Document:

exhibit10-40.htm

    EXHIBIT
10.40

     

    EMPLOYMENT AGREEMENT

     

         THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of May 21, 2010 by and
between Photronics, Inc., a Connecticut corporation (the “Company”), having a principal place of business at 15
Secor Road, Brookfield, CT 06804 and Peter S. Kirlin(“Executive”) residing at 18 Butternut Ridge, Newtown, CT
06470. 

     

    WITNESSETH:

     

         WHEREAS, the Company and Executive desire to enter into this Agreement to
assure the Company of the continuing service of Executive and to set forth the
terms and conditions of Executive’s employment with the Company. 

     

         NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties agree as follows: 

     

    1. Term. The Company agrees to employ Executive and
Executive hereby accepts such employment, in accordance with the terms of this
Agreement. Subject to Section 5, the term of Executive’s employment shall
commence on the date hereof and continue for three (3) years thereafter unless
this Agreement is earlier terminated as provided herein (the “Term”); provided, however, that unless the Company gives
written notice to Executive at least thirty (30) days prior to the end of the
Term of this Agreement (as the Term may be extended pursuant to this
Section 1), on each anniversary of the date hereof, the
Term of this Agreement shall automatically be extended for an additional one (1)
year period. 

     

    2. Services. So long as this
Agreement shall continue in effect, Executive shall devote Executive’s full business time, energy and
ability to the business, affairs and interests of the Company and its
subsidiaries and matters related thereto. Executive shall use his best efforts
and abilities to promote the Company’s interests and shall perform faithfully
the services contemplated by this Agreement in accordance with the Company’s
policies as established by the Board of Directors of the Company. 

     

    3. Duties and
Responsibilities.

     

         (a) Executive shall serve as the Senior Vice President, U.S and Europe of
the Company. In the performance of Executive’s duties, Executive shall report
directly to the CEO or as otherwise directed by the CEO or the Company’s Board
of Directors, and shall have such duties, responsibilities and authority as may
from time to time be assigned to the Executive by the CEO or the Company’s Board
of Directors. 

     

         (b) In addition, Executive agrees to observe and comply with the
policies, rules and regulations of the Company. The Company agrees that the
duties which may be assigned to Executive shall be the customary duties of the
office of Senior Vice President, U.S. and Europe and shall not be inconsistent
with the provisions of the charter documents of the Company or applicable law.

     

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    4. Compensation.

     

         (a) Base Compensation. During the Term, the Company agrees to pay
Executive a base salary at the rate of $280,000 per year payable in accordance
with the Company’s customary payroll practices generally applicable to similarly
situated employees as may be in effect from time to time (the “Base Salary”). All payments required hereunder, including
the payments required by this Section 4(a), may be allocated by the Company to one or
more of its subsidiaries to which Executive renders services but the Company
shall remain responsible for all payments hereunder and Executive shall have no
obligation to seek payment from such subsidiaries. 

     

         (b) Periodic Review. The Compensation Committee or the Board of
Directors of the Company shall review Executive’s Base Salary and Benefits (as
defined below) from time to time in accordance with the normal business
practices of the Company. The Company may in its sole discretion increase the
Base Salary during the Term. The amount of any increase combined with the
previous year’s Base Salary shall then constitute Executive’s Base Salary for
purposes of this Agreement. 

     

         (c) Additional Benefits. During the Term, the Executive shall be
entitled to participate in the employee benefit plans and arrangements as the
Company may establish from time to time in which other employees similarly
situated are entitled to participate (which may include, without limitation,
bonus plan(s), medical plan, dental plan, disability plan, basic life insurance
and business travel accident insurance plan, 401(k) plan, stock option or stock
purchase plans or any successor plans thereto (the “Benefits”)). The Company shall have the right to
terminate or change any such plans or programs at any time. 

     

         (d) Automobile Allowance. During the Term of this Agreement, the
Company shall provide the Executive with an automobile allowance or company car
consistent with the Company’s policies and provisions applicable to other
similarly situated executives of the Company. 

     

         (e) Vacation. During the Term of this Agreement, Executive
shall be entitled to four (4) weeks’ paid vacation per calendar year, which
shall not be transferable to any subsequent year. 

     

    5. Termination. This Agreement and
all rights and obligations hereunder, except the rights and obligations
contained in this Section 5, Section 7 (Confidential Information), Section 8 (Non-Competition), Section 9 (Intellectual Property) and Section 10 (Remedies), which shall survive any
termination hereunder, shall terminate upon the earliest to occur of any of the
following: 

     

         (a) Resignation without Good Reason;
Retirement. Upon the
resignation by Executive without Good Reason (as defined below) following at
least thirty (30) days written notice to the Company or retirement from the
Company in accordance with the normal retirement policies of the Company,
Executive shall be entitled to receive a payment in the amount of the sum of (A)
Executive’s Base Salary through the last day of employment to the extent not
theretofore paid, (B) any compensation previously deferred by Executive
(together with any accrued interest or earnings thereon), and (C) any accrued
vacation pay according to Company U.S. Vacation Policy, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses (A),
(B) and (C) shall be hereinafter referred to as the “Accrued Obligations”), in a lump sum, subject to statutory
deductions and withholdings, in cash within ten (10) business days after the
last day of employment or any earlier time required by applicable law.

     

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         (b) Death or Disability of
Executive. 

     

              (i) If Executive’s employment is terminated by
reason of Executive’s death or disability, this Agreement shall terminate
without further obligations to Executive (or Executive’s heirs or legal
representatives) under this Agreement, other than for: 

     

                   (1) Payment of any Accrued Obligations, which
shall be paid to Executive or Executive’s estate or beneficiary, as applicable,
in a lump sum, subject to statutory deductions and withholdings, in cash within
ten (10) business days after the date of termination or any earlier time
required by applicable law. 

     

                   (2) Payment to Executive or Executive’s estate
or beneficiary, as applicable, of any amount accrued pursuant to the terms of
any other applicable benefit plan. 

     

              (ii) If Executive shall become disabled,
Executive’s employment may be terminated only by written notice from the Company
to Executive. 

     

              (iii) For the purposes of this Agreement,
“disability” or “disabled” shall mean a mental or physical incapacity
which prevents Executive from performing Executive’s duties with the Company for
a period of three hundred sixty (360) consecutive calendar days, as certified by
a physician selected by the Company or its insurers. 

     

         (c) Termination for Cause. 

     

              (i) The Company may terminate Executive’s
employment and all of Executive’s rights to receive Base Salary, and any
Benefits hereunder for Cause. 

     

              (ii) Upon such termination for Cause,
Executive shall be entitled to receive any Accrued Obligations, which shall be
paid to Executive in a lump sum, subject to statutory deductions and
withholdings, in cash within ten (10) business days after the date of
termination or any earlier time required by applicable law. 

     

              (iii) For purposes of this Agreement, the term
“Cause” shall be defined as any of the following:

     

                   (1) Executive’s material breach of any of any
obligations under this Agreement (other than by reason of physical or mental
illness, injury, or condition); 

     

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                   (2) Executive’s conviction by, or entry of a
plea of “guilty” or “nolo contendere” in a court of competent and final
jurisdiction for any felony that impairs his ability to perform his duties to
the Company or any crime of moral turpitude; 

     

                   (3)
Executive’s commission of an act of fraud upon the Company; 

     

                   (4) Executive’s engaging in willful or
reckless misconduct or gross negligence in connection with any property or
activity of the Company or its Affiliates; 

     

                   (5) Executive’s repeated and intemperate use
of alcohol or illegal drugs after written notice from the Board or Directors;

     

                   (6) Executive’s material breach of any other
material obligation to the Company (other than by reason of physical or mental
illness, injury, or condition) that is or could reasonably be expected to result
in material harm to the Company; 

     

                   (7)
Executive’s becoming insolvent or filing for bankruptcy; 

     

                   (8) Executive’s becoming barred or prohibited
by the SEC from holding my position with the Company; or 

     

                   (9) Executive’s violation of any duty of
loyalty (i.e., engaging in self-interested transactions, misappropriation of
business opportunities that belong to the Company, or a breach of Executive’s
fiduciary duties to the Company). 

     

         (d) Termination Without Cause; Resignation For
Good Reason. 

