Document:

10.21

OUTSOURCING AGREEMENT

This OUTSOURCING AGREEMENT (this “Agreement”) is made and entered into as of the 20th day of November, 2013, by and among Photronics, Inc., a Connecticut corporation (“Photronics”), Dai Nippon Printing Co., Ltd., a Japanese corporation (“DNP”), and Photronics Semiconductor Mask Corp. (the “Company”), a company limited by shares organized and formed under the Company Act of the Republic of China.  Each of Photronics and DNP is hereinafter referred to as a “Supplier” and collectively as the “Suppliers” and each of the Suppliers and the Company is hereinafter referred to as a “Party” and collectively as the “Parties.”

ARTICLE 1.

BACKGROUND

Photronics and DNP wish to participate in a joint venture either directly or indirectly through their respective Affiliates as Shareholders in the Company, and to carry on the Business (as defined below) through the Company.  The Parties are engaged, among other things, in the design, development, fabrication and sale of advanced photomasks (the “Business”).  In connection with the formation of the joint venture, Photronics and DNP have entered into a Joint Venture Operating Agreement (the “JV Operating Agreement”) dated as of the 20th day of November, 2013. In connection with the JV Operating Agreement and in order to support the business objective of the Company, including but not limited in order to allow the Company access to products it may be unable to manufacture on its own and also to provide backup capacity to the Company in the event the Company operations are disrupted or the Company has a capacity shortfall, the Company desires to outsource or issue to the Suppliers, and the Suppliers agree to accept, certain purchase orders of the Company in connection with its Business pursuant to the terms and conditions set forth herein.

ARTICLE 2.

INTERPRETATION

2.1           Defined Terms

Unless otherwise defined in this Agreement, terms defined in the JV Operating Agreement shall have the same meanings when used in this Agreement.

2.2           Incorporation by Reference

The following Articles and Sections of the JV Operating Agreement shall be incorporated by reference into and form an integral part of this Agreement, mutatis mutandis: Section 5.16 (Non-Disclosure) and Section 12 (Miscellaneous).

ARTICLE 3.

PURCHASE ORDERS

3.1           Outsource and Issuance of Purchase Orders

The Company may at its own discretion * or issue Purchase Orders to * on the terms and conditions of this Agreement.  The Parties agree that they may add additional * to this Agreement through additional Purchase Orders signed by the Company and the relevant *.

 

3.2           Purchase Orders

		·	* will make good faith efforts to accept all Purchase Orders from the Company for * that comply with this Agreement including adhering to all relevant specifications of * as set forth in the Purchase Order entered into between the Company and the * shall notify the Company of acceptance or rejection of a Purchase Order within * of receipt of a Purchase Order (“Product PO Confirmation”).  Failure of * to accept or reject a Purchase Order within * shall constitute acceptance of such Purchase Order. The * for the * will be as set forth in the applicable Purchase Order (“Product Lead Time”).  Each Purchase Order shall include the following: (a) the Company’s Purchase Order *; (b) identification of the quantity and type of the Product ordered by *; (c) the * of each Product ordered per Schedule 2 attached hereto; (d) the requested delivery date (subject to the applicable *); (e) any shipping instructions, including preferred carrier and shipping destination; and (f) the specifications for the Product.

3.3           Purchase Order Terms

All * orders agreed to between the Company and a * shall be governed by this Agreement unless otherwise agreed by the Company and the * in writing; the Parties agree that the * submitted by the Company to any of the * will mirror the terms and conditions of the * with respect to * for the Product and the * requirement submitted to the Company by the *. Those terms and conditions of the * may be discussed and agreed between the Company and any of the * prior to issuance of such * to any of the *.

3.4           Rescheduling and Cancellation

The Company may not adjust or cancel or reschedule any portion of an * unless the * fails to fulfill any material term of such accepted *.  * shall at all times use prudent material planning practices, including by way of example, reducing manufacturing and lead-times for * .  The Company forecast for each * will be provided on a weekly basis covering a rolling * month period.  The Company will provide the * with such * which will be updated * and * which will be updated * and will be used for planning purposes only.  If a * ability to * any * is constrained for any reason, such * shall immediately notify the Company of such * for the purpose of resolving the same.

