAGE>

         IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.

CENTER FOR REPRODUCTIVE MEDICINE, P.A.

By: /s/ Randall A. Loy
    --------------------------------------
        Randall A. Loy, M.D., President

INTEGRAMED AMERICA, INC.

By: /s/ Jay Higham
   ---------------------------------------
        Jay Higham, President & CEO

                  [Signature page- Business Service Agreement]

                                 Page 29 of 31
<PAGE>

                                  Exhibit 3.12

                          Business Associate Agreement

                                   [Attached]

                                 Page 30 of 31
<PAGE>

                                   Exhibit 6.3

                               Security Agreement

                                   [Attached]

                                 Page 31 of 31

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