     

              (i) Notwithstanding any other provision of
this Section 5, (i) the Company may, at its option and at
any time, provide to Executive: (A) up to twelve (12) months’ advance written
notice of termination of employment without Cause, or (B) written notice of a
current material adverse change in the Executive’s position (such notice in (A)
or (B) being referred to herein as a “Working Notice”). If the Company issues a
Working Notice to the Executive, any entitlement to a Severance Payment and
Benefit Period (as defined below) shall be reduced in proportion to the period
covered by the Working Notice. During the period covered by the Working Notice,
the Executive shall continue to provide the services according to Section 2,
hereof as an employee of the Company. If the Executive resigns during the period
covered by the Working Notice, then Executive shall receive only the Accrued
Obligations through the date of termination. Executive, upon thirty (30) days
advance notice to the Company, shall have the right to resign for Good Reason.

     

              (ii) If Executive is so terminated without
Cause or resigns for Good Reason, Executive shall receive from the Company:

     

                   (1) Any Accrued Obligations through the date
of termination, which shall be paid to Executive in a lump sum, subject to
statutory deductions and withholdings, in cash within ten (10) business days
after the date of termination or any earlier time required by applicable
law.

     

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                   (2) A payment (“Severance Payment”) equal to twelve (12) months of Executive’s
current Base Salary. The Severance Payment shall be paid by the Company to
Executive in equal installments, following the expiration of the Revocation
Period defined in the Release referred to in Section 5(d)(iv), in accordance with the Company’s customary
payroll practices generally applicable to similarly situated employees as may be
in effect from time and shall be subject to statutory deductions and
withholdings. 

     

                   (3) Payment of Executive’s COBRA premiums for
the 360-day period following termination of employment (“Benefit Period”), provided Executive elects to receive COBRA
continuation coverage and is eligible for COBRA continuation coverage.

     

              (iii) As used in this Agreement, the term
“Good Reason” shall mean (i) (except as set forth in Section 5(e)) the relocation of the Company’s principal
executive offices to a location outside the contiguous 48 United States without
the consent of Executive or (ii) a material diminution in Executive’s overall
employee benefits not the result of changes in benefit plans affecting other
employees, without the consent of Executive. 

     

              (iv) As a condition to receiving the payment
and benefits extension contemplated by Section 5(d) or 5(e), Executive agrees to execute and deliver to
the Company the Release substantially in the form attached to this Agreement as
Exhibit A. 

     

         (e) Change of Control. 

     

              (i) For purposes of the Agreement, a “change
of control” means, and shall be deemed to have taken place, if; 

     

                   (1) any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other entity or
person, or any syndicate or group deemed to be a person under Section 14 (d) (2)
of the Exchange Act, is or becomes the “beneficial owner” (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities entitled to
vote in the election of directors of the Company; 

     

                   (2) during any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement)
individuals who at the beginning of such period constituted the Board and any
new directors, whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least three-fourths (3/4ths)
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board;

     

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                   (3) there occurs a reorganization, merger,
consolidation or other corporate transaction involving the Company (a
“Transaction”), and shareholders of the Company
immediately prior to such Transaction do not, immediately after the Transaction,
own more than 50% of the combined voting power of the Company or other
corporation resulting from such Transaction; or 

     

                   (4) there is a “change in control” of the
Company within the meaning of Section 280G of the U.S. Federal internal revenue
code of 1986. 

     

              (iii) If during the period three (3) months
before or two (2) years following a “change in control” of the Company (or any
successor), the Executive is terminated by the Company for any reason (other
than for Cause as defined in Section 5(c) thereof), including an election by the
Company or its successor not to extend this Agreement pursuant to Section 1, or
the Executive resigns for Good Reason as defined in Section 5(e)(ii)), “ ”Executive shall be entitled to receive a
cash payment equal to eighteen (18) months of Executive’s current Base Salary
and the benefits described in Section 5(d)(ii) of the Agreement. Upon such “change of
control” during the Term, the Term of this Agreement shall automatically be the
period equal to the longer of (i) two (2) years from the date of the “change of
control” or (ii) the remaining period of the initial three (3) year Term after
the “change of control”. In no event shall Executive be entitled to receive both
the Severance Payment described in Section 5(d) hereof and the “change of control” payment
described in this Section 5(e). 

     

              (iv) Any payments to be made to Executive in
connection with this Section 5(e) shall be made in a lump sum, subject to
statutory deductions and withholdings, in cash within ten (10) business days
after the date of termination or any earlier time required by applicable law,
following the expiration of the Revocation Period defined in the Release
referred to in Section 5(d)(iv). 

     

         (f) Tax Consideration. 

     

              (i) In the event that the aggregate of all
payments or benefits made or provided to the Executive under this Agreement and
under all other plans and programs of the Company (the “Aggregate Payment”) is determined to constitute a Parachute
Payment, as such term is defined in Section 280G(b)(2) of the Internal Revenue
Code of 1986, as amended (the “Code”), the Company shall pay to the Executive an
additional amount (the “Gross-Up Amount”), prior to the time any excise tax
(“Excise Tax”) is imposed by Section 4999 of the Code is
payable with respect to such Aggregate Payment, which, after the imposition of
all excise, federal, state and local income taxes, enables the Executive to
retain a total amount equal to the Aggregate Payment prior to the payment of the
Gross-Up Amount. Notwithstanding the foregoing, if it shall be determined that
the Executive is entitled to receive the Gross-Up Amount, but the portion of the
Aggregate Payment that would be treated as a Parachute Payment does not exceed
125% of the greatest amount that could be paid to the Executive such that the
receipt of the Aggregate Payment would not give rise to any Excise Tax (the
“Safe Harbor Amount”), then no Gross-Up Amount shall be paid to the Executive
and the Aggregate Payment shall be reduced to the Safe Harbor
Amount.

     

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              (ii) All determinations required to be made
under this Section 5(f), including whether the Aggregate Payment
constitutes a Parachute Payment, the amount of the Gross-Up Amount to be paid to
the Executive, if any, and the determination of the Safe Harbor Amount, if
applicable, shall be made in good faith by the by the Company’s regular outside
auditors (the “Accounting Firm”); provided, however, that such Accounting Firm presents
its rationale and supporting calculations to the Executive upon his request and
shall in good faith work to resolve any discrepancies raised by accountants or
lawyers chosen by the Executive who present reasonable critiques of the
determination. If a dispute over the methodology or conclusions of the
Accounting Firm cannot be resolved between the parties, an impartial accounting
firm shall be consulted to resolve the dispute. All fees and expenses of the
Accounting Firm incurred in connection with the retention of the Accounting Firm
pursuant to this Section 5(f) shall be borne by the Company. All fees and
expenses of the accountants and lawyers chosen by the Executive and, if
retained, the additional accounting firm, incurred in connection with the
resolution of any disputes pursuant to this Section 5(f) shall be borne by the
non-prevailing party. 

     

              (iii) As a result of uncertainty in the
application of Sections 280G and 4999 of the Code at the time of the
determination by the Accounting Firm, the parties hereto acknowledge and agree
that it is possible that the Company will have paid a Gross-Up Amount that
exceeds the amount that the Company should have paid pursuant to this Section
5(f) (the “Overpayment”) or that the Company will have paid a
Gross-Up Amount that is less than the amount that the Company should have paid
pursuant to this Section 5(f) (the “Underpayment”). In the event the Accounting Firm, in a
written opinion delivered to the Company and to the Executive, determines that,
based upon the assertion of a deficiency by the Internal Revenue Service against
the Executive, which the Accounting Firm believes has a high probability of
success, an Overpayment has been made, then any such Overpayment shall, to the
extent permitted under applicable law (including Section 402 of the
Sarbanes-Oxley Act of 2002), be treated for all purposes as a loan to the
Executive which the Executive shall promptly repay to the Company together with
interest at the Applicable Federal Rate provided for in Section 7872(f)(2) of
the Code; provided, however, the Executive may contest any such determination by
the Accounting Firm at his own expense. In the event the Accounting Firm, based
upon controlling precedent or other substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive together with interest at the
Applicable Federal Rate provided for in Section 7872(f)(2) of the Code.

     

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         (g) Treatment of Stock Options Upon Change of
Control or a Termination.

     

              (i) All stock options or similar rights
granted to Executive pursuant to the Company’s stock option plans including,
without limitation, any restricted stock shall immediately vest as of the
effective date of such “change of control”. 