3.5           End of Life

Each of the * may terminate its obligations to * a particular Product under this Agreement by giving written notice of the * of such Product to the Company at least * before the effective date of such termination (a “Product EOL Notice”), provided that (a) the relevant *, and the Company shall *, such Product ordered pursuant to this Agreement until the effective date of such termination and including any accepted * outstanding on the effective date of termination, (b) the relevant * its obligations to its other * with respect to such Product. When the Company becomes aware that any of its * any type of the Products, the Company shall promptly notify the * thereof.  Notwithstanding the above, if the Company has a * and the * (i) has confirmed in writing its intention to support the performance of such * by the Company through the * hereunder and (ii) are actually providing Product in support of such *, neither * can, to the extent of its confirmation, terminate its obligation * until such * is terminated.

 

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3.6           Certain Claims

Notwithstanding any other provisions in this Agreement, either * may * of any Product after * receipt of a * or the * that is deemed credible by written opinion of the relevant * outside counsel, provided that the relevant * also discontinues * with respect to such Product; provided further that (i) * shall give the Company at least * prior written notice of its intent to discontinue sales of such Product, and (ii) at the Company’s request, if the Company will continue to * using the Product, * will provide the Company with all reasonable information and assistance necessary, and any necessary * to the * in accordance with the terms and conditions to be agreed by the relevant * and the Company, to enable the Company to *.

Any such granted * shall terminate and provided information shall be destroyed or returned in the event the relevant * resumes providing the * to the Company.  The Company shall defend, indemnify and hold harmless the relevant * from and against any claims, expenses and costs (including but not limited to attorney and other professional fees and expenses), settlement of third party claims (if negotiated and approved by the Company), damages and liability arising from or related to * of any third party solely with respect to the Company’s * specified in this Section 3.6 or * by or on behalf of the Company under the * granted in this Section 3.6.

3.7           Priority for New Products

During the development by either of the * as set forth in the Company's * as defined and attached in the JV Operating Agreement, the * who develops * shall provide the Company sufficient opportunity to test such * and determine whether to purchase such * under the terms and conditions including the timing agreed between such * and the Company, provided however the Company will not be obligated to * for * made by any of the * in order to continue to be *.   This Section 3.7 shall not applied to any products developed by the * for or with any * where such * is subject to non-disclosure obligations.

3.8           Qualification

* will make all reasonable efforts to * the Company for the *, and the Company with * will make all reasonable efforts to * but only for the purpose of being an * for the Company for the *.

 

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Furthermore, * will make all reasonable efforts to * the Company for * so that the Company will be able to manufacture the products for *.

ARTICLE 4.

PURCHASE ORDER ALLOCATION

Notwithstanding any other provisions in this Agreement, the Parties agree that the outsourcing or issuance of any Purchase Orders hereunder by the Company to any of the * shall be at the Company’s discretion pursuant to the best interest of the Company taking into account the preference of the Company’s *; provided however that the Company will attempt to *.  The Parties will review * on a * basis.  If at the end of each * the value of * is higher than that of the *, the Company will attempt to * orders for the previous * until such * has received orders with value approximately equal to the other *.  Notwithstanding the above, each of the Parties agrees and acknowledges that if a * cannot provide * because of * or * to meet * of the Company, then the Company will be free to seek the Product *.  Additionally it is understood by the parties that any outsourcing * whether existing on the date hereof or entered into or existing after the date hereof will not * and any *.

ARTICLE 5.

PRODUCT PRICES AND PAYMENT

5.1           Prices

The purchase price for the Product shall be as set forth in Schedule 2.

5.2           Invoices; Payments

* shall issue invoices to the Company for any amounts payable to * pursuant to this Agreement upon * of the applicable Products to the Company.  Payments for Products delivered in accordance with Purchase Orders, and any other to be made by the Company * hereunder, shall be made in the Applicable Currency within * from the shipment of the applicable Products delivered.

 

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5.3           Taxes

All amounts payable for Product sold by * to the Company hereunder are exclusive of any taxes.  The Company shall be responsible for and shall pay any applicable sales, use, excise or similar taxes, including value added taxes and customs duties due on the importation of Products and arising from purchases made by the Company under this Agreement, excluding any taxes based on * income and any applicable withholding taxes.  All such taxes shall be determined based upon the final shipment designation of the items identified on the invoice.

ARTICLE 6.

