Document:

KBS SOR Q2 2014 Exhibit 10.6

Exhibit 10.6
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (the “Agreement”), dated as of May 2, 2014, is made by and among PEARLMARK MEZZANINE REALTY PARTNERS III, L.L.C., a Delaware limited liability company and TMRP III CO-INVESTMENT, L.L.C., a Delaware limited liability company (collectively “Lender”), 110 WILLIAM MEZZ, LLC, a Delaware limited liability company (“Original Borrower”), LONGWING INCORPORATED, a Delaware corporation (“Longwing”), KENT M. SWIG, an individual (“Swig”, and together with Longwing, “Original Guarantor”), 110 WILLIAM MEZZ III, LLC, a Delaware limited liability company (“New Borrower”), and SAVANNA REAL ESTATE FUND III, L.P., a Delaware limited partnership (“New Guarantor”).
RECITALS
		
	A.
	Pursuant to the terms and conditions of a Mezzanine Loan Agreement dated June 11, 2012 by and between Lender and Original Borrower (the “Original Mezzanine Loan Agreement”), Lender made a mezzanine loan (the “Loan”) to Original Borrower in the stated principal amount of Twenty Million and No/100 Dollars ($20,000,000.00).  The Loan was evidenced by a Promissory Note (the “Note”) made by Original Borrower in favor of Lender in the face amount of the Loan.  The Note, the Original Mezzanine Loan Agreement, and the agreements identified as “Loan Documents” in the Original Mezzanine Loan Agreement are collectively referred to herein as the “Original Loan Documents”.  Capitalized terms used herein, if not otherwise defined, shall have the meanings ascribed to them in the Original Loan Documents.  

		
	B.
	As security for the Loan, Original Borrower delivered to Lender a Pledge and Security Agreement (the “Original Pledge Agreement”), pursuant to which Original Borrower pledged to Lender all of Original Borrower’s ownership interests in 110 WILLIAM, LLC, a Delaware limited liability company (“Original Mortgage Borrower”).  Original Mortgage Borrower was the owner, in fee simple of real property and improvements in lower Manhattan, New York, New York, commonly known as the office building at 110 William Street and more particularly described in the Original Mezzanine Loan Agreement (the “Property”).  As additional security for the Loan, Original Guarantors delivered to Lender certain guaranties, and Original Borrower and Swig delivered to Lender an Environmental Indemnity Agreement (Mezzanine Loan) pertaining to the Property (the “Environmental Indemnity”).

		
	C.
	Concurrently with origination of the Loan, pursuant to the terms of a Loan Agreement dated as of June 11, 2012, UBS REAL ESTATE SECURITIES, INC. (“Original Mortgage Lender”) made a mortgage loan (the “Mortgage Loan”) to Original Mortgage Borrower in the stated principal amount of One Hundred Forty One Million Five Hundred Thousand and No/100 Dollars ($141,500,000.00).  The Mortgage Loan was secured by a mortgage encumbering the Property.  The current holder of the Mortgage Loan (“Mortgage Lender”) is a securitization trust.

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	D.
	Concurrently herewith, Original Mortgage Borrower is conveying the Property to 110 WILLIAM PROPERTY INVESTORS III, LLC, a Delaware limited liability company (“New Mortgage Borrower”).  Pursuant to Section 8.1 of the Original Mezzanine Loan Agreement, such conveyance (the “Approved Transfer”) is a transaction that requires the consent of Lender.  Pursuant to Section 8.1(f) of the Original Mezzanine Loan Agreement, Lender agreed not to unreasonably withhold consent to the Approved Transfer provided that certain conditions were satisfied.

		
	E.
	Concurrently herewith, New Borrower and Lender are entering into an Amended and Restated Mezzanine Loan Agreement (the “Amended and Restated Mezzanine Loan Agreement”), and New Borrower and New Guarantor, as applicable, are entering into the agreements in favor of Lender that are identified as “Loan Documents” in the Amended and Restated Mezzanine Loan Agreement.  This Agreement, the Amended and Restated Mezzanine Loan Agreement, and the agreements in favor of Lender to which New Borrower, New Mortgage Borrower, or New Guarantor are a party that are identified as “Loan Documents” in the Amended and Restated Mezzanine Loan Agreement, are collectively referred to herein as the “Assumption Documents”.  

		
	F.
	Concurrently herewith New Mortgage Borrower is assuming the Mortgage Loan, and Mortgage Lender is consenting thereto.  In connection with the assumption of the Mortgage Loan, New Mortgage Borrower and New Guarantor are entering into an assumption agreement and various other agreements.  The agreements pertaining to the assumption of the Mortgage Loan and the agreements evidencing, securing, guarantying, and otherwise relating to the Mortgage Loan to which New Mortgage Borrower or New Guarantor are a party that remain effective after giving effect to the assumption of the Mortgage Loan are collectively referred to herein as the “Mortgage Loan Assumption Documents”.

AGREEMENT
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, Lender, Original Borrower, Longwing, Swig, New Borrower, and New Guarantor agree as follows:
		
	1.
	Effective Date.    This Agreement shall be effective concurrently with the Approved Transfer, which shall occur on the date hereof (the “Assumption Date”).

		
	2.
	Assumption.    New Borrower hereby assumes and agrees to pay when due all sums due or to become due or owing by Borrower under the Note.  Each reference in the Note to the “Loan Agreement” shall be construed to refer to the Amended and Restated Mezzanine Loan Agreement.  The execution and delivery of this Agreement by New Borrower shall be deemed its execution and delivery of the Note.

		
	3.
	Consent to Approved Transfer.    In consideration of the representations, warranties, and covenants in this Agreement and the other Assumption Documents, Lender consents to the Approved Transfer.  Nothing in this Agreement shall be construed to obligate Lender to consent to any subsequent Transfer, event, or transaction.  Lender’s and New Borrower’s 

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rights and obligations with respect to any Transfer after the Assumption Date shall be governed by the Amended and Restated Mezzanine Loan Agreement.
		