     

              (ii) If this Agreement is terminated pursuant
to clause (c) of this Section 5 or if Executive resigns his employment, all
unvested stock options granted to Executive pursuant to the Company’s stock
plans shall terminate immediately. 

     

              To the extent that the Executive has been
granted stock options intended to be incentive stock options under Section 422
of the Internal Revenue Code, such stock options shall cease to be incentive
stock options and shall be treated as nonqualified stock options if the options
are exercised by the Employee more than three (3) months (one year in case of
death or disability as defined in Section 422 of the Internal Revenue Code)
following termination of employment. 

     

              Except as expressly modified by this clause
(g) of this Section 5, all stock options and similar rights granted
under the Company’s stock plans shall remain subject to all of the terms and
conditions of the applicable stock plans and agreements evidencing the grants
thereof. 

     

         (h) Exclusive Remedy. Executive agrees that the payments other
benefits provided and contemplated by this Agreement shall constitute the sole
and exclusive obligation of the Company in respect of Executive’s employment
with and relationship to the Company and that the full payment thereof shall be
the sole and exclusive remedy for any termination of Executive’s employment.
Executive covenants not to assert or pursue any other remedies, at law or in
equity, with respect to any termination of employment. 

     

    6. Business Expenses. During the Term
of this Agreement, to the extent that such expenditures satisfy the criteria
under the Internal Revenue Code or other applicable laws for deductibility by
the Company (whether or not fully deductible by the Company) for federal income
tax purposes as ordinary and necessary business expenses, the Company shall
provide the Executive with reimbursement of reasonable business expenses
incurred by the Executive while conducting Company business in a manner
consistent with the Company’s policies and provisions applicable to the
Executives of the Company. 

     

    7. Confidential
Information.

     

         (a) Executive acknowledges that the nature of Executive’s employment by
the Company is such that Executive shall have access to information of a
confidential and/or trade secret nature which has great value to the Company and
which constitutes a substantial basis and foundation upon which the business of
the Company is based. Such information includes (A) trade secrets, inventions,
mask works, ideas, processes, manufacturing, formulas, source and object codes,
data, programs, other works of authorship, know-how, improvements, discoveries,
developments or experimental work, designs, and techniques; (B) information
regarding plans for research, development, new products, marketing and selling,
business plans, budgets and unpublished financial statements, licenses, prices
and costs, suppliers and customers; (C) information regarding the skills and
compensation of other employees the Company or its affiliates, including but not
limited to, their respective business plans or clients (including, without
limitation, customer lists and lists of customer sources), or information
relating to the products, services, customers, sales or business affairs of the
Company or its Affiliates (the “Confidential Information”). 

     

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         (b) Executive shall keep all such Confidential Information in confidence
during the Term of this Agreement and at any time thereafter and shall not
disclose any of such Confidential Information to any other person, except to the
extent such disclosure is (i) necessary to the performance of this Agreement and
in furtherance of the Company’s best interests, (ii) required by applicable law,
(iii) publicly known within the relevant industry, or (iv) authorized in writing
by the Board. Upon termination of Executive’s employment with the Company,
Executive shall deliver to the Company all documents, records, notebooks, work
papers, and all similar material containing any of the foregoing information,
whether prepared by Executive, the Company or anyone else. 

     

    8. Non-Competition. Executive
covenants and agrees that commencing on the date hereof and continuing for the
entire Term of Executive’s employment and for period of twelve (12) months
thereafter (the “Restricted Period”), Executive shall not: 

     

         (a) Work or be affiliated with in any capacity (including as a founder,
employee, owner, consultant, or otherwise), directly or indirectly, for himself
or on behalf of any other entity, in any business that manufacturers photomasks
or that is otherwise competitive with the business of the Company or any
subsidiary of the Company at any time during Executive’s employment or during
the Restricted Period, such as, for example and not as a limitation, Toppan, DNP
and the photomask manufacturing operations of semiconductor manufacturers such
as IBM and TSMC. 

     

         (b) Solicit, attempt to solicit, or assist others in soliciting or
attempting to solicit, directly or indirectly, any business related to the
business of the Company from any customers or prospective customers of the
Company; for the purposes of this Section 8, the term “customer” means any entity or person who is or has
been a client or customer of the Company during the time which Executive was
employed with the Company, and the term “prospective customer” means a person or entity who became known to
the Company during the time which Executive was employed with the Company as a
result of that person’s or entity’s interest in obtaining the services or
products of the Company; and 

     

         (c) Solicit, attempt to solicit, or assist others in soliciting or
attempting to solicit, directly or indirectly, for employment or similar
capacity, any person who is an employee of, or an independent contractor for,
the Company or its direct or indirect subsidiaries, parents or Affiliates or who
was such an employee within twelve (12) months prior to the date of such
solicitation or attempted solicitation. 

     

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         (d) Executive acknowledges that in the event of his employment with the
Company terminates for any reason, Executive will be able to earn a livelihood
without violating the foregoing restrictions. 

     

         (e) If any provision or clause, or portion thereof, within this
Section 8 shall be held by any court or other tribunal
of competent jurisdiction to be illegal, invalid, or unenforceable in such
jurisdiction, the remainder of such provision shall not be thereby affected and
shall be given full effect, without regard to the invalid portion. It is the
intention of the parties that, if any court construes any provision or clause
within this Section 8, or any portion thereof, to be illegal, void
or unenforceable because of the duration of such provision or the geographic
area or matter covered thereby, such court shall reduce the duration, area, or
matter of such provision, and, in its reduced form, such provision shall then be
enforceable and shall be enforced. 

     

    9. Intellectual
Property.

     

         (a) Executive has no interest (except as disclosed to the Company) in any
inventions, designs, improvements, patents, copyrights and discoveries which are
useful in or directly or indirectly related to the business of the Company or to
any experimental work carried on by the Company. Except as may be limited by
applicable law, all inventions, designs, improvements, patents, copyrights and
discoveries conceived by Executive during the Term of this Agreement which are
useful in or directly or indirectly related to the business of the Company or to
any experimental work carried on by the Company, shall be the property of the
Company. Executive will promptly and fully disclose to the Company all such
inventions, designs, improvements, patents, copyrights and discoveries (whether
developed individually or with other persons) and will take all steps necessary
and reasonably required to assure the Company’s ownership thereof and to assist
the Company in protecting or defending the Company’s proprietary rights therein.

     

         (b) Executive also agrees to assist the Company in obtaining United
States or foreign letters patent and copyright registrations covering inventions
assigned hereunder to the Company and that Executive’s obligation to assist the
Company shall continue beyond the termination of Executive’s employment but the
Company shall compensate Executive at a reasonable rate for time actually spent
by Executive at the Company’s request with respect to such assistance. If the
Company is unable because of Executive’s mental or physical incapacity (for the
period of such incapacity only) or for any other reason to secure Executive’s
signature to apply for or to pursue any application for any United States or
foreign letters patent or copyright registrations covering inventions assigned
to the Company (after reasonable efforts to contact employee), then Executive
hereby irrevocably designates and appoints the Company, each of its duly
authorized officers and agents as Executive’s agent and attorney-in-fact to act
for and in Executive’s behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by Executive. Executive will
perform all other lawful acts necessary to assist the Company to enforce any
copyrights or patents obtained including, without limitation, testifying in any
suit or proceeding involving any of the copyrights or patents or executing any
documents deemed necessary by the Company, all without further consideration but
at the expense of the Company. If Executive is called upon to render such
assistance after the termination of Executive’s employment, then Executive shall
be entitled to a fair and reasonable per diem fee in addition to reimbursement
of any expenses incurred at the request of the Company.

     

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    10. Remedies. The parties hereto agree that the services to
be rendered by Executive pursuant to this Agreement, and the rights and
privileges granted to the Company pursuant to this Agreement, are of a special,
unique, extraordinary and intellectual character, which gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in any action at law, and that a breach by Executive of any of the terms
of this Agreement will cause the Company great and irreparable injury and
damage. Executive hereby expressly agrees that the Company shall be entitled to
the remedies of injunction, specific performance and other equitable relief to
prevent a breach of this Agreement by Executive. This Section 10 shall not be construed as a waiver of any
other rights or remedies which the Company may have for damages or otherwise.

     

    11. Return of Property. Executive agrees to return, on or before his
last day of employment, all property belonging to the Company, including but not
limited to computers, PDA, telephone and other credit cards, Company business
records, Company automobile (if applicable), etc. 