DELIVERY

6.1           Risk of Loss and Title

Delivery of all Products shall be made pursuant to the Delivery Term.  Risk of loss for the Products and title to the Products shall pass to the Company in accordance with the Delivery Term.

6.2           Delivery

* shall deliver the * in accordance with the Delivery Term, shipping instructions in the Purchase Order issued by the Company with regard to the requested delivery date (subject to the Product Lead Time), ship-to address, and carrier.  If the Company does not provide shipping instructions, * will select the carrier on a commercially reasonable basis.  * shall be responsible for * in accordance with the Delivery Term.

ARTICLE 7.

LIMITED WARRANTIES

7.1           Suppliers Limited Warranty

Each of the * warrants that the Products shall * agreed by the * and the Company in writing that is applicable to such Products for the Warranty Period.  This warranty does not apply to any Product failures resulting from misuse, storage in or exposure to environmental conditions inconsistent with those specified in the applicable specifications or documentation, modification of the Product by anyone other *.  If a Product fails to comply with the foregoing warranty, the * shall, at its option, either * such Product, or, in the event the foregoing options are not commercially practicable, * any amounts * for the applicable Product.  Without limiting the remedies specified in Article 9 and Section 10.2, this Section 7.1 states the exclusive remedy of the * of a Product to conform to the warranty provisions set forth in this Section 7.1.

7.2           Disclaimer

EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 7, THE PARTIES MAKE NO WARRANTIES OR REPRESENTATIONS TO THE OTHER PARTIES AND EACH PARTY HEREBY DISCLAIMS ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.

 

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ARTICLE 8.

TERM AND TERMINATION

8.1           Term

This Agreement shall become effective on the completion of the merger contemplated under the Merger Agreement and shall continue to be in full force and effect for *.

8.2           Termination for Cause

A Party shall have the right to terminate its obligations under this Agreement if the other Party materially breaches this Agreement and fails to cure such breach within thirty (30) days after its receipt of written notice of the breach specifying such default.

8.3           Survival

Article 7 (for the duration of the applicable warranty period), Article 8, Article 9 and Article 10 shall survive any termination or expiration of this Agreement.

ARTICLE 9.

INDEMNIFICATION

9.1           Indemnification by Suppliers

Each of the * shall, with respect to Products supplied by such * the Company from and against any * Product by any party other than the *, (ii) the combination or use of the Product with other products, processes, methods, materials or devices except as approved by the *, or (iii) the fault of the Company.

9.2           Indemnification by Company

Other than claims for which the * are obligated to indemnify the Company under Section 9.1, the Company shall *.  The foregoing indemnity does not cover claims that solely arise from (i) the modification of the Product by any party other than the Company, or (ii) the combination or use of the Product with other products, processes, methods, materials or devices except as approved by the Company.

 

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9.3           Procedure

The Party seeking indemnification hereunder (the “Indemnified Party”) agrees to promptly inform the other Party in writing of such claim and furnish a copy of each communication, notice or other action relating to the claim and the alleged infringement.  The Indemnified Party shall permit the other Party (the “Indemnifying Party”) to have sole control over the defense and negotiations for a settlement or compromise, provided that the Indemnifying Party may not settle or compromise a claim in a manner that imposes or purports to impose any liability or obligations on the Indemnified Party without obtaining the Indemnified Party’s prior written consent.  The Indemnified Party agrees to give all reasonable authority, information and assistance necessary to defend or settle such suit or proceeding at the Indemnifying Party’s reasonable request and at the Indemnifying Party’s expense.

ARTICLE 10.

