Photronics
Annual Report 2018

Plain-text annual report

TABLE OF CONTENTSUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended October 31, 2018OR oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number 0-15451 PHOTRONICS, INC.(Exact name of registrant as specified in its charter)Connecticut06-0854886(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)15 Secor Road, Brookfield, Connecticut 06804(Address of principal executive offices)(Zip Code)(203) 775-9000(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of each className of each exchange on which registeredCommon Stock, $.01 par valueNASDAQ Global Select MarketSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes  o No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes  o No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.Yes ☒ No  oIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant toRule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required tosubmit such files).Yes ☒ No  oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,and will not be contained, to the best of registrant’s knowledge in definitive proxy or information statements incorporated by reference in Part III ofthis Form 10-K or any amendment to this Form 10-K. ☒Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of theExchange Act. (Check one):Large Accelerated Filer☒Accelerated Filer oNon-Accelerated Filer oSmaller Reporting Company o Emerging growth company oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with anynew or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes  o No ☒As of April 29, 2018, which was the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value ofthe shares of the registrant’s common stock held by non-affiliates was approximately $534,704,024 (based upon the closing price of $7.80 per shareas reported by the NASDAQ Global Select Market on that date).As of December 13, 2018, 66,987,737 shares of the registrant’s common stock were outstanding.DOCUMENTS INCORPORATED BY REFERENCEProxy Statement for the 2019Annual Meeting of Shareholdersto be held on March 25, 2019 Incorporated into Part IIIof this Form 10-KTABLE OF CONTENTSForward-Looking StatementsThe Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or onbehalf of Photronics, Inc. (“Photronics”, the “Company”, “we”, “our”, or “us”). These statements are based on management’sbeliefs, as well as assumptions made by, and information currently available to, management. Forward-looking statements may beidentified by words like “expect,” “anticipate,” “believe,” “plan,” “project,” “could,” “estimate,” “intend,” “may,” “will” andsimilar expressions, or the negative of such terms, or other comparable terminology. All forward-looking statements involve risksand uncertainties that are difficult to predict. In particular, any statement contained in this annual report on Form 10-K or in otherdocuments filed with the Securities and Exchange Commission in press releases or in the Company’s communications anddiscussions with investors and analysts in the normal course of business through meetings, phone calls, or conference callsregarding, among other things, the consummation and benefits of transactions, joint ventures, business combinations, divestituresand acquisitions, expectations with respect to future sales, financial performance, operating efficiencies, or product expansion, aresubject to known and unknown risks, uncertainties, and contingencies, many of which are beyond the control of the Company.Various factors may cause actual results, performance, or achievements to differ materially from anticipated results, performance, orachievements expressed or implied by forward-looking statements. Factors that might affect forward-looking statements include,but are not limited to, overall economic and business conditions; economic and political conditions in international markets; thedemand for the Company’s products; competitive factors in the industries and geographic markets in which the Companycompetes; the timing of orders received from customers; the gain or loss of significant customers; competition from othermanufacturers; changes in accounting standards; federal, state and international tax requirements (including tax rate changes, newtax laws and revised tax law interpretations); changes in the jurisdictional mix of our earnings and changes in tax laws and rates;interest rate and other capital market conditions, including changes in the market price of the Company’s securities; foreigncurrency exchange rate fluctuations; changes in technology; technology or intellectual property infringement, includingcybersecurity breaches, and other innovation risks; unsuccessful or unproductive research and development or capitalexpenditures; the timing, impact, and other uncertainties related to transactions and acquisitions, divestitures, businesscombinations, and joint ventures as well as decisions the Company may make in the future regarding the Company’s business,capital and organizational structures and other matters; the seasonal and cyclical nature of the semiconductor and flat paneldisplay industries; management changes; changes in laws and government regulation impacting our operations or our products,including laws relating to export controls and import laws, rules and tariffs; the occurrence of regulatory proceedings, claims orlitigation; damage or destruction to the Company’s facilities, or the facilities of its customers or suppliers, by natural disasters,labor strikes, political unrest, or terrorist activity; the ability of the Company to (i) place new equipment in service on a timelybasis; (ii) obtain additional financing; (iii) achieve anticipated synergies and cost savings; (iv) fully utilize its tools; (v) achievedesired yields, pricing, product mix, and market acceptance of its products and (vi) obtain necessary export licenses. Any forward-looking statements should be considered in light of these factors. Accordingly, there is no assurance that the Company’sexpectations will be realized. The Company does not assume responsibility for the accuracy and completeness of the forward-looking statements and does not assume an obligation to provide revisions to any forward-looking statements, except as otherwiserequired by securities and other applicable laws.2TABLE OF CONTENTSPART IITEM 1.BUSINESSGeneralPhotronics, Inc. (and its subsidiaries, collectively referred to herein as “Photronics”, the “Company”, “we”, “our”, or “us”) isone of the world’s leading manufacturers of photomasks, which are high precision photographic quartz or glass plates containingmicroscopic images of electronic circuits. Photomasks are a key element in the manufacture of semiconductors and flat paneldisplays (“FPDs”), and are used as masters to transfer circuit patterns onto semiconductor wafers and flat panel display substratesduring the fabrication of integrated circuits (“ICs” or “semiconductors”) and a variety of FPDs and, to a lesser extent, other types ofelectrical and optical components. We currently operate principally from nine manufacturing facilities; two of which are located inEurope, three in Taiwan, one in Korea and three in the United States. We are building two manufacturing facilities in China andanticipate production to begin at these facilities during the first half of 2019.Photronics is a Connecticut corporation, organized in 1969. Our principal executive offices are located at 15 Secor Road,Brookfield, Connecticut 06804, telephone (203) 775-9000. Our website address is http://www.photronics.com. We make available,free of charge through our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to these reports as soon as reasonably practicable after such materials are electronically filed with, orfurnished to, the Securities and Exchange Commission (“SEC”). The information found on, or incorporated into, our website is notpart of this or any other report we file with or furnish to the SEC. The SEC also maintains a website at http://www.sec.gov thatcontains reports, proxy statements and other information regarding SEC registrants, including Photronics.Products and Manufacturing TechnologyWe manufacture photomasks, which are used as masters to transfer circuit patterns onto semiconductor wafers and flat paneldisplay substrates. Photomasks are manufactured in accordance with circuit designs provided to us on a confidential basis by ourcustomers. IC and FPD photomask sets are manufactured in layers, each having a distinct pattern which is etched onto a differentphotomask. The resulting series of photomasks is then used to image the circuit patterns onto each successive layer of asemiconductor wafer or flat panel display substrate. The typical manufacturing process for a photomask involves the receipt andconversion of circuit design data to manufacturing pattern data. A lithography system then exposes the circuit pattern onto thephotomask blank. The exposed areas are developed and etched to produce that pattern on the photomask. The photomask is theninspected for defects and conformity to the customer’s design data. After any defects are repaired, the photomask is cleaned, anyrequired pellicles (protective translucent cellulose membranes) are applied and, after final inspection, the photomask is shipped tothe customer.We currently support customers across the full spectrum of IC production and FPD technologies by manufacturingphotomasks using electron beam or optical (laser-based) systems, which are the predominant technologies used for photomaskmanufacturing, and are capable of producing the finer line resolution, tighter overlay and larger die size for the larger and morecomplex circuits currently being designed. Electron beam and laser generated photomasks can be used to produce the mostadvanced semiconductors and FPDs for use in an array of products. However, in the case of IC production, the large majority ofhigher cost critical layer photomasks are fabricated using electron beam technologies, while photomasks produced using laser-based systems are less expensive and less precise. End markets served with IC photomasks include devices used formicroprocessors, memory, telecommunications and related applications. We currently own a number of both high-end and matureelectron beam and laser-based systems.The first several layers of photomasks are sometimes required to be delivered by us within 24 hours from the time we receivecustomers’ design data. The ability to manufacture high quality photomasks within short time periods is dependent upon robustprocesses, efficient manufacturing methods, high production yield, available manufacturing capacity and high equipmentreliability. We work to meet these requirements by making significant investments in research and development, capitalequipment, manufacturing and data processing systems, and by utilizing statistical process control methods to optimize ourmanufacturing processes and reduce cycle times.3TABLE OF CONTENTSQuality control is an integral part of the photomask manufacturing process. Photomasks are manufactured in temperature,humidity, and particulate-controlled clean rooms because of the high level of precision, quality and manufacturing yield required.Each photomask is inspected several times during the manufacturing process to ensure compliance with customer specifications.We continue to make substantial investments in equipment to inspect and repair photomasks to ensure that customer specificationsare met.The majority of IC photomasks produced for the semiconductor industry employ geometries larger than 28 nanometers. Atthese geometries, we can produce full lines of photomasks and there is no significant technology employed by our competitors thatis not also available to us. We are also capable of producing full lines of photomasks for high-end IC and FPD applications. In thecase of ICs, this includes photomasks at and below the 28 nanometer technology node and, for FPDs, at and above the Generation 8technology node and active-matrix organic light-emitting diode (AMOLED) display screens. We hold customer-qualifiedmanufacturing capability and own, or have access to, technology that enables us to compete in the high-end markets that serve ICand FPD applications.Sales and MarketingThe market for photomasks primarily consists of domestic and non-US semiconductor and FPD manufacturers and designers.Photomasks are manufactured by independent merchant manufacturers like Photronics, and by semiconductor and FPDmanufacturers that produce photomasks for their own use (captive manufacturers). In some instances, captive manufacturers alsosell to other semiconductor or FPD manufacturers. Previously there was a trend towards the divesture or closing of captivephotomask operations by semiconductor manufacturers and an increase in the share of the market served by independentmanufacturers. This trend was driven by the increased complexity and cost of capital equipment used in manufacturingphotomasks and the lack of economy of scale for many semiconductor and FPD manufacturers to effectively utilize the equipment.However, more recently, some captive mask facilities have been investing at faster rates than independent manufacturers to reachcertain roadmap milestones, particularly in the foundry logic and memory spaces. Nevertheless, most captive manufacturersmaintain business and technology relationships with independent photomask manufacturers for ongoing support.Generally, Photronics and each of its customers engage in a qualification and correlation process before one becomes anapproved supplier. Thereafter, based on the customer’s expectations, we typically negotiate pricing parameters for a customer’sorder. Some prices may remain in effect for an extended period of time. In many instances, we enter into sales arrangements with anunderstanding that, as long as our performance is competitive, we will receive a specified percentage of that customer’s photomaskrequirements.We conduct our sales and marketing activities primarily through a staff of full-time sales personnel and customer servicerepresentatives who work closely with the Company’s management and technical personnel. We support non-US customersthrough both our domestic and foreign facilities. We consider our presence in non-US markets to be an important factor inattracting new customers, as it provides global solutions to our customers, minimizes delivery time, and allows us to servecustomers that utilize manufacturing foundries outside of the United States, principally in Asia. See Note 13 to our consolidatedfinancial statements for the amount of revenue and long-lived assets attributable to each of our geographic areas of operations.CustomersWe sell our products primarily to leading semiconductor and FPD manufacturers. During fiscal year 2018, we sold ourproducts to approximately 600 customers. Revenue from Samsung Electronics Co. Ltd. accounted for approximately 16%, 16%and 19% of our total revenues, and revenue from United Microelectronics Corp. Co. Ltd. accounted for approximately 15%, 16%and 17% of our total revenues in fiscal years 2018, 2017 and 2016, respectively. Our five largest customers, in the aggregate,accounted for approximately 47%, 43% and 50% of our revenue in fiscal years 2018, 2017 and 2016, respectively. A significantdecrease in the amount of revenue from any of these customers could have a material adverse effect on our financial performanceand business prospects.SeasonalityOur business is typically impacted during the first, and sometimes the second, quarter of our fiscal year by the North American,European, and Asian holiday periods, as some customers reduce their development and buying activities during those periods.4TABLE OF CONTENTSResearch and DevelopmentWe conduct research and development activities for IC photomasks at our U.S. nanoFab, which is located in Boise, Idaho, aswell as at PK, Ltd. (“PKL”), our subsidiary in Korea and Photronics DNP Mask Corporation (“PDMC”), one of our subsidiaries inTaiwan. Research and development for FPD photomasks is conducted at PKL. Additionally, we conduct site-specific research anddevelopment programs to support strategic customers. These research and development programs and activities are undertaken toadvance our competitiveness in technology and manufacturing efficiency. We also conduct application-oriented research anddevelopment activities to support the early adoption of new photomask or supporting data and services technology into ourcustomers’ applications. Currently, research and development photomask activities for ICs are focused on masks with wafergeometrics of 20 nanometer node and below and, for FPDs, on Generations 8 and 10.5+ substrate size mask process enhancementsand mask technology for complex FPD masks used in the manufacture of advanced mobile displays, such as AMOLED. We believethese core competencies will continue to be a critical part of semiconductor and FPD manufacturing, as optical lithographycontinues to scale capabilities on high-end devices. We incurred research and development expenses of $14.5 million, $15.9million, and $21.7 million in fiscal years 2018, 2017, and 2016, respectively. It is our belief that we own, control, or license theproprietary information, including trade secrets and patents, that is necessary for our business, as it is presently conducted. We alsobelieve that our intellectual property and trade secret know-how will continue to be important to our maintaining technicalleadership in the field of photomasks.On May 5, 2016, we sold our investment in MP Mask to Micron for $93.1 million and recorded a gain on the sale of $0.1million, which is included in interest income and other income (expense) in our 2016 consolidated statements of income. On thatsame date a supply agreement commenced between Photronics and Micron, which provided that we would be the majorityoutsourced supplier of Micron’s photomasks and related services. The supply agreement had a one year term, and expired in May2017. Photronics has unlimited rights to use the technology it acquired under its prior technology license agreement.Patents and TrademarksWe have ownership interests in approximately 42 issued U.S. patents. The subject matter of these patents, which are registeredin various countries, generally relates to the manufacture of IC photomasks or the use of photomasks to manufacture otherproducts. The expiration dates of these patents range from 2019 to 2034. We also have a number of trademarks and trademarkregistrations in the United States and in other countries.While we believe that our intellectual property is, and will continue to be, important to our technical leadership in the field ofphotomasks, our operations are not dependent on any one individual patent. We protect our intellectual property rights andproprietary processes by utilizing patents and non-disclosure agreements with employees, customers and vendors.Materials, Supplies and EquipmentRaw materials used by Photronics generally include: high precision quartz plates (including large area plates), which are usedas photomask blanks and are primarily obtained from Japanese and Korean suppliers; pellicles and electronic grade chemicals,which are used in the manufacturing process; and compacts, which are durable plastic containers in which photomasks are shipped.These materials are generally sourced from several suppliers. We believe that our utilization of a select group of strategic suppliersenables us to access the most technologically advanced materials available. On an ongoing basis, we continue to consideradditional supply sources.We rely on a limited number of equipment suppliers to develop and supply the equipment used in the photomaskmanufacturing process. Although, historically, we have been able to obtain equipment on a timely basis, an inability to obtainequipment when required could adversely affect our business and results of operations.BacklogThe first several layers of a set of photomasks for a circuit pattern are often required to be shipped within 24 hours of receivinga customer’s designs. Because of the short period between order and shipment dates (typically from 1 day to 2 weeks) for asignificant amount of our revenue, the dollar amount of our current backlog is not considered to be a reliable indicator of futurerevenue.5TABLE OF CONTENTSInternational OperationsRevenues from our non-U.S. operations were approximately 79%, 77% and 76% of our total revenues in fiscal 2018, 2017 and2016, respectively. We believe that our ability to serve non-US markets is enhanced by our having, among other things, a localpresence in the markets that we serve. This requires significant investments in financial, managerial, operational, and otherresources.Operations outside of the United States are subject to inherent risks, including fluctuations in exchange rates, political andeconomic conditions in various countries, legal compliance and regulatory requirements, tariffs and other trade barriers, difficultiesin staffing and managing international operations, longer accounts receivable collection cycles, potential restrictions on transfersof funds and potentially adverse tax consequences. These factors may have a material adverse effect on our ability to generaterevenue outside of the United States and to deploy resources where they could otherwise be used to their greatest advantage and,consequently, may adversely affect our financial condition and results of operations. Note 13 of the notes to our consolidatedfinancial statements presents revenue and long-lived assets by geographic area.CompetitionThe photomask industry is highly competitive, and most of our customers utilize multiple photomask suppliers. Our ability tocompete depends primarily upon the consistency of our product quality, timeliness of delivery, competitive pricing, technicalcapability, and service, which we believe are the principal factors considered by customers in selecting their photomask suppliers.An inability to meet these requirements could adversely affect our financial condition, results of operations and cash flows. Wealso believe that geographic proximity to customers is an important factor in certain markets where cycle time from order todelivery is critical. While some of our competitors may have greater financial, technical, sales, marketing or other resources thanPhotronics, we believe that we are able to compete effectively because of our dedication to customer service, investments in state-of-the-art photomask equipment and facilities, and experienced technical employees.We estimate that, for the types of photomasks we manufacture (IC and FPD), the size of the total market (captive and merchant)is approximately $4.7 billion. Our competitors include Compugraphics International, Ltd., Dai Nippon Printing Co., Ltd (outsideof Taiwan and China), Hoya Corporation, SK-Electronics Co. Ltd., Taiwan Mask Corporation, Toppan Printing Co., Ltd.,Supermask Co. Ltd., and Chengdu NeWay Photomask Making Co., Ltd. We also compete with semiconductor and FPDmanufacturers’ captive photomask manufacturing operations that supply photomasks for internal use and, in some instances, alsofor external customers and foundries. We expect to face continued competition which, in the past, has led to pressure to reduceprices. We believe the pressure to reduce prices, together with the significant investment required in capital equipment tomanufacture high-end photomasks, has contributed to the decrease in the number of independent manufacturers, and we expectsuch pressure to continue in the future.EmployeesAs of October 31, 2018, we had approximately 1,575 employees. We believe we offer competitive compensation and otherbenefits, and that our employee relations are good.ITEM 1A.RISK FACTORSTechnology failures or cyber security breaches could have a material adverse effect on our operations.We rely on information technology systems to process, transmit, store, and protect electronic information. For example, asignificant portion of the communications between our personnel, customers, and suppliers depends on information technology.Our information technology systems may be vulnerable to a variety of interruptions due to events beyond our control, including,but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers, and other securityissues. We have technology and information security processes and disaster recovery plans in place to mitigate our risks to thesevulnerabilities. However, these measures may not be adequate to ensure that our operations will not be disrupted, should such anevent occur.The General Data Protection Regulation (GDPR), which went into effect in the European Union (EU) on May 25, 2018,applies to the collection, use, retention, security, processing, and transfer of personally identifiable information of residents of EUcountries. The GDPR created a range of new compliance obligations, and imposes6TABLE OF CONTENTSsignificant fines and sanctions for violations. It is possible that the GDPR may be interpreted or applied in a manner that is adverseto us, unforeseen by us, or otherwise inconsistent with our practices; or that we may otherwise fail to construe its requirements inways that are satisfactory to the EU authorities.Any failure, or perceived failure, by us to comply with the GDPR, or with any applicable regulatory requirements or orders,including but not limited to privacy, data protection, information security, or consumer protection-related privacy laws andregulations, in one or more jurisdictions within the EU or elsewhere, could: result in proceedings or actions against us bygovernmental entities or individuals; subject us to significant fines, penalties, and/or judgments; require us to change our businesspractices; limit access to our products and services in certain countries, or otherwise adversely affect our business, as we would beat risk to lose both customers and revenue, and incur substantial costs.The risk of loss of the Company’s intellectual property, trade secrets or other sensitive business or customer confidentialinformation or disruption of operations due to breaches of cybersecurity could negatively impact the Company’s financialresults.Cyber-attacks or security breaches could compromise confidential, business critical information, cause a disruption in theCompany’s operations or harm the Company’s reputation. The Company has important assets, including intellectual property,trade secrets and other sensitive, business critical and/or confidential information. While the Company has a comprehensivecybersecurity program that is continuously reviewed, maintained and upgraded, a significant cyber-attack could result in the lossof critical business or