     

    12. Severability. If any provision of this Agreement is held
to be unenforceable for any reason, it shall be adjusted rather than voided, if
possible, to achieve the intent of the parties to the extent possible. In any
event, all other provisions of this Agreement shall be deemed valid and
enforceable to the extent possible. 

     

    13. Succession. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns and any such
successor or assignee shall be deemed substituted for the Company under the
terms of this Agreement for all purposes. As used herein, “successor” and
“assignee” shall include any person, firm, corporation or other business entity
which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires the stock of the Company or to which the Company assigns
this Agreement by operation of law or otherwise. The obligations and duties of
Executive hereunder are personal
and otherwise not assignable. Executive’s obligations and representations under
this Agreement will survive the termination of Executive’s employment,
regardless of the manner of such termination. 

     

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    14. Notices. Any notice or other communication provided
for in this Agreement shall be in writing and sent if to the Company to its
principal office at: 

     

    Photronics,
Inc.
15 Secor Road, PO Box
5226
Brookfield, Connecticut
06804 

     

    Attention: Chief
Executive Officer
With a copy
to the Vice President, General Counsel of Photronics, Inc. 

     

    or at such other address
as the Company may from time to time in writing designate, and if to Executive
at the address set forth above or at such address as Executive may from time to
time in writing designate. Each such notice or other communication shall be
effective (I) if given by written telecommunication, three (3) days after its
transmission to the applicable number so specified in (or pursuant to) this
Section 14 and a verification of receipt is received,
(ii) if given by certified mail, once verification of receipt is received, or
(iii) if given by any other means, when actually delivered to the addressee at
such address and verification of receipt is received. 

     

    15. Adequate
Consideration.
Executive acknowledges that the cash severance and other benefits to be provided
by the Company to Executive are not available under any current plan or policies
of the Company. Accordingly, Executive further acknowledges that the payments
and benefits under this Agreement provide adequate consideration for Executive’s
obligations to the Company contained in Section 7 (Confidential Information),
Section 8 (Non-Competition), Section 10 (Remedies) and Exhibit A (Release). 

     

    16. Entire Agreement. This Agreement contains the entire agreement
of the parties relating to the subject matter hereof and supersedes any prior
agreements, undertakings, commitments and practices relating to Executive’s
employment by the Company. 

     

    17. Amendments. No amendment or modification of the terms of
this Agreement shall be valid unless made in writing, duly executed by both
parties. 

     

    18. Waiver. No failure on the part of any party to
exercise or delay in exercising any right hereunder shall be deemed a waiver
thereof or of any other right, nor shall any single or partial exercise preclude
any further or other exercise of such right or any other right. 

     

    19. Governing Law. This Agreement, and the legal relations
between the parties, shall be governed by and construed in accordance with the
laws of the State of Connecticut without regard to conflicts of law doctrines
and any court action arising out of this Agreement shall be brought in any court
of competent jurisdiction within the State of Connecticut. 

     

    12

     

    

    
    

    20. Withholding. All compensation payable hereunder,
including salary and other benefits, shall be subject to applicable taxes,
withholding and other required, normal or elected employee deductions.

     

    21. Counterparts. This Agreement and any amendment hereto may
be executed in one or more counterparts. All of such counterparts shall
constitute one and the same agreement and shall become effective when a copy
signed by each party has been delivered to the other party. 

     

    22. Headings. Section and other headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. 

     

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written. 

     

    THE COMPANY

     

    PHOTRONICS, INC.

     

    
      	By:  	       	/s/ Constantine S. Macricostas
	
            	
            	 
	
            	
            	
              Name: Constantine
      S. Macricostas

            
	
            	
            	
              Title:  
      Chief Executive Officer and
President

            

    

     

     

    EXECUTIVE

     

    
      	/s/ Peter S. Kirlin
	
              Name: Peter S.
      Kirlin

            
	
              Address:
      18 Butternut Ridge,
      Newtown, CT 06470

            

    

    13

     

    

    
    

    EXHIBIT A

     

    RELEASE

     

    1. I signed an
Employment Agreement with Photronics, Inc. (the “Company”), dated May 21, 2010
(the “Agreement”), wherein I agreed to the terms applicable to certain
terminations of employment with the Company. Pursuant to the terms of the
Agreement, I am entitled to certain severance payments and benefits, described
in the Agreement, provided that I sign this Release.

     

    2. In consideration of
the severance payments described in the Agreement, I, on behalf of myself, my
heirs, agents, representatives, predecessors, successors and assigns, hereby
irrevocably release, acquit and forever discharge the Company and each of its
respective agents, employees, representatives, parents, subsidiaries, divisions,
affiliates, officers, directors, shareholders, investors, employees, attorneys,
transferors, transferees, predecessors, successors and assigns, jointly and
severally (the “Released
Parties”) of and from any and all debts, suits, claims, actions, causes
of action, controversies, demands, rights, damages, losses, expenses, costs,
attorneys’ fees, compensation, liabilities and obligations whatsoever, suspected
or unsuspected, known or unknown, foreseen or unforeseen, arising at any time up
to and including the date of this Release, save and except for the parties’
obligations and rights under this Release. In recognition of the consideration
set forth in the Agreement, I hereby release and forever discharge the Released
Parties from any and all claims, actions and causes of action, I have or may
have as of the date of this Release arising under any federal, state, or local
statute, regulation, ordinance, or law of any kind, including under the Age
Discrimination in Employment Act of 1967, as amended, and the applicable rules
and regulations promulgated thereunder (“ADEA”), the Connecticut Human Rights
and Opportunities Law, the Connecticut Family and Medical Leave Law, and the
Connecticut Age Discrimination and Employee Insurance Benefits Law, and
including claims for wrongful discharge, breach of contract, or in tort.

     

    3. I agree not to
criticize, denigrate, or otherwise disparage the Company or any other Released
Party.

     

    4. This Release is not
an admission of guilt or wrongdoing by either me or the Company. This Release
constitutes the entire agreement between me and the Company with respect to the
subject matter hereof, and I am not signing this Release in reliance on any
representation not expressly set forth herein. No provisions of this Release may
be modified, waived, amended or discharged except by a written document signed
by me and a duly authorized Company representative. This Release binds my heirs,
administrators, representatives, executors, successors, and assigns, and will
inure to the benefit of all Released Parties and their respective heirs,
administrators, representatives, executors, successors, and assigns. The
invalidity or unenforceability of any provision of this Release shall not affect
the validity or enforceability of any other provision of this Release, which
shall remain in full force and effect. A waiver of any conditions or provisions
of this Release in a given instance shall not be deemed a waiver of such
conditions or provisions at any other time. If any of the provisions, terms or
clauses of this Release are declared illegal, unenforceable or ineffective in a
legal forum, those provisions, terms and clauses shall be deemed severable, such
that all other provisions, terms and clauses of this Release shall remain valid
and binding upon both parties. If any of the provisions, terms or clauses of
this Release are found by a court to be overly broad, those provisions, terms
and clauses shall be enforceable (and modified and enforced) to the broadest
extent permissible under the law. The validity, interpretation, construction,
and performance of this Release shall be governed by the internal laws of the
State of Connecticut (excluding any that mandate the use of another
jurisdiction’s laws).

     

    14

     

    

    
    

    5. All payments to me
under this Release shall be net of applicable withholdings and
deductions.

     

    6. The Company advised
me to take this Release home, read it, and carefully consider all of its terms
before signing it. The Company gave me at least 21 days in which to consider
this Release, and I waive any right I might have to additional time beyond this
consideration period within which to consider this Release. The Company advised
me to discuss this Release with my own attorney (at my own expense) during this
period if I wished to do so. I understand that I may revoke my acceptance of
this Release within seven (7) days after I sign it (“Revocation Period”). I
understand that if I revoke my acceptance of this Release, I will not be
entitled to any payments or benefits hereunder or otherwise in connection with
the termination of my employment with the Company, except as required by law in
the absence of the Agreement and this Release. I have carefully read this
Release, fully understand what it means, and am entering into it voluntarily.