LIABILITY AND REMEDY

10.1           Limited Liability

EXCEPT FOR LIABILITY ARISING FROM BREACHES OF A PARTY’S CONFIDENTIALITY OBLIGATIONS CONTAINED IN THE NON-DISCLOSURE  CLAUSE IN SECTION 9 OF THE FRAMEWORK AGREEMENT, BREACHES OF LICENSE GRANTS CONTAINED HEREIN, AND EXCEPT FOR AMOUNTS PAYABLE TO THIRD PARTIES TO FULFILL INDEMNITY OBLIGATIONS DESCRIBED IN ARTICLE 9, (A) IN NO EVENT SHALL ANY PARTY HAVE ANY LIABILITY TO THE OTHERS, OR TO ANY PARTY CLAIMING THROUGH OR UNDER THE OTHER, FOR ANY LOST PROFITS, ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; AND (B) IN NO EVENT SHALL A PARTY’S CUMULATIVE LIABILITY ARISING OUT OF THIS AGREEMENT EXCEED THE AMOUNTS ACTUALLY PAID, PAYABLE, RECEIVED OR RECEIVABLE BY SUCH PARTY FOR THE PRODUCTS CONCERNED THEREWITH HEREUNDER PURSUANT TO THIS AGREEMENT DURING THE TWELVE (12) MONTHS PRIOR TO THE OCCURRENCE OF THE INITIAL EVENT FOR WHICH A PARTY RECOVERS DAMAGES HEREUNDER.  THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY REMEDY.  THE PARTIES ACKNOWLEDGE AND AGREE THAT THIS ARTICLE 10 IS AN ESSENTIAL ELEMENT OF THE BARGAIN AND ABSENT THIS ARTICLE 10 THE ECONOMIC AND OTHER TERMS OF THIS AGREEMENT WOULD BE SUBSTANTIALLY DIFFERENT.

10.2           Remedies

Notwithstanding anything stated to the contrary in this Agreement, the Parties acknowledge that any breach of * of this Agreement and/or the non-disclosure clause in Section 9 of the Framework Agreement by a Party would cause irreparable harm to the other Parties, and that the damages arising from any such breach would be difficult or impossible to ascertain.  As such, the Parties agree that a Party shall be entitled to injunctive relief and other equitable remedies in the event of any breach or threatened breach of Section 3.5 of this Agreement and/or the non-disclosure clause in Section 9 of the Framework Agreement by another Party.  Such injunctive or other equitable relief shall be in addition to, and not in lieu of, any other remedies that may be available to that Party.  The Parties shall be entitled reasonable attorney fees and costs of enforcement of this Agreement.

 

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ARTICLE 11.           OTHER ARRANGEMENT

*

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the day and year first above written.

	 	
PHOTRONICS, INC.

	 	 	 
	 	
By:

	
                                                      

	 	
Name:

	
Constantine Macricostas

	 	
Title:

	
Chairman and Chief Executive Officer

	 	 	 
	 	
DAI NIPPON PRINTING CO., LTD.

	 	 	 
	 	
By:

	
                                                                    

	 	
Name:

	
Koichi Takanami

	 	
Title:

	
Executive Vice President

	 	 	 
	 	
Photronics Semiconductor Mask Corp.

	 	 	 
	 	
By:

	
                                                            

	 	
Name:

	
                                                      

	 	
Title:

	
                                                        

Outsourcing Agreement Signature Page

 

Schedule 1

Definitions

Capitalized words and phrases used and not otherwise defined elsewhere in this Agreement shall have the following meanings:

*

 

Schedule 2

Product Prices

*10.22

LICENSE AGREEMENT

This LICENSE AGREEMENT (“Agreement”) is entered into, as of this ____ day of__________, 2013by and between Photronics, Inc., a corporation organized under the laws of the State of Connecticut, U.S.A. with its principal place of business at 15 Secor Road, Brookfield, Connecticut, U.S.A. (“Photronics”) and Photronics Semiconductor Mask Corporation, a corporation organized under the laws of the Republic of China (hereinafter “ROC” or “Taiwan”) , with its registered office at  1F, No. 2, Lising Road, Hsinchu City, Hsinchu Science Park, Taiwan, R.O.C  (“Company”).  Each of Photronics and the Company is hereafter referred to as a “Party” and collectively the “Parties”.

RECITALS

WHEREAS, in order to integrate resources, reduce operating costs and expand the economic scale of each of  DNP Photomask Technology Taiwan Co. Ltd. (“DPTT”) and Photronics Semiconductor Mask Corp. (“PSMC”) which is the predecessor of the Company,  DPTT agreed to enter into a Merger Agreement (“Merger Agreement”) with the Company as the surviving company;

WHEREAS, after the merger of DPTT into the Company, the Company will become a joint venture entity directly or indirectly owned by Photronics and Dai Nippon Printing Co., Ltd., a corporation organized under the laws of Japan, with its principal place of business at 1-1-1, Ichigaya-Kagacho, Shinjuku-ku, Tokyo 162-8001, Japan (“DNP”) as its shareholders;;