	4.
	Representations and Warranties of New Borrower and New Guarantor.    Except as disclosed on the exception schedule attached hereto as Schedule 1, New Borrower and New Guarantor represent and warrant to Lender as of the date hereof as follows:

		
	a.
	Neither New Borrower nor New Guarantor, nor any other Person owned or controlled, directly or indirectly, by New Guarantor, has interfered in bad faith with the exercise by any lender of its remedies in connection with a default with respect to any Indebtedness or has defaulted under its obligations which caused a foreclosure with respect to any Indebtedness.

		
	b.
	There is no material litigation or regulatory action pending or threatened against New Borrower, New Guarantor, or any other Person owned or controlled, directly or indirectly, by New Guarantor.

		
	c.
	New Borrower has delivered to Lender true and complete copies of all of the Mortgage Loan Assumption Documents.

		
	d.
	New Borrower and New Guarantor acknowledge that Lender is relying on the representations and warranties of Original Borrower and Original Guarantor in this Agreement, and agree that they shall be estopped from disputing the accuracy of such representations and warranties.

		
	5.
	Representations and Warranties of Original Borrower and Original Guarantor.  Original Borrower and Original Guarantor represent and warrant to Lender, New Borrower and New Guarantor that:

		
	a.
	Concurrently with origination of the Loan, Lender advanced the full face amount of the Loan to Original Borrower.  

		
	b.
	The outstanding principal balance of the Loan as of the Assumption Date is Twenty Million and 00/100 Dollars ($20,000,000.00).

		
	c.
	Accrued interest on the Loan was last paid on April 4, 2014, and the next payment of accrued interest will be due and payable on May 6, 2014.  This Agreement shall have no bearing on the amount due and payable on the first Monthly Payment Date following the Assumption Date (and New Borrower acknowledges that it shall be liable for the full amount thereof).

		
	d.
	The information pertaining to the Mortgage Loan set forth in Recital B of the Loan Assumption and Substitution Agreement of even date herewith among Mortgage Lender, New Mortgage Borrower, New Guarantor, Original Borrower, and New Borrower is accurate, complete, and consistent with Original Borrower’s own records.

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	e.
	Lender has performed all of its obligations to Original Borrower and its Affiliates.  Neither New Borrower nor New Guarantor nor any Affiliate thereof is acquiring any claims against Lender relating in any way to the Loan, the Mortgage Loan, the Property, or the collateral for the Loan.

		
	f.
	Mortgage Lender has performed all of its obligations to Original Mortgage Borrower and its Affiliates.  Neither New Mortgage Borrower nor New Guarantor nor any Affiliate thereof is acquiring any claims against Mortgage Lender relating in any way to the Loan, the Mortgage Loan, the Property, or the collateral for the Loan.

		
	g.
	To the knowledge of Original Borrower and Original Guarantor, neither Original Mortgage Borrower nor Original Guarantor is in default under any obligation to Mortgage Lender with respect to the Mortgage Loan.

		
	h.
	To the knowledge of Original Borrower and Original Guarantor, neither Original Borrower nor Original Guarantor is in default under any obligation to Lender with respect to the Loan.

		
	i.
	Original Mortgage Borrower has terminated its management agreement with respect to the Property with Swig Equities, LLC.

		
	6.
	Environmental Matters.  Original Borrower and Swig represent and warrant that, except as otherwise disclosed in that certain Phase I Environmental Site Assessment of the Property prepared by EBI Consulting, EBI Project No. 11122774, dated May 23, 2012, to their knowledge, the representations and warranties contained in Section 1 of the Environmental Indemnity remain true as of the date hereof.  

		
	7.
	Representations and Warranties of Lender.  Lender represents and warrants to New Borrower and New Guarantor that:

		
	a.
	The outstanding principal balance of the Loan as of the Assumption Date is Twenty Million and 00/100 Dollars ($20,000,000.00).

		
	b.
	Accrued interest on the Loan was last paid on April 4, 2014, and the next payment of accrued interest will be due and payable on May 6, 2014.

		
	c.
	Lender does not currently hold any reserves or escrows with respect to the Loan.

		
	d.
	Lender has not delivered to Original Borrower any notice alleging a default under the Loan.  To Lender’s knowledge, as of the date hereof, there are no defaults by Original Borrower under the Loan and no events or circumstances have occurred that, with notice, passage of time, or both, would ripen into a default or Event of Default by Original Borrower under the Loan.

		
	8.
	Partial Release of Original Borrower and Original Guarantor.    Effective on the Assumption Date, Lender releases Original Borrower and Original Guarantor from 

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liability under the Original Loan Documents; except that Original Borrower and Original Guarantor are expressly not released from, and nothing herein is intended to limit, impair, waive, forgive, terminate or revoke any of their liabilities under the Original Loan Documents, to the extent the same arise out of or in connection with (a) breaches of representations or warranties in the Original Loan Documents or this Agreement, (b) any act, condition or omission occurring or existing prior to the Assumption Date, or (c) the obligations under the Environmental Indemnity (the “Retained Obligations”).  The Retained Obligations shall survive this Agreement and continue in full force and effect in accordance with the terms and conditions of the Original Loan Documents (including, without limitation, the terms and conditions of Section 10 of the Environmental Indemnity).  The Retained Obligations shall not be deemed modified, discharged, waived, forgiven, or reduced by any amendment or modification to, or extension, renewal, restatement or replacement of the Assumption Documents.  Promptly following the Assumption Date, Lender shall return to Original Borrower the certificate(s) evidencing Original Borrower’s ownership interests in Original Mortgage Borrower, and shall deliver to Original Borrower a financing statement release, suitable for recording with the Secretary of State of Delaware, releasing Lender’s security interest in such ownership interests.
		