     

    
      	Peter Kirlin	 	
            	 
	
            	 
	
              Print
      Name

            	
              Date

            
	 	 	 
	 	 	 
	Signature	 	 

    

    15exhibit10-41.htm

    EXHIBIT
10.41

     

    EMPLOYMENT AGREEMENT

     

         THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of May 21,
2010 by and between Photronics, Inc., a Connecticut corporation (the
“Company”), having a principal place of business at 15
Secor Road, Brookfield, CT 06804 and Richelle E. Burr (“Executive”) residing at 7 Greenknoll Drive, Brookfield,
CT 06804.

     

    WITNESSETH:

     

         WHEREAS, the Company and Executive desire to enter into this Agreement to
assure the Company of the continuing service of Executive and to set forth the
terms and conditions of Executive’s employment with the Company.

     

         NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties agree as follows:

     

    1. Term. The Company agrees to employ Executive and
Executive hereby accepts such employment, in accordance with the terms of this
Agreement. Subject to Section 5, the term of Executive’s employment shall
commence on the date hereof and continue for three (3) years thereafter unless
this Agreement is earlier terminated as provided herein (the “Term”); provided, however, that unless the Company gives
written notice to Executive at least thirty (30) days prior to the end of the
Term of this Agreement (as the Term may be extended pursuant to this
Section 1), on each anniversary of the date hereof, the
Term of this Agreement shall automatically be extended for an additional one (1)
year period. 

     

    2. Services. So long as this
Agreement shall continue in effect, Executive shall devote Executive’s full
business time, energy and ability to the business, affairs and interests of the
Company and its subsidiaries and matters related thereto. Executive shall use
his best efforts and abilities to promote the Company’s interests and shall
perform faithfully the services contemplated by this Agreement in accordance
with the Company’s policies as established by the Board of Directors of the
Company.

     

    3. Duties and
Responsibilities.

     

         (a) Executive shall serve as the Vice President, General Counsel and
Secretary. In the performance of Executive’s duties, Executive shall report
directly to the CEO or as otherwise directed by the CEO or the Company’s Board
of Directors, and shall have such duties, responsibilities and authority as may
from time to time be assigned to the Executive by the CEO or the Company’s Board
of Directors. 

     

         (b) In addition, Executive agrees to observe and comply with the
policies, rules and regulations of the Company. The Company agrees that the
duties which may be assigned to Executive shall be the customary duties of the
office of Vice President, General Counsel and Secretary and shall not be
inconsistent with the provisions of the charter documents of the Company or
applicable law.

     

    1

     

    

    
    

    4. Compensation.

     

         (a) Base Compensation. During the Term, the Company agrees to pay
Executive a base salary at the rate of $170,000 per year payable in accordance
with the Company’s customary payroll practices generally applicable to similarly
situated employees as may be in effect from time to time (the “Base Salary”). All payments required hereunder, including
the payments required by this Section 4(a), may be allocated by the Company to one or
more of its subsidiaries to which Executive renders services but the Company
shall remain responsible for all payments hereunder and Executive shall have no
obligation to seek payment from such subsidiaries. 

     

         (b) Periodic Review. The Compensation Committee or the Board of
Directors of the Company shall review Executive’s Base Salary and Benefits (as
defined below) from time to time in accordance with the normal business
practices of the Company. The Company may in its sole discretion increase the
Base Salary during the Term. The amount of any increase combined with the
previous year’s Base Salary shall then constitute Executive’s Base Salary for
purposes of this Agreement.

     

         (c) Additional Benefits. During the Term, the Executive shall be
entitled to participate in the employee benefit plans and arrangements as the
Company may establish from time to time in which other employees similarly
situated are entitled to participate (which may include, without limitation,
bonus plan(s), medical plan, dental plan, disability plan, basic life insurance
and business travel accident insurance plan, 401(k) plan, stock option or stock
purchase plans or any successor plans thereto (the “Benefits”)). The Company shall have the right to
terminate or change any such plans or programs at any time. 

     

         (d) Automobile Allowance. During the Term of this Agreement, the
Company shall provide the Executive with an automobile allowance or company car
consistent with the Company’s policies and provisions applicable to other
similarly situated executives of the Company.

     

         (e) Vacation. During the Term of this Agreement, Executive
shall be entitled to four (4) weeks’ paid vacation per calendar year, which
shall not be transferable to any subsequent year.

     

    5. Termination. This Agreement and
all rights and obligations hereunder, except the rights and obligations
contained in this Section 5, Section 7 (Confidential Information), Section 8 (Non-Competition), Section 9 (Intellectual Property) and Section 10 (Remedies), which shall survive any
termination hereunder, shall terminate upon the earliest to occur of any of the
following:

     

    2

     

    

    
    

         (a) Resignation without Good Reason;
Retirement. Upon the
resignation by Executive without Good Reason (as defined below) following at
least thirty (30) days written notice to the Company or retirement from the
Company in accordance with the normal retirement policies of the Company,
Executive shall be entitled to receive a payment in the amount of the sum of (A)
Executive’s Base Salary through the last day of employment to the extent not
theretofore paid, (B) any compensation previously deferred by Executive
(together with any accrued interest or earnings thereon), and (C) any accrued
vacation pay according to Company U.S. Vacation Policy, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses (A),
(B) and (C) shall be hereinafter referred to as the “Accrued Obligations”), in a lump sum, subject to statutory
deductions and withholdings, in cash within ten (10) business days after the
last day of employment or any earlier time required by applicable law.

     

         (b) Death or Disability of
Executive. 

     

              (i) If Executive’s employment is terminated by
reason of Executive’s death or disability, this Agreement shall terminate
without further obligations to Executive (or Executive’s heirs or legal
representatives) under this Agreement, other than for:

     

                   (1) Payment of any Accrued Obligations, which
shall be paid to Executive or Executive’s estate or beneficiary, as applicable,
in a lump sum, subject to statutory deductions and withholdings, in cash within
ten (10) business days after the date of termination or any earlier time
required by applicable law.

     

                   (2) Payment to Executive or Executive’s estate
or beneficiary, as applicable, of any amount accrued pursuant to the terms of
any other applicable benefit plan.

     

              (ii) If Executive shall become disabled,
Executive’s employment may be terminated only by written notice from the Company
to Executive.

     

              (iii) For the purposes of this Agreement,
“disability” or “disabled” shall mean a mental or physical incapacity
which prevents Executive from performing Executive’s duties with the Company for
a period of three hundred sixty (360) consecutive calendar days, as certified by
a physician selected by the Company or its insurers.

     

         (c) Termination for Cause.

     

              (i) The Company may terminate Executive’s
employment and all of Executive’s rights to receive Base Salary, and any
Benefits hereunder for Cause.

     

              (ii) Upon such termination for Cause,
Executive shall be entitled to receive any Accrued Obligations, which shall be
paid to Executive in a lump sum, subject to statutory deductions and
withholdings, in cash within ten (10) business days after the date of
termination or any earlier time required by applicable law.

     

    3

     

    

    
    

              (iii) For purposes of this Agreement, the term
“Cause” shall be defined as any of the
following:

     

                   (1) Executive’s material breach of any of any
obligations under this Agreement (other than by reason of physical or mental
illness, injury, or condition);

     

                   (2) Executive’s conviction by, or entry of a
plea of “guilty” or “nolo contendere” in a court of competent and final
jurisdiction for any felony that impairs his ability to perform his duties to
the Company or any crime of moral turpitude;

     

                   (3)
Executive’s commission of an act of fraud upon the Company;

     

                   (4) Executive’s engaging in willful or
reckless misconduct or gross negligence in connection with any property or
activity of the Company or its Affiliates;

     

                   (5) Executive’s repeated and intemperate use
of alcohol or illegal drugs after written notice from the Board or
Directors;

     

                   (6) Executive’s material breach of any other
material obligation to the Company (other than by reason of physical or mental
illness, injury, or condition) that is or could reasonably be expected to result
in material harm to the Company;

     

                   (7)
Executive’s becoming insolvent or filing for bankruptcy;

     

                   (8) Executive’s becoming barred or prohibited
by the SEC from holding my position with the Company; or

     

                   (9) Executive’s violation of any duty of
loyalty (i.e., engaging in self-interested transactions, misappropriation of
business opportunities that belong to the Company, or a breach of Executive’s
fiduciary duties to the Company).

     

         (d) Termination Without Cause; Resignation For
Good Reason.