WHEREAS, Photronics who owns certain patents, patent applications, Know-How and invention disclosures with respect to the Licensed Products (defined below) desires to enter into this Agreement, pursuant to which Photronics agrees to grant a fully paid-up, non-exclusive, non-sublicensable, non-transferable and non-assignable license to the Company under such patents, patent applications, Know-How and invention disclosures subject to the terms and conditions herein;

*

WHEREAS, the Company  wishes to continue using such license to make, use, distribute or otherwise dispose of Photomasks (as defined below) ;

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein and intending to be legally bound, the Parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.1.  Certain Defined Terms.  The following terms shall have the meanings set forth below:

“Affiliate” means, with respect to any Person (as hereinafter defined), any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, such Person.  For the purposes of this definition, “control,” when used with respect to any specified Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of equity interests in such Person, by contract or otherwise; and the terms “controlling” and “controlled” have correlative meanings to the foregoing.

“Agreement” has the meaning set forth in the introductory paragraph hereof.

“Business Day” means any day other than a Saturday, Sunday or any other day on which banks are authorized or required by law or other governmental action to close in Japan, Taiwan and the United States of America.

“Control”, “Controlled” or “Controlling”, when used in reference to Know-how or Patent Rights, means the legal authority or right of a Party hereto (or any of its Affiliates) to grant a license or sublicense of Know-how or Patent Rights to the other Party, or to otherwise disclose proprietary or trade secret information to such other Party, without breaching the terms of any agreement with a third party, or misappropriating the proprietary or trade secret information of a third party.

“Effective Date” means the completion date of the merger contemplated under the Merger Agreement .

“Governmental Authority” means any nation, state, territory, province, county, city or other unit or subdivision thereof or any entity, authority, agency, department, board, commission, instrumentality, court or other judicial body authorized on behalf of any of the foregoing to exercise legislative, judicial, regulatory or administrative functions of or pertaining to government, and any governmental or non-governmental self-regulatory organization.

  “Know-how” means any and all technical, scientific, trade, quality assurance, quality control, financial and business information, know-how, trade secrets, materials, manuals, flow sheets, software, including without limitation all methods, protocol, results, analyses, conclusions and other information, data, discoveries, inventions, improvements, processes, regulatory documentation, information and submissions and formulae, whether patentable or unpatentable, provided, however, those which are of general public knowledge and/or those subject to the Patent Rights shall be excluded.

 

  “Improvements” shall mean all enhancements, modifications, and improvements to the Licensed Patents and Licensed Know-how  including , but not limited to, enhancements, modifications, and improvements in the form of equipment and devices, software, methods and methodology whether or not patented or patentable.

“License” has the meaning set forth in Section 2.1 herein.

“Licensed Know-how” means *.

“Licensed Patents” means *.

 “Licensed Products” means *.

 “Order” means any judicial, administrative or arbitral judgment, order, award, writ, decree, injunction, lawsuit, proceeding or stipulation of any Governmental Authority.

“Party” and “Parties” have the meaning set forth in the introductory paragraph hereof.

“Patent Rights” means *.

“Person” means any natural person, corporation, company, limited liability company, partnership (limited or general), joint venture, association, trust, unincorporated organization or other entity.

“Photomasks” means *.

.

 “Term” means the period commencing upon the completion of the merger contemplated under the Merger Agreement and concluding upon termination of this Agreement pursuant to Article VII herein.

“Territory” means *.

 

Section 1.2.  Rules of Construction and Interpretation.

(a)           The definitions of the terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  The word “any” shall mean “any and all” unless otherwise clearly indicated by context.  Where either Party’s consent is required hereunder, except as otherwise specified herein, such Party’s consent may be granted or withheld in such Party’s sole discretion.

(b)           Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (ii) any reference to any laws herein shall be construed as referring to such laws as from time to time enacted, repealed or amended, (iii) any reference herein to any person shall be construed to include the person’s successors and assigns, (iv) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (v) all references herein to Articles, Sections or Exhibits, unless otherwise specifically provided, shall be construed to refer to Articles, Sections and Exhibits of this Agreement.

ARTICLE II.

GRANT OF LICENSE

* License.  In consideration for good and valuable consideration, (i) Photronics hereby agrees to grant, and the Company hereby accepts, a fully paid-up, non-exclusive, non-sublicensable, non-transferable and non-assignable right and license *.