	9.
	Pre-Assumption Date Claims and Obligations.  Original Borrower and Original Guarantor shall terminate (or cause Original Mortgage Borrower to terminate), without cost to New Borrower or New Mortgage Borrower, all agreements for goods and services relating to the Property, other than agreements that New Mortgage Borrower agrees in writing to assume.  New Mortgage Borrower shall not assume any debts or obligations of Original Mortgage Borrower or any other debts or obligations relating to the Property, other than leases of space at the Property and agreements in the ordinary course for the provision of goods and services to or for the benefit of the Property from and after the Assumption Date.  New Borrower shall not assume any debts or obligations that arose prior to the Assumption Date.

		
	10.
	Release of Lender Parties and Covenant Not to Sue.  Original Borrower, Original Guarantor, New Borrower and New Guarantor, on behalf of themselves and their respective affiliates, heirs, predecessors-in-interest, successors and assigns, hereby release and forever discharge, as of the Assumption Date, Lender, any trustee with regard to the Loan, all servicers of the Loan, each of their respective predecessors-in-interest and successors and assigns, together with the officers, directors, partners, members, shareholders, employees, investors, certificate holders and agents of each of the foregoing (collectively, the “Lender Parties”), from all debts, accountings, bonds, warranties, representations, covenants, promises, contracts, controversies, agreements, claims, damages, judgments, executions, actions, inactions, liabilities, demands or causes of action of any nature, at law or in equity, known or unknown, which Original Borrower, Original Guarantor, New Borrower or New Guarantor have as of the Assumption Date by reason of any cause, matter, condition or thing through and including the Assumption Date, arising out of or relating to: (a) the Loan, including, without limitation, its funding, administration and servicing, (b) the Original Loan Documents, (c) the Property, (d) the collateral for the Loan, (e) the Mortgage Loan, (f) any reserve and/or escrow balances 

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held by Lender or Mortgage Lender or any servicers of the Loan or Mortgage Loan, (g) the sale, conveyance, assignment and transfer of the Property or (h) the transactions contemplated hereunder (collectively, the “Released Matters”); provided, however, that in no event shall this sentence be considered a release of Lender for Lender’s failure to comply with this Agreement or a release of any claims arising from facts or circumstances first occurring after the Assumption Date.  Original Borrower, Original Guarantor, New Borrower and New Guarantor, on behalf of themselves and their respective affiliates, heirs, predecessors-in-interest, successors and assigns, covenant and agree never to institute or cause to be instituted or continue prosecution of any suit or other form of action or proceeding of any kind or nature whatsoever against any of the Lender Parties by reason of or in connection with any of the foregoing Released Matters.
THE RELEASE CONTAINED IN THIS SECTION 10 INCLUDES CLAIMS OF WHICH ORIGINAL BORROWER, ORIGINAL GUARANTOR, NEW BORROWER AND/OR NEW GUARANTOR ARE PRESENTLY UNAWARE OR WHICH ORIGINAL BORROWER, ORIGINAL GUARANTOR, NEW BORROWER AND/OR NEW GUARANTOR DO NOT PRESENTLY SUSPECT TO EXIST WHICH, IF KNOWN BY ORIGINAL BORROWER, ORIGINAL GUARANTOR, NEW BORROWER AND/OR NEW GUARANTOR, WOULD MATERIALLY AFFECT ORIGINAL BORROWER’S, ORIGINAL GUARANTOR’S, NEW BORROWER’S AND/OR NEW GUARANTOR’S RELEASE OF THE LENDER PARTIES.  
BY EXECUTING THIS AGREEMENT, ORIGINAL BORROWER, ORIGINAL GUARANTOR, NEW BORROWER AND NEW GUARANTOR EACH ACKNOWLEDGES THAT (i) THIS SECTION 10 HAS BEEN READ AND FULLY UNDERSTOOD, (ii) ORIGINAL BORROWER, ORIGINAL GUARANTOR, NEW BORROWER AND NEW GUARANTOR HAVE EACH HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE, AND (iii) ORIGINAL BORROWER, ORIGINAL GUARANTOR, NEW BORROWER AND NEW GUARANTOR EACH HAS ACCEPTED AND AGREED TO THE TERMS SET FORTH IN THIS SECTION 10.
		
	11.
	Fees.  To the extent not collected by Lender through the Assumption Date, New Borrower shall pay to Lender the assumption fee described in Section 8.1(e)(xix) of the Original Mezzanine Loan Agreement and all reasonable out-of-pocket costs and expenses incurred by Lender in connection with the Approved Transfer, New Borrower’s request for consent to the Approved Transfer, and the Assumption Documents (including reasonable fees and disbursements of Lender’s counsel).  New Borrower’s obligations under this Section 11 are “Other Obligations” within the meaning of the Amended and Restated Mezzanine Loan Agreement.

		
	12.
	Integration.  The Assumption Documents, including this Agreement, contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated herein and therein and supersede all prior negotiations. The Assumption Documents shall not be modified except by written instrument executed by Lender and the other parties thereto.  

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	13.
	Successors and Assigns.  This Agreement is binding upon and shall inure to the benefit of the heirs, successors and assigns of the parties but shall be subject to all prohibitions on Transfers contained in any of the Assumption Documents.

		
	14.
	Attorneys’ Fees; Enforcement.  If any attorney is engaged by Lender to enforce, construe or defend, relative to New Borrower or New Guarantor, any provision of this Agreement, or as a consequence of any default under or breach of this Agreement which continue after expiration of any applicable notice and cure periods, with or without the filing of any legal action or proceeding, New Borrower and New Guarantor shall pay to Lender, upon demand, the amount of all reasonable attorneys’ fees and reasonable out-of-pocket costs incurred by Lender in connection therewith, together with interest thereon from the date of such demand at the rate of interest applicable to the principal balance of the Note as specified therein.  In the event of any litigation among Lender, Original Borrower, or Original Guarantor, the prevailing party shall recover its costs, including reasonable attorneys’ fees and costs.