     

              (i) Notwithstanding any other provision of
this Section 5, (i) the Company may, at its option and at
any time, provide to Executive: (A) up to twelve (12) months’ advance written
notice of termination of employment without Cause, or (B) written notice of a
current material adverse change in the Executive’s position (such notice in (A)
or (B) being referred to herein as a “Working Notice”). If the Company issues a
Working Notice to the Executive, any entitlement to a Severance Payment and
Benefit Period (as defined below) shall be reduced in proportion to the period
covered by the Working Notice. During the period covered by the Working Notice,
the Executive shall continue to provide the services according to Section 2,
hereof as an employee of the Company. If the Executive resigns during the period
covered by the Working Notice, then Executive shall receive only the Accrued
Obligations through the date of termination. Executive, upon thirty (30) days
advance notice to the Company, shall have the right to resign for Good
Reason.

     

    4

     

    

    
    

              (ii) If Executive is so terminated without
Cause or resigns for Good Reason, Executive shall receive from the
Company:

     

                   (1) Any Accrued Obligations through the date
of termination, which shall be paid to Executive in a lump sum, subject to
statutory deductions and withholdings, in cash within ten (10) business days
after the date of termination or any earlier time required by applicable
law.

     

                   (2) A payment (“Severance Payment”) equal to twelve (12) months of Executive’s
current Base Salary. The Severance Payment shall be paid by the Company to
Executive in equal installments, following the expiration of the Revocation
Period defined in the Release referred to in Section 5(d)(iv), in accordance with the Company’s customary
payroll practices generally applicable to similarly situated employees as may be
in effect from time and shall be subject to statutory deductions and
withholdings.

     

                   (3) Payment of Executive’s COBRA premiums for
the 360-day period following termination of employment (“Benefit Period”), provided Executive elects to receive COBRA
continuation coverage and is eligible for COBRA continuation
coverage.

     

              (iii) As used in this Agreement, the term
“Good Reason” shall mean (i) (except as set forth in Section 5(e)) the relocation of the Company’s principal
executive offices to a location outside the contiguous 48 United States without
the consent of Executive or (ii) a material diminution in Executive’s overall
employee benefits not the result of changes in benefit plans affecting other
employees, without the consent of Executive.

     

              (iv) As a condition to receiving the payment
and benefits extension contemplated by Section 5(d) or 5(e), Executive agrees to execute and deliver to
the Company the Release substantially in the form attached to this Agreement as
Exhibit A.

     

         (e) Change of Control.

     

              (i) For purposes of the Agreement, a “change
of control” means, and shall be deemed to have taken place, if;

     

                   (1) any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other entity or
person, or any syndicate or group deemed to be a person under Section 14 (d) (2)
of the Exchange Act, is or becomes the “beneficial owner” (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities entitled to
vote in the election of directors of the Company;

     

                   (2) during any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement)
individuals who at the beginning of such period constituted the Board and any
new directors, whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least three-fourths (3/4ths)
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the
Board;

     

    5

     

    

    
    

                   (3) there occurs a reorganization, merger,
consolidation or other corporate transaction involving the Company (a
“Transaction”), and shareholders of the Company
immediately prior to such Transaction do not, immediately after the Transaction,
own more than 50% of the combined voting power of the Company or other
corporation resulting from such Transaction; or

     

                   (4) there is a “change in control” of the
Company within the meaning of Section 280G of the U.S. Federal internal revenue
code of 1986. 

     

              (iii) If during the period three (3) months
before or two (2) years following a “change in control” of the Company (or any
successor), the Executive is terminated by the Company for any reason (other
than for Cause as defined in Section 5(c) thereof), including an election by the
Company or its successor not to extend this Agreement pursuant to Section 1, or
the Executive resigns for Good Reason as defined in Section 5(e)(ii)), “ ”Executive shall be entitled to receive a
cash payment equal to eighteen (18) months of Executive’s current Base Salary
and the benefits described in Section 5(d)(ii) of the Agreement. Upon such “change of
control” during the Term, the Term of this Agreement shall automatically be the
period equal to the longer of (i) two (2) years from the date of the “change of
control” or (ii) the remaining period of the initial three (3) year Term after
the “change of control”. In no event shall Executive be entitled to receive both
the Severance Payment described in Section 5(d) hereof and the “change of control” payment
described in this Section 5(e).

     

              (iv) Any payments to be made to Executive in
connection with this Section 5(e) shall be made in a lump sum, subject to
statutory deductions and withholdings, in cash within ten (10) business days
after the date of termination or any earlier time required by applicable law,
following the expiration of the Revocation Period defined in the Release
referred to in Section 5(d)(iv).

     

         (f) Tax Consideration.

     

              (i) In the event that the aggregate of all
payments or benefits made or provided to the Executive under this Agreement and
under all other plans and programs of the Company (the “Aggregate Payment”) is determined to constitute a Parachute
Payment, as such term is defined in Section 280G(b)(2) of the Internal Revenue
Code of 1986, as amended (the “Code”), the Company shall pay to the Executive an
additional amount (the “Gross-Up Amount”), prior to the time any excise tax
(“Excise Tax”) is imposed by Section 4999 of the Code is
payable with respect to such Aggregate Payment, which, after the imposition of
all excise, federal, state and local income taxes, enables the Executive to
retain a total amount equal to the Aggregate Payment prior to the payment of the
Gross-Up Amount. Notwithstanding the foregoing, if it shall be determined that
the Executive is entitled to receive the Gross-Up Amount, but the portion of the
Aggregate Payment that would be treated as a Parachute Payment does not exceed
125% of the greatest amount that could be paid to the Executive such that the
receipt of the Aggregate Payment would not give rise to any Excise Tax (the
“Safe Harbor Amount”), then no Gross-Up Amount shall be paid to the Executive
and the Aggregate Payment shall be reduced to the Safe Harbor
Amount.

     

    6

     

    

    
    

              (ii) All determinations required to be made
under this Section 5(f), including whether the Aggregate Payment
constitutes a Parachute Payment, the amount of the Gross-Up Amount to be paid to
the Executive, if any, and the determination of the Safe Harbor Amount, if
applicable, shall be made in good faith by the by the Company’s regular outside
auditors (the “Accounting Firm”); provided, however, that such Accounting Firm presents
its rationale and supporting calculations to the Executive upon his request and
shall in good faith work to resolve any discrepancies raised by accountants or
lawyers chosen by the Executive who present reasonable critiques of the
determination. If a dispute over the methodology or conclusions of the
Accounting Firm cannot be resolved between the parties, an impartial accounting
firm shall be consulted to resolve the dispute. All fees and expenses of the
Accounting Firm incurred in connection with the retention of the Accounting Firm
pursuant to this Section 5(f) shall be borne by the Company. All fees and
expenses of the accountants and lawyers chosen by the Executive and, if
retained, the additional accounting firm, incurred in connection with the
resolution of any disputes pursuant to this Section 5(f) shall be borne by the
non-prevailing party.

     

              (iii) As a result of uncertainty in the
application of Sections 280G and 4999 of the Code at the time of the
determination by the Accounting Firm, the parties hereto acknowledge and agree
that it is possible that the Company will have paid a Gross-Up Amount that
exceeds the amount that the Company should have paid pursuant to this Section
5(f) (the “Overpayment”) or that the Company will have paid a
Gross-Up Amount that is less than the amount that the Company should have paid
pursuant to this Section 5(f) (the “Underpayment”). In the event the Accounting Firm, in a
written opinion delivered to the Company and to the Executive, determines that,
based upon the assertion of a deficiency by the Internal Revenue Service against
the Executive, which the Accounting Firm believes has a high probability of
success, an Overpayment has been made, then any such Overpayment shall, to the
extent permitted under applicable law (including Section 402 of the
Sarbanes-Oxley Act of 2002), be treated for all purposes as a loan to the
Executive which the Executive shall promptly repay to the Company together with
interest at the Applicable Federal Rate provided for in Section 7872(f)(2) of
the Code; provided, however, the Executive may contest any such determination by
the Accounting Firm at his own expense. In the event the Accounting Firm, based
upon controlling precedent or other substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive together with interest at the
Applicable Federal Rate provided for in Section 7872(f)(2) of the
Code.

     

    7

     

    

    
    

         (g) Treatment of Stock Options Upon Change of
Control or a Termination.

     

              (i) All stock options or similar rights
granted to Executive pursuant to the Company’s stock option plans including,
without limitation, any restricted stock shall immediately vest as of the
effective date of such “change of control”.