Section 2.2.  Technical Documents. Photronics shall furnish the Company with the technical documents *.

Section 2.3.   If the Company wishes to obtain a license for any Improvements and developments relating to the Licensed Know-how or Licensed Patents which Photronics obtains or comes into possession of during the Term of this Agreement in order to *.

 

Section 2.4.  Subcontracting.  If the Company wishes *.

Section 2.5.  Further License to Third Parties. The Company acknowledges that Photronics has the right to *.

Section 2.6.  Marking.  In connection with the Company’s exercise of its rights under the License during the Term hereof, the Company shall comply with applicable patent marking laws with respect to the Licensed Patents, and as otherwise reasonably instructed by Photronics.

 

Section 2.7.  Restrictions. The Company hereby agrees that the Licensed Know-how that is licensed by Photronics hereunder shall remain solely *.

* No Analysis. Without written permission from Photronics, no compositional, structural or reverse analysis shall be made of any *.

ARTICLE III.

ROYALTIES

Section 3.1.  The Parties acknowledge and agree *.

ARTICLE IV.

CONFIDENTIALITY

Section 4.1.  The Company agrees that during the Term hereof and thereafter, it shall keep the Licensed Know-how strictly confidential by employing appropriate measures and shall not, without prior written consent of Photronics, (i) disclose, sell, assign, or divulge such Licensed Know-how in any manner to anyone, with the exception of disclosure on a strictly need-to-know basis to its employees, and (ii) use the Licensed Know-how for any purpose other than this Agreement.

Section 4.2.  Upon expiration or termination of this Agreement, the Company shall forthwith return or destroy in an appropriate manner, as requested by Photronics, all documents and electronic data (including all copies, summaries, excerpts thereof) containing, or derived or produced partly or wholly from the Licensed Know-how.

Section 4.3.  The Company agrees to take all appropriate measures to comply with Article 4.1 above, including but not limited to the following: (i) the Company shall procure the personnel of the Company who have access to the Licensed Know-how under this Agreement to execute a confidentiality agreement in which the terms and conditions are identical to those of Section 4.1 above;

 

Section 4.4.  The Company agrees that in the event the Company *.

ARTICLE V.

REPRESENTATIONS, WARRANTIES AND LIMITATION OF LIABILITY

Section 5.1           Title and Contest.   Except for any technology owned by or licensed by *.

Section 5.2           Disclaimer. EXCEPT FOR THE EXPRESS LIMITED WARRANTY SET FORTH IN SECTION 5.1 ABOVE, THE LICENSED KNOW-HOW AND LICENSED PATENTS ARE PROVIDED “AS-IS” AND WITHOUT WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE. PHOTRONICS SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE LICENSED KNOW-HOW AND LICENSED PATENTS LICENSED BY PHOTRONICS HEREUNDER.

Section 5.3           Non-contravention.  Each Party represents and warrants that the execution of this Agreement and the grant of the License hereunder will not conflict with, or result in any breach of or constitute a default under any contract by which that Party is bound, or violate or conflict with any Order.

Section 5.4           No Challenge.  The Company agrees that at no time shall it challenge directly or indirectly or assist anyone else in challenging directly or indirectly the validity and/or enforceability of any claim of any of the Licensed Patents at any time.

 

Section 5.5           Use of Licensed Patents; No Permitted Sublicensing.   The Company represents and warrants that it shall only use the Licensed Know-how and Licensed Patents for its own account, and the Company is not permitted hereunder to sublicense the Licensed Know-how and Licensed Patents for use by any other third party or Person.

Section 5.6           Limitation of Liability.  IN NO EVENT WILL PHOTRONICS HAVE ANY LIABILITY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER FOR BREACH OF CONTRACT, TORT OR OTHERWISE, ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO, LOSS OF ANTICIPATED PROFITS, LOSS OF DATA, OR LOSS OF USE, EVEN IF PHOTRONICS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE CUMULATIVE LIABILITY OF PHOTRONICS FOR DAMAGES HEREUNDER WILLBE SUBJECT TO THE INDEMNIFICATION BASKET AND CAP ON LIABILITY AS SET FORTH IN THE FRAMEWORK AGREEMENT.

ARTICLE VI.