confidential information and/or could negatively impact operations, which could have a negative impact onthe Company’s financial results.Our dependency on the microelectronics industry, which as a whole is volatile, could have a negative material impact on ourbusiness.We sell substantially all of our photomasks to semiconductor or flat panel display designers, manufacturers and foundries, aswell as to other high performance electronics manufacturers. We believe that the demand for photomasks depends primarily ondesign activity rather than sales volume from products using photomask technologies. Consequently, an increase in semiconductoror FPD sales does not necessarily result in a corresponding increase in photomask sales. In addition, the reduced use of customizedICs, a reduction in design complexity, other changes in the technology or methods of manufacturing or designing semiconductorsor FPDs, or a slowdown in the introduction of new semiconductor or FPD designs could reduce demand for photomasks – even ifthe demand for semiconductors and FPDs increases. Historically, the semiconductor industry has been volatile, with sharp periodicdownturns and slowdowns. These downturns have been characterized by, among other things, diminished product demand, excessproduction capacity and accelerated erosion of selling prices with a concomitant effect on revenue and profitability.We may, in the future, incur net losses.Although we have been profitable since fiscal 2010, we have, in the past, incurred net losses. We cannot provide assurancethat we will not incur net losses in the future.We have a high level of fixed costs.As a consequence of the capital-intensive nature of the photomask manufacturing business, we have a high level of fixed costsand a high degree of operating leverage. Accordingly, should our sales volumes decline as a result of a decrease in design releasesfrom our customers or for any other reason, we may have excess or underutilized production capacity which could significantlyimpact our operating margins or result in write-offs from asset impairments.Our quarterly operating results fluctuate significantly and may continue to do so in the future.We have experienced fluctuations in our quarterly operating results, and we anticipate that such fluctuations will continueand could intensify in the future. Fluctuations in operating results may result in volatility in the prices of our common stock andfinancial instruments linked to its value. Operating results may fluctuate as a result of many factors, including the size and timingof orders and shipments, the loss of significant customers, changes in product mix, the flow of customer design releases,technological change, fluctuations in manufacturing yields, competition and general economic conditions. We operate in a highfixed-cost environment and, should our revenues and asset utilization decrease, our operating margins could be negativelyimpacted.7TABLE OF CONTENTSOur customers generally order photomasks on an as-needed basis, and our revenue in any quarter is dependent on ordersreceived during that quarter. Since we operate with little backlog, and the rate of new orders may vary significantly from quarter-to-quarter, our capital expenditures and, to some extent, expense levels are based primarily on sales forecasts and technologicaladvancements in photomask manufacturing equipment. Consequently, if anticipated revenues in any quarter do not occur whenexpected, capital expenditures could be higher than needed, resulting in underutilized capacity and disproportionately highexpense levels, causing operating results to be adversely affected. Due to the foregoing factors, we believe that quarter-to-quartercomparisons of our operating results cannot be relied upon as indicators of future performance. In addition, in future quarters, ouroperating results could be below any guidance we may provide as well as the expectations of public market analysts and investors,which, in turn, could have a material adverse effect on the market price of our common stock.The photomask industry is subject to rapid technological change, and we might fail to remain competitive, which could have amaterial adverse effect on our business and results of operations.The photomask industry has been, and is expected to continue to be, characterized by technological change and evolvingindustry standards. In order to remain competitive, we will be required to continually anticipate, respond to and utilize changingtechnologies of increasing complexity in both traditional and emerging markets that we serve. In particular, we believe that, assemiconductor geometries continue to become smaller and FPDs become larger or otherwise more advanced, we will be required tomanufacture increasingly complex photomasks. Additionally, the demand for photomasks has been, and could in the future be,adversely affected by changes in semiconductor and high- performance electronics fabrication methods that affect the type orquantity of photomasks utilized, such as changes in semiconductor demand that favor field-programmable gate arrays and othersemiconductor designs that replace application-specific ICs. Furthermore, evidence of the viability and the corresponding marketacceptance of alternative methods of transferring IC designs onto semiconductor wafers could reduce or eliminate the need forphotomasks in the production of semiconductors. As of the end of fiscal 2018, one alternative method, direct-write lithography, hasnot been proven to be a commercially viable alternative to photomasks, as it is considered to be too slow for high volumesemiconductor wafer production. However, should direct-write or any other alternative method of transferring IC or FPD designswithout the use of photomasks achieve market acceptance, and if we are unable to anticipate, respond to or utilize these or othertechnological changes, due to resource, technological or other constraints, our business and results of operations could bematerially adversely affected.Our operations will continue to require substantial capital expenditures, for which we may be unable to provide or obtainfunding.The manufacture of photomasks requires us to make substantial investments in high-end manufacturing capability. We expectthat we will be required to continue to make substantial capital expenditures to meet the technological demands of our customersand to position us for future growth. Our capital expenditure payments for fiscal 2019 are expected to be approximately $210million, of which $30 million was included in accounts payable on our October 31, 2018, consolidated balance sheet. We cannotprovide assurance that we will be able to obtain the additional capital required to fund our operations on reasonable terms, if at all,or that any such inability will not have a material adverse effect on our business and results of operations.We have been dependent on sales to a limited number of large customers; the loss of any of these customers or a significantreduction in orders from these customers could have a material adverse effect on our revenues and results of operations.Historically, we have sold a significant proportion of photomasks to a limited number of IC and FPD manufacturers. Duringfiscal years 2018, 2017 and 2016 our two largest customers accounted for 31%, 32% and 36%, respectively, of our revenue. Ourfive largest customers accounted for 47%, 43% and 50% of our revenue in fiscal years 2018, 2017 and 2016 respectively. The lossof a significant customer or a significant reduction or delay in orders from any significant customer, (including reductions or delaysdue to customer departures from recent buying patterns), or an unfavorable change in competitive conditions in the semiconductoror FPD industries, could have a material adverse effect on our financial performance and business prospects. The consolidation ofsemiconductor manufacturers or an economic downturn in the semiconductor industry may increase the likelihood of losing asignificant customer and could also have an adverse effect on our financial performance and business prospects.8TABLE OF CONTENTSWe depend on a limited number of suppliers for equipment and raw materials, and, if those suppliers fail to timely delivertheir products to us, we may be unable to fulfill orders from our customers, which could adversely affect our business andresults of operations.We rely on a limited number of photomask equipment manufacturers to develop and supply the equipment we use. Theseequipment manufacturers currently require lead times of up to twelve months or longer between the order and the delivery ofcertain photomask imaging and inspection equipment. The failure of our suppliers to develop or deliver such equipment on atimely basis could have a material adverse effect on our business and results of operations. In addition, the manufacturingequipment necessary to produce advanced photomasks could become prohibitively expensive, which could similarly affect us.We use high precision quartz photomask blanks, pellicles, and electronic grade chemicals in our manufacturing processes.There are a limited number of suppliers of these raw materials and we have no long-term contracts with these suppliers. Any delaysor quality problems in connection with significant raw materials, particularly photomask blanks, could cause delays in theshipments of photomasks, which could have a material adverse effect on our business and results of operations. The fluctuation offoreign currency exchange rates, with respect to prices of equipment and raw materials used in manufacturing, could also have amaterial adverse effect on our business and results of operations.We face risks associated with the use of sophisticated equipment and complex manufacturing processes and technologies. Ourinability to effectively utilize such equipment and technologies and perform such processes could have a material adverseeffect on our business and results of operations.Our complex manufacturing processes require the use of expensive and technologically sophisticated equipment andmaterials, and are continually modified in an effort to improve manufacturing yields and product quality. Minute impurities,defects or other difficulties in the manufacturing process can lower manufacturing yields and render products unmarketable.Moreover, the manufacture of leading-edge photomasks is more complex and time consuming than manufacturing less advancedphotomasks, and their fabrication may result in delays in the manufacture of all levels of photomasks. We have, on occasion,experienced manufacturing difficulties and capacity limitations that have delayed our ability to deliver products within the timeframes contracted for by our customers. We cannot provide assurance that we will not experience these or other manufacturingdifficulties, or be subject to increased costs which could result in a loss of customers or could otherwise have a material adverseeffect on our business and results of operations.We could be subject to damages based on claims brought against us by our customers or lose customers as a result of thefailure of our products to meet certain quality specifications.Our products provide important performance attributes to our customers’ products. If a product fails to perform in a mannerconsistent with quality specifications, or has a shorter useful life than warranted, a customer could seek replacement of the productor damages for costs incurred as a result of the product failing to perform, particularly if such products are sold under agreementsthat contain limited performance and life cycle warrantees. Our customers often require us to represent that our products conform tocertain product specifications that they provide. Any failure to comply with such specifications could result in claims or legalaction. A successful claim or series of claims against us could have a material adverse effect on our financial condition and resultsof operations and could result in a loss of one or more customers.Our credit agreements restrict our business activities, limit our ability to obtain additional financing and may obligate us torepay debt before its maturity.Financial covenants related to our credit facility, which expires in September 2023, include a Total Leverage Ratio, aMinimum Interest Coverage Ratio, and Minimum Unrestricted Cash Balances. Our credit facility may also limit our flexibility inplanning for, or reacting to, changes in our business and industry, which may place us at a competitive disadvantage comparedwith our competitors. We are also subject to covenants that limit our operating flexibility, such as limiting our ability to repurchaseshares of our common stock. Existing covenant restrictions limit our ability to obtain additional debt financing and, should we beunable to meet one or more of these covenants, our lenders may require us to repay any outstanding balance prior to the expirationdate of the agreements. Our ability to comply with the financial and other covenants in our credit agreements may be affected byworsening economic or business conditions, or other events. We cannot assure that, under such circumstances, additional sourcesof financing would be available to fund operating requirements or pay off any long-term borrowings, so as to avoid default.9TABLE OF CONTENTSJoint ventures may not operate according to their business plans if our partners fail to fulfill their obligations, which mayadversely affect our results of operations and may force us to dedicate additional resources to these joint ventures.The nature of a joint venture requires us to share control in certain areas with unaffiliated third parties. If our joint venturepartner does not fulfill its obligations, the affected joint venture may not be able to operate according to its business plan. Shouldthat be the case, our results of operations may be adversely affected and we may be required to increase the level of ourcommitment to the joint venture. Also, differences in views among joint venture participants may result in delayed decisions orfailures to agree on major issues. If these differences cause the joint ventures to deviate from their business plans, our results ofoperations could be adversely affected.We may not be able to consummate future acquisitions or joint ventures or integrate acquisitions into our business, whichcould result in unanticipated expenses and losses.As part of our business growth strategy, we have acquired businesses and entered into joint ventures in the past, and we maypursue acquisitions and joint venture opportunities in the future. Future efforts to grow the Company may include expanding intonew or related markets or industries. Our ability to implement this component of our growth strategy may be limited by both ourability to identify appropriate acquisition or joint venture candidates and our financial resources, including our available cash andborrowing capacity. The expense incurred in consummating acquisitions or entering into joint ventures, the time it takes tointegrate an acquisition, or our failure to integrate businesses successfully, could result in unanticipated expenses and losses.Furthermore, we may not be able to realize any of the anticipated benefits from acquisitions or joint ventures.The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties, andmay require significant financial resources that would otherwise be available for the ongoing development or expansion ofexisting operations. Some of the risks associated with the integration of acquisitions include: potential disruption of our ongoingbusiness and distraction of management; unforeseen claims and liabilities, including unexpected environmental exposures;unforeseen adjustments, taxes, charges and write-offs; problems enforcing the indemnification obligations of sellers of businessesor joint venture partners for claims and liabilities; unexpected losses of customers of, or suppliers to, the acquired business;difficulty in conforming the acquired businesses’ standards, processes, procedures and controls with our operations; variability infinancial information arising from the implementation of purchase price accounting; inability to coordinate new product andprocess development; loss of senior managers and other critical personnel and problems with new labor unions; and challengesarising from the increased scope, geographic diversity and complexity of our operations.Our expansion into China entails substantial risks.We are currently building two manufacturing facilities in China. These investments are subject to substantial risks which mayinclude, but are not limited to: delays in or the inability to obtain necessary permits that are needed to enable us to construct ourfacilities or conduct our ongoing business; the inability to protect our intellectual property rights under Chinese law, which maynot offer as high a level of protection as U.S. law; unexpectedly long negotiation periods with Chinese suppliers and customers;quality issues related to materials sourced from local vendors; unexpectedly high labor costs due to a tight labor supply; anddifficulty in repatriating funds and selling or transferring assets. Our investments in China also expose us to a significant additionalforeign currency exchange risk, which we have not been subject to in recent years. These and other risks may result in our notrealizing a return on, or losing some, or all, of our planned investments in China, which would have a material adverse effect on ourfinancial condition and financial performance.Our cash flows from operations and current holdings of cash may not be adequate for our current and long-term needs.Our liquidity, as we operate in a high fixed cost environment, is highly dependent on our revenue volume and the timing ofour capital expenditures, which can vary significantly from period to period. Depending on conditions in the semiconductor andFPD markets, our cash flows from operations and current holdings of cash may not be adequate to meet our current and long-termneeds for capital expenditures, operations and debt repayments. Historically, in certain years, we have used external financing tofund these needs. Due to conditions in the credit markets and covenant restrictions on our existing debt, some financinginstruments used by us in the past may not be available. Therefore, we cannot provide assurance that additional sources offinancing would be available to us on commercially favorable terms, if at all, should our cash requirements exceed our existingcash, operating cash flow and cash available under our credit facility.10TABLE OF CONTENTSWe may incur unforeseen charges related to possible future facility closures or restructurings.We cannot provide assurance that there will not be facility closures or restructurings in the near or long-term, nor can weassure that we will not incur significant charges should there be any future facility closures or restructurings.We operate in a highly competitive environment, and, should we be unable to meet our customers’ requirements for productquality, timeliness of delivery or technical capabilities, our revenue could be adversely affected.The photomask industry is highly competitive, and most of our customers utilize more than one photomask supplier. Ourcompetitors include Compugraphics International, Ltd., DNP (outside of Taiwan and China), Hoya Corporation, SK-ElectronicsCo., Ltd., Taiwan Mask Corporation and Toppan Printing Co., Ltd. We also compete with semiconductor manufacturers’ captivephotomask manufacturing operations, some of which market their photomask manufacturing services to outside customers. Weexpect to face continued competition from these and other suppliers in the future. Some of our competitors have substantiallygreater financial, technical, sales, marketing or other resources than we do. Also, when producing smaller geometry photomasks,some of our competitors may be able to more rapidly develop, produce, and achieve higher manufacturing yields than we can. Webelieve that consistency of product quality and timeliness of delivery, competitive pricing, technical capability, and service are theprincipal factors considered by customers when selecting their photomask suppliers. Our inability to meet these competitiverequirements could have a material adverse effect on our business and results of operations. In the past, competition has led topressure to reduce prices and the need to invest in advanced manufacturing technology, which we believe contributed to thedecrease in the number of independent photomask suppliers. These pressures may continue in the future.We operate in a global, competitive environment which gives rise to operating and market risk exposure.We sell our products in a competitive, global environment, and compete worldwide for sales on the basis of product quality,price, technology and customer service. Sales of our products are also subject to federal, state, local and foreign taxes, laws andregulations, trade agreements, import and export controls and duties and tariffs. The imposition of additional regulations, controlsincluding export controls and duties and tariffs or changes to bilateral and regional trade agreements could negatively impact ourresults of operations.Our substantial non-US operations are subject to additional risks.Revenues from our non-U.S. operations were approximately 79%, 77% and 76% of our total revenues in fiscal years 2018,2017 and 2016, respectively. We believe that maintaining significant international operations requires us to have, among otherthings, a local presence in the geographic markets that we supply. This requires significant investments in financial, managerial,operational, and other resources. Since 1996, we have significantly expanded our operations in international markets by acquiringexisting businesses in Europe, acquiring majority equity interests in photomask manufacturing operations in Korea and Taiwanand building a manufacturing facility for FPD photomasks in Taiwan. Currently, we are building two manufacturing facilities inChina. In order to enable us to optimize our investments and other resources, we closely monitor the semiconductor and FPDmanufacturing markets for indications of geographic movement and, in conjunction with these efforts, continue to assess thelocations of our manufacturing facilities. These assessments may result in the opening or closing of facilities.Operations outside of the United States are subject to inherent risks, including fluctuations in exchange rates, unstablepolitical and economic conditions in various countries, changes in economic alliances, unexpected changes in regulatoryrequirements, compliance with: a variety of burdensome foreign laws and regulations, with anti-bribery and anti-corruption laws(such as the Foreign Corrupt Practices Act), as well as anti-money-laundering laws may be costly, tariffs and other trade barriers,difficulties in staffing and managing international operations, longer accounts receivable payment cycles, foreign countries mayadopt other restrictions on foreign trade or investment, including currency exchange controls, trade sanctions could result in losingaccess to customers and suppliers in those countries, agreements may be difficult to enforce and receivables difficult to collect andpotentially adverse tax consequences. These factors may have a material adverse effect on our ability to generate revenues outsideof the United States and, consequently, on our business and results of operations.11TABLE OF CONTENTSOur business could suffer as a result of the United Kingdom’s decision to end its membership in the European Union.The decision of the United Kingdom to exit from the European Union (generally referred to as “BREXIT”) could causedisruptions to and create uncertainty surrounding our business, including affecting our relationships with existing and potentialcustomers, suppliers, and employees. The effects of BREXIT will depend on any agreements the United Kingdom makes to retainaccess to European Union markets either during a transitional period or more permanently. The measures could potentially disruptsome of our target markets and jurisdictions in which we operate, and adversely change tax benefits or liabilities in these or otherjurisdictions. In addition, BREXIT could lead to legal uncertainty and potentially divergent national laws and regulations, as theUnited Kingdom determines which European Union laws to replace or replicate. BREXIT also may create global economicuncertainty, which may cause our customers and potential customers to monitor their costs and reduce their budgets for either ourproducts or other products that incorporate our products. Any of these effects of BREXIT, among others, could materially adverselyaffect our business, business opportunities, results of operations, financial condition, and cash flows.Changes in foreign currency exchange rates could have a material adverse effect on our results of operations, financialcondition or cash flows.Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the UnitedStates of America (U.S. GAAP) and are reported in U.S. dollars. Our operations have transactions and balances denominated incurrencies other than the U.S. dollar; primarily the Korean won, New Taiwan dollar, Japanese yen, Chinese renminbi, euro,Singapore dollar, and the pound sterling. In fiscal year 2018, we recorded a net gain from changes in foreign currency exchangerates of $0.4 million in our statement of income, while our net assets were decreased by $16.7 million as a result of the translationof foreign currency financial statements to U.S. dollars. Significant foreign currency fluctuations may adversely affect our results ofoperations, financial condition or cash flows.Our business depends on managerial and technical personnel, who are in great demand, and our inability to attract and retainqualified employees could adversely affect our business and results of operations.Our success depends, in part, upon key managerial and technical personnel, as well as our ability to continue to attract andretain additional qualified personnel. The loss of certain key personnel could have a material adverse effect on our business andresults of operations. There can be no assurance that we can retain our key managerial and technical employees, or that we canattract similar additional employees in the future.We may be unable to enforce or defend our ownership and use of proprietary technology, and the utilization of unprotectedcompany developed technology by our competitors could adversely affect our business, results of operations and financialposition.We believe that the success of our business depends more on proprietary technology, information and processes, and know-how than on our patents or trademarks. Much of our proprietary information and technology related to manufacturing processes isnot patented and may not be patentable. We cannot offer assurance that:•we will be able to adequately protect our technology;•competitors will not independently develop similar technology; or•international intellectual property laws will adequately protect our intellectual property rights.We may become the subject of infringement claims or legal proceedings by third parties with respect to current or futureproducts or processes. Any such claims, with or without merit, or litigation to enforce or protect our intellectual property rights thatrequire us to defend against claimed infringements of the rights of others, could result in substantial costs, diversion of resources,and product shipment delays or could force us to enter into royalty or license agreements, rather than dispute the merits of theseclaims. Any of the foregoing could have a material adverse effect on our business, results of operations and financial position.We may be unprepared for changes to environmental laws and regulations and may incur liabilities arising fromenvironmental matters.We are subject to numerous environmental laws and regulations that impose various environmental controls on, among otherthings, the discharge of pollutants into the air and water and the handling, use, storage, disposal and12TABLE OF CONTENTSclean-up of solid and hazardous wastes. Changes in these laws and regulations may have a material adverse effect on our financialposition and results of operations, and inadequate compliance with their requirements could give rise to significant liabilities.If we violate environmental, health or safety laws or regulations, in addition to being required to correct such violations, wecan be held liable in administrative, civil or criminal proceedings, and substantial fines and other sanctions could be imposed thatcould disrupt or limit our operations. Liabilities associated with the investigation and cleanup of hazardous substances, as well aspersonal injury, property damages or natural resource damages arising from the release of, or exposure to, such hazardoussubstances, may be imposed in many situations without regard to violations of laws or regulations or other fault, and may also beimposed jointly and severally (so that a responsible party may be held liable for more than its share of the losses involved, or eventhe entire loss). Such liabilities may also be imposed on many different entities with a relationship to the hazardous substances atissue, including, for example, entities that formerly owned or operated the property affected by the hazardous substances andentities that arranged for the disposal of the hazardous substances at the affected property, as well as entities that currently own oroperate such property. The nature of our business, including historical operations at our current and former facilities, exposes us torisks of liability under these laws and regulations due to the production, storage, use, transportation and sale of materials that cancause contamination or personal injury if released into the environment. Additional information may arise in the future concerningthe nature or extent of our liability with respect to identified sites and additional sites that may be identified for which we arealleged to be liable.Our production facilities could be damaged or disrupted by natural disasters or labor strikes, either of which could adverselyaffect our financial position, results of operations and cash flows.A major catastrophe, such as an earthquake or other natural disaster, labor strike, or work stoppage at any of our manufacturingfacilities, or a manufacturing facility of our suppliers or customers, could result in a prolonged interruption of our business. Adisruption resulting from any one of these events could cause significant delays in shipments of our products and the loss ofrevenue and customers, which could have a material adverse effect on our financial position, results of operations, and cash flows.Our facilities in Taiwan are located in a seismically active area.Our sales can be impacted by the health and stability of the general economy, which could adversely affect our results ofoperations and cash flows.Unfavorable general economic conditions in the U.S. or other countries in which we or our customers conduct business mayhave the effect of reducing the demand for photomasks. Economic downturns may lead to a decrease in demand for end productswhose manufacturing processes involve the use of photomasks, which may result in a reduction in new product design anddevelopment by semiconductor or FPD manufacturers and adversely affect our results of operations and cash flows.Additional taxes could adversely affect our financial results.Our tax filings are subject to audits by tax authorities in the various jurisdictions in which we do business. These audits mayresult in assessments of additional taxes that are subsequently resolved with the taxing authorities or through the courts. Currently,we believe there are no outstanding assessments whose resolution would result in a material adverse financial result. However, wecannot offer assurances that unasserted or potential future assessments would not have a material adverse effect on our financialcondition or results of operations.Our business could be adversely impacted by global or regional catastrophic events.Our business could be adversely affected by terrorist acts, major natural disasters, widespread outbreaks of infectious diseases,or the outbreak or escalation of wars, especially in the Asian markets, where we generate a significant portion of our sales, and inJapan where we purchase raw materials and capital equipment. Such events in the geographic regions in which we do business,including escalations of political tensions and military operations within the Korean Peninsula, where a significant portion of ourforeign operations are located, could have material adverse impacts on our revenue, cost and availability of raw materials, results ofoperations, cash flows and financial condition.Servicing our debt requires a significant amount of cash, and we may not generate sufficient cash flows from our operations topay our indebtedness.Our ability to make scheduled payments of debt principal and interest, or to refinance our indebtedness, depends on our futureperformance, which is subject to economic, financial, competitive and other factors beyond our control.13TABLE OF CONTENTSOur business may not continue to generate sufficient cash flows from operations to both service our debt and make necessarycapital expenditures. If we are unable to generate such cash flows, we may be required to adopt one or more alternatives, such asselling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our abilityto refinance our indebtedness would depend upon the conditions in the capital markets and our financial condition at such time.We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in adefault on our debt obligations.Our hedging activity could negatively impact our results of operations and cash flows.We may enter into derivatives to manage our exposure to interest rate and currency movements. If we do not accuratelyforecast our results of operations, execute contracts that do not effectively mitigate our economic exposure to interest rates andcurrency rates, elect to not apply hedge accounting, or fail to comply with the complex accounting requirements for hedgingtransactions, our results of operations and cash flows could be volatile, as well as negatively impacted.The market price of our common stock is subject to volatility and could fluctuate widely in response to various factors, manyof which are beyond our control.Factors that may influence the price of our common stock include, but are not limited to, the following:•loss of any of our key customers or suppliers;•additions or departures of key personnel;•third party sales of common stock;•our ability to execute our business plan, including but not limited to, our expansion into China;•announcements and consummations of business acquisitions;•operating results that fall below expectations;•issuances or repurchases of our common stock;•intellectual property disputes;•industry developments;•news or disclosures by competitors or customers;•business combinations, divestitures or bankruptcies by customers, suppliers or competitors;•economic and other external factors; and•period-to-period fluctuations in our financial results.In addition, securities markets have from time to time experienced significant price and volume fluctuations that are unrelatedto the operating performance of particular companies. These market fluctuations may also materially and adversely affect themarket price of our common stock. Such fluctuations may be the result of imbalances between buy and sell offers, or low tradingvolume which can magnify the effects of a small number of transactions on the price of a stock.Ineffective Internal Controls could impact our Business and Operating Results.Our internal controls over financial reporting may not prevent or detect misstatements because of the inherent limitations,including the possibility of human error, the circumvention or overriding of controls, or fraud. Even effective internal controls canprovide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail tomaintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if weexperience difficulties in their implementation, our business and operating results could be harmed, and we could fail to meet ourfinancial reporting obligations.ITEM 1B.UNRESOLVED STAFF COMMENTSNone.14TABLE OF CONTENTSITEM 2.PROPERTIESThe following table presents certain information about the Company’s photomask manufacturing facilities:LocationType of InterestAllen, TexasOwnedBoise, IdahoOwnedBrookfield, ConnecticutOwnedBridgend, WalesLeasedCheonan, KoreaOwnedDresden, GermanyLeasedHsinchu, TaiwanOwned(1)Hsinchu, TaiwanLeasedTaichung, TaiwanOwned(1)(1)The Company owns its manufacturing facility in Taichung and one of its manufacturing facilities in Hsinchu. However, it leases the related land.We are currently building two manufacturing facilities on lands that we lease in Xiamen and Hefei, China.ITEM 3.LEGAL PROCEEDINGSWe are subject to various claims that arise in the ordinary course of business. We believe such claims, individually or in theaggregate, will not have a material adverse effect on our business.ITEM 4.MINE SAFETY DISCLOSURESNot applicable.15TABLE OF CONTENTSPART IIITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUERPURCHASES OF EQUITY SECURITIESThe Common Stock of the Company is traded on the NASDAQ Global Select Market (“NASDAQ”) under the symbol PLAB.On December 13, 2018, the closing sale price of our Common Stock, per the NASDAQ Global Select Market, was $10.02. Based onavailable information, we estimate that we have approximately 8,000 shareholders.To date, we have not paid any cash dividends on PLAB shares, and, for the foreseeable future, we anticipate that earnings willcontinue to be retained for use in our business. Further, our credit facility limits the amount that can be paid as cash dividends onPhotronics stock.Issuer Purchases of Equity SecuritiesIn July 2018 and October 2018, the Company’s Board of Directors authorized the repurchase of up to $20 million and $25million, respectively, of its common stock, to be executed in open-market transactions or in accordance with a repurchase planunder rule 10b5-1 of the Securities Act of 1933 (as amended). The authorization does not obligate us to repurchase any dollaramount or number of shares of common stock, and the repurchase program may be suspended or discontinued at any time. Total Number ofShares Purchased(in millions)Average PricePaidPer shareTotal Number of SharesPurchased as Part ofPublicly AnnouncedProgram (in millions)Dollar Value ofShares That MayYet Be Purchased(in millions)Period July 10, 2018 – July 29, 2018 0.8 $8.72 0.8 $13.2 July 30, 2018 – August 26, 2018 0.9 $9.05 0.9 $5.0 September 23, 2018 – October 31, 2018 0.9 $9.46 0.9 $21.9 Total 2.6 $9.04 2.6 Securities authorized for issuance under equity compensation plansThe information regarding our equity compensation required to be disclosed by Item 201(d) of Regulation S-K is incorporatedby reference from the Photronics, Inc. 2019 definitive Proxy Statement in Item 12 of Part III of this report. The 2019 ProxyStatement will be filed within 120 days after our fiscal year ended October 31, 2018.16TABLE OF CONTENTSITEM 6.SELECTED FINANCIAL DATAThe following selected financial data (in thousands, except per share amounts) is derived from our audited consolidatedfinancial statements. The data should be read in conjunction with the audited consolidated financial statements and notes thereto,and other financial information included elsewhere in this Annual Report on Form 10-K. Year Ended October 31,2018October 29,2017October 30,2016November 1,2015November 2,2014OPERATING DATA: Revenue$535,276 $450,678 $483,456 $524,206 $455,527 Cost of goods sold (403,773) (359,363) (364,750) (381,070) (355,181)Gross profit 131,503 91,315 118,706 143,136 100,346 Selling, general and administrative (51,395) (43,585) (44,577) (48,983) (49,638)(e)Research and development (14,481) (15,862) (21,654) (21,920) (21,913)Operating income 65,627 31,868 52,475 72,233 28,795 Other income (expense): Interest and other income (expense), net 5,206(a) (3,068) 2,424 2,797(d) 3,410 Interest expense (2,262) (2,235) (3,365) (4,990) (7,247)Gains on sales of investments — — 8,940(b) — — Gain on acquisition — — — — 16,372(f)Income before income tax provision 68,571 26,565 60,474 70,040 41,330 Income tax provision (7,335) (5,276) (4,798)(c) (13,181) (9,295)Net income 61,236(a) 21,289 55,676 56,859(d) 32,035(e)(f) Net income attributable to noncontrollinginterests (19,181) (8,159) (9,476) (12,234) (6,039) Net income attributable to Photronics, Inc.shareholders$42,055(a)$13,130 $46,200(b)(c)$44,625(d)$25,996(e)(f) Earnings per share: Basic$0.61(a)$0.19 $0.68(b)(c)$0.67(d)$0.42(e)(f)Diluted$0.59(a)$0.19 $0.64(b)(c)$0.63(d)$0.41(e)(f) Weighted-average number of common sharesoutstanding: Basic 68,829 68,436 67,539 66,331 61,779 Diluted 74,821 69,288 76,354 78,383 66,679 17TABLE OF CONTENTSBALANCE SHEET DATA As of October 31,2018October 29,2017October 30,2016November 1,2015November 2,2014Working capital$311,655 $367,348 $360,269 $168,237 $190,152 Property, plant and equipment, net 571,781 535,197 506,434 547,284 550,069 Total assets 1,110,009 1,020,794 987,988 1,042,811 1,025,564 Total debt 57,453 61,976 67,288 132,219 141,011 Total Photronics, Inc. shareholders’ equity 759,671 744,564 710,363 646,555 628,050 (a)Includes $0.6 million gain on sale of assets.(b)Includes $8.8 million gain on sale of investment in a foreign entity and $0.2 million gain on the sale of the Company’s 49.99% interest in the MPMask joint venture.(c)Includes tax benefits in Taiwan of $4.8 million primarily related to the recognition of prior period tax benefits and other tax positions no longerdeemed necessary.(d)Includes $0.9 million of financing expenses related to the exchange of $57.5 million of 3.25% convertible senior notes.(e)Includes $2.5 million, net of tax, of expenses related to the acquisition of DPTT.(f)Includes non-cash gain of $16.4 million, net of tax, on acquisition of DPTT.18TABLE OF CONTENTSITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONSResults of Operations for the Years Ended October 31, 2018, October 29, 2017 and October 30, 2016OverviewWe sell substantially all of our photomasks to semiconductor designers and manufacturers, and manufacturers of FPDs.Photomask technology is also being applied to the fabrication of other higher performance electronic products such as photonics,micro-electronic mechanical systems and certain nanotechnology applications. Our selling cycle is tightly interwoven with thedevelopment and release of new semiconductor designs and flat panel display applications, particularly as they relate to thesemiconductor industry’s migration to more advanced product innovation, design methodologies and fabrication processes. Webelieve that the demand for photomasks primarily depends on design activity rather than sales volumes from productsmanufactured using photomask technologies. Consequently, an increase in semiconductor or FPD sales does not necessarily resultin a corresponding increase in photomask sales. However, the reduced use of customized ICs, reductions in design complexity,other changes in the technology or methods of manufacturing or designing semiconductors, or a slowdown in the introduction ofnew semiconductor or FPD designs could reduce demand for photomasks – even if the demand for semiconductors and FPDsincreases. Advances in semiconductor, FPD and photomask design and semiconductor and FPD production methods that shift theburden of achieving device performance away from lithography could also reduce the demand for photomasks. Historically, themicroelectronic industry has been volatile, experiencing periodic downturns and slowdowns in design activity. These downturnshave been characterized by, among other things, diminished product demand, excess production capacity and accelerated erosionof selling prices with a concomitant effect on revenue and profitability.We are typically required to fulfill customer orders within a short period of time, sometimes within 24 hours. This results inour having a minimal level of backlog orders, typically one to two weeks of backlog for IC photomasks and two to three weeks ofbacklog for FPD photomasks.The global semiconductor industry is driven by end markets which have been closely tied to consumer driven applications ofhigh performance semiconductor devices, including, but not limited to, mobile display devices, mobile communications, andcomputing solutions. While we cannot predict the timing of the industry’s transition to volume production of next-generationtechnology nodes, or the timing of up and down cycles with precise accuracy, we believe that such transitions and cycles willcontinue into the future, beneficially and adversely affecting our business, financial condition and operating results as they occur.We believe our ability to remain successful in these environments is dependent upon the achievement of our goals of being aservice and technology leader and efficient solutions supplier, which we believe should enable us to continually reinvest in ourglobal infrastructure.We are focused on improving our competitiveness by advancing our technology and reducing costs and, in connectiontherewith, have invested and plan to continue to invest in manufacturing equipment to serve the high-end markets. As we facechallenges in the current and near term that require us to make significant improvements in our competitiveness, we continue toevaluate further cost reduction initiatives.As of December 2018, state-of-the-art production for semiconductor masks is considered to be 28 nanometer and smaller forICs and Generation 8 and above and AMOLED display-based process technologies for FPDs. However, 32 nanometer and abovegeometries for semiconductors and Generation 7 and below, excluding AMOLED, process technologies for FPDs constitute themajority of designs currently being fabricated in volume. At these geometries, we can produce full lines of photomasks, and there isno significant technology employed by our competitors that is not available to us. We expect 28 nanometer and below designs tocontinue to move to wafer fabrication throughout fiscal 2019, and we believe we are well positioned to service an increasingvolume of this business as a result of our investments in manufacturing processes and technology in the regions where ourcustomers are located.The photomask industry has been, and is expected to continue to be, characterized by technological change and evolvingindustry standards. In order to remain competitive, we will be required to continually anticipate, respond to, and utilize changingtechnologies. In particular, we believe that, as semiconductor geometries continue to become smaller, and FPD designs becomelarger or otherwise more advanced, we will be required to manufacture even more complex optically-enhanced reticles, includingoptical proximity correction and phase-shift photomasks. Additionally, demand for photomasks has been, and could in the futurebe, adversely affected by changes in semiconductor and high performance electronics fabrication methods that affect the type orquantity of photomasks19TABLE OF CONTENTSused, such as changes in semiconductor demand that favor field-programmable gate arrays and other semiconductor designs thatreplace application-specific ICs, or the use of certain chip stacking methodologies that lessen the emphasis on conventionallithography technology. Furthermore, increased market acceptance of alternative methods of transferring circuit designs ontosemiconductor wafers could reduce or eliminate the need for photomasks in the production of semiconductors. As of the end offiscal year 2018, one alternative method, direct-write lithography, has not been proven to be a commercially viable alternative tophotomasks, as it is considered to be too slow for high volume semiconductor wafer production, and we have not experienced asignificant loss of revenue as a result of this or other alternative semiconductor design methodologies. However, should direct-write lithography or any other alternative method of transferring IC designs to semiconductor wafers without the use of photomasksachieve market acceptance, and we do not anticipate, respond to, or utilize these or other changing technologies due to resource,technological or other constraints, our business and results of operations could be materially adversely affected.Both our revenues and costs have been affected by the increased demand for high-end technology photomasks that requiremore advanced manufacturing capabilities, but generally command higher average selling prices (“ASPs”). Our capital expenditurepayments aggregated approximately $235 million for the three fiscal years ended October 31, 2018, which has significantlycontributed to our cost of goods sold. We intend to continue to make the required investments to support the technologicaldemands of our customers that we believe will position the Company for future growth. In support of this effort, we expect capitalexpenditure payments to be approximately $210 million in fiscal year 2019.The manufacture of photomasks for use in fabricating ICs, FPDs, and other related products built using comparablephotomask-based process technologies has been, and continues to be, capital intensive. Our employees and our integrated globalmanufacturing network, which will expand to eleven manufacturing sites in 2019, represent a significant portion of our fixedoperating cost base. Should our revenue decrease as a result of a decrease in design releases from our customers, we may haveexcess or underutilized production capacity, which could significantly impact our operating margins, or result in write-offs fromasset impairments.In the first quarter of fiscal 2019, PDMC, the Company’s majority owned subsidiary in Taiwan, paid a dividend of which49.99%, or approximately $26.0 million, was paid to noncontrolling interests.In November FY2019, Xiamen American Japan Photronics Mask Co., Ltd. (“PDMCX”), an indirect majority owned jointventure subsidiary of Photronics, Inc., entered into a commitment letter for an 8-year term loan agreement under which it canborrow up to approximately $50.0 million (“the Project Loan”). PDMCX will use the Project Loan to finance certain capitalexpenditures in China. PDMCX will grant a lien on the land, building and equipment owned by PDMCX as collateral for theProject Loan. The interest rate of the Project Loan is based on the benchmark lending rate (as defined in the Project Loanagreement) plus a floating rate spread, of the People’s Bank of China on the date of borrowings. We anticipate that interest incurredon this loan will be reimbursed through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, up to acertain cap.On November 7, 2018, PDMCX entered into a working capital loan agreement with a maximum borrowing limit ofapproximately $25.0 million, (“the Working Capital Loan”). In November 2018, we borrowed $2.2 million against this loan.PDMCX will use the Working Capital Loan for general financing purposes including for the payment of import and value addedtaxes. The term of the Working Capital Loan will not exceed three years, and no guarantees were required under the terms of theWorking Capital Loan. The interest rate of the Working Capital Loan is based on the benchmark lending rate (as defined in theWorking Capital Loan agreement) plus a floating rate spread, of the People’s Bank of China on the date of borrowings. Weanticipate that interest incurred on this loan will be reimbursed through incentives provided by the Xiamen Torch Hi-TechIndustrial Development Zone, up to a certain cap.In the fourth quarter of fiscal 2018, we entered into an amendment to our credit agreement (the “credit agreement”) whichallows us to sell, transfer, lease, or otherwise dispose of our assets to a subsidiary guarantor. Subsequently, in that same fiscalquarter, we entered into an amended and restated credit agreement (“the new agreement”) that expires in September 2023, whichcarried forward the amendment made to the credit agreement. The new agreement, which replaced our prior credit agreement, has a$50 million borrowing limit, and a $50 million expansion capacity, which represents a $25 million increase over the previouscredit agreement. The new agreement is secured by substantially all of our assets located in the United States and common stock weown in certain of our foreign subsidiaries, and limits the amount we can pay in cash dividends on Photronics, Inc. stock. The newagreement contains the following financial covenants: minimum interest coverage ratio, total leverage ratio and20TABLE OF CONTENTSminimum unrestricted cash balance, all of which we were in compliance with at October 31, 2018. We had no outstandingborrowings against the new agreement at October 31, 2018, and $50 million was available for borrowing. The interest rate on thenew agreement (2.30% at October 31, 2018) is based on our total leverage ratio at LIBOR plus a spread, as defined in the creditagreement.In the fourth quarter of fiscal 2018, the Company’s Board of Directors