     

              (ii) If this Agreement is terminated pursuant
to clause (c) of this Section 5 or if Executive resigns his employment, all
unvested stock options granted to Executive pursuant to the Company’s stock
plans shall terminate immediately. 

     

              To the extent that the Executive has been
granted stock options intended to be incentive stock options under Section 422
of the Internal Revenue Code, such stock options shall cease to be incentive
stock options and shall be treated as nonqualified stock options if the options
are exercised by the Employee more than three (3) months (one year in case of
death or disability as defined in Section 422 of the Internal Revenue Code)
following termination of employment.

     

              Except as expressly modified by this clause
(g) of this Section 5, all stock options and similar rights granted
under the Company’s stock plans shall remain subject to all of the terms and
conditions of the applicable stock plans and agreements evidencing the grants
thereof.

     

         (h) Exclusive Remedy. Executive agrees that the payments other
benefits provided and contemplated by this Agreement shall constitute the sole
and exclusive obligation of the Company in respect of Executive’s employment
with and relationship to the Company and that the full payment thereof shall be
the sole and exclusive remedy for any termination of Executive’s employment.
Executive covenants not to assert or pursue any other remedies, at law or in
equity, with respect to any termination of employment.

     

    6. Business Expenses. During the Term
of this Agreement, to the extent that such expenditures satisfy the criteria
under the Internal Revenue Code or other applicable laws for deductibility by
the Company (whether or not fully deductible by the Company) for federal income
tax purposes as ordinary and necessary business expenses, the Company shall
provide the Executive with reimbursement of reasonable business expenses
incurred by the Executive while conducting Company business in a manner
consistent with the Company’s policies and provisions applicable to the
Executives of the Company. 

     

    7. Confidential
Information.

     

         (a) Executive acknowledges that the nature of Executive’s employment by
the Company is such that Executive shall have access to information of a
confidential and/or trade secret nature which has great value to the Company and
which constitutes a substantial basis and foundation upon which the business of
the Company is based. Such information includes (A) trade secrets, inventions,
mask works, ideas, processes, manufacturing, formulas, source and object codes,
data, programs, other works of authorship, know-how, improvements, discoveries,
developments or experimental work, designs, and techniques; (B) information
regarding plans for research, development, new products, marketing and selling,
business plans, budgets and unpublished financial statements, licenses, prices
and costs, suppliers and customers; (C) information regarding the skills and
compensation of other employees the Company or its affiliates, including but not
limited to, their respective business plans or clients (including, without
limitation, customer lists and lists of customer sources), or information
relating to the products, services, customers, sales or business affairs of the
Company or its Affiliates (the “Confidential Information”).

     

    8

     

    

    
    

         (b) Executive shall keep all such Confidential Information in confidence
during the Term of this Agreement and at any time thereafter and shall not
disclose any of such Confidential Information to any other person, except to the
extent such disclosure is (i) necessary to the performance of this Agreement and
in furtherance of the Company’s best interests, (ii) required by applicable law,
(iii) publicly known within the relevant industry, or (iv) authorized in writing
by the Board. Upon termination of Executive’s employment with the Company,
Executive shall deliver to the Company all documents, records, notebooks, work
papers, and all similar material containing any of the foregoing information,
whether prepared by Executive, the Company or anyone else.

     

    8. Non-Competition. Executive
covenants and agrees that commencing on the date hereof and continuing for the
entire Term of Executive’s employment and for period of twelve (12) months
thereafter (the “Restricted Period”), Executive shall not:

     

         (a) Work or be affiliated with in any capacity (including as a founder,
employee, owner, consultant, or otherwise), directly or indirectly, for himself
or on behalf of any other entity, in any business that manufacturers photomasks
or that is otherwise competitive with the business of the Company or any
subsidiary of the Company at any time during Executive’s employment or during
the Restricted Period, such as, for example and not as a limitation, Toppan, DNP
and the photomask manufacturing operations of semiconductor manufacturers such
as IBM and TSMC.

     

         (b) Solicit, attempt to solicit, or assist others in soliciting or
attempting to solicit, directly or indirectly, any business related to the
business of the Company from any customers or prospective customers of the
Company; for the purposes of this Section 8, the term “customer” means any entity or person who is or has
been a client or customer of the Company during the time which Executive was
employed with the Company, and the term “prospective customer” means a person or entity who became known to
the Company during the time which Executive was employed with the Company as a
result of that person’s or entity’s interest in obtaining the services or
products of the Company; and

     

         (c) Solicit, attempt to solicit, or assist others in soliciting or
attempting to solicit, directly or indirectly, for employment or similar
capacity, any person who is an employee of, or an independent contractor for,
the Company or its direct or indirect subsidiaries, parents or Affiliates or who
was such an employee within twelve (12) months prior to the date of such
solicitation or attempted solicitation.

     

    9

     

    

    
    

         (d) Executive acknowledges that in the event of his employment with the
Company terminates for any reason, Executive will be able to earn a livelihood
without violating the foregoing restrictions.

     

         (e) If any provision or clause, or portion thereof, within this
Section 8 shall be held by any court or other tribunal
of competent jurisdiction to be illegal, invalid, or unenforceable in such
jurisdiction, the remainder of such provision shall not be thereby affected and
shall be given full effect, without regard to the invalid portion. It is the
intention of the parties that, if any court construes any provision or clause
within this Section 8, or any portion thereof, to be illegal, void
or unenforceable because of the duration of such provision or the geographic
area or matter covered thereby, such court shall reduce the duration, area, or
matter of such provision, and, in its reduced form, such provision shall then be
enforceable and shall be enforced.

     

    9. Intellectual
Property.

     

         (a) Executive has no interest (except as disclosed to the Company) in any
inventions, designs, improvements, patents, copyrights and discoveries which are
useful in or directly or indirectly related to the business of the Company or to
any experimental work carried on by the Company. Except as may be limited by
applicable law, all inventions, designs, improvements, patents, copyrights and
discoveries conceived by Executive during the Term of this Agreement which are
useful in or directly or indirectly related to the business of the Company or to
any experimental work carried on by the Company, shall be the property of the
Company. Executive will promptly and fully disclose to the Company all such
inventions, designs, improvements, patents, copyrights and discoveries (whether
developed individually or with other persons) and will take all steps necessary
and reasonably required to assure the Company’s ownership thereof and to assist
the Company in protecting or defending the Company’s proprietary rights therein.

     

         (b) Executive also agrees to assist the Company in obtaining United
States or foreign letters patent and copyright registrations covering inventions
assigned hereunder to the Company and that Executive’s obligation to assist the
Company shall continue beyond the termination of Executive’s employment but the
Company shall compensate Executive at a reasonable rate for time actually spent
by Executive at the Company’s request with respect to such assistance. If the
Company is unable because of Executive’s mental or physical incapacity (for the
period of such incapacity only) or for any other reason to secure Executive’s
signature to apply for or to pursue any application for any United States or
foreign letters patent or copyright registrations covering inventions assigned
to the Company (after reasonable efforts to contact employee), then Executive
hereby irrevocably designates and appoints the Company, each of its duly
authorized officers and agents as Executive’s agent and attorney-in-fact to act
for and in Executive’s behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by Executive. Executive will
perform all other lawful acts necessary to assist the Company to enforce any
copyrights or patents obtained including, without limitation, testifying in any
suit or proceeding involving any of the copyrights or patents or executing any
documents deemed necessary by the Company, all without further consideration but
at the expense of the Company. If Executive is called upon to render such
assistance after the termination of Executive’s employment, then Executive shall
be entitled to a fair and reasonable per diem fee in addition to reimbursement
of any expenses incurred at the request of the Company.

     

    10

     

    

    
    

    10. Remedies. The parties hereto agree that the services to
be rendered by Executive pursuant to this Agreement, and the rights and
privileges granted to the Company pursuant to this Agreement, are of a special,
unique, extraordinary and intellectual character, which gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in any action at law, and that a breach by Executive of any of the terms
of this Agreement will cause the Company great and irreparable injury and
damage. Executive hereby expressly agrees that the Company shall be entitled to
the remedies of injunction, specific performance and other equitable relief to
prevent a breach of this Agreement by Executive. This Section 10 shall not be construed as a waiver of any
other rights or remedies which the Company may have for damages or
otherwise.