PROSECUTION AND MAINTENANCE AND ENFORCEMENT

Section 6.1.  Prosecution and Maintenance.  PHOTRONICS shall have sole responsibility and discretion with respect to prosecution, issuance and maintenance of the Licensed Patents.

Section 6.2.  Enforcement.  During the Term, the Company shall promptly provide written notice to PHOTRONICS of any infringement of any Licensed Patents of which it becomes aware, including in such notice a reasonable level of detail regarding such infringement.

Section 6.3.  Cost of Action.  Unless the Parties otherwise agree, the total cost of any such action commenced by PHOTRONICS, shall be borne by PHOTRONICS (but excluding fees and expenses charged by separate counsel, if any, engaged by the Company).  Except as the Parties may otherwise agree in writing, any damages or settlement payments resulting from any such action commenced as set forth above, whether in an out-of-court settlement or through legal adjudication of such action, and at any time, shall be retained by PHOTRONICS.

Section 6.4.  Cooperation.  In any infringement action that PHOTRONICS may institute pursuant to this Article 6 during the Term of this Agreement, the Company hereto shall, at the request of PHOTRONICS and at PHOTRONICS’S sole cost, cooperate reasonably in the prosecution of such action.

 

ARTICLE VII.

TERM; TERMINATION

Section 7.1.  Term.  The term of this Agreement shall commence on the Effective Date and, shall continue unless terminated in accordance with the provisions of Section 7.2.  .

Section 7.2.  Termination.

(a)           PHOTRONICS shall have the right to forthwith terminate this Agreement in the event of: (i) the voluntary of involuntary filing of a petition, order or other decree in bankruptcy by or against the Company, or the commencement of any proceedings, under court supervision or otherwise, for the liquidation of, reorganization of, or composition, extension, arrangement or readjustment of the obligations of the Company, or filing of any petition therefore; (ii) breach of Section 4.1 of this Agreement; (iii) the Company , directly or indirectly, commences or attempts to commence any legal proceeding (including, without limitation, any lawsuit in court, administrative proceeding, and petition, claim, filing or other action for administrative act) to contest or dispute, or cause or assist others in any legal proceeding to contest or dispute, the title, patentability, or validity of any Licensed Patent or any claim therein or ; (iv) any share in the Company is *.

*           Subject to Section 7.2(a), PHOTRONICS shall have the right to terminate this Agreement by *;.

 

Subject to Section 7.2 (a), upon the termination under this Section 7.2(b), the Company will have *.

ARTICLE VIII.

MISCELLANEOUS

Section 8.1.  Publicity.  Except as otherwise required by law, legal process or stock exchange rules, neither Party shall issue any press release or make any public announcement or disclosure related to the Agreement or the transactions contemplated hereunder without the prior agreement of the other Party, including with respect to the content of such release, announcement or disclosure (and, with respect in any legally required announcement, Photronics and the Company shall use all reasonable efforts to consult and agree with each other with respect to the content of any such required press release or other publicity).

Section 8.2.  Notices.  All notices and other communications hereunder shall be in writing and shall be deemed given and effective (a) when delivered, if delivered in person, (b) when transmitted by telecopy (with confirmation of transmission received), (c) three (3) Business Days after mailing, if mailed by certified or registered mail (return receipt requested and obtained) or (d) one (1) Business Day after transmitted, if transmitted by a nationally recognized overnight courier to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

If to the Company

[]

Photronics, Inc.

15 Secor Rd.

Brookfield, CT 06804 USA

Attention:  Richelle Burr

Facsimile:  (203)775-5601

With a copy (which shall not constitute notice) to:

 

If to Photronics

Photronics, Inc.

15 Secor Rd.

Brookfield, CT 06804 USA

Attention:  Richelle Burr

Facsimile: (203)775-5601

and/or to such other respective addresses and/or addressees as may be designated by notice given in accordance with the provisions of this Section 8.2.

Section 8.3.  Expenses.  Except as otherwise expressly set forth in this Agreement, each Party hereto shall bear all fees and expenses incurred by such Party in connection with, relating to or arising out of the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby, including financial advisors’, attorneys’, accountants’ and other professional fees and expenses.

Section 8.4.  Entire Agreement.  This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes any previous agreements, arrangements or understandings between them relating to the subject matter hereof.  For the avoidance of doubt, the Technology License Agreement shall be superseded and replaced by this Agreement upon the completion of the merger contemplated under the Merger Agreement in accordance with Section 2.1 above. Each exhibit hereto shall be considered incorporated into this Agreement.