authorized the repurchase of up to $25 million of itscommon stock, to be executed in open-market transactions or in accordance with a repurchase plan under rule 10b5-1 of theSecurities Act of 1933 (as amended). The share repurchase program commenced, under 10b5-1, on October 22, 2018, and willexpire no later than October 21, 2019. As of October 31, 2018, we had repurchased a combined 2.6 million shares at a cost of $23.1million (an average of $9.04 per share) under this and our share repurchase program that commenced in the third quarter of fiscal2018 (discussed below). The volume of shares repurchased are subject to market conditions, and our continual evaluation of theoptimal use of our cash.In the third quarter of fiscal 2018, the Company’s Board of Directors authorized the repurchase of up to $20 million of itscommon stock, to be effectuated in open-market transactions or in accordance with a repurchase plan under rule 10b5-1 of theSecurities Act of 1933 (as amended). The share repurchase program commenced on July 10, 2018, and was completed in October2018.In the third quarters of fiscal years 2018, 2017, and 2016, our majority owned IC facility in Taiwan paid dividends of $8.2million, $8.3 million, and $11.9 million, respectively, to its noncontrolling interest.In the first quarter of fiscal 2018, we announced the successful closing of the China joint venture agreement with Dai NipponPrinting Co., Ltd. (“DNP”), which we had agreed to enter into and announced in the third quarter of fiscal 2017 (see discussionbelow). Under the agreement, our wholly-owned Singapore subsidiary owns 50.01% of the joint venture, which is namedPhotronics DNP Mask Corporation Xiamen (PDMCX), and a subsidiary of DNP owns the remaining 49.99%. The financial resultsof the joint venture are included in the Photronics, Inc. consolidated financial statements. See Note 4 of the condensedconsolidated financial statements for additional information on the joint venture.In the fourth quarter of fiscal 2017, we announced that Photronics UK, Ltd., a wholly-owned subsidiary of ours, signed aninvestment agreement with Hefei State Hi-tech Industry Development Zone to establish a manufacturing facility in Hefei, China.Under the terms of the agreement, through our subsidiary, we will invest a minimum of $160 million, a portion of which may befunded with local borrowings, to build and operate a research and development and manufacturing facility for high-end andmainstream FPD photomasks. Hefei State Hi-tech Industry Development Zone will provide certain investment incentives andsupport for this facility, which will have initial capability to produce up to G10.5+ large area masks and AMOLED products.Construction began in late 2017 and production is anticipated to commence in the first half 2019.In the fourth quarter of 2016, Photronics Singapore Pte, Ltd., a wholly-owned subsidiary, signed an investment agreement withthe Administrative Committee of Xiamen Torch Hi-Tech Industrial Development Zone (Xiamen Torch) to establish an ICmanufacturing facility in Xiamen, China. Under the terms of the agreement, we will build and operate an IC facility to engage inresearch and development, manufacture and sale of photomasks, in return for which Xiamen Torch will provide certain investmentincentives and support. This expansion is also substantially supported by customer commitments for its output. As discussedabove, in the first quarter of fiscal 2018, we entered into a joint venture agreement with DNP, under which they hold a 49.99%ownership interest in this investment. The total investment per the agreement is $160 million, of which approximately $62 millionremained for Photronics as of October 31, 2018, and will be funded over the next several years with cash and local borrowings.Construction began in 2017 and production is anticipated to start in the first half of 2019.In the third quarter of fiscal 2016, we sold our investment in MP Mask to Micron for $93.1 million and recorded a gain of $0.1million on the sale. On that same date, a supply agreement commenced between Photronics and Micron, which provided that wewould be the majority outsourced supplier of Micron’s photomasks and related services. The supply agreement had a one year termand expired in May 2017. We have unlimited rights to use the technology under our prior technology license agreement.In the second quarter of fiscal 2016, $57.5 million of our senior convertible notes matured. We repaid $50.1 million tonoteholders, and issued approximately 0.7 million shares to noteholders that elected to convert their notes to common stock. Thenotes were exchanged at the rate of approximately 96 shares per $1,000 note principle, equivalent to a conversion rate of $10.37per share.21TABLE OF CONTENTSResults of OperationsThe following tables present selected operating information expressed as a percentage of revenue: Three Months Ended October 31,2018July 29,2018October 29,2017Revenue 100.0% 100.0% 100.0%Cost of goods sold (75.5) (73.9) (78.1) Gross profit 24.5 26.1 21.9 Selling, general and administrative expenses (9.3) (9.2) (8.4)Research and development expenses (2.7) (1.9) (3.2)Operating income 12.5 15.0 10.3 Other income (expense), net 1.5 1.0 0.4 Income before income tax provision 14.0 16.0 10.7 Income tax provision (2.4) (1.5) (2.0)Net income 11.6 14.5 8.7 Net income attributable to noncontrolling interests (3.0) (5.0) (4.2)Net income attributable to Photronics, Inc. shareholders 8.6% 9.5% 4.5% Year Ended October 31,2018October 29,2017October 30,2016Revenue 100.0% 100.0% 100.0%Cost of goods sold (75.4) (79.7) (75.4) Gross profit 24.6 20.3 24.6 Selling, general and administrative expenses (9.6) (9.7) (9.2)Research and development expenses (2.7) (3.5) (4.5)Operating income 12.3 7.1 10.9 Interest income and other income (expense) 0.9 (0.7) 0.5 Interest expense (0.4) (0.5) (0.7)Gains on sales of investments — — 1.8 Income before income tax provision 12.8 5.9 12.5 Income tax provision (1.4) (1.2) (1.0)Net income 11.4 4.7 11.5 Net income attributable to noncontrolling interests (3.5) (1.8) (1.9)Net income attributable to Photronics, Inc. shareholders 7.9% 2.9% 9.6%Note: All the following tabular comparisons, unless otherwise indicated, are for the three months ended October 31, 2018 (Q4FY18), July 29, 2018 (Q3 FY18) and October 29, 2017 (Q4 FY17), and for the fiscal years ended October 31, 2018 (FY18), October29, 2017 (FY17) and October 30, 2016 (FY16), in millions of dollars.Revenue Q4 FY18 Comparedwith Q3 FY18Q4 FY18 Comparedwith Q4 FY17 Revenue inQ4 FY18PercentChangeIncrease(Decrease)PercentChangeIncrease(Decrease)IC High-end$39.4 (14.4)%$(6.7) 29.5%$9.0 Mainstream 71.5 16.8% 10.3 8.9% 5.8 Total IC$110.9 3.4%$3.6 15.4%$14.8 FPD High-end$22.0 29.0%$5.0 28.5%$4.9 Mainstream 11.8 (2.5)% (0.3) 51.2% 4.0 Total FPD$33.8 15.9%$4.7 35.6%$8.9 Total Revenue$144.7 6.1%$8.3 19.6%$23.7 22TABLE OF CONTENTSIn Q1 FY18, we changed the threshold for the definition of high-end IC, from 45 nanometer or smaller to 28 nanometer orsmaller, to reflect the overall advancement of technology in the semiconductor industry. All comparisons to prior period results inthis MD&A reflect this modification. Our definition of high-end FPD products remains as G8 and above and active matrix organiclight-emitting diode (AMOLED) display screens. High-end photomasks typically have higher ASPs than mainstream products.Our quarterly revenues can be affected by the seasonal purchasing tendencies of our customers. As a result, demand for ourproducts is typically negatively impacted during the first, and sometimes the second, quarters of our fiscal year by the NorthAmerican, European, and Asian holiday periods, as some of our customers reduce their development and, consequently, theirbuying activities during those periods.The following tables compare revenue in Q4 FY18 with revenue in Q3 FY18 and Q4 FY17 by geographic area: Q4 FY18 with Q3 FY18Q4 FY18 with Q4 FY17 Revenue inQ4 FY18PercentChangeIncrease(Decrease)PercentChangeIncrease(Decrease)Taiwan$62.3 0.3%$0.2 13.1%$7.2 Korea 40.8 9.5% 3.6 40.7% 11.8 United States 30.7 10.8% 3.0 16.0% 4.2 Europe 9.8 14.5% 1.2 0.5% 0.1 Other 1.1 38.9% 0.3 54.2% 0.4 $144.7 6.1%$8.3 19.6%$23.7 Revenue increased 6.1% in Q4 FY18 compared with Q3 FY18, as a result of mainstream IC and high end FPD growth. ICmainstream increased 16.8% from Q3 FY18, due to healthy foundry demand across Asia. High end IC decreased 14.4%, as softdemand for high-end logic offset growth in high-end memory. FPD revenue increased 15.9% from Q3 FY18 due to an increase inhigh end driven by mobile AMOLED demand, partially offset by a decrease in FPD mainstream. The decrease in FPD mainstreamwas slightly offset by improved demand from masks used in LTPS LCD mobile displays.Revenue increased 19.6% in Q4 FY18 compared with Q4 FY17, primarily as a result of high-end and mainstream IC growth.That revenue increased 15.4% from Q4 FY17, due to high-end growth in both logic and memory from the healthy foundry demandacross Asia. FPD revenue increased 35.6% from Q4 FY17 due to better demand across our products and markets, particularly inmobile displays.The following tables compare revenue in FY18 with revenue in FY17, and revenue in FY17 with revenue in FY16: FY18 Comparedwith FY17FY17 Comparedwith FY16 Revenue inFY18PercentChangeIncrease(Decrease)PercentChangeIncrease(Decrease)IC High-end$160.4 61.9%$61.3 16.3%$13.9 Mainstream 255.7 1.8% 4.5 (10.1)% (28.2)Total IC$416.1 18.8%$65.8 (3.9)%$(14.3)FPD High-end$76.1 12.1%$8.2 (21.6)%$(18.7)Mainstream 43.1 32.6% 10.6 0.7% 0.2 Total FPD$119.2 18.7%$18.8 (15.6)%$(18.5)Total Revenue$535.3 18.8%$84.6 (6.8)%$(32.8)23TABLE OF CONTENTS FY18 with FY17FY17 with FY16 Revenue inFY18PercentChangeIncrease(Decrease)Revenue inFY17PercentChangeIncrease(Decrease)Taiwan$237.0 26.2%$49.2 $187.8 (2.8)%$(5.4)Korea 147.1 20.4% 24.9 122.2 (13.4)% (18.9)United States 112.7 10.4% 10.6 102.0 (10.2)% (11.6)Europe 35.5 (1.5)% (0.5) 36.1 8.1% 2.7 Other 3.0 15.9% 0.4 2.6 18.7% 0.4 $535.3 18.8%$84.6 $450.7 (6.8)%$(32.8)Revenue increased 18.8% in FY18 compared with FY17 primarily due to increased high end IC growth. That revenueincreased 61.9% due to growth in both logic and memory from healthy foundry demand across Asia. FPD revenue increased 18.7%from FY17 due to better demand across our products and markets.Revenue decreased 6.8% in FY17 compared with FY16 primarily due to decreases in both IC and FPD. IC photomask revenuedecreased 3.9% as growth in high-end memory was offset by weakness in high-end and mainstream logic. FPD sales decreased15.6% in FY17 compared with FY16 primarily due to a decline in high-end mobile displays.As we begin our 2019 fiscal year, we are cautiously optimistic, as we observe favorable signs of demand drivers, but we areaware of certain potential macro challenges. While the photomask market has held up well, there are some sectors in thesemiconductor industry that have witnessed slowing demand. If this expands into a more widespread economic slowdown, then it’spossible that our markets will also be impacted. In addition to potential demand challenges, there are also geopolitical risks, theoutcome of which are uncertain. We currently expect greater than normal seasonal impact in Q1 as the high-end IC market looks toremain soft, and we will have fewer days in our fiscal first quarter. Beyond the first quarter, growth will be dependent on the shapeand duration of any potential market downturn. As we approach the second half of the year, we anticipate additional growth fromthe ramp of our new China facilities. As a result, we anticipate that, our 2019 growth will be dependent on underlying marketdemand and how effectively we ramp production in China.Gross Profit Percent Change Q4 FY18Q3 FY18Q4 FY17Q4 FY18from Q3FY18Q4 FY18from Q4FY17Gross profit$35.4 $35.6 $26.4 (0.5)% 34.0%Gross margin 24.5% 26.1% 21.9% Gross profit and gross margin decreased in Q4 FY18, compared with Q3 FY18, primarily due to increased materials andequipment maintenance costs incurred in the current quarter. Gross profit and gross margin increased in Q4 FY18, compared withQ4 FY17, primarily as a result of the increased revenue in the current quarter, which exceeded increased materials, labor, and otheroverhead costs incurred in Q4 FY18. As we operate in a high fixed-cost environment increases or decreases in our revenues andcapacity utilization will generally positively or negatively impact our gross margin. Percent Change FY18FY17FY16FY18fromFY17FY17fromFY16Gross profit$131.5 $91.3 $118.7 44.0% (23.1)%Gross margin 24.6% 20.3% 24.6% Gross profit and gross margin increased on a full-year basis in FY18, compared with FY17, primarily as a result of theincreased revenue in the current year, which exceeded increased materials, labor, and other overhead costs incurred in FY18. Grossprofit and gross margin decreased in FY17, compared with FY16, primarily due to a decrease in overall revenue that resulted fromlower ASPs and, to a lesser extent, a reduction in units sold.24TABLE OF CONTENTSSelling, General and Administrative ExpensesSelling, general and administrative expenses increased by $1.0 million, or 8.0%, to $13.5 million in Q4 FY18, from $12.5million in Q3 FY18, primarily due to increased compensation and freight expenses. Selling, general and administrative expensesincreased in Q4 FY18 by $3.3 million, or 32.6%, to $13.5 million, from $10.2 million in Q4 FY17, primarily as a result of increasedcompensation, professional services, and freight expenses.On a full year basis, selling, general and administrative expenses increased $7.8 million, or 17.9% in FY18, to $51.4 millionfrom $43.6 million in FY17, primarily due to increases in compensation, freight, and travel expenses, partially as a result ofactivities related to our expansion into China. In addition, bad debt recoveries were more favorable in FY17 than in the currentyear. Selling, general and administrative expenses decreased by $1.0 million in FY17, compared with FY16, primarily due toreduced bad debt expense and professional fees, which were partially offset by increased compensation costs and selling expenses.Research and DevelopmentIn the U.S., research and development expenses consist of development efforts related to high-end process technologies for28nm and smaller IC nodes, while in Asia, in addition to the focus on high-end IC technology nodes, G8 and above FPDs andAMOLED applications are also under development.Research and development expense increased $1.3 million to 3.9 million in Q4 FY18, or 47.2%, from Q3 FY18, as a result ofincreased expenditures in both the U.S. and Asia. Research and development expense was up moderately ($0.1 million, or 1.8%) inQ4 FY18 from Q4 FY17, with increased spending in Taiwan exceeding decreased expenditures and related activities on large areamasks in Korea.On a full year basis, research and development expense decreased $1.4 million in FY18, or 8.7%, to $14.5 million, as spendingdecreases in the U.S. and Taiwan exceeded an increase in Korea, primarily related to large area masks. Research and developmentexpenses decreased by $5.8 million in FY17 to $15.9 million, from $21.7 million in FY16 as a result of lower customerqualification costs for high-end reticles in both Asia and the U.S.Other Income (Expense), net Q4 FY18Q3 FY18Q4 FY17Interest income and other income (expense)$2.9 $2.0 $1.1 Interest expense (0.6) (0.6) (0.6)Total other income (expense), net$2.3 $1.4 $0.5 Interest income and other income (expense) increased by $0.9 million in Q4 FY18, compared with Q3 FY18, primarily as aresult of increased foreign currency transaction gains. Interest income and other income (expense) increased by $1.8 million in Q4FY18, compared with Q4 FY17, also primarily as a result of increased foreign currency transaction gains in Q4 FY18 and gainsrealized on the sales of assets in Q4 FY18. Interest expense, which is principally related to our 3.25% convertible senior notes wasessentially unchanged over the comparative quarterly periods. FY18FY17FY16Interest income and other income (expense)$5.2 $(3.1)$2.4 Interest expense (2.3) (2.2) (3.3)Gains on sales of investments — — 8.9 Total other income (expense), net$2.9 $(5.3)$8.0 Interest income and other income (expense) increased by $8.3 million on a full-year basis in FY18, compared with FY17,primarily as a result of our experiencing moderate foreign currency transaction gains in FY18, in contrast to significant losses inFY17. In addition, we realized gains on asset sales in FY18, and achieved better investment results on our cash balances than wedid in the prior year.Interest income and other income (expense) decreased by $5.5 million in FY17, compared with FY16, primarily as a result ofincreased foreign currency transaction losses in FY17. Interest expense decreased in FY17 compared with FY16 primarily as aresult of the maturity of our 3.25% convertible senior notes in April 2016, and lower average outstanding debt balance on our otherdebt obligations.25TABLE OF CONTENTSIn January 2016, we sold a minority interest investment in a foreign entity and recognized a gain of $8.8 million. In May2016, we sold our 49.99% interest in the MP Mask joint venture and recognized a gain of $0.1 million.Income Tax ProvisionThe U.S. Tax Cuts and Jobs Act (the “Act”) that was signed into law on December 22, 2017, included significant changes tothe United States Internal Revenue Code of 1986, as amended, which we expect to have a positive impact on our future after-taxearnings. Our FY18 results reflect the corporate rate reduction, alternative minimum tax refund, meals and entertainment anddeemed repatriation tax provisions. Other provisions of the Tax Act are effective for tax years beginning on or after January 1,2018. As a fiscal year U.S. taxpayer, these provisions will apply to our fiscal 2019, including eliminating the domesticmanufacturing deduction, creating new taxes on certain foreign sourced income, and introducing new limitations on certainbusiness deductions. Q4 FY18Q3 FY18Q4 FY17Income tax provision$3.6 $2.1 $2.5 Effective income tax rate 17.5% 9.4% 19.0%The effective income tax rate is sensitive to the jurisdictional mix of our earnings, due, in part, to the non-recognition of taxbenefits on losses in jurisdictions with valuation allowances.The effective income tax rate in Q4 FY18, compared with Q3 FY18, increased primarily due to Q3 FY18 nonrecurring taxbenefits of $1.8 million related to tax audit settlements. The difference was somewhat reduced by an increased tax holiday benefitof $1.1 million in Q4 FY18. The effective income tax rate decreased in Q4 FY18, compared with Q4 FY17, primarily due to agreater percentage of the Q4 FY17 income before taxes being generated in jurisdictions where the Company incurs tax losses that,due to valuation allowances, did not result in the recognition of tax benefits, and an increased benefit of $0.9 million from the taxholiday in Taiwan. FY18FY17FY16Income tax provision$7.3 $5.3 $4.8 Effective income tax rate 10.7% 19.9% 7.9%The decrease in effective income tax rate on a full-year basis in FY18, compared with FY17, was primarily due to therecognition of a tax benefit related to $3.7 million of alternative minimum tax credits that became fully refundable under US taxreform, an increased benefit of $2.4 million from a tax holiday in Taiwan, and an increase in the recognition of $1.2 million ofpreviously unrecognized tax benefits, which resulted from audit settlements and expirations of assessment period statutes oflimitations, partially offset by a greater percentage of the FY17 income before taxes being generated in jurisdictions where theCompany incurs tax losses that, due to valuation allowances, did not result in the recognition of tax benefits.The increase in effective income tax rate in FY17, compared with FY16, was primarily due to recognition of $1.0 million ofpreviously unrecognized tax benefits, which arose from audit settlements and expirations of assessment period statutes oflimitations. Those effects were partially offset by FY16 benefit factors, including: the recognition of $2.5 million of previouslyunrecognized deferred tax assets resulting from improved performance of our FPD operations; the reversal of previously recognizedtax expense of $2.4 million that was eliminated by a distribution of the earnings of a foreign subsidiary to its foreign parent; ahigher percentage of income before income taxes, including an $8.8 million gain on the sale of an investment in the first quarter ofFY16, generated in jurisdictions where we previously incurred losses that, due to valuation allowances, did not result inrecognition of expense.We consider all available evidence when evaluating the potential future realization of deferred tax assets, and when, based onthe weight of all available evidence, we determine that it is more likely than not that some portion or all of our deferred tax assetswill not be realized, we reduce our deferred tax assets by a valuation allowance. We also regularly assess the potential outcomes ofongoing and future tax examinations and, accordingly, have recorded accruals for such contingencies. Included in the balance ofunrecognized tax benefits as of October 31, 2018, October 29, 2017 and October 30, 2016, are $1.9 million, $3.4 million and $4.6million, respectively, recorded in other liabilities in the consolidated balance sheets that, if recognized, would impact the effectivetax rate.26TABLE OF CONTENTSNet Income Attributable to Noncontrolling Interests Q4 FY18Q3 FY18Q4 FY17FY18FY17FY16Net income attributable to noncontrolling interest$4.3 $6.8 $5.1 $19.2 $8.2 $9.5 Periods subsequent to FY17 include DNP’s share of the earnings of our IC subsidiary in Taiwan, as well as their attribution oflosses incurred at our IC facility in China, which will commence operations in the first half of fiscal 2019. For all periods prior toFY18, substantially all of the net income attributable to noncontrolling interests reflects DNP’s share of the earnings of our ICmanufacturing subsidiary in Taiwan.Liquidity and Capital Resources October 31,2018October 29,2017October 30,2016 (in $ millions)(in $ millions)(in $ millions)Cash and cash equivalents$329.3 $308.0 $314.1 Net cash provided by operating activities$130.6 $96.8 $122.1 Net cash used in/provided by investing activities$(90.7)$(98.1)$52.3 Net cash used in financing activities$(13.8)$(10.9)$(67.0)As of October 31, 2018, we had cash and cash equivalents of $329.3 million compared with $308.0 million as of October 29,2017. Our working capital decreased $55.7 million to $311.7 million at October 31, 2018, compared with $367.3 million atOctober 29, 2017, primarily due to the reclassification of our 3.25% senior convertible notes, which mature in April 2019 to currentstatus. We may use our available cash on hand for operations, capital expenditures, debt repayments, strategic opportunities, stockrepurchases or other corporate uses, any of which may be material.As of October 29, 2017, we had cash and cash equivalents of $308.0 million compared with $314.1 million as of October 30,2016. Our working capital increased $7.1 million to $367.3 million at October 29, 2017, compared with $360.3 million at October30, 2016.As of October 31, 2018 and October 29, 2017, our total cash and cash equivalents included $244.5 million and $190.0million, respectively, held by our foreign subsidiaries. The majority of earnings of our foreign subsidiaries are considered to beindefinitely reinvested. Repatriation of these funds to the U.S. are, as a result of the U.S. Tax Cut and Jobs Act, generally notsubject to U.S. federal income tax, but may be subject to U.S. state income taxes and local country withholding taxes. Our foreignsubsidiaries continue to grow through the reinvestment of earnings in additional manufacturing capacity and capability,particularly in the high-end IC and FPD areas.Net cash provided by operating activities increased to $130.6 million in FY18, compared with $96.8 million in FY17,primarily due to increased net income and an increase in cash from accounts payable and other liabilities exceeding decreases inmost operating accounts and non-cash items, partially attributable to beginning operations in China. Net cash provided byoperating activities decreased by $25.3 million to $96.8 million in FY17, compared with $122.1 million in FY16, primarily due tothe decrease of $34.4 million of net income. Net cash provided by operating activities decreased to $122.1 million in FY16,compared with $133.2 million in fiscal 2015, primarily due to reduced year-over-year operating income, partially offset by net cashfavorable changes in accrual accounts.Net cash used in investing activities in FY18 was $90.7 million primarily resulting from capital expenditure payments. Cashflows from investing activities decreased from funds provided of $52.3 million in FY16 to $98.1 million used in FY17 due to$101.9 million aggregate proceeds received from the sale of our investments in MP Mask and an interest we held in a foreign entityin FY16, compared to increased capital expenditures of $41.8 million and the acquisition of a business of $5.4 million in FY17.Cash flows from investing activities increased to $52.3 million provided in FY16 from $104.3 used in fiscal year 2015, primarilydue to proceeds of $101.9 million received from the sale of our investments in the MP Mask joint venture and an interest we heldin a foreign entity, as well as decreased expenditures for capital equipment. Capital expenditure payments for the FY18, FY17, andFY16, were $92.6, $92.0, and $50.1 million, respectively. We expect capital expenditure payments in fiscal 2019 to beapproximately $210 million.27TABLE OF CONTENTSNet cash used in financing activities was $13.8 million in FY18, primarily comprised of the receipt of $18.0 million from anoncontrolling interest for their investment in our recently established joint venture in China and $4.6 million of proceedsreceived from share-based arrangements, which partially offset the payment of a dividend to the noncontrolling interest of our ICfacility in Taiwan of $8.2 million, $23.1 million used to acquire our common stock under a share repurchase program, and debtrepayments of $4.6 million. Net cash used in financing activities was $10.9 million in FY17, which primarily comprisedrepayments of long-term borrowings and a dividend paid to the noncontrolling interest in a subsidiary, partially offset by proceedsreceived from employee share-based arrangements. Net cash used in financing activities was $67.0 million in FY16, primarilycomprised of repayments of long-term borrowings (including $50.1 million to retire our 3.25% convertible senior