		
	15.
	Governing Law; Miscellaneous.  As among Lender, Original Borrower, and Original Guarantor, Section 11.3 of the Original Mezzanine Loan Agreement is incorporated herein.  As among Lender, New Borrower, and New Guarantor, Section 11.3 of the Amended and Restated Mezzanine Loan Agreement is incorporated herein.  Time is of the essence of each term of the Assumption Documents, including this Agreement.  If any provision of this Agreement or any of the other Assumption Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed therefrom and the remaining parts shall remain in full force as though the invalid, illegal or unenforceable portion had not been a part thereof.

		
	16.
	Counterparts.  This Agreement may be executed in any number of counterparts, each of which when executed and delivered will be deemed an original and all of which taken together will be deemed to be one and the same instrument.

		
	17.
	Further Assurances.  Each of Original Borrower, Original Guarantor, New Borrower and New Guarantor agrees to execute and deliver such further agreements, instruments and other documents, and to take such other actions, in each case, as Lender may reasonably request, at no out-of-pocket cost or expense to Lender, in order to consummate the transactions contemplated herein.  Each of Original Borrower, Original Guarantor, New Borrower and New Guarantor acknowledge and agree that the covenants set forth in this Section 17 shall survive the Assumption Date.  

[Signature pages follow]

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IN WITNESS WHEREOF, Lender, Original Borrower, Original Guarantor, New Borrower, and New Guarantor have caused this Agreement to be duly executed as of the date first above written, to be effective as of the Assumption Date.
LENDER:
PEARLMARK MEZZANINE REALTY PARTNERS III, L.L.C., 
a Delaware limited liability company

By: /s/ Michael Girimonti    
Name: Michael Girimonti
Title: Managing Director

TMRP III CO‐INVESTMENT, L.L.C., 
a Delaware limited liability company

By: /s/ Michael Girimonti    
Name: Michael Girimonti
Title: Managing Director

ASSUMPTION AGREEMENT
(signature page)

ORIGINAL BORROWER:

110 WILLIAM MEZZ, LLC, 
a Delaware limited liability company

		
	By:
	110 William Mezz Parent, LLC, a Delaware limited liability company, its sole equity member

		
	By:
	SE 110 William Management, LLC, a New York limited liability company, its managing member

By: /s/ Kent M. Swig    
Name:    Kent M. Swig
Title:    Managing Member

ASSUMPTION AGREEMENT
(signature page)

ORIGINAL GUARANTOR:

_/s/ Kent M. Swig_________________
Kent M. Swig

ASSUMPTION AGREEMENT
(signature page)

ORIGINAL GUARANTOR:

LONGWING INCORPORATED, a Delaware corporation

By:    _/s/ Mark S. Edelstein__________
Name: Mark S. Edelstein
Title: Authorized Signatory

NEW BORROWER:
110 WILLIAM MEZZ III, LLC 
a Delaware limited liability company

By: /s Nicholas Beinstock                
Name: Nicholas Beinstock
Title:  Authorized Signatory

ASSUMPTION AGREEMENT
(signature page)

NEW GUARANTOR:
SAVANNA REAL ESTATE FUND III, L.P., 
a Delaware limited partnership

By: /s/ Nicholas Beinstock                            
Name: Nicholas Beinstock
Title:  Authorized Signatory

ASSUMPTION AGREEMENT
(signature page)

SCHEDULE 1
Exceptions to Representations and Warranties
None

Assumption AgreementExhibit 4.1 

	EMPLOYEE STOCK PURCHASE PLAN
(Amended and Current as of March 28,
    2012) 

ARTICLE I -
General 

	1.1	     	The purpose of
      Photronics, Inc. Employee Stock Purchase Plan is to provide eligible
      employees of the Company and its designated subsidiaries (if any) with an
      opportunity to acquire a proprietary interest in the Company by the
      purchase of shares of the Common Stock of the Company directly from the
      Company through payroll deductions. It is felt that employee participation
      in the ownership of the Company will be to the mutual benefit of both the
      employees and the Company.
	 
	1.2		The Plan is intended
      to qualify as an "employee stock purchase plan" within the meaning of
      Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
      The provisions of the Plan shall, accordingly, be construed so as to
      extend and/or limit eligibility and participation in a manner consistent,
      and so as to otherwise comply, with the requirements of the
  Code.
	 
	1.3		Eligibility and
      participation in the Plan shall give any Employee only such rights as are
      set forth in the Plan and any amendments hereto and shall in no way affect
      or in any manner limit the Company's right to discharge the Employee,
      which right is expressly reserved by the Company, or impair the authority
      of the Plan Committee to limit the Employee's rights, claims or causes, as
      provided in the Plan.

ARTICLE II -
Definitions

	2.1	       	The following words
      and phrases, when used in the Plan, shall have the following respective
      meanings, unless the context clearly indicates
  otherwise:

"Authorized Leave of
Absence" 

Any leave of absence
authorized under the Company's standard personnel practices, provided that all
persons under similar circumstances must be treated equally in the granting of
such Authorized Leave of Absence and provided further that the person returns to
the employ of the Company upon the expiration of an Authorized Leave of Absence.

"Board of
Directors" 

The Board of Directors of
Photronics, Inc. 

"Code" 

The Internal Revenue Code
of 1986, as amended from time to time, and applicable Treasury Department
regulations issued thereunder. 

"Common
Stock" 

The Common Stock, par value
$0.01 per share, of the Company, or the securities adjusted or substituted
therefor pursuant to Article XIV. 

10

"Company" 

Photronics, Inc., a
Connecticut corporation, or its successor or successors or any present or future
subsidiary of Photronics, Inc., which may be designated to participate in the
Plan by the Board of Directors. 