Section 8.5.  Non-Waiver.  The failure in any one or more instances of a Party to insist upon performance of any of the terms, covenants or conditions of this Agreement, to exercise any right or privilege in this Agreement conferred, or the waiver by said Party of any breach of any of the terms, covenants or conditions of this Agreement, shall not be construed as a subsequent waiver of any such terms, covenants, conditions, rights or privileges, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.  No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving Party.

Section 8.6.  Severability.  Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as broad as is enforceable.

Section 8.7.  Binding Effect; Benefit.  This Agreement shall inure to the benefit of and be binding upon the Parties, and their successors and permitted assigns.  Nothing in this Agreement, express or implied, is intended to confer on any Person other than the Parties, and their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, including third party beneficiary rights.

 

 Section 8.8.  Assignability.  The Company shall not assign, pledge or otherwise dispose of its rights or delegate its obligations under this Agreement in whole or in part without the prior written consent of PHOTRONICS. .

Section 8.9.  Amendments.  This Agreement shall not be modified or amended except pursuant to an instrument in writing executed and delivered on behalf of each of the Parties.

Section 8.10.  Headings.  The headings contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

Section 8.11.  Governmental Reporting.  Anything to the contrary in this Agreement notwithstanding, nothing in this Agreement shall be construed to mean that a Party or other Person must make or file, or cooperate in the making or filing of, any return or report to any Governmental Authority in any manner that such Person or such Party reasonably believes or reasonably is advised is not in accordance with applicable laws.

Section 8.12.  Survival. The terms and conditions of Article I (to the extent necessary to give effect to this Section 8.12), Article III, Article IV, Article V and Sections 7.3, 8.2, 8.4, 8.5, 8.6, 8.7, 8.10, 8.12,8.14, 8.15, 8.16 and 8.17 of this Agreement shall survive any termination hereof.

Section 8.13.  Relationship of Parties.  Neither Party has any express or implied authority to assume or create any obligations on behalf of the other or to bind the other to any contract, agreement or undertaking with any third party.

Section 8.14.  Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of Taiwan without reference to the choice of law principles thereof.

Section 8.15.  Arbitration. In the event of any dispute, controversy or claim arising out of or in connection with this Agreement (each, a “Dispute”), the Parties shall use their reasonable efforts to resolve such Dispute within a period of ninety (90) days commencing from either Party’s receipt of a notice from the other Party stating the existence of a Dispute. In the event any such Dispute is not resolved, either Party may refer such Dispute to arbitration in Taipei, Taiwan before one (1) arbitrator appointed in accordance with the ROC Arbitration Law and the Arbitration Rules of the ROC Arbitration Association. The arbitration proceeding shall be conducted in English. The award thereof shall be final and binding upon the Parties hereto.  Judgment upon such award may be entered in any court having jurisdiction thereof.

 

 Section 8.16.  Equitable Relief.  The Company  acknowledges and agrees that damages alone would be insufficient to compensate Photronics for a breach by the Company of this Agreement and that irreparable harm would result from a breach of this Agreement.  The Company hereby consents to the entering of an order for injunctive relief to prevent a breach or further breach, and the entering of an order for specific performance to compel performance of any obligations under this Agreement.

Section 8.17.  Language.  The official language of this Agreement exclusively shall be, and all communications and agreements between the Parties exclusively shall be made in, the English language.  The Parties hereto waive any rights they may have under any other law to have this Agreement written in another language, and any translation of this Agreement will be solely for the convenience of the Parties.

Section 8.18.  Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement.

IN WITNESS WHEREOF, intending to be legally bound, the Parties have executed this  Agreement as of the Effective Date.

	
Photronics, Inc.

	 	
Photronics Semiconductor Mask Corporation

	 
	 	 	 	 	 	 
	
By:

	                                              	 	
By:

	                                                    	 
	 	 	 	 	 	 
	
Name:

	 	
Name:

	 
	 	 	 	 	 	 
	
Title:

	 	
Title:

	 

 

EXHIBIT A

LICENSED KNOW-HOW

 

EXHIBIT B

LICENSED PATENTS

	                                                    	                                                       
	                                                         	                                                   

 

EXHIBIT C

*

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