notes whichmatured in April FY16) and $11.9 million dividend paid to the noncontrolling interest in a subsidiary, partially offset by proceedsreceived from employee share-based arrangements.Our liquidity, as we operate in a high fixed-cost environment, is highly dependent on our revenue, cash conversion cycle, andthe timing of our capital expenditures (which can vary significantly from period to period). Depending on conditions in thesemiconductor and FPD markets, our cash flows from operations and current holdings of cash may not be adequate to meet ourcurrent and long-term needs for capital expenditures, operations and debt repayments. Historically, in certain years, we have usedexternal financing to fund these needs. Due to conditions in the credit markets and covenant restrictions on our existing debt, somefinancing instruments we have used in the past may not be available to us when required. Consequently, we cannot assure thatadditional sources of financing would be available to us on commercially favorable terms, should our long-term cash requirementsexceed our existing cash and cash available under our credit facilities.As of October 31, 2018, we had capital commitments outstanding of approximately $130 million, nearly all of which relatedto the building and equipping of our China facilities (discussed below). We intend to finance our capital expenditures with ourworking capital, cash generated from operations, and, if necessary, additional borrowings. We have entered into a joint venture thatis constructing an IC facility in China with an estimated total joint investment of $160 million. Our remaining fundingcommitment for the joint venture is approximately $62 million which we will fulfill over the next several quarters. We have alsocommenced construction of an FPD facility in China in which, as of October 31, 2018, we have invested $90 million, and willinvest an additional $70 million during the first half of 2019. We believe that our cash on hand, cash generated from operationsand amounts available to borrow will be sufficient to meet our cash requirements for the next twelve months. We regularly reviewthe availability and terms at which we might issue additional equity or debt securities in the public or private markets. However,we cannot assure that additional sources of financing would be available to us on commercially favorable terms, should our capitalrequirements exceed our existing cash, cash generated by operations, and cash available under our credit facilities.Cash RequirementsOur cash requirements in fiscal 2019 will be primarily to: fund our operations; capital spending, including the completion ofconstructing and equipping an IC research and development and manufacturing facility in Xiamen, China and an FPDmanufacturing facility in Hefei, China; and service our debt. We believe that our cash on hand, cash generated from operations andamounts available to borrow will be sufficient to meet our cash requirements for the next twelve months. We regularly review theavailability and terms at which we might issue additional equity or debt securities in the public or private markets. However, wecannot assure that additional sources of financing would be available to us on commercially favorable terms, should our cashrequirements exceed our existing cash and cash available under our credit facilities.28TABLE OF CONTENTSContractual ObligationsThe following table presents our contractual obligations as of October 31, 2018: Payment due by periodContractual ObligationsTotalLess Than1 Year1 - 3Years3 - 5YearsMore Than5 YearsLong-term debt$57,500 $57,500 $— $— $— Operating leases 7,495 1,943 2,922 1,963 667 Purchase obligations 144,174 137,034 7,042 98 — Interest 1,234 1,034 200 — — Other noncurrent liabilities 11,858 1,038 3,793 2,771 4,256 Total$222,261 $198,549 $13,957 $4,832 $4,923 Long-term debt of $57.5 million in the table above represent our obligation under our 3.25% senior convertible notes, whichmature on April 1, 2019, and, at the option of the note holders, may be settled either in cash or by conversion into our commonstock. See Note 6 to the consolidated financial statements for additional information. As of October 31, 2018, the Company hadrecorded accruals for uncertain tax positions and related interest and penalties of $1.9 million which were not included in theabove table due to the high degree of uncertainty regarding the timing of future payments related to such liabilities.In November FY2019, Xiamen American Japan Photronics Mask Co., Ltd. (“PDMCX”), an indirect majority-owned jointventure subsidiary of Photronics, Inc., entered into a commitment letter under which it can borrow up to approximately $50.0million (“the Project Loan”). PDMCX will use the Project Loan to finance certain capital expenditures in China. During the eight-year term of the Project Loan, PDMCX will grant a lien on the land, building and equipment owned by PDMCX as collateral for theProject Loan. The interest rate of the Project Loan is based on the benchmark lending rate (as defined in the Project Loanagreement) plus a floating rate spread of the People’s Bank of China on the date of borrowings. We anticipate that interest incurredon this loan will be reimbursed through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, up to acertain cap.On November 7, 2018, PDMCX entered into a working capital loan agreement with a maximum borrowing limit ofapproximately $25.0 million, (“the Working Capital Loan”). In November 2018, we borrowed $2.2 million against this loan.PDMCX will use the Working Capital Loan for general financing purposes including the payment of import and value added taxes.The term of the Working Capital Loan will not exceed three years, and no guarantees were required under the terms of the WorkingCapital Loan. The interest rate of the Working Capital Loan is based on the benchmark lending rate (as defined in the WorkingCapital Loan agreement) plus a floating rate spread of the People’s Bank of China on the date of borrowings. We anticipate thatinterest incurred on this loan will be reimbursed through incentives provided by the Xiamen Torch Hi-Tech IndustrialDevelopment Zone, up to a certain cap.Off-Balance Sheet ArrangementsIn January 2018, Photronics, through its wholly-owned Singapore subsidiary, and DNP, through its wholly-owned subsidiary“DNP Asia Pacific PTE, Ltd.” entered into a joint venture under which DNP obtained a 49.99% interest in our IC business inXiamen, China. The joint venture, known as “Photronics DNP Mask Corporation Xiamen” (“PDMCX”), was established to developand manufacture photomasks for leading edge and advanced generation semiconductors. Under the Joint Venture OperatingAgreement of Photronics DNP Mask Corporation Xiamen (“the Agreement”), DNP is afforded, under certain circumstances, theright to put its interest in PDMCX to Photronics. These circumstances include disputes regarding the strategic direction of PDMCXthat may arise after the initial two year term of the Agreement that cannot be resolved between the two parties. In addition, bothPhotronics and DNP have the option to purchase, or put, their interest from, or to, the other party, should their ownership interestfall below 20% for a period of more than six consecutive months. Under all such circumstances, the sales of ownership interestswould be at the exiting party’s ownership percentage of the joint venture’s net book value, with closing to take place within threebusiness days of obtaining required approvals and clearance. Should DNP exercise an option to put their, or purchase our, interestin PDMCX, we may, depending on the relationship of the fair and book value of the net assets of PDMCX, incur a loss. As ofOctober 31, 2018, Photronics and DNP each had net investments in PDMCX of $15.9 million.29TABLE OF CONTENTSWe lease certain office facilities and equipment under operating leases that may require us to pay taxes, insurance andmaintenance expenses related to the properties. Certain of these leases contain renewal or purchase options exercisable at the endof the lease terms. See Note 7 to the consolidated financial statements for additional information on these operating leases.Business OutlookA majority of our revenue growth is expected to continue to come from the Asia region, predominantly in China. In responseto this expectation, we have entered into a joint venture that will complete the construction of an IC research and development andmanufacturing facility in Xiamen, China, in late 2018. Production is anticipated to begin at this facility during the first half of2019. In addition, in August 2017, we entered into an investment agreement to construct an FPD manufacturing facility in Hefei,China. Construction of this facility commenced in Q1 FY18, and production is anticipated to begin during the first half of 2019.We make continual assessments of our global manufacturing strategy and monitor our revenue and related cash flows fromoperations. This ongoing assessment could result in future facility closures, asset redeployments, impairments of intangible orlong-lived assets, workforce reductions, or the addition of manufacturing facilities, all of which would be based on marketconditions and customer requirements.We are cautiously optimistic regarding results of operations in fiscal 2019, as we observe favorable signs of demand drivers,but we are aware of certain potential macro challenges. While the photomask market has held up well, there are some sectors in thesemiconductor industry that have seen slowing demand. If this spreads into a more widespread economic slowdown, then it’spossible that our markets will also be impacted. In addition to potential demand challenges, there are also geopolitical risks, theoutcome of which, are uncertain. Entering 2019, we currently expect higher than normal seasonal impact in Q1 as the high-end ICmarket looks to remain soft, and we will have fewer days in our first quarter. Beyond the first quarter, growth will be dependent onthe shape and duration of any potential market downturn. As we get to the second half of the year, we should see additional growthfrom the ramp of our new China facilities. Therefore, our 2019 growth will be dependent on underlying market demand and howeffectively we ramp production in China.Our future results of operations and the other forward-looking statements contained in this filing involve a number of risks anduncertainties. While various risks and uncertainties have been discussed, a number of other unforeseen factors could cause actualresults to differ materially from our expectations.Critical Accounting EstimatesOur consolidated financial statements are based on the selection and application of accounting policies, which requiremanagement to make significant estimates and assumptions. We believe the following to be the more critical areas that requirejudgement when applying our accounting policies:•the determination of the useful lives of our property, plant, and equipment and the timing of when depreciation shouldbegin on such assets, as these determinations can significantly impact our gross margin and research and developmentexpenses;•the evaluation of the recoverability of our long-lived and definite-lived intangible assets, which requires us to forecastthe future cash flows related to these assets, and the potential impacts to our gross margin and operating expenses;•the estimation of the collectability of our accounts receivables which impacts our gross margin and operating expenses;•the recognition and measurement of current and deferred income taxes, including the measurement of uncertain taxpositions, which impact our provision for income taxes and our tax-related asset and liability balances.Please refer to Note 1 to our consolidated financial statements for additional information related to these critical accountingestimates and our other significant accounting policies.Recent Accounting PronouncementsSee “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 23 RecentAccounting Pronouncements” for recent accounting pronouncements that may affect our financial reporting.30TABLE OF CONTENTSITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKForeign Currency Exchange Rate RiskWe conduct business in several major currencies throughout our worldwide operations, and our financial performance may beaffected by fluctuations in the exchange rates of these currencies. Changes in exchange rates can positively or negatively affect ourreported revenue, operating income, assets, liabilities, and equity. The functional currencies of our Asian subsidiaries are the SouthKorean won, the New Taiwan dollar, the Chinese renminbi and the Singapore dollar. The functional currencies of our Europeansubsidiaries are the British pound and the euro. In addition, we have transactions and balances in Japanese yen.We attempt to minimize our risk of foreign currency transaction losses by producing products in the same country in whichthe products are sold (thereby generating revenues and incurring expenses in the same currency), and by managing our workingcapital. However, in some instances, we sell products in a currency other than the functional currency of the country where it wasproduced, or purchase products in a currency that differs from the functional currency of the purchasing manufacturing facility. Forexample, we are currently shipping a significant quantity of photomasks into China, while our China facilities are underconstruction. In addition, to the extent practicable, we attempt to reduce our exposure to foreign currency exchange fluctuations byconverting cash and cash equivalents into the functional currency of the subsidiary which holds the cash. We may also enter intoderivative contracts to mitigate our exposure to foreign currency fluctuations when we have a significant purchase obligation orsignificant receivable denominated in a currency that differs from the transacting subsidiaries’ functional currencies. We do notenter into derivatives for speculative purposes. There can be no assurance that these practices will protect us from the need torecognize significant foreign currency transaction gains and losses, especially in the event of a significant adverse movement inthe value of any foreign currency in which we conduct business against any of our functional currencies, including the U.S. dollar.Our primary net foreign currency exposures as of October 31, 2018, included the South Korean won, the Japanese yen, theNew Taiwan dollar, the Chinese renminbi, the Singapore dollar, the British pound, and the euro. As of October 31, 2018, a 10%adverse movement in the value of these currencies against the functional currencies of our subsidiaries would have resulted in a netunrealized pre-tax loss of $13.2 million, which represents an increase of $0.2 million from the same result as of October 29, 2017.The increase in foreign currency rate change risk is primarily the result of increased exposure of Korean won against USD. We donot believe that a 10% change in the exchange rates of other non-US dollar currencies would have had a material effect on ourOctober 31, 2018 consolidated financial statements.Interest Rate RiskAt October 31, 2018, we did not have any variable rate borrowings. Therefore, a 10% change in interest rates would not havehad a material effect on our consolidated financial position, results of operations, or cash flows in the year ended October 31, 2018.31TABLE OF CONTENTSITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm 33 Consolidated Balance Sheets at October 31, 2018 and October 29, 2017 35 Consolidated Statements of Income for the years ended October 31, 2018, October 29, 2017 and October 30, 2016 36 Consolidated Statements of Comprehensive Income for the years ended October 31, 2018, October 29, 2017 andOctober 30, 2016 37 Consolidated Statements of Equity for the years ended October 31, 2018, October 29, 2017 and October 30, 2016 38 Consolidated Statements of Cash Flows for the years ended October 31, 2018, October 29, 2017 and October 30, 2016 39 Notes to Consolidated Financial Statements 40 32TABLE OF CONTENTSREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo Shareholders and the Board of Directorsof Photronics, Inc.Brookfield, ConnecticutOpinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Photronics, Inc. (the “Company”) as of October 31, 2018 andOctober 29, 2017, and the related consolidated statements of income, consolidated statements of comprehensive income,consolidated statements of equity, and consolidated statements of cash flows for each of the years ended October 31, 2018, October29, 2017 and October 30, 2016. We also have audited the Company’s internal control over financial reporting as of October 31,2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial positionof the Company as of October 31, 2018 and October 29, 2017, and the results of its operations and their cash flows for each of thefiscal years ended October 31, 2018, October 29, 2017, and October 30, 2016 in conformity with accounting principles generallyaccepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internalcontrol over financial reporting as of October 31, 2018, based on the criteria established in Internal Control — IntegratedFramework (2013) issued by COSO.Basis for OpinionsThe Company’s management is responsible for these financial statements, for maintaining effective internal control over financialreporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanyingManagement’s Report on Internal Control over Financial Reporting in Item 9A. Our responsibility is to express an opinion onthese financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are apublic accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are requiredto be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement and whether effective internal control over financial reporting was maintained in all materialrespects.Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financialstatements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures includedexamining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overallpresentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understandingof internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. Our audits also included performing such otherprocedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definition and Limitations of Internal Control over financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions ofthe assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’sassets that could have a material effect on the financial statements.33TABLE OF CONTENTSBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements Also,projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to therisk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policiesor procedures may deteriorate./s/ Deloitte & Touche LLPHartford, ConnecticutDecember 21, 2018We have served as the Company’s auditor since 1991.34TABLE OF CONTENTSPHOTRONICS, INC.Consolidated Balance Sheets(in thousands, except per share amounts) October 31,2018October 29,2017ASSETS Current assets: Cash and cash equivalents$329,277 $308,021 Accounts receivable, net of allowance of $1,526 in 2018 and $2,319 in 2017 120,515 105,320 Inventories 29,180 23,703 Other current assets 23,759 12,080 Total current assets 502,731 449,124 Property, plant and equipment, net 571,781 535,197 Intangible assets, net 12,368 17,122 Deferred income taxes 18,109 15,481 Other assets 5,020 3,870 Total assets$1,110,009 $1,020,794 LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt$57,453 $4,639 Accounts payable 89,149 50,834 Accrued liabilities 44,474 26,303 Total current liabilities 191,076 81,776 Long-term debt — 57,337 Deferred income taxes 643 2,049 Other liabilities 13,721 14,337 Total liabilities 205,440 155,499 Commitments and contingencies Equity: Preferred stock, $0.01 par value, 2,000 shares authorized, none issued and outstanding — — Common stock, $0.01 par value, 150,000 shares authorized, 69,700 shares issued and 67,142outstanding at October 31, 2018, and 68,666 shares issued and outstanding at October 29, 2017 697 687 Additional paid-in capital 555,606 547,596 Retained earnings 231,445 189,390 Treasury stock, 2,558 shares at October 31, 2018 (23,111) — Accumulated other comprehensive income (loss) (4,966) 6,891 Total Photronics, Inc. shareholders’ equity 759,671 744,564 Noncontrolling interests 144,898 120,731 Total equity 904,569 865,295 Total liabilities and equity$1,110,009 $1,020,794 See accompanying notes to consolidated financial statements.35TABLE OF CONTENTSPHOTRONICS, INC.Consolidated Statements of Income(in thousands, except per share amounts) Year Ended October 31,2018October 29,2017October 30,2016Revenue$535,276 $450,678 $483,456 Cost of goods sold (403,773) (359,363) (364,750)Gross profit 131,503 91,315 118,706 Operating expenses: Selling, general and administrative (51,395) (43,585) (44,577)Research and development (14,481) (15,862) (21,654)Total operating expenses (65,876) (59,447) (66,231)Operating income 65,627 31,868 52,475 Other income (expense): Interest income and other income (expense) 5,206 (3,068) 2,424 Interest expense (2,262) (2,235) (3,365)Gains on sales of investments — — 8,940 Income before income tax provision 68,571 26,565 60,474 Income tax provision (7,335) (5,276) (4,798)Net income 61,236 21,289 55,676 Net income attributable to noncontrolling interests (19,181) (8,159) (9,476)Net income attributable to Photronics, Inc. shareholders$42,055 $13,130 $46,200 Earnings per share: Basic$0.61 $0.19 $0.68 Diluted$0.59 $0.19 $0.64 Weighted-average number of common shares outstanding: Basic 68,829 68,436 67,539 Diluted 74,821 69,288 76,354 See accompanying notes to consolidated financial statements.36TABLE OF CONTENTSPHOTRONICS, INC.Consolidated Statements of Comprehensive Income(in thousands) Year Ended October 31,2018October 29,2017October 30,2016Net income$61,236 $21,289 $55,676 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments (16,672) 19,799 6,334 Amortization of cash flow hedge 48 129 129 Other 101 478 (589)Net other comprehensive (loss) income (16,523) 20,406 5,874 Comprehensive income 44,713 41,695 61,550 Less: comprehensive income attributable to noncontrolling interests 14,515 14,003 12,448 Comprehensive income attributable to Photronics, Inc. shareholders$30,198 $27,692 $49,102 See accompanying notes to consolidated financial statements.37TABLE OF CONTENTSPHOTRONICS, INC.Consolidated Statements of EquityYears Ended October 31, 2018, October 29, 2017 and October 30, 2016(in thousands) Common StockAdditionalPaid-InCapitalRetainedEarningsTreasuryStockAccumulatedOtherComprehensiveIncome (Loss)Non-ControllingInterestsTotalEquity SharesAmountBalance at November 1,2015 66,602 $666 $526,402 $130,060 $— $(10,573)$115,511 $762,066 Net income — — — 46,200 — — 9,476 55,676 Other comprehensive income — — — — — 2,902 2,972 5,874 Sales of common stockthrough employee stockoption and purchase plan 618 6 3,441 — — — — 3,447 Restricted stock awardsvesting and expense 143 2 1,190 — — — — 1,192 Share-based compensationexpense — — 2,637 — — — — 2,637 Conversion of debt tocommon stock 717 7 7,431 — — — — 7,438 Dividends to noncontrollinginterests — — — — — — (11,901) (11,901)Return of capital tononcontrolling interest — — — — — — (955) (955)Repurchase of common stockby subsidiary — — (8) — — — 8 — Balance at October 30, 2016 68,080 681 541,093 176,260 — (7,671) 115,111 825,474 Net income — — — 13,130 — — 8,159 21,289 Other comprehensive income — — — — — 14,562 5,844 20,406 Sales of common stockthrough employee stockoption and purchase plan 459 5 2,877 — — — — 2,882 Restricted stock awardsvesting and expense 127 1 1,508 — — — — 1,509 Share-based compensationexpense — — 2,118 — — — — 2,118 Dividends to noncontrollinginterests — — — — — — (8,383) (8,383)Balance at October 29, 2017 68,666 687 547,596 189,390 — 6,891 120,731 865,295 Net income — — — 42,055 — — 19,181 61,236 Other comprehensive income — — — — — (11,857) (4,666) (16,523)Sales of common stockthrough employee stockoption and purchase plan 870 9 4,683 — — — — 4,692 Restricted stock awardsvesting and expense 164 1 1,747 — — — — 1,748 Share-based compensationexpense — — 1,432 — — — — 1,432 Contribution fromnoncontrolling interests — — 148 — — — 17,848 17,996 Dividends to noncontrollinginterests — — — — — — (8,196) (8,196)Purchase of treasury stock — — — — (23,111) — — (23,111)Balance at October 31, 2018 69,700 $697 $555,606 $231,445 $(23,111)$(4,966)$144,898 $904,569 See accompanying notes to consolidated financial statements.38TABLE OF CONTENTSPHOTRONICS, INC.Consolidated Statements of Cash Flows(in thousands) Year Ended October 31,2018October 29,2017October 30,2016Cash flows from operating activities: Net income$61,236 $21,289 $55,676 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property, plant and equipment 79,536 81,699 77,613 Amortization of intangible assets 4,797 4,874 5,228 Gains on sales of investments — — (8,940)Share-based compensation 3,180 3,627 3,827 Deferred income taxes (273) 1,633 (3,816)Changes in assets, liabilities, and other: Accounts receivable (18,553) (9,625) 18,807 Inventories (6,162) (602) 2,268 Other current assets (11,731) 1,127 7,936 Accounts payable, accrued liabilities and other 18,537 (7,189) (36,462)Net cash provided by operating activities 130,567 96,833 122,137 Cash flows from investing activities: Purchases of property, plant and equipment (92,585) (91,965) (50,147)Purchases of intangible assets (218) (834) (13)Acquisition of business — (5,400) — Proceeds from sales of investments — 167 101,853 Other 2,074 (34) 597 Net cash (used in) provided by investing activities (90,729) (98,066) 52,290 Cash flows from financing activities: Purchase of treasury stock (23,111) — — Dividends paid to noncontrolling interests (8,166) (8,298) (11,890)Repayments of long-term debt (4,639) (5,428) (57,609)Contribution from noncontrolling interests 17,996 — — Proceeds from share-based arrangements 4,634 2,830 3,463 Return of capital to noncontrolling interests — — (966)Other (519) (32) (20) Net cash used in financing activities (13,805) (10,928) (67,022) Effects of exchange rate changes on cash and cash equivalents (4,777) 6,108 802 Net increase (decrease) in cash and cash equivalents 21,256 (6,053) 108,207 Cash and cash equivalents at beginning of year 308,021 314,074 205,867 Cash and cash equivalents at end of year$329,277 $308,021 $314,074 Supplemental disclosure of non-cash information: Accrual for property, plant and equipment purchased during year$29,602 $2,767 $7,866 Conversion of debt to common stock — — 7,439 See accompanying notes to consolidated