"Compensation"

The Compensation of an
Eligible Employee shall be determined in accordance with procedures approved by
the Plan Committee or the Board of Directors. In the absence of the adoption of
specific procedures, Compensation of an Eligible Employee shall be the
annualized salary or wages of such Employee based on such Employee's current
rate of pay and work schedule, but excluding any discretionary overtime, sick
pay, vacation pay or other benefits.

"Disability" 

Disability shall have the
same meaning set forth in Section 22(e)(3) of the Code or any successor
provision thereto. At present, a disability is defined as a physical or mental
impairment or incapacity which, in the opinion of a physician selected by the
Plan Committee, can be expected to result in death or has lasted or can be
expected to last for a continuous period of at least twelve (12) months and
renders the Participant unable to engage in any substantial, gainful activity.

"Effective Date of the
Plan" 

The date on which the Plan
shall have become effective pursuant to Article XVII, provided, however, that if
the Plan shall not be approved by the stockholders of the Company as provided in
Article XVII, the Plan and all rights granted hereunder shall be, and be deemed
to have been, null and void. 

"Eligible
Employee" 

An Employee who is eligible
to participate in the Plan in accordance with provisions of Articles IV and V.

"Employee" 

Any person who, on an
Offering Date, is a common law employee of the Company and whose customary
employment is for more than twenty (20) hours per week and for more than five
(5) months per calendar year, other than any highly compensated employees
(within the meaning of Section 414[q] of the Code or any successor provision
thereto) of the Company who are excluded from participation hereunder by action
of the Board of Directors. A person who is or has been on an Authorized Leave of
Absence, and who in the absence of such Authorized Leave of Absence would have
been classified as an Employee, shall in the discretion of the Plan Committee be
considered to be an Employee, except to the extent that such determination is
inconsistent with Section 423 of the Code. Such determination by the Plan
Committee shall be final and conclusive. 

"Offering" 

An Offering in accordance
with the provisions of Article V. 

"Offering
Date" 

The date of an Offering as
established by the Plan Committee pursuant to Section 5.1 hereof. 

"Participant" 

An Eligible Employee who
subscribes for Shares pursuant to Article VI. 

11

"Plan" 

The Photronics, Inc.
Employee Stock Purchase Plan set forth herein, as amended from time to time in
accordance with the provisions of Article XV. 

"Plan
Committee" 

The committee provided for
in Article XII to administer the Plan. 

"Purchase
Date" 

A Purchase Date as provided
in Sections 8.1 or 10.3, as appropriate. 

"Shares" 

Shares of Common Stock
offered under the Plan. 

       The masculine gender,
whenever used in the Plan, shall be deemed to include the feminine gender, and
whenever the plural is used it shall include the singular, if the context so
requires. 

ARTICLE III -
Shares Subject to the
Plan 

	3.1	     	Subject to the
      provisions of Article XIV hereof, the aggregate number of shares of Common
      Stock which may be issued under the Plan shall not exceed 1,500,000. The
      aggregate number of such shares which may be issued with respect to any
      Offering shall be determined by the Plan Committee with respect to such
      Offering. Such shares may be authorized but unissued shares of Common
      Stock or issued shares of Common Stock which are held by the Company. Any
      shares subscribed for under the Plan and not purchased as a result of the
      cancellation in whole or in part of such subscription shall (unless the
      Plan shall have terminated) be again available for issuance under the
      Plan.

ARTICLE IV -
Eligibility

	4.1	     	Each Employee who has
      been continuously employed by the Company for the one complete calendar
      month (or such longer period as may be determined by the Plan Committee)
      ending immediately prior to an Offering Date shall be eligible to
      participate in the Offering under the Plan made on such Offering
      Date.
	 
	4.2		Notwithstanding the
      provisions of Section 4.1, no Employee shall be offered Shares if,
      immediately after he would subscribe for such Shares, such Employee would
      own capital stock (including shares of Common Stock which may be purchased
      under such subscription and under any other outstanding subscriptions
      under the Plan or options to purchase shares of Common Stock of the
      Company held by such Employee, as computed in accordance with Section
      423[b][3] of the Code or any successor provision thereto) possessing 5% or
      more of the total combined voting power or value of all classes of stock
      of the Company. For purposes of determining the stock ownership of any
      Employee, the provisions of Section 424[d] of the Code shall
    apply.

ARTICLE V -
Offering Under the
Plan 

	5.1	     	Offerings under the
      Plan shall be made on such Offering Dates as shall be determined by the
      Plan Committee. Notwithstanding anything to the contrary, no Offering
      shall be made on any date prior to the date that a required registration
      statement with respect to such Offering filed under the Securities Act of
      1933, as amended, has become effective. Nothing contained herein shall be
      deemed to require that an Offering be made in any
  year.

	5.2	     	[a]	       	Subject to the
      limitations set forth in Sections 5.2[b] and 6.3, and to the other terms
      and conditions of the Plan, in each offering under the Plan, each Eligible
      Employee on an Offering Date shall be offered the right during the
      Subscription Period as provided in Section 6.2, to subscribe to purchase
      such number of Shares as the percentage designated by the Plan Committee
      for such offering (not to exceed 5%) of his Compensation would buy, at a
      price equal to the product of (i) the fair market value of a Share on the
      Offering Date, multiplied by (ii) the Purchase Price percentage utilized
      under Section 5.3 hereof.
					 
			[b]		Notwithstanding anything to
      the contrary contained in Sub-Section [a] of this Section 5.2, no Eligible
      Employee shall be eligible to subscribe for Shares in an Offering if,
      immediately after he would subscribe for such Shares, such subscription
      would permit his rights to purchase shares of Common Stock under all
      employee stock purchase plans of the Company to accrue at a rate which
      exceeds $25,000 (or such other maximum amounts as may be prescribed from
      time to time under the Code) of the fair market value of such shares
      (determined as of the Offering Date for such Offering) for each calendar
      year in which such subscription would be outstanding at any time. For
      purposes of this limitation the provisions of Section 423[b][8] of the
      Code shall be applicable.