     

    11. Return of Property. Executive agrees to return, on or before his
last day of employment, all property belonging to the Company, including but not
limited to computers, PDA, telephone and other credit cards, Company business
records, Company automobile (if applicable), etc.

     

    12. Severability. If any provision of this Agreement is held
to be unenforceable for any reason, it shall be adjusted rather than voided, if
possible, to achieve the intent of the parties to the extent possible. In any
event, all other provisions of this Agreement shall be deemed valid and
enforceable to the extent possible.

     

    13. Succession. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns and any such
successor or assignee shall be deemed substituted for the Company under the
terms of this Agreement for all purposes. As used herein, “successor” and
“assignee” shall include any person, firm, corporation or other business entity
which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires the stock of the Company or to which the Company assigns
this Agreement by operation of law or otherwise. The obligations and duties of
Executive hereunder are personal and otherwise not assignable. Executive’s
obligations and representations under this Agreement will survive the
termination of Executive’s employment, regardless of the manner of such
termination.

     

    11

     

    

    
    

    14. Notices. Any notice or other communication provided
for in this Agreement shall be in writing and sent if to the Company to its
principal office at:

     

    Photronics,
Inc.
15 Secor Road, PO Box
5226
Brookfield, Connecticut
06804

     

    Attention: Chief
Executive Officer
With a copy
to the Vice President, General Counsel of Photronics, Inc.

     

    or at such other address
as the Company may from time to time in writing designate, and if to Executive
at the address set forth above or at such address as Executive may from time to
time in writing designate. Each such notice or other communication shall be
effective (I) if given by written telecommunication, three (3) days after its
transmission to the applicable number so specified in (or pursuant to) this
Section 14 and a verification of receipt is received,
(ii) if given by certified mail, once verification of receipt is received, or
(iii) if given by any other means, when actually delivered to the addressee at
such address and verification of receipt is received.

     

    15. Adequate
Consideration.
Executive acknowledges that the cash severance and other benefits to be provided
by the Company to Executive are not available under any current plan or policies
of the Company. Accordingly, Executive further acknowledges that the payments
and benefits under this Agreement provide adequate consideration for Executive’s
obligations to the Company contained in Section 7 (Confidential Information),
Section 8 (Non-Competition), Section 10 (Remedies) and Exhibit A (Release).

     

    16. Entire Agreement. This Agreement contains the entire agreement
of the parties relating to the subject matter hereof and supersedes any prior
agreements, undertakings, commitments and practices relating to Executive’s
employment by the Company.

     

    17. Amendments. No amendment or modification of the terms of
this Agreement shall be valid unless made in writing, duly executed by both
parties.

     

    18. Waiver. No failure on the part of any party to
exercise or delay in exercising any right hereunder shall be deemed a waiver
thereof or of any other right, nor shall any single or partial exercise preclude
any further or other exercise of such right or any other right. 

     

    19. Governing Law. This Agreement, and the legal relations
between the parties, shall be governed by and construed in accordance with the
laws of the State of Connecticut without regard to conflicts of law doctrines
and any court action arising out of this Agreement shall be brought in any court
of competent jurisdiction within the State of Connecticut. 

     

    12

     

    

    
    

    20. Withholding. All compensation payable hereunder,
including salary and other benefits, shall be subject to applicable taxes,
withholding and other required, normal or elected employee
deductions.

     

    21. Counterparts. This Agreement and any amendment hereto may
be executed in one or more counterparts. All of such counterparts shall
constitute one and the same agreement and shall become effective when a copy
signed by each party has been delivered to the other party.

     

    22. Headings. Section and other headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. 

     

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.

     

    THE COMPANY

     

    PHOTRONICS,
INC.

     

    
      	By:  	       	/s/ Constantine S. Macricostas
	
            	
            	 
	
            	
            	
              Name: Constantine
      S. Macricostas

            
	
            	
            	
              Title:   Chief Executive Officer and
      President

            

    

     

     

    EXECUTIVE

     

    
      	/s/ Richelle E. Burr
	
              Name: Richelle E.
      Burr

            
	
              Address: 7
      Greenknoll Dr.

            
	                 
      Brookfield, CT 06804

    

    13

     

    

    
    

    EXHIBIT A

     

    RELEASE

     

    1. I signed an
Employment Agreement with Photronics, Inc. (the “Company”), dated ________________ (the “Agreement”), wherein I
agreed to the terms applicable to certain terminations of employment with the
Company. Pursuant to the terms of the Agreement, I am entitled to certain
severance payments and benefits, described in the Agreement, provided that I
sign this Release. 

     

    2. In consideration of
the severance payments described in the Agreement, I, on behalf of myself, my
heirs, agents, representatives, predecessors, successors and assigns, hereby
irrevocably release, acquit and forever discharge the Company and each of its
respective agents, employees, representatives, parents, subsidiaries, divisions,
affiliates, officers, directors, shareholders, investors, employees, attorneys,
transferors, transferees, predecessors, successors and assigns, jointly and
severally (the “Released
Parties”) of and from any and all debts, suits, claims, actions, causes
of action, controversies, demands, rights, damages, losses, expenses, costs,
attorneys’ fees, compensation, liabilities and obligations whatsoever, suspected
or unsuspected, known or unknown, foreseen or unforeseen, arising at any time up
to and including the date of this Release, save and except for the parties’
obligations and rights under this Release. In recognition of the consideration
set forth in the Agreement, I hereby release and forever discharge the Released
Parties from any and all claims, actions and causes of action, I have or may
have as of the date of this Release arising under any federal, state, or local
statute, regulation, ordinance, or law of any kind, including under the Age
Discrimination in Employment Act of 1967, as amended, and the applicable rules
and regulations promulgated thereunder (“ADEA”), the Connecticut Human Rights
and Opportunities Law, the Connecticut Family and Medical Leave Law, and the
Connecticut Age Discrimination and Employee Insurance Benefits Law, and
including claims for wrongful discharge, breach of contract, or in
tort.

     

    3. I agree not to
criticize, denigrate, or otherwise disparage the Company or any other Released
Party.

     

    4. This Release is not
an admission of guilt or wrongdoing by either me or the Company. This Release
constitutes the entire agreement between me and the Company with respect to the
subject matter hereof, and I am not signing this Release in reliance on any
representation not expressly set forth herein. No provisions of this Release may
be modified, waived, amended or discharged except by a written document signed
by me and a duly authorized Company representative. This Release binds my heirs,
administrators, representatives, executors, successors, and assigns, and will
inure to the benefit of all Released Parties and their respective heirs,
administrators, representatives, executors, successors, and assigns. The
invalidity or unenforceability of any provision of this Release shall not affect
the validity or enforceability of any other provision of this Release, which
shall remain in full force and effect. A waiver of any conditions or provisions
of this Release in a given instance shall not be deemed a waiver of such
conditions or provisions at any other time. If any of the provisions, terms or
clauses of this Release are declared illegal, unenforceable or ineffective in a
legal forum, those provisions, terms and clauses shall be deemed severable, such
that all other provisions, terms and clauses of this Release shall remain valid
and binding upon both parties. If any of the provisions, terms or clauses of
this Release are found by a court to be overly broad, those provisions, terms
and clauses shall be enforceable (and modified and enforced) to the broadest
extent permissible under the law. The validity, interpretation, construction,
and performance of this Release shall be governed by the internal laws of the
State of Connecticut (excluding any that mandate the use of another
jurisdiction’s laws)

     

    14

     

    

    
    

    5. All payments to me
under this Release shall be net of applicable withholdings and
deductions.

     

    6. The Company advised
me to take this Release home, read it, and carefully consider all of its terms
before signing it. The Company gave me at least 21 days in which to consider
this Release, and I waive any right I might have to additional time beyond this
consideration period within which to consider this Release. The Company advised
me to discuss this Release with my own attorney (at my own expense) during this
period if I wished to do so. I understand that I may revoke my acceptance of
this Release within seven (7) days after I sign it (“Revocation Period”). I
understand that if I revoke my acceptance of this Release, I will not be
entitled to any payments or benefits hereunder or otherwise in connection with
the termination of my employment with the Company, except as required by law in
the absence of the Agreement and this Release. I have carefully read this
Release, fully understand what it means, and am entering into it
voluntarily.

     

    
      	 	 	
            	 
	
              Print
      Name

            	 	
              Date

            	
            
	 	 	 
	 	 	 
	Signature	 	 

    

    15

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