financial statements.39TABLE OF CONTENTSPHOTRONICS, INC.Notes to Consolidated Financial StatementsYears Ended October 31, 2018, October 29, 2017 and October 30, 2016(in thousands, except share amounts)NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBusinessPhotronics, Inc. and its subsidiaries (“Photronics”, the “Company”, “we”, “our”, or “us”) is one of the world’s leadingmanufacturers of photomasks, which are high precision photographic quartz plates containing microscopic images of electroniccircuits. Photomasks are a key element in the manufacture of semiconductors and flat panel displays (“FPDs”), and are used asmasters to transfer circuit patterns onto semiconductor wafers and flat panel display substrates during the fabrication of integratedcircuits (“ICs” or semiconductors) and a variety of FPDs and, to a lesser extent, other types of electrical and optical components.The Company currently operates principally from nine manufacturing facilities, two of which are located in Europe, three inTaiwan, one in Korea, and three in the United States. We have commenced construction of two manufacturing facilities in China.ConsolidationThe accompanying consolidated financial statements include the accounts of Photronics, Inc. and majority-ownedsubsidiaries that it controls. All intercompany balances and transactions have been eliminated in consolidation.Estimates and AssumptionsThe preparation of financial statements in conformity with accounting principles generally accepted in the United States ofAmerica requires us to make estimates and assumptions that affect amounts reported in them. Estimates are based on historicalexperience and on various assumptions that are believed to be reasonable under the circumstances. Our estimates are based on thefacts and circumstances available at the time they are made. Actual results we report may differ from such estimates. We reviewthese estimates periodically and reflect any effects of revisions in the period in which they are determined.Fiscal YearCommencing with our 2018 fiscal year, our fiscal year ends on October 31. In prior years, our fiscal years ended on the Sundayclosest to October 31. Prior year results in this Form 10-K have not been restated to reflect yearend dates of October 31.Cash and Cash EquivalentsCash and cash equivalents include cash and highly liquid investments purchased with an original maturity of 3 months orless. The carrying values of cash equivalents approximate their fair values, due to the short-term maturities of these instruments.Accounts Receivable and Allowance for Doubtful AccountsWe generally record our trade accounts receivable at their billed amounts. All outstanding past due customer invoices arereviewed during and at the end of every reporting period for collectability. When, in the judgment of management, a loss on thecollection of a customer invoice is probable, the amount is charged to expense and credited to the allowance for doubtful accounts.When the amount is determined to be uncollectible, the amount is charged to the allowance for doubtful accounts, and the relatedreceivable is eliminated.40TABLE OF CONTENTSInventoriesInventories are stated at the lower of cost, determined under the first-in, first-out (“FIFO”) method, or net realizable value.Presented below are the components of inventory at the balance sheet dates: October 312018October 292017Finished goods$668 $664 Work in process 3,402 2,957 Raw materials 25,110 20,082 $29,180 $23,703 Property, Plant and EquipmentProperty, plant and equipment, except as explained below under “Impairment of Long-Lived Assets,” is stated at cost lessaccumulated depreciation and amortization. Repairs and maintenance, as well as renewals and replacements of a routine nature, arecharged to operations as incurred, while those that improve, or extend the lives of, existing assets are capitalized. Upon sale orother disposition, the cost of the asset and its related accumulated depreciation are removed from the accounts, and any resultinggain or loss is reflected in earnings.Depreciation and amortization, substantially all of which are included in cost of goods sold, are computed using the straight-line method over the estimated useful lives of the related assets. Buildings and improvements are depreciated over 10 to 39 years,machinery and equipment over 5 to 15 years, and furniture, fixtures and office equipment over 3 to 5 years. Leaseholdimprovements are amortized over the life of the lease or the estimated useful life of the improvement, whichever is less. We employjudgment and assumptions when we establish estimated useful lives and depreciation periods, as well as when we periodicallyreview property, plant and equipment for any potential impairment in carrying values, whenever events such as a significantindustry downturn, plant closures, technological obsolescence, or other change in circumstances indicate that their carryingamounts may not be recoverable.Intangible AssetsIntangible assets consist primarily of a technology license agreement and acquisition-related intangibles. These assets, exceptas explained below, are stated at fair value as of the date acquired, less accumulated amortization. Amortization is calculated basedon the estimated useful lives of the assets, which range from 3 to 15 years, using the straight-line method or another method thatmore fairly represents the utilization of the assets.We periodically evaluate the remaining useful lives of our intangible assets to determine whether events or circumstanceswarrant a revision to the remaining periods of amortization. In the event that the estimate of an intangible asset’s remaining usefullife has changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaininguseful life. If it is determined that an intangible asset has an indefinite useful life, that intangible asset would be subject toimpairment testing annually or whenever events or circumstances indicate that its carrying value may not, based on futureundiscounted cash flows or market factors, be recoverable; and an impairment loss would be recorded in the period in which theimpairment determination is made. The amount of the impairment loss recorded would be based on the fair value of the intangibleasset at the measurement date.Impairment of Long-Lived AssetsLong-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amountof such assets may not be recoverable. Determinations of recoverability are based upon our judgment and estimates ofundiscounted future cash flows resulting from the use of the assets and their eventual disposition. Measurement of an impairmentloss for long-lived assets that we expect to hold and use is based on the fair value of the assets determined using a market or incomeapproach compared to the carrying value of the asset. The carrying values of assets determined to be impaired are reduced to theirestimated fair values.Business CombinationsWhen acquiring other businesses, or participating in mergers or joint ventures in which we are deemed to be the acquirer, wegenerally recognize identifiable assets acquired, liabilities assumed and any noncontrolling interests at41TABLE OF CONTENTStheir acquisition date fair values, separately from any goodwill that may be required to be recognized. Goodwill, whenrecognizable, would be measured as the excess amount of any consideration transferred, which is generally measured at fair value,over the acquisition date fair values of the identifiable assets acquired and liabilities assumed.Accounting for such transactions requires us to make significant assumptions and estimates and, although we believe anyestimates and assumptions we make to be reasonable and appropriate at the time they are made, unanticipated events andcircumstances may arise that affect their accuracy, which may cause actual results to differ from those we estimated. When required,we will adjust the values of the assets acquired and liabilities assumed against the acquisition gain or goodwill, as initiallyrecorded, for a period of up to one year after the transaction.Costs incurred to effect a merger or acquisition, such as legal, accounting, valuation and other third party costs, as well asinternal general and administrative costs incurred are charged to expense in the periods incurred. Costs incurred to issue any debtand equity securities are recognized in accordance with other applicable generally accepted accounting principles.Investments in Joint VenturesThe financial results of investments in joint ventures in which we have a controlling financial interest are included in ourconsolidated financial statements. Investments in joint ventures over which we have the ability to exercise significant influenceand that, in general, are at least 20 percent-owned are accounted for under the equity method. An impairment loss would berecognized whenever a decrease in the fair value of such an investment below its carrying amount is determined to be other thantemporary. In judging “other than temporary,” we would consider the length of time and the extent to which the fair value of theinvestment has been less than the carrying amount of the investment, the near-term and longer-term operating and financialprospects of the investee, and our longer-term intent of retaining our investment in the investee.Variable Interest EntitiesWe account for the investments we make in certain legal entities in which equity investors do not have 1) sufficient equity atrisk for the legal entity to finance its activities without additional subordinated financial support or, 2) as a group, the holders ofthe equity investment at risk do not have either the power, through voting or similar rights, to direct the activities of the legalentity that most significantly impact the entity’s economic performance or, 3) the obligation to absorb the expected losses of thelegal entity or the right to receive expected residual returns of the legal entity as “variable interest entities”, or “VIEs”.We consolidate the results of any such entity in which we have determined that we have a controlling financial interest. Wewould have a “controlling financial interest” (and thus be considered the “primary beneficiary” of the entity) in such an entitywhen we have both the power to direct the activities that most significantly affect the VIE’s economic performance and theobligation to absorb the losses of, or right to receive the benefits from, the VIE that could be potentially significant to the VIE. Ona quarterly basis, we reassess whether we have a controlling financial interest in any investments we have in these certain legalentities.We account for investments we make in VIEs in which we have determined that we do not have a controlling financial interestbut have a significant influence over, and hold at least a 20 percent ownership interest in, using the equity method. Any suchinvestment not meeting the parameters to be accounted for under the equity method would be accounted for using the cost method,unless the investment had a readily determinable fair value, at which value it would then be reported.Income TaxesThe income tax provision is computed on the basis of the various tax jurisdictions’ income or loss before income taxes.Deferred income taxes reflect the tax effects of differences between the carrying amounts of assets and liabilities for financialreporting purposes and their amounts used for income tax purposes, as well as the tax effects of net operating losses and tax creditcarryforwards. We use judgment and make assumptions to determine if valuation allowances for deferred income tax assets arerequired, if their realization is not more likely than not, by considering future market growth, operating forecasts, future taxableincome, and the mix of earnings among the tax jurisdictions in which we operate. Accordingly, income taxes charged againstearnings may have been impacted by changes in the valuation allowances.We consider income taxes in each of the tax jurisdictions in which we operate in order to determine our effective income taxrate. Our current income tax expense is thus identified, and temporary differences resulting from differing42TABLE OF CONTENTStreatments of items for tax and financial reporting purposes are assessed. These differences result in deferred tax assets andliabilities, which are included in our consolidated balance sheets.We account for uncertain tax positions by recording a liability for unrecognized tax benefits resulting from uncertain taxpositions taken, or expected to be taken, in our tax returns. We include any applicable interest and penalties related to uncertaintax positions in our income tax provision.Treasury StockWe record treasury stock purchases under the cost method, recording the entire cost of the acquired stock as treasury stock.Gains and losses on subsequent reissuances would be credited or charged to additional paid-in capital, and we would employ theaverage cost method (with average cost being determined separately for each share repurchase program), in the event that wesubsequently reissue shares.Earnings Per ShareBasic earnings per share (“EPS”) is based on the weighted-average number of common shares outstanding for the period,excluding any dilutive common share equivalents. Diluted EPS reflects the potential dilution that could occur if certain share-based payment awards or financial instruments were exercised, earned or converted.Share-Based CompensationWe recognize share-based compensation expense over the service period that the awards are expected to vest. Share-basedcompensation expense includes the estimated effects of forfeitures, which are adjusted over the requisite service period to theextent actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized in theperiod of change, and will impact the amount of expense to be recognized in future periods. Determining the appropriate optionpricing model, calculating the grant date fair value of share-based awards and estimating forfeiture rates requires considerablejudgment, including estimations of stock price volatility and the expected term of options granted.We use the Black-Scholes option pricing model to value employee stock options. We estimate stock price volatility based ondaily averages of our common stock’s historical volatility over a term approximately equal to the estimated time period the grantwill remain outstanding. The expected term of options and forfeiture rate assumptions are derived from historical data.Research and DevelopmentResearch and development costs are expensed as incurred and consist primarily of development efforts related to high-endprocess technologies for advanced sub-wavelength reticle solutions for IC and FPD photomask technologies.Foreign Currency TranslationOur non-US subsidiaries maintain their accounts in their respective local currencies. Assets and liabilities of such subsidiariesare translated to U.S. dollars at year-end exchange rates. Income and expenses are translated at average rates of exchange prevailingduring the year. Foreign currency translation adjustments are accumulated and reported in accumulated other comprehensiveincome, a component of equity. The effects of changes in exchange rates on foreign currency transactions, which are included ininterest income and other income (expense) were a net gain/(loss) of $0.4 million, $(5.2) million and $(0.3) million in fiscal years2018, 2017 and 2016, respectively.Noncontrolling InterestsSubstantially all of noncontrolling interests represents the minority shareholders’ proportionate share in the equity of two ofthe Company’s majority-owned subsidiaries: Photronics DNP Mask Corporation (“PDMC”) in Taiwan, and Photronics DNP MaskCorporation Xiamen (“PDMCX”) in China, of which noncontrolling interests owned 49.99% as of October 31, 2018 and October29, 2017. In addition, noncontrolling shareholders owned approximately 0.2% and 0.3% of PK Ltd. (“PKL”) in Korea as of October31, 2018 and October 29, 2017, respectively.43TABLE OF CONTENTSDerivative Instruments and Hedging ActivitiesWe record derivatives in the consolidated balance sheets as assets or liabilities, measured at fair value. We do not engage inderivative instruments for speculative purposes. Gains or losses resulting from changes in the values of derivatives are reflected inearnings, or as accumulated other comprehensive income or loss, a separate component of equity, depending on the use of thederivatives and whether they qualify for hedge accounting. In order to qualify for hedge accounting, among other criteria, aderivative must be a hedge of an interest rate, price, foreign currency exchange rate, or credit risk that is expected to be highlyeffective at the inception of the hedge, be highly effective in achieving offsetting changes in the fair value or cash flows of thehedged item during the term of the hedge and formally documented at the inception of the hedge. In general, the types of risks wewould hedge are those related to the variability of future cash flows caused by movements in foreign currency exchange andinterest rates. We would document our risk management strategy and hedge effectiveness at the inception of, and during the termof, each hedge.Revenue RecognitionWe recognize revenue when there is persuasive evidence that an arrangement exists, delivery has occurred, the sales price ofthe transaction is fixed or determinable, and collectability is reasonably assured. Delivery is determined by the shipping terms ofthe individual revenue transactions. For transactions with FOB destination or similar shipping terms, delivery occurs when ourproduct reaches its destination and is received by the customer. For transactions with FOB shipping point terms, delivery occurswhen our product is received by the common carrier. We use judgment when estimating the effect on revenue of discounts andsales incentives, both of which are accrued when the related revenue is recognized. Our revenue is reported net of any sales taxesbilled to customers.Product WarrantyWe warrant that items sold will conform to customer specifications for a 30-day period. However, our liability generally islimited to the repair, replacement, or refund of the cost of the photomasks at our sole option. We inspect photomasks for conformityto customer specifications prior to shipment. Accordingly, customer claims related to items under warranty have historically beeninsignificant. Our warranty policy includes accepting returns of products with defects, or products that have not been produced toprecise customer specifications.NOTE 2 - PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment consists of the following: October 31,2018October 29,2017Land$11,139 $9,959 Buildings and improvements 124,771 125,290 Machinery and equipment 1,566,163 1,547,870 Leasehold improvements 19,577 20,050 Furniture, fixtures and office equipment 12,415 12,989 Construction in progress 128,649 72,045 1,862,714 1,788,203 Accumulated depreciation and amortization (1,290,933) (1,253,006) $571,781 $535,197 Equipment under capital leases is included in the property, plant and equipment amount, above, as follows: October 31,2018October 29,2017Machinery and equipment$— $34,917 Less accumulated amortization — 13,843 $— $21,074 In January 2017, we acquired a business comprised of manufacturing assets and certain intellectual property that enabled us toexpand our manufacturing capability, primarily in large area masks for IC, for approximately44TABLE OF CONTENTS$5.7 million, including $0.3 million paid one year after the acquisition date. The transaction was accounted for in accordance withASC 805, “Business Combinations”, with substantially all of the purchase price being allocated to long-lived assets that are beingdepreciated over five years.In January 2017, we entered into a noncash transaction with a customer which resulted in the acquisition of equipment with afair value of approximately $6.7 million and $9.0 million in fiscal years 2018 and 2017, respectively.NOTE 3 - INTANGIBLE ASSETSAmortization expense of the Company’s finite-lived intangible assets was $4.8 million, $4.9 million and $4.8 million in fiscalyears 2018, 2017 and 2016, respectively.Intangible assets consist of: GrossAmountAccumulatedAmortizationNetAmountAs of October 31, 2018 Technology license agreement$59,616 $(49,349)$10,267 Customer relationships 9,147 (7,959) 1,188 Software and other 6,519 (5,606) 913 $75,282 $(62,914)$12,368 As of October 29, 2017 Technology license agreement$59,616 $(45,374)$14,242 Customer relationships 9,375 (7,793) 1,582 Software and other 8,195 (6,897) 1,298 $77,186 $(60,064)$17,122 The weighted-average amortization period of intangible assets acquired in fiscal year 2018, which is comprised of software, isthree years. The weighted-average amortization period of intangible assets acquired in fiscal year 2017 was 4.5 years, primarilycomprised of acquired customer relationships and technology that has an amortization period of five years, and software that has anamortization period of three years.Intangible asset amortization over the next five years is estimated to be as follows:Fiscal Years: 2019$4,588 2020 4,539 2021 2,706 2022 129 2023 126 NOTE 4 - PDMCX JOINT VENTUREIn January 2018, Photronics, through its wholly-owned Singapore subsidiary (hereinafter, within this Note “we”, or“Photronics”), and Dai Nippon Printing Co., Ltd., through its wholly owned subsidiary “DNP Asia Pacific PTE, Ltd.” (hereinafter,within this Note “DNP”) entered into a joint venture under which DNP obtained a 49.99% interest in our recently established ICbusiness in Xiamen, China, which includes the facility currently under construction. The joint venture, known as “Photronics DNPMask Corporation Xiamen” (hereinafter, “PDMCX”), was established to develop and manufacture photomasks for leading edgeand advanced generation semiconductors. We entered into this joint venture to enable us to compete more effectively for themerchant photomask business in China and to benefit from the additional resources and investment that DNP will provide toenable us to offer advanced process technology to our customers. No gain or loss was recorded upon the formation of the jointventure.As of October 31, 2018, Photronics and DNP have each contributed cash of approximately $18.0 million to the joint venture.We estimate that, over the next several years and per the PDMCX joint venture operating agreement (“the Agreement”), DNP andPhotronics will each contribute an additional $62 million of cash and additional amounts to be obtained through local borrowings.45TABLE OF CONTENTSUnder the Agreement, DNP is afforded, under certain circumstances, the right to put its interest in PDMCX to Photronics.These circumstances include disputes regarding the strategic direction of PDMCX that may arise after the initial two year term ofthe Agreement and cannot be resolved between the two parties. In addition, both Photronics and DNP have the option to purchase,or put, their interest from, or to, the other party, should their ownership interest fall below 20% for a period of more than sixconsecutive months. Under all such circumstances, the sales of ownership interests would be at the exiting party’s ownershippercentage of the joint venture’s net book value, with closing to take place within three business days of obtaining requiredapprovals and clearance.We recorded net losses from the operations of the PDMCX joint venture of approximately $0.7 million in fiscal 2018. Generalcreditors of PDMCX do not have recourse to the assets of Photronics, Inc., and the maximum exposure to loss for Photronics fromPDMCX at October 31, 2018, was $15.9 million.As required by the guidance in Topic 810 - “Consolidation” of the Accounting Codification Standards, we evaluated ourinvolvement in PDMCX for the purpose of determining whether we should consolidate its results in our financial statements. Theinitial step of our evaluation was to determine whether PDMCX was a variable interest entity (“VIE”). Due to its lack of sufficientequity at risk to finance its activities without additional subordinated financial support, we determined that it is a VIE. Havingmade this determination, we then assessed whether we were the primary beneficiary of the VIE, and concluded that we were theprimary beneficiary during the current reporting period; thus, as required, the PDMCX financial results should be consolidatedwith Photronics, Inc. Our conclusion was based on the fact that we held a controlling financial interest in PDMCX, which resultedfrom our having the power to direct the activities that most significantly impacted its economic performance, the obligation toabsorb losses, and the right to receive benefits that could potentially be significant to PDMCX. Our conclusion that we had thepower to direct the activities that most significantly affected the economic performance of PDMCX during the current period wasbased on our right to appoint the majority of its board of directors, which has, among others, the powers to manage the business(through its rights to appoint and evaluate PDMCX’s management), incur indebtedness, enter into agreements and commitments,and acquire and dispose of PDMCX’s assets. In addition, as a result of the 50.01% variable interest we held during the currentperiod, we had the obligation to absorb losses and the right to receive benefits that could potentially be significant to PDMCX.The carrying amounts of PDMCX assets and liabilities included in our condensed consolidated balance sheet as of October31, 2018, are presented in the following table, together with the maximum exposure to loss of Photronics due to its interests in thenet assets of this joint venture.ClassificationCarryingAmountPhotronicsInterestCurrent assets$9,625 $4,813 Non-current assets 43,415 21,708 Total assets 53,040 26,521 Current liabilities 21,205 10,603 Non-current liabilities 20 10 Total liabilities 21,225 10,613 Net assets$31,815 $15,908 NOTE 5 - ACCRUED LIABILITIESAccrued liabilities consist of the following: October 31,2018October 29,2017Compensation related expenses$15,359 $9,981 Income taxes 10,369 2,305 Unearned revenue 7,834 5,659 Value added and other taxes 3,683 3,064 Professional fees 1,257 1,011 Other 5,972 4,283 $44,474 $26,303 46TABLE OF CONTENTSNOTE 6 - LONG-TERM DEBTLong-term debt consists of the following: October 31,2018October 29,20173.25% convertible senior notes due in April 2019$57,453 $57,337 2.77% capital lease obligation payable through July 2018 — 4,639 57,453 61,976 Less: current portion 57,453 4,639 $— $57,337 In April 2016, $57.5 million of our senior convertible notes matured. We repaid $50.1 million to noteholders and issuedapproximately 0.7 million shares to