12

	5.3	     	The Purchase Price
      per share subscribed for all Shares in a particular Offering shall be an
      amount equal to such percentages, not greater than 100% nor less than 85%,
      as shall be determined by the Plan Committee on or prior to the Offering
      Date, of the fair market value of a share of Common Stock (determined in
      accordance with the provisions of Article XIII) on one of the following
      dates with respect to such Offering, with such date to be determined by
      the Plan Committee on or prior to the Offering Date: (i) the Offering
      Date, (ii) the Purchase Date, or (iii) the Offering Date or the Purchase
      Date (whichever would result in a lower Purchase Price for the Common
      Stock).
	 
	5.4		In order to
      participate in any Offering, an Eligible Employee entitled to subscribe
      for Shares in such Offering shall comply with the subscription procedures
      set forth in Article VI.

ARTICLE VI -
Subscriptions for
Shares 

	6.1	     	As soon as
      practicable after an Offering Date, the Company shall furnish to each
      Eligible Employee a Subscription Agreement setting forth the maximum
      number of Shares to which such Eligible Employee may subscribe in such
      Offering, the fair market value per share of Common Stock on the Offering
      Date, the Purchase Price for Shares in such Offering and such other terms
      and conditions consistent with the Plan as shall be determined by the Plan
      Committee.
	 
	6.2		Within fifteen (15)
      days after receipt of such Subscription Agreement, an Eligible Employee
      desiring to participate in the Offering shall notify the Plan Committee of
      the number of Shares for which he desires to subscribe. Such notification
      shall be effected by the Eligible Employee's completing, executing and
      returning to the Secretary of the Company the Subscription Agreement. All
      such subscriptions shall be deemed to have been made as of the Offering
      Date. No subscription shall be accepted from any person who is not an
      Eligible Employee on the date his subscription is received by the
      Company.
	 
	6.3		The minimum number of
      Shares for which an Eligible Employee will be permitted to subscribe in
      any Offering is ten (10) (or the number of Shares offered to him if fewer
      than ten). If at any time the Shares available for an Offering are
      oversubscribed, the Number of Shares for which each Eligible Employee is
      entitled to subscribe pursuant to Section 5.2 shall be reduced, pro rata,
      to such lower number as may be necessary to eliminate such
      over-subscription.
	 
	6.4		If an Eligible
      Employee fails to subscribe to the Shares within the period and in the
      manner prescribed in Section 6.2, he shall waive all rights to purchase
      Shares in that Offering.

ARTICLE VII -
Payment for
Shares 

	7.1	     	The aggregate
      Purchase Price for the Shares for which a Participant subscribes in any
      Offering in accordance with the provisions of Article VI of the Plan shall
      be paid by means of payroll deductions.

	7.2	     	[a]	     	The aggregate Purchase Price for Shares
      shall be paid by payroll deductions in equal amounts over a period of 24
      months (or such shorter period as shall be determined by the Plan
      Committee in accordance with the Plan) from the Offering Date. The period
      over which such payroll deductions are to be made in hereinafter referred
      to as the "Payment Period".

13

	          	[b]	     	Such payroll
      deductions with respect to an Offering shall commence as soon as
      practicable after the receipt of the Company of the executed Subscription
      Agreement authorizing such payroll deductions, and shall cease upon the
      earlier of the termination of the Payment Period or payment in full of the
      Purchase Price for such Shares. A Participant may cancel his subscription
      to the extent provided for in Article X, but no other change in terms of
      his Subscription Agreement may be made during the Payment Period and, in
      particular, in no event may a Participant change the amount of his payroll
      deductions under such Subscription Agreement. All payroll deductions
      withheld from a Participant under a Subscription Agreement shall be
      credited to his account under the Plan. In the event that payroll
      deductions are simultaneously being made with respect to more than one
      Subscription Agreement, the aggregate amount of such payroll deductions at
      any payday shall be credited first toward the payment for Shares
      subscribed for in the earliest Offering. A Participant may not make any
      separate cash payment into his account, provided, however, that a
      Participant who has been deemed to be in the employ of the Company while
      on an Authorized Leave of Absence without pay during the Payment Period,
      may upon his return to the actual employ of the Company, make a cash
      payment into his account in an amount not exceeding the aggregate of the
      payroll deductions which would have been made during such Authorized Leave
      of Absence.
		 
		[c]		All funds
      representing payroll deductions for the accounts of Participants will,
      except as provided in Section 7.3, be paid into the general funds of the
      Company. No interest will be paid or accrued under any circumstances on
      any funds withheld by the Company as payroll deductions pursuant to this
      Section 7.2 or on any other funds paid to the Company for purchases of
      Shares under the Plan.

	7.3	     	Notwithstanding
      anything in this Article VII to the contrary, with respect to any Offering
      which is made prior to the approval of the Plan by the stockholders of the
      Company, all payroll deductions withheld for the accounts of Participants
      shall, until the Plan is approved by the stockholders, be held by the
      Company in a special escrow account for the benefit of such Participants.
      No interest will be paid or accrued under any circumstances on such funds.
      No Shares will be issued to such Participants until after approval of the
      Plan by the stockholders. In the event that the Plan is not approved by
      the stockholders within the period specified in Article XVII, all such
      funds will thereupon be promptly refunded to the respective
      Participants.
	 
	7.4		Failure to pay for
      subscribed Shares as provided in this Article VII shall constitute the
      cancellation of such subscription to the extent that any such Shares shall
      not have been so paid for.

ARTICLE VIII -
Issuance of
Shares 

	8.1	     	At the end of the
      Payment Period for an Offering, (each of which dates is referred to as a
      "Purchase Date"), the balance of all amounts then held in the account of a
      Participant representing payroll deductions pursuant to a Subscription
      Agreement shall be applied to the purchase by the Participant from the
      Company of the number of Shares equal to the amount of such balance
      divided by the Purchase Price per share for such Shares applicable on such
      Purchase Date up to the number of Shares provided for in the respective
      Subscription Agreement. Any amount remaining in the Participant's account
      in excess of the sum required to purchase whole Shares on a Purchase Date
      shall be promptly refunded to the Participant. As soon as practicable
      after a Purchase Date, the Company will issue and deliver to the
      Participant a certificate representing the Shares purchased by him from
      the Company on such Purchase Date. No fractional shares will be issued at
      any time.
	 
	8.2		A Participant who
      disposes (whether by sale, exchange, gift or otherwise) of any of the
      Shares acquired by him pursuant to the Plan within two (2) years after the
      Offering Date for such Shares or within one (1) year after the issuance of
      Shares to him shall notify the Company in writing of such disposition
      within thirty (30) days after such disposition.

14

ARTICLE IX -
Rights of
Stockholders 

	9.1	     	A Participant shall
      not have any rights to dividends or any other rights as a stockholder of
      the Company with respect to any Shares until such Shares shall have been
      issued to him as reflected by the books and records maintained by the
      Company's transfer agent relating to stockholders of the
  Company.

ARTICLE X -
Voluntary
Withdrawal/Termination of Employment 

	10.1	     	A Participant may
      discontinue his payroll deductions under a Subscription Agreement at any
      time by giving written notice thereof to the Plan Committee, effective for
      all payroll periods commencing five (5) days after receipt of such notice
      by the Plan Committee. The balance in the account of such Participant
      following such discontinuance shall be promptly refunded to the
      Participant. Withdrawal from an Offering pursuant to this Section 10.1
      shall not affect an Eligible Employee's eligibility to participate in any
      other Offering under the Plan.
	 
	10.2		If the Participant's
      employment with the Company is terminated for any reason other than death
      while still an Employee, such Participant's rights to purchase Shares
      under any Subscription Agreement shall immediately terminate. Any balance
      remaining in his account as of the date of such termination of employment
      shall be promptly refunded to the Participant.
	 
	10.3		In the event of the
      death of an Employee who was a Participant prior to the purchase of the
      Shares for which he subscribed pursuant to Article VI hereof, the person
      or persons who acquired by laws of descent and distribution (his "Estate")
      his rights to purchase Shares under his Subscription Agreement(s), shall
      have the right within ninety (90) days after the death of the Participant
      (but in no event later than the termination of the Payment Period) to
      purchase from the Company that number of Shares subscribed for and not
      issued to the Participant prior to his death which the balance in the
      Participant's payroll deduction account is sufficient to purchase. The
      failure of the person or persons so acquiring his rights to so give notice
      of intention to purchase shall constitute a forfeiture of all further
      rights of the Participant or other persons to purchase such Shares and in
      such event, the balance in the Participant's payroll deduction account
      will be refunded, without interest. If the Participant dies more than
      fifty (50) days prior to the termination of the Payment Period and his
      Estate elects to purchase the Shares subscribed for, the Purchase Price
      for his Shares shall be the percentage, designated pursuant to Section
      5.3, of the fair market value on the Offering Date, irrespective of the
      Purchase Price for other Participants.

ARTICLE XI -
Non-Transferability of
Subscription Rights

	11.1	     	During the lifetime
      of a Participant, the Shares for which he subscribes may be purchased only
      by him. No Subscription Agreement of a Participant and no right under or
      interest in the Plan or any such Subscription Agreement (hereinafter
      collectively referred to as "Subscription Rights") may be assigned,
      transferred, pledged, hypothecated or disposed of in any way (whether by
      operation of law or otherwise), except by the Participant's will or by the
      applicable laws of descent and distribution, or may be subject to
      execution, attachment or similar process. Any assignment, transfer,
      pledge, hypothecation or other disposition of Subscription Rights, or any
      levy of execution, attachment or other process attempted upon Subscription
      Rights, shall be null and void and without effect, and in any such event
      all Subscription Rights shall, in the sole discretion of the Plan
      Committee (exercised by written notice to the Participant or to the person
      then entitled to purchase the Shares under the provisions of Sections 10.3
      hereof), terminate as of the occurrence of any such
  event.

ARTICLE XII -
Administration of the
Plan 

	12.1	     	The Plan shall be
      administered by a Plan Committee which shall consist of two (2) or more
      members of the Board of Directors, none of whom shall be eligible to
      participate in the Plan. The members of the Plan Committee shall be
      appointed, and may be removed, by the Board of Directors. The Board of
      Directors shall have the power to remove and substitute for members of the
      Plan Committee and to fill any vacancy which may occur in the Plan
      Committee.

15

	12.2	     	Unless otherwise
      determined by the Board of Directors, the members of the Plan Committee
      shall serve without additional compensation for their services. All
      expenses in connection with the administration of the Plan, including, but
      not limited to, clerical, legal and accounting fees, and other costs of
      administration, shall be paid by the Company.
	 
	12.3	 	The Chairman of the
      Plan Committee shall be designated by the Board of Directors. The Plan
      Committee shall select a Secretary who need not be a member of the Plan
      Committee. The Secretary, or in his absence, any member of the Plan
      Committee designated by the Chairman, shall keep the minutes of the
      proceedings of the Plan Committee and all data, records and documents
      relating to the administration of the Plan by the Plan
  Committee.
	 
	12.4		A quorum of the Plan
      Committee shall be such number as the Committee shall from time to time
      determine, but shall not be less than a majority of the entire Plan
      Committee. The acts of a majority of the members of the Plan Committee
      present at any meeting at which a quorum is present shall be the act of
      the Plan Committee. Members of the Plan Committee may participate in a
      meeting by means of telephone conference or similar communications
      procedure pursuant to which all persons participating in the meeting can
      hear each other. The Plan Committee may take action without a meeting if
      such action is evidenced by a writing signed by at least a majority of the
      entire Plan Committee.
	 