noteholders that elected to convert their notes to common stock. The notes were exchanged atthe rate of approximately 96 shares per $1,000 note principle, equivalent to a conversion rate of $10.37 per share.In January 2015, we privately exchanged $57.5 million in aggregate principal amount of our 3.25% convertible senior noteswith a maturity date of April 1, 2016, for new 3.25% convertible senior notes with an aggregate principal amount of $57.5 millionwith a maturity date of April 1, 2019. The conversion rate of the new notes is the same as that of the exchanged notes, which wereissued in March 2011 with a conversion rate of approximately 96 shares of common stock per $1,000 note principal, equivalent toa conversion price of $10.37 per share of common stock, and is subject to adjustment upon the occurrence of certain events, whichare described in the indenture dated January 22, 2015. Note holders may convert each $1,000 principal amount of notes at any timeprior to the close of business on the second scheduled trading day immediately preceding April 1, 2019, and we are not required toredeem the notes prior to their maturity date. Interest on the notes accrues in arrears, and is paid semiannually through the notes’maturity date.In November FY2019, Xiamen American Japan Photronics Mask Co., Ltd. (“PDMCX”), an indirect majority owned jointventure subsidiary of Photronics, Inc., entered into a commitment letter for an 8-year term loan agreement under which it canborrow up to approximately $50.0 million (“the Project Loan”). PDMCX will use the Project Loan to finance certain capitalexpenditures in China. PDMCX will grant a lien on the land, building and equipment owned by PDMCX as collateral for theProject Loan. The interest rate of the Project Loan is based on the benchmark lending rate (as defined in the Project Loanagreement) plus a floating rate spread, of the People’s Bank of China on the date of borrowings. We anticipate that interest incurredon this loan will be reimbursed through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, up to acertain cap.On November 7, 2018, PDMCX entered into a working capital loan agreement with a maximum borrowing limit ofapproximately $25.0 million, (“the Working Capital Loan”). In November 2018, we borrowed $2.2 million against this loan.PDMCX will use the Working Capital Loan for general financing purposes including for the payment of import and value addedtaxes. The term of the Working Capital Loan will not exceed three years, and no guarantees were required under the terms of theWorking Capital Loan. The interest rate of the Working Capital Loan is based on the benchmark lending rate (as defined in theWorking Capital Loan agreement) plus a floating rate spread, of the People’s Bank of China on the date of borrowings. Weanticipate that interest incurred on this loan will be reimbursed through incentives provided by the Xiamen Torch Hi-TechIndustrial Development Zone, up to a certain cap.In August 2018, we entered into an amendment to our credit facility which allows us to sell, transfer, lease, or otherwisedispose of our assets to a subsidiary guarantor. In September 2018, we entered into an amended and restated credit agreement (“thenew agreement”) that expires in September 2023. The new agreement, which replaced our prior credit facility, has a $50 millionborrowing limit, with an expansion capacity to $100 million, and is secured by substantially all of our assets located in the UnitedStates and common stock we own in certain of our foreign subsidiaries. The new agreement limits the amount we can pay in cashdividends on Photronics, Inc. stock, and contains the following financial covenants: minimum interest coverage ratio, totalleverage ratio and minimum unrestricted cash balance, all of which we were in compliance with at October 31, 2018. We had nooutstanding borrowings against the new agreement at October 31, 2018, and $50 million was available for borrowing. The interestrate on the new agreement (2.3% at October 31, 2018) is based on our total leverage ratio at LIBOR plus a spread, as defined in thecredit facility.47TABLE OF CONTENTSIn August 2013, a $26.4 million principal amount, five year capital lease commenced to fund the purchase of a high-endlithography tool. Payments under the capital lease, which bore interest at 2.77%, were $0.5 million per month through July 2018.Interest payments were $1.9 million, $2.1 million, and $3.2 million, in fiscal years 2018, 2017 and 2016, respectively.NOTE 7 - OPERATING LEASESWe lease various real estate and equipment under non-cancelable operating leases, for which rent expense was $2.9 million,$3.0 million, and $2.8 million in fiscal 2018, 2017, and 2016, respectively.At October 31, 2018, future minimum lease payments under non-cancelable operating leases with initial terms in excess of oneyear were as follows:2019$1,850 2020 1,547 2021 1,375 2022 1,345 2023 618 Thereafter 667 $7,402 See Note 6 for disclosures related to capital lease obligations.NOTE 8 - SHARE-BASED COMPENSATIONIn March 2016, shareholders approved a new equity incentive compensation plan (“the Plan”), under which incentive stockoptions, non-qualified stock options, stock grants, stock-based awards, restricted stock, restricted stock units, stock appreciationrights, performance units, performance stock, and other stock or cash awards may be granted. Shares to be issued under the Planmay be authorized and unissued shares, issued shares that have been reacquired by us (in the open-market or in privatetransactions), shares that are being held in the treasury, or a combination thereof. The maximum number of shares of common stockapproved that may be issued under the Plan is four million shares. Awards may be granted to officers, employees, directors,consultants, advisors, and independent contractors of Photronics or its subsidiaries. In the event of a change in control (as definedin the Plan), the vesting of awards may be accelerated. The Plan, aspects of which are more fully described below, prohibits furtherawards from being issued under prior plans. We incurred total share-based compensation expenses of $3.2 million, $3.6 million,and $3.8 million in fiscal years 2018, 2017, and 2016, respectively. No share-based compensation cost was capitalized as part of anasset and no related income tax benefits were recorded during the fiscal years presented.Stock OptionsOption awards generally vest in one-to-four years, and have a ten year contractual term. All incentive and non-qualified stockoption grants must have an exercise price no less than the market value of the underlying common stock on the date of grant. Thegrant date fair values of options are based on the closing price of our common stock on the date of grant, and are calculated usingthe Black-Scholes option pricing model. Expected volatility is based on the historical volatility of our common stock. We usehistorical option exercise behavior and employee termination data to estimate expected term, which represents the period of timethat the options granted are expected to remain outstanding. The risk-free rate of return for the estimated term of the option is basedon the U.S. Treasury yield curve in effect at the date of grant.The weighted-average inputs and risk-free rate of return ranges used to calculate the grant date fair values of stock optionsissued during fiscal years 2018, 2017 and 2016 are presented in the following table: Year Ended October 31,2018October 29,2017October 30,2016Expected volatility31.7%32.2%48.4%Risk-free rate of return2.2 – 2.8%1.9 – 2.0%1.2 – 1.7%Dividend yield0.0%0.0%0.0%Expected term5.0 years5.0 years5.1 years48TABLE OF CONTENTSThe table below presents a summary of stock options activity during fiscal year 2018 and information on stock optionsoutstanding at October 31, 2018.OptionsSharesWeighted-AverageExercise PriceWeighted-AverageRemainingContractual LifeAggregateIntrinsic ValueOutstanding at October 29, 2017 3,345,235 $8.01 Granted 269,000 8.62 Exercised (823,311) 5.27 Cancelled and forfeited (367,364) 10.19 Outstanding at October 31, 2018 2,423,560 $8.68 5.8 years$3,977 Exercisable at October 31, 2018 1,612,945 $7.93 4.8 years$3,524 Vested and expected to vest as of October 31, 2018 2,315,890 $8.59 5.7 years$3,930 The weighted-average grant date fair value of options granted during fiscal years 2018, 2017 and 2016 were $2.76, $3.59 and$4.51, respectively. The total intrinsic value of options exercised during fiscal years 2018, 2017 and 2016 was $2.5 million, $1.9million and $3.5 million, respectively.We received cash from option exercises of $4.3 million, $2.4 million and $3.1 million in fiscal years 2018, 2017 and 2016,respectively. As of October 31, 2018, the total unrecognized compensation cost of unvested option awards was approximately $1.5million. That cost is expected to be recognized over a weighted-average amortization period of 1.9 years.Restricted StockWe periodically grant restricted stock awards, the restrictions on which typically lapse over a service period of one-to-fouryears. The fair value of the awards are our closing stock prices on the dates of grant. There were 290,000, 317,750, and 115,225restricted stock awards granted during fiscal years, 2018, 2017 and 2016. The weighted-average grant date fair values of restrictedstock awards issued during fiscal years 2018, 2017 and 2016 were $8.62, $10.94 and $12.13, respectively. The total fair value ofawards for which restrictions lapsed was $1.4 million, $1.2 million and $1.7 million during fiscal years 2018, 2017 and 2016,respectively. As of October 31, 2018, the total compensation cost for restricted stock awards not yet recognized was approximately$2.8 million. That cost is expected to be recognized over a weighted-average amortization period of 2.6 years.A summary of restricted stock award activity during fiscal year 2018 and the status of our outstanding restricted stock awardsas of October 31, 2018, is presented below:Restricted StockSharesWeighted-AverageFair Value atGrant DateOutstanding at October 29, 2017 339,181 $10.74 Granted 290,000 8.62 Vested (163,664) 9.88 Cancelled (46,220) 11.07 Outstanding at October 31, 2018 419,297 $9.58 Expected to vest as of October 31, 2018 383,413 $9.53 Employee Stock Purchase PlanOur Employee Stock Purchase Plan (“ESPP”) permits employees to purchase Photronics, Inc. common shares at 85% of thelower of the closing market price at the commencement or ending date of the Plan year (which is approximately one year). Werecognize the ESPP expense during that same period. As of October 31, 2018, the maximum number of shares of common stockapproved by our shareholders to be purchased under the ESPP was 1.5 million shares; approximately 1.4 million shares had beenissued through October 31, 2018, and approximately 0.1 million shares were subject to outstanding subscriptions. As of October31, 2018, the total compensation cost related to the ESPP not yet recognized was $0.1 million, which is expected to be recognizedin fiscal 2019.49TABLE OF CONTENTSNOTE 9 - EMPLOYEE RETIREMENT PLANSWe maintain a 401(k) Savings and Profit Sharing Plan (“401(k) Plan”) which covers all full and certain part time U.S.employees who have completed three months of service and are 18 years of age or older. Under the terms of the 401(k) Plan,employees may contribute up to 50% of their salary, subject to certain maximum amounts, which will be matched by the Companyat 50% of the employee’s contributions that are not in excess of 4% of the employee’s compensation. Employee and employercontributions vest immediately upon contribution. The total employer contributions for all of our defined contribution plans were$0.7 million, $0.6 million and $0.6 million in fiscal years 2018, 2017 and 2016, respectively.NOTE 10 - INCOME TAXESOn December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Act”), was signed into law, enacting significant changes to theUnited States Internal Revenue Code of 1986, as amended. For fiscal 2018, the most significant impacts include: the reduction ofthe U.S. federal corporate income tax rate; remeasurement of certain net deferred tax assets; phased refund of alternative minimumtax credit carryforward and requirement of a transition tax on the deemed repatriation of certain foreign earnings. The phase-in ofthe lower corporate income tax rate resulted in a blended income tax rate of 23.42% for fiscal 2018, as compared to the previousrate of 35%. The tax rate has been reduced to 21% for subsequent fiscal years, which impacted the remeasurement of our year enddeferred tax balances.In December 2017, in response to the Act, the Securities and Exchange Commission released Staff Accounting Bulletin No.118 (“SAB 118”) to address situations in which the accounting under ASC 740 is incomplete for certain income tax effects of theAct. We adopted SAB 118 in our first quarter of fiscal year 2018. SAB 118 summarizes a three-step process to be applied at eachreporting period to account for and qualitatively disclose: (1) the effects of the change in tax law for which accounting is complete;(2) provisional amounts (or adjustments to provisional amounts) for the effects of the tax law where accounting is not complete, butfor which reasonable estimates have been determined; and (3) reasonable estimates cannot yet be made and, therefore, taxes arereflected in accordance with law prior to the enactment of the Act. The effects of the Act provisions and the application of SAB 118included in the fiscal 2018 results are summarized as follows:•The accounting for the net income tax change for the remeasurement of certain deferred taxes is complete, and resulted inan increase of $1.6 million (provisional estimate of $2.5 million) reflecting the remeasurement of the final year enddeferred taxes to the fiscal 2019 tax rate, all of which was offset by the remeasurement adjustment of $1.6 million(provisional estimate of $2.5 million) of the related valuation allowance, resulting in a net zero change in the income taxprovision.•As a result of the Act our determination regarding the realization of the benefit of the alternative minimum tax creditcarryforwards changed; accordingly, the related valuation allowance has been reversed, and a $3.7 million, net ofsequestration, tax benefit has been recorded (our original provisional estimate of $3.9 million, was reduced to $3.7million in FY 2018 Q3 to reflect sequestration). The accounting for this item is now complete.•Additionally, the accounting of the transition tax, for the year ended October 31, 2018 is complete. We recorded incometax expense of $29.6 million (provisional estimate of $28.4 million reported in the previous three quarters of FY 2018,changed based on the most current available information). The entire amount of transition tax was offset by the currentyear loss, current year credits and available credit carryforwards.Based on our current interpretation of the Act, we have completed the accounting for all items that impact our fiscal 2018financial statements. Collectively, these items and the changes in measurement did not have a material impact to our consolidatedeffective tax rate or financial statements.On January 18, 2018, the Taiwan Legislature Yuan approved amendments to the Income Tax Act, enacting an increase in thecorporate tax rate from 17% to 20%. Under generally accepted accounting principles, we are required to revalue our deferred taxassets and liabilities, utilizing the rate applicable to the period, when a temporary difference will reverse. Our analysis indicatesthat our Taiwan deferred tax asset will be increased and, accordingly, we have recognized a net benefit of $0.2 million.50TABLE OF CONTENTSIncome before the income tax provisions consists of the following: Year Ended October 31,2018October 29,2017October 30,2016United States$(9,859)$(11,544)$6,270 Foreign 78,430 38,109 54,204 $68,571 $26,565 $60,474 The income tax provisions consist of the following: Year Ended October 31,2018October 29,2017October 30,2016Current: Federal$(30)$173 $492 State (0) (4) (2)Foreign 11,584 3,474 8,115 Deferred: Federal (3,673) — — State (24) 15 10 Foreign (522) 1,618 (3,817)Total$7,335 $5,276 $4,798 The income tax provisions differ from the amount computed by applying the statutory U.S. federal income tax rate to incomebefore income taxes as a result of the following: Year Ended October 31,2018October 29,2017October 30,2016U.S. federal income tax at statutory rate$16,059 $9,298 $21,166 Changes in valuation allowances 4,554 (3,632) (9,516)Distributions from foreign subsidiaries — 6,471 3,438 Foreign tax rate differentials (2,078) (5,230) (9,620)Tax credits (1,530) (1,925) (944)Uncertain tax positions, including reserves, settlements and resolutions (1,791) (932) 134 Employee stock option (1,433) 512 452 Income tax holiday (2,648) (743) (507)Tax reform (3,736) — — Tax on foreign subsidiary earnings — 1,712 225 Other, net (62) (255) (30) $7,335 $5,276 $4,798 The fiscal year 2018 effective tax rate differs from the U.S. federal blended rate of 23.42% primarily due to the impact of theAct allowing for the refund of AMT credits that caused a corresponding reversal of the related valuation allowance, the recognitionof a benefit related to previously unrecognized tax positions, earnings being taxed at lower statutory rates in foreign jurisdictions,the benefits of tax holiday, and investment credits in foreign jurisdictions.The fiscal years 2017 and 2016 effective tax rates differ from the U.S. statutory rate of 35% primarily due to earnings beingtaxed at lower statutory rates in foreign jurisdictions, changes in deferred tax asset valuation allowances, including the reversalsnoted below, together with the benefit of various investment credits in a foreign jurisdiction. In addition, the lower rate in fiscalyear 2016 was partially driven by a benefit that resulted from the reversal of a previously recorded undistributed earnings taxliability in a foreign jurisdiction for which we are no51TABLE OF CONTENTSlonger liable. We were granted two five-year tax holidays in Taiwan, one that expired unused in 2017 and the other that expires in2019. The latter tax holiday reduced foreign taxes by $2.6 million, $0.7 million and $0.5 million in fiscal years 2018, 2017 and2016, respectively, with a $0.035 cents per share impact in fiscal 2018 and a de minimis per share effect in the fiscal 2017 and2016 periods.The net deferred income tax assets consist of the following: As of October 31,2018October 29,2017Deferred income tax assets: Net operating losses$30,805 $40,942 Reserves not currently deductible 4,703 4,196 Alternative minimum tax credits 3,673 3,946 Tax credit carryforwards 9,159 10,037 Share-based compensation 767 2,335 Other 1,210 1,503 50,317 62,959 Valuation allowances (24,383) (25,590) 25,934 37,369 Deferred income tax liabilities: Undistributed earnings of foreign subsidiaries (0) (4,335)Property, plant and equipment (8,020) (19,280)Other (448) (322) (8,468) (23,937)Net deferred income tax assets$17,466 $13,432 Reported as: Deferred income tax assets$18,109 $15,481 Deferred income tax liabilities (643) (2,049) $17,466 $13,432 We have established a valuation allowance for a portion of our deferred tax assets because we believe, based on the weight ofall available evidence, that it is more likely than not that a portion of our net operating loss carryforwards will expire prior toutilization. During fiscal year 2018, the valuation allowance decrease primarily resulted from the reversal of the valuationallowance related to alternative minimum tax credits of $(3.9) million as the result of the Act, prior year additional NOL utilizationof $(1.8) million, credit utilization of $(1.3) million, other impacts of $(0.4) million, changes in the deferred tax liability of $2.8million, $1.8 million from the adoption of ASU 2016-09 related to stock compensation, and $1.6 million from the corporate taxrate reduction. During fiscal year 2016, we determined that sufficient positive evidence existed in certain foreign jurisdictions thatit was more likely than not that additional deferred tax assets were realizable and, therefore, we reduced the valuation allowance by$4.3 million. Fiscal years 2017 and 2016 also changed as a result of loss utilizations and deferred tax liability changes of $3.7million and $5.2 million, respectively.Due to the Act, as of fiscal year end 2018, U.S. deferred taxes are no longer provided on the undistributed earnings of non-U.S.subsidiaries. Our policy to indefinitely reinvest these earnings in non-U.S. operations remains unchanged for the purpose ofdetermining deferred tax liabilities for U.S. state and foreign withholding taxes. During fiscal year 2017, the permanentreinvestment assertion was partially changed due to changes in circumstances within one of our non-U.S. subsidiary entities, and aU.S. tax liability was recognized for the related undistributed earnings. Outside of the Act, should we elect in the future torepatriate the remaining foreign earnings deemed to be indefinitely reinvested, we may incur additional state and withholding taxexpense on those foreign earnings, the amount of which is not practicable to compute.52TABLE OF CONTENTSThe following tables present our available operating loss and credit carryforwards at October 31, 2018, and their relatedexpiration periods:Operating Loss CarryforwardsAmountExpirationPeriodsFederal$78,902 2028-2033 State 208,411 2018-2038 Foreign 9,761 2021-2027 Tax Credit CarryforwardsAmountExpirationPeriodFederal research and development$4,314 2019-2038 Federal alternative minimum 3,673 Refundable State 5,819 2020-2032 Foreign 246 2019-2020 A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is asfollows: Year Ended October 31,2018October 29,2017October 30,2016Balance at beginning of year$3,384 $4,606 $4,029 Additions (reductions) for tax positions in prior years (44) 207 744 Additions based on current year tax positions 498 323 268 Settlements (56) (922) (378)Lapses of statutes of limitations (2,007) (830) (57)Balance at end of year$1,775 $3,384 $4,606 As of October 31, 2018, October 29, 2017 and October 30, 2016, the balance of unrecognized tax benefits includes $1.9million, $3.4 million, and $4.6 million, respectively, recorded in other liabilities in the consolidated balance sheets that, ifrecognized, would impact the effective tax rate. Included in these amounts in each of fiscal years 2018, 2017 and 2016 were $0.1million of interest and penalties. We include any applicable interest and penalties related to uncertain tax positions in our incometax provision. The amounts reflected in the table above for the fiscal years 2018, 2017 and 2016 include settlements of non-U.S.audits.Although the timing of the expirations of statutes of limitations may be uncertain, as they can be dependent upon thesettlement of tax audits, the Company believes that it is reasonably possible that up to $0.9 million of its uncertain tax positions(including accrued interest and penalties, and net of tax benefits) may be resolved over the next twelve months. Resolution of theseuncertain tax positions may result from either or both of the lapses of statutes of limitations and tax settlements. The Company isno longer subject to tax authority examinations in the U.S., major foreign, or state tax jurisdictions for years prior to fiscal year2014.Income tax payments were $6.1 million, $9.3 million and $11.4 million in fiscal years 2018, 2017 and 2016, respectively.Cash received as refunds of income taxes paid in prior years amounted to $1.1 million, $0.1 million and $0.2 million in fiscal years2018, 2017 and 2016, respectively.53TABLE OF CONTENTSNOTE 11 - EARNINGS PER SHAREThe calculation of basic and diluted earnings per share is presented as follows: Year Ended October 31,2018October 29,2017October 30,2016Net income attributable to Photronics, Inc. shareholders$42,055 $13,130 $46,200 Effect of dilutive securities: Interest expense on convertible notes, net of related tax effects 1,999 — 2,938 Earnings for diluted earnings per share$44,054 $13,130 $49,138 Weighted-average common shares computations: Weighted-average common shares used for basic earnings per share 68,829 68,436 67,539 Effect of dilutive securities: Convertible notes 5,542 — 7,841 Share-based payment awards 450 852 974 Potentially dilutive common shares 5,992 852 8,815 Weighted-average common shares used for diluted earnings per share 74,821 69,288 76,354 Basic earnings per share$0.61 $0.19 $0.68 Diluted earnings per share$0.59 $0.19 $0.64 The table below shows the outstanding weighted-average share-based payment awards that were excluded from thecalculation of diluted earnings per share because their exercise price exceeded the average market value of the common shares forthe period or, under application of the treasury stock method, they were otherwise determined to be antidilutive. The table alsoshows convertible notes that, if converted, would have been antidilutive. Year Ended October 31,2018October 29,2017October 30,2016Share based payment awards 1,627 1,308 1,635 Convertible notes — 5,542 — Total potentially dilutive shares excluded 1,627 6,850 1,635 NOTE 12 - COMMITMENTS AND CONTINGENCIESAt October 31, 2018, we had outstanding purchase commitments of $144 million, $126 million of which related to thebuilding and equipping of our China facilities, and had recorded liabilities for the purchase of equipment of $30 million. See Note7 for information on our operating lease commitments.We are subject to various claims that arise in the ordinary course of business. We believe such claims, individually and in theaggregate, will not have a material effect on our consolidated financial statements.54TABLE OF CONTENTSNOTE 13 - GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATIONWe operate as a single operating segment as a manufacturer of photomasks, which are high precision quartz or glass platescontaining microscopic images of electronic circuits for use in the fabrication of IC’s and FPDs. Geographic revenues (shownbelow) are based primarily on where our manufacturing facility is located.Our 2018, 2017 and 2016 revenue by geographic area and by IC and FPD products, and long-lived assets by geographic areawere as follows: Year Ended October 31,2018October 29,2017October 30,2016Net revenue Taiwan$237,039 $187,818 $193,216 Korea 147,066 122,165 141,017 United States 112,648 102,040 113,670 Europe 35,540 36,081 33,384 All other Asia 2,983 2,574 2,169 $535,276 $450,678 $483,456 IC$416,064 $350,260 $364,531 FPD 119,212 100,418 118,925 $535,276 $450,678 $483,456 As of October 31,2018October 29,2017October 30,2016Long-lived assets Taiwan$177,626 $186,192 $176,644 United States 156,948 180,095 173,658 Korea 127,764 147,265 146,515 China 102,985 8,273 — Europe 6,458 13,372 9,617 $571,781 $535,197 $506,434 One customer accounted for 16%, 16% and 19% of our revenue in fiscal years 2018, 2017 and 2016, respectively, and anothercustomer accounted for 15%, 16% and 17% of our revenue in fiscal years 2018, 2017 and 2016, respectively.55TABLE OF CONTENTSNOTE 14 - CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENTThe following tables set forth the changes in our accumulated other comprehensive income by component (net of tax of $0)for the years ended October 31, 2018 and October 29, 2017: Year Ended October 31, 2018 Foreign CurrencyTranslationAdjustmentsAmortizationof CashFlow HedgeOtherTotalBalance at October 29, 2017$7,627 $(48)$(688)$6,891 Other comprehensive income before reclassifications (16,672) — 101 (16,571)Amounts reclassified from other accumulated comprehensive income — 48 — 48 Net current period other comprehensive income (16,672) 48 101 (16,523)Less: other comprehensive loss (income) attributable to noncontrollinginterests 4,717 — (51) 4,666 Balance at October 31, 2018$(4,328)$— $(638)$(4,966) Year Ended October 29, 2017 Foreign CurrencyTranslationAdjustmentsAmortizationof CashFlow HedgeOtherTotalBalance at October 31, 2016$(6,567)$(177)$(927)$(7,671)Other comprehensive income before reclassifications 19,799 — 478 20,277 Amounts reclassified from other accumulated comprehensive income — 129 — 129 Net current period other comprehensive income 19,799 129 478 20,406 Less: other comprehensive income attributable to noncontrollinginterests (5,605) — (239) (5,844)Balance at October 29, 2017$7,627 $(48)$(688)$6,891 Amortization of the cash flow hedge is included in cost of goods sold in the consolidated statements of income in all periodspresented.NOTE 15 – CONCENTRATIONS OF CREDIT RISKFinancial instruments that potentially subject us to credit risk principally consist of trade accounts receivables and short-termcash investments. We sell our products primarily to semiconductor and FPD manufacturers in Asia, North America, and Europe. Webelieve that the concentration of credit risk in our trade receivables is substantially mitigated by our ongoing credit evaluationprocess and relatively short collection terms. We do not generally require collateral from customers. We establish an allowance fordoubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.Our cash and cash equivalents are deposited in several financial institutions, including institutions located within all of thecountries in which we manufacture photomasks. Portions of deposits in some of these institutions may exceed the amount ofinsurance available for such deposits at these institutions. As these deposits are generally redeemable upon demand and are held byhigh quality, reputable institutions, we consider them to bear minimal credit risk. We further mitigate credit risks related to ourcash and cash equivalents by spreading such risk among a number of institutions.One customer accounted for 20% and 23% of our net accounts receivable in fiscal years 2018 and 2017, respectively, andanother customer accounted for 10% of our net accounts receivables in fiscal year 2018 and less than 10% in fiscal year 2017.56TABLE OF CONTENTSNOTE 16 - RELATED PARTY TRANSACTIONSOn January 20, 2018, Photronics, Inc. entered into a four-year consulting agreement with DEMA Associates, LLC, for $0.4million per year. Two members of our board of directors, including the chairman and a member of the chairman’s immediate family,are members of DEMA Associates, LLC. In FY 2018, we incurred expenses for services provided by this entity of $0.3 million.Our chairman of the board of directors was also a director of an entity that provided secure managed information technologyservices to Photronics in fiscal year 2016. Another member of our board of directors was the chief executive officer and chairman ofthe board of this entity. We had contracted with this entity since 2002 for services it provided to all of our facilities. In fiscal year2016, we incurred expenses for services provided by this entity of $0.2 million. As of January 30, 2018, no members of our board ofdirectors were executive officers, directors or shareholders of this entity.In July 2016, we entered into a contract for information technology services with a parent entity for which members of ourboard of directors served as the executive chairman of the board and a director of a wholly owned subsidiary of that entity. In fiscalyear 2018, we incurred expenses for services provided by the parent entity of $0.1 million during the period in which our boardmembers served on the board of directors of this entity and, in 2017 and 2016, we incurred expenses of $0.5 million and $0.3million respectively, with the parent entity. As of October 29, 2017, we had payables outstanding to the parent entity of $0.1million. As of January 30, 2018, no members of our board of directors were executive offices, directors or shareholders of thewholly owned subsidiary.An officer of one of our foreign subsidiaries is related to an individual in a position of authority at one of our largestcustomers. We recorded revenue from this customer of $78.4 million, $73.6 million and $80.5 million, in fiscal years 2018, 2017and 2016, respectively. At October 31, 2018 and October 29, 2017, we had accounts receivable of $23.5 million and $24.3 million,respectively, from this customer.We purchase photomask blanks from an entity of which a former officer of ours is a significant shareholder. The Companypurchased $4.5 million of photomask blanks from this entity during the period in 2017 when the former officer was employed byus, and $16.3 million in fiscal year 2016. This former officer’s employment with the Company ended in February 2017.We believe that the terms of our transactions with the related parties described above were negotiated at arm’s length and wereno less favorable to us than terms we could have obtained from unrelated third parties. See Note 19 for additional related partytransactions.NOTE 17 - FAIR VALUE MEASUREMENTSThe accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of theinformation used to measure fair value, which enables the reader of the financial statements to assess the inputs used to developthose measurements. The fair value hierarchy consists of three tiers as follows: Level 1, defined as quoted market prices(unadjusted) in active markets for identical securities; Level 2, defined as inputs other than Level 1 that are observable, eitherdirectly or indirectly; and Level 3, defined as unobservable inputs that are not corroborated by market data.The fair values of our cash and cash equivalents (Level 1 measurements), accounts receivable, accounts payable, and certainother current assets and current liabilities (Level 2 measurements) approximate their carrying value due to their short-termmaturities. We did not have any assets or liabilities measured at fair value, on a recurring or a nonrecurring basis, at October 31,2018 and October 29, 2017.Fair Value of Financial Instruments Not Recorded at Fair ValueThe fair value of our convertible senior notes is a Level 2 measurement, as it was determined using inputs that were eitherobservable market data or could be derived from or corroborated with observable market data. These inputs included our stockprice and interest rates offered on debt issued by entities with credit ratings similar to ours. The table below presents the fair andcarrying values of our convertible senior notes at October 31, 2018 and October 29, 2017. October 31, 2018October 29, 2017 FairValueCarryingValueFairValueCarrying Value3.25% convertible senior notes due 2019$62,094 $57,453 $67,396 $57,337 57TABLE OF CONTENTSNOTE 18 - SHARE REPURCHASE PROGRAMIn October 2018, the Company’s Board of Directors authorized the repurchase of up to $25 million of its common stock, to beexecuted in open-market transactions or in accordance with a repurchase plan under rule 10b5-1 of the Securities Act of 1933 (asamended). The share repurchase program commenced on October 22, 2018, and will expire no later than October 21, 2019. As ofOctober 31, 2018, we had repurchased a combined 0.3 million shares at a cost of $3.1 million (an average of $9.45 per share) underthis share repurchase program. The volume of shares repurchased are subject to market conditions and our continual evaluation ofthe optimal use of our cash.In July 2018, the Company’s Board of Directors authorized the repurchase of up to $20 million of its common stock, to beexecuted in open-market transactions or in accordance with a repurchase plan under rule 10b5-1 of the Securities Act of 1933 (asamended). The share repurchase program commenced on July 10, 2018, and expired in October 2018, when the authorized amountwas exhausted. Under this program, we repurchased 2.2 million shares at a cost of $20.0 million (an average of $8.97 per share).NOTE 19 - JOINT VENTURE, TECHNOLOGY LICENSE AND OTHER AGREEMENTS WITH MICRON TECHNOLOGY,INC.In May 2006, Photronics and Micron Technology, Inc. (“Micron”) entered into the MP Mask joint venture (“MP Mask”),which developed and produced photomasks for leading-edge and advanced next generation semiconductors. At the time of theformation of the joint venture, we also entered into an agreement to license photomask technology developed by Micron andcertain supply agreements. In May 2016, we sold our investment in MP Mask to Micron for $93.1 million and recorded a gain onthe sale of $0.1 million, which is included in interest income and other income (expense) in our 2016 consolidated statement ofincome. On that same date, a supply agreement commenced between Photronics and Micron, which provided that we would be themajority outsourced supplier of Micron’s photomasks and related services. The supply agreement had a one year term and expiredin May 2017. However, we have the unlimited rights to use technology under the prior technology license agreement.This joint venture was a variable interest entity (“VIE”) (as that term is defined in ASC 810), because all costs of the jointventure were passed on to Photronics and Micron through purchase agreements they had entered into with the joint venture, and itwas dependent upon Photronics and Micron for any additional cash requirements. On a quarterly basis, we reassessed whether ourinterest in MP Mask gave us a controlling financial interest in this VIE. The purpose of this quarterly reassessment was to identifythe primary beneficiary (which is defined in ASC 810 as the entity that consolidates a VIE) of the VIE. As a result of thereassessments in fiscal year 2016, we determined that Micron remained the primary beneficiary of the VIE, by virtue of its tie-breaking voting rights within MP Mask’s Board of Managers, thereby having given it the power to direct the activities of MP Maskthat most significantly impacted its economic performance, including its decision making authority in the ordinary course ofbusiness and its purchase of the majority of products produced by the VIE.We utilized MP Mask for both high-end IC photomask production and research and development purposes. MP Mask chargedits variable interest holders based on their actual usage of its facility and charged separately for any research and developmentactivities it engaged in at the requests of its owners.MP Mask was governed by a Board of Managers appointed by Micron and Photronics. Throughout MP Mask’s existence,Micron, as a result of its majority ownership, held majority voting power on the Board of Managers. Under the MP Mask jointventure operating agreement, we may have been required to make additional capital contributions to MP Mask. MP Mask did notrequest, and we did not make, any contributions to MP Mask in fiscal year 2016, and we did not receive any distributions (otherthan upon the sale of our investment to Micron in fiscal year 2016) from MP Mask during 2016.We recorded a loss from operations from our investment in MP Mask of $0.1 million in fiscal year 2016, which is included inInterest income and other income (expense) in our consolidated statements of income.In fiscal 2016, we recorded $0.4 million of commission revenue earned under the supply agreements with Micron and MPMask, and amortization of $0.1 million of the related supply agreement intangible asset. In 2016, we also recorded cost of goodssold in the amount of $5.7 million for photomasks produced by MP Mask for Photronics customers, and incurred expenses of $0.5million for research and development activities and other goods and services purchased from MP Mask by Photronics.58TABLE OF CONTENTSSummarized financial information of MP Mask is presented below. The financial results of 2016 represent activities throughMay 5, 2016, the date of the sale of the joint venture. Fiscal Year2016Revenue$49,626 Gross profit 2,736 Net income — NOTE 20 - GAINS ON SALE OF INVESTMENTSWe had a minority interest in a foreign entity. In fiscal year 2016, we sold this investment and recognized a gain of $8.8million. In addition, as discussed in Note 19, we sold our investment in the MP Mask joint venture in fiscal year 2016.NOTE 21 - SUBSIDIARY DIVIDENDIn November 2018, PDMC, the Company’s majority owned subsidiary in Taiwan, paid a dividend of which 49.99%, orapproximately $26.0 million, was paid to noncontrolling interests.NOTE 22 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)The following table sets forth certain unaudited quarterly financial data: FirstSecondThirdFourthYear (a) (a)Fiscal 2018: Revenue$123,446 $130,779 $136,391 $144,660 $535,276 Gross profit 27,662 32,819 35,597 35,425 131,503 Net income 9,481 15,189 19,797 16,769 61,236 Net income attributable to Photronics, Inc. shareholders 5,898 10,665 13,005 12,487 42,055 Earnings per share: Basic$0.09 $0.15 $0.19 $0.18 $0.61 Diluted$0.09 $0.15 $0.18 $0.18 $0.59 Fiscal 2017: Revenue$109,831 $108,297 $111,579 $120,971 $450,678 Gross profit 22,999 20,157 21,717 26,442 91,315 Net income 4,510 1,484 4,799 10,496 21,289 Net income attributable to Photronics, Inc. shareholders 1,946 1,797 4,001 5,386 13,130 Earnings per share: Basic$0.03 $0.03 $0.06 $0.08 $0.19 Diluted$0.03 $0.03 $0.06 $0.08 $0.19 (a)Includes $0.6 million gain on sale of assets.NOTE 23 - RECENT ACCOUNTING PRONOUNCEMENTSIn December 2017, the Securities and Exchange Commission released Staff Accounting Bulletin No. 118 (“SAB 118”) toaddress situations where the accounting under ASC Topic 740 – “Income Taxes” is incomplete for certain income tax effects of theTax Cuts and Jobs Act, which was signed into law on December 22, 2017, and changed existing U.S. tax law. We adopted thisguidance in our first quarter of fiscal year 2018. Please see Note 10 for a discussion of the effects of adopting this guidance.59TABLE OF CONTENTSIn November 2016, the FASB issued ASU 2016-18 “Restricted Cash”, which requires that a statement of cash flows explainthe change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restrictedcash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included withcash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement ofcash flows. ASU 2016-18 is effective for Photronics, Inc. in its first quarter of fiscal year 2019 and should be applied on aretrospective transition basis. Early adoption is permitted, including adoption in an interim period. We are currently evaluating theeffect that this ASU will have on our consolidated financial statements.In October 2016, the FASB issued ASU 2016-16 “Intra-Entity Transfers of Assets Other Than Inventory”, which eliminates theexception of recognizing, at the time of transfer, current and deferred income taxes for intra-entity asset transfers other thaninventory. ASU 2016-16 is effective for Photronics, Inc. in the first quarter of fiscal year 2019 and should be applied on a modifiedretrospective transition basis. Early adoption is permitted as of the beginning of an annual reporting period for which interim orannual financial statements have not been issued or made available for issuance. We are currently evaluating the effect this ASUwill have on our consolidated financial statements.In June 2016, the FASB issued ASU 2016-13 “Measurement of Credit Losses”, the main objective of which is to provide moreuseful information about expected credit losses on financial instruments and other commitments of an entity to extend credit. Insupport of this objective, the ASU replaces the incurred loss impairment methodology, found in current GAAP, with a methodologythat reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information toinform credit loss estimates. This ASU requires a cumulative-effect adjustment as of the beginning of the first reporting period inwhich the guidance is adopted. ASU 2016-13 is effective for Photronics, Inc. in its first quarter of fiscal year 2021, with earlyadoption permitted beginning in the first quarter of fiscal year 2019. We are currently evaluating the effect that this ASU will haveon our consolidated financial statements.In March 2016, the FASB issued ASU 2016 – 09 “Improvements to Employee Share-Based Payment Accounting”, whichsimplifies the accounting for share-based payment transactions including their income tax consequences, classification as eitherequity or liability awards, classification on the statement of cash flows, and other areas. The method of adoption varies with thedifferent aspects of the Update. Adoption of this guidance in the first quarter of our fiscal year 2018 did not have a material impacton our financial statements.In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”, which requires lessees to recognize right-of-use assetsand corresponding liabilities for all leases with an initial term in excess of twelve months. ASU 2016-02 was required to be adoptedusing a modified retrospective approach, which includes a number of practical expedients, that requires leases to be measured andrecognized under the new guidance at the beginning of the earliest period presented. In July 2018, the FASB issued ASU 2018-11“Targeted Improvements”, which allows the new leases standard to be initially applied at the adoption date through a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. These Updates are effective for Photronics,Inc. in the first quarter of fiscal year 2020, with early application permitted. We are currently evaluating the effect that theseUpdates will have on our consolidated financial statements.In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers”, which will supersede nearly allexisting revenue recognition guidance under accounting principles generally accepted in the United States. The core principle ofthis ASU is that revenue should be recognized for the amount of consideration expected to be received for promised goods orservices transferred to customers. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty ofrevenue and cash flows arising from customer contracts, including significant judgments, and assets recognized for costs incurredto obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 byone year and allows entities to early adopt, but no earlier than the original effective date. ASU 2014-09 will now be effective forPhotronics, Inc. in the first quarter of our fiscal year 2019. This update allows for either full retrospective or modified retrospectiveadoption. In April 2016, the FASB issued ASU 2016-10 “Identifying Performance Obligations and Licensing” which amendsguidance previously issued on these matters in ASU 2014-09. The effective date and transition requirements of ASU 2016-10 arethe same as those for ASU 2014-09.We adopted the new revenue and related guidance on November 1, 2018, using the modified retrospective approach, underwhich we will increase our accounts receivable by $0.6 million, record a contract asset of60TABLE OF CONTENTS$4.6 million, and reduce our inventories balance by $3.7 million. The recognition and adjustments to these assets will be reflectedin increases to our retained earnings and noncontrolling interest balances of $1.4 million and $0.2 million, respectively. The mostsignificant impact of the new guidance is its requirement for us to recognize revenue as we manufacture products for which, in theevent that the customer cancels the contract, we are entitled to reasonable compensation for work we have completed prior tocancellation.The guidance allows for a number of accounting policy elections and practical expedients. In addition to our abovementioned election to use the modified retrospective application method for adopting the guidance, those we have employed thatare most significant to us are summarized below.Shipping and handling activities performed after control of a good is transferred to a customerWe have elected to treat shipping and handling activities that occur after control of a good is transferred to a customer asactivities to fulfill our promise to transfer goods to the customer. Thus, such activities will not be considered to be separateperformance obligations under contracts with our customers.Non-recognition of financing component when we transfer goods to a customer and the period between when we transferand when we are paid will be less than one year.We have elected the practical expedient that allows for the non-recognition, as a component of a customer contract, of afinancing component when the period between when we transfer a good and when we are paid will be less than one year.Exclusion of sales and similar taxes collected from customers in the transaction price.Consistent with our practice before adoption of the new guidance, we will not recognize the sales tax and similar taxes wecollect from customers as revenue.Use of an “input method” to measure our progress towards the transfer of control of performance obligations to customersAs, in our judgment, an input method based on our efforts to satisfy our performance obligations will best serve to depict thetransfer of control of our performance obligations to our customers, we have adopted an accounting policy to employ such amethod. Our decision was based primarily on the facts that our photomasks are not physically transferred to customers untilthey are complete, and that we can employ our internal cost accumulation systems and methods, which are input-based tomeasure our progress towards the transfer of control of our performance obligations to customers.Non-disclosure of the transaction prices of unsatisfied or partially satisfied performance obligationsFor contracts that have an original expected duration of one year or less, we have elected the practical expedient that allows usnot to disclose the aggregate transaction prices of unsatisfied or partially satisfied performance obligations that exist at theend of a reporting period.61TABLE OF CONTENTSITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURENone.ITEM 9A.CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresWe have established and currently maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), designed to provide reasonable assurancethat information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized andreported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such informationis accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate,to allow for timely decisions regarding required disclosure. In designing and evaluating disclosure controls and procedures,management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonableassurance of achieving the desired control objectives, and management necessarily was required to apply its judgment inevaluating the cost-benefit relationship of possible controls and procedures.Our management, under the supervision and with the participation of our chief executive officer and chief financial officer,evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the periodcovered by this report. Based upon that evaluation, our chief executive officer and chief financial officer concluded that ourdisclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.Changes in Internal Control over Financial ReportingThere was no change in our internal control over financial reporting during the fourth fiscal quarter that has materiallyaffected, or is reasonably likely to materially affect, our internal control over financial reporting.Management’s Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as such term isdefined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles.Management assessed the effectiveness of our internal control over financial reporting as of October 31, 2018, based on thecriteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in its “Internal Control - IntegratedFramework” (2013). Management, under the supervision and with the participation of our chief executive officer and chieffinancial officer, concluded that our internal control over financial reporting was effective as of October 31, 2018.The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has audited the effectiveness of theCompany’s internal control over financial reporting as of October 31, 2018, as stated in their report on page 33 of this Form 10-K.December 21, 2018ITEM 9B.OTHER INFORMATIONNone.62TABLE OF CONTENTSPART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information as to Directors required by Items 401, 405 and 407(c)(3)(d)(4) and (d)(5) of Regulation S-K is set forth in our2019 definitive Proxy Statement which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A ofthe Exchange Act within 120 days after the end of the fiscal year covered by this Form 10-K under the caption “PROPOSAL 1 -ELECTION OF DIRECTORS,” “SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE” and in the thirdparagraph under the caption “MEETINGS AND COMMITTEES OF THE BOARD,” and is incorporated in this report by reference.The information as to Executive Officers is included in our 2019 definitive Proxy Statement under the caption “EXECUTIVEOFFICERS” and is incorporated in this report by reference.We have adopted a code of ethics that applies to our principal executive officer, principal financial officer and principalaccounting officer or chief financial officer. A copy of the code of ethics may be obtained, free of charge, by writing to the vicepresident, general counsel of Photronics, Inc. at 15 Secor Road, Brookfield, Connecticut 06804.ITEM 11.EXECUTIVE COMPENSATIONThe information required by Item 402 of Regulation S-K and paragraph (e)(4) and (e)(5) of Item 407 is set forth in our 2019definitive Proxy Statement under the captions “EXECUTIVE COMPENSATION”, “CERTAIN AGREEMENTS”, “DIRECTORS’COMPENSATION”, “COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION” and “COMPENSATIONCOMMITTEE REPORT ON EXECUTIVE COMPENSATION”