	12.5		The Plan Committee
      may, by an instrument in writing, delegate to one or more of its members
      or to an officer or officers of the Company any of its powers and its
      authority under the Plan, including the execution and delivery on its
      behalf of instruments, instructions and other documents.
	 
	12.6		It shall be the sole
      and exclusive duty and authority of the Plan Committee to interpret and
      construe the provisions of the Plan, to decide any disputes which may
      arise with regard to the status, eligibility and rights of Employees under
      the terms of the Plan, and any other persons claiming an interest under
      the terms of the Plan, and, in general, to direct the administration of
      the Plan.
	 
	12.7	 	The Plan Committee
      may adopt, and from time to time amend, such rules and regulations
      consistent with the purposes and provisions of the Plan, as it deems
      necessary or advisable to administer and effectuate the Plan.
	 
	12.8	 	The Plan Committee
      may shorten, lengthen (but not beyond thirty (30) days) or waive the time
      required by the Plan for the filing of any notice or other form under the
      Plan.
	 
	12.9		The discretionary
      powers granted hereunder to the Plan Committee shall in no event be
      exercised in any manner that will discriminate against individual
      employees or a class of employees or discriminate in favor of employees
      who are shareholders, officers, supervisors or highly compensated
      employees of the Company.

ARTICLE XIII -
Valuation of Shares of
Common Stock 

	13.1	       	For purposes of the
      Plan, the "fair market value" of a share of Common Stock as of any date
      shall be determined as follows:

	               	[a]	     	If the Common Stock
      is then listed on a national securities exchange, the "fair market value"
      shall be the closing price of a share of Common Stock on such exchange on
      such date, or, if there has been no sale of shares of Common Stock on that
      date, the closing price of a share of Common Stock on such exchange on the
      last preceding business day on which shares of Common Stock were
      traded.
		 
		[b]		If the Common Stock
      is then listed on the National Association of Securities Dealers Automatic
      Quotation System National Market System, the "fair market value" shall be
      the average of the high and low sales prices of a share of Common Stock on
      that date, or if there has been no sale of shares of Common Stock on that
      date, the average of the high and low sales prices of Common Stock on the
      last preceding business day on which shares of Common Stock were
      traded.

16

ARTICLE XIV -
Adjustments in Certain
Events 

	14.1	     	If (i) the Company shall at any time be
      involved in a transaction to which sub-section [a] of Section 424 of the
      Code is applicable, (ii) the Company shall declare a dividend payable in,
      or shall sub-divide or combine, its Common Stock, or (iii) any other event
      shall occur which in the judgment of the Board of Directors necessitates
      action by way of adjusting the terms of the outstanding Subscription
      Agreements, the Board of Directors shall take any such action as in its
      judgment shall be appropriate to preserve Participant rights substantially
      proportionate to the rights existing prior to such event. To the extent
      that such action shall include an increase or decrease in the number of
      shares of Common Stock subject to outstanding Subscription Agreements, the
      aggregate number of shares available under Article III hereof for issuance
      under the Plan pursuant to outstanding Subscription Agreements and
      Subscription Agreements which may be entered into, and the aggregate
      number of shares available for issuance in any Offering and the number
      which may be subscribed for, shall be proportionately increased or
      decreased, as the case may be. No action shall be taken by the Board of
      Directors under the provisions of this Article XIV which, in its judgment,
      would constitute a modification, extension or renewal of the Subscription
      Agreement (within the meaning of Section 424[h] of the Code), or would
      prevent the Plan from qualifying as an "employee stock purchase plan"
      (within the meaning of Section 423 of the Code). The determination of the
      Board of Directors with respect to any matter referred to in this Article
      XIV shall be conclusive and binding upon each
  Participant.

ARTICLE XV -
Termination and Amendment
of the Plan 

	15.1	     	The Board of
      Directors may, without further approval by the stockholders of the
      Company, at any time terminate or amend the Plan without notice, or make
      such modifications of the Plan as it shall deem advisable; provided that
      the Board of Directors may not, without prior approval by the holders of a
      majority of the outstanding shares of Common Stock of the Company, amend
      or modify the Plan so as to (i) increase the maximum number of shares of
      Common Stock which may be issued under the Plan (except as contemplated in
      Article XIV hereof), (ii) extend the term during which Offerings may be
      made under the Plan or (iii) increase the maximum number of Shares which
      an Eligible Employee is entitled to purchase (except as contemplated in
      Article XIV hereof); and provided further that the Board of Directors may
      not amend or modify the Plan in any manner which would prevent the Plan
      from qualifying as an "employee stock purchase plan" (within the meaning
      of Section 423 of the Code). No termination, amendment or modification of
      the Plan may, without the consent of a Participant, adversely affect the
      rights of such Participant under an outstanding Subscription
      Agreement.

ARTICLE XVI
-
Miscellaneous 

	16.1	     	Unless otherwise
      expressly provided in the Plan, all notices or other communications by a
      Participant to the Company under or in connection with the Plan shall be
      deemed to have been duly given when received by the Secretary of the
      Company or when received in the form specified by the Company at the
      location and by the persons, designated by the Company for the receipt
      thereof.
	 
	16.2		Notwithstanding
      anything hereunder to the contrary, the offer, sale and delivery by the
      Company of Shares under the Plan to any Eligible Employee is subject to
      compliance with all applicable securities regulation and other federal and
      state laws. The terms of this Plan shall be construed under the laws of
      the State of Connecticut.

ARTICLE XVII -
Effective
Date 

	17.1	     	The Plan shall become
      effective at such time as the Plan has been adopted by the Board of
      Directors or such later date as shall be designated by the Board of
      Directors upon its adoption of the Plan; provided, however, that the Plan
      and all Subscription Agreements entered into thereunder shall be, and be
      deemed to have been, null and void if the Plan is not approved by the
      holders of a majority of the outstanding shares of Common Stock of the
      Company within twelve (12) months after the date on which the Plan is
      adopted by the Board of Directors.

Photronics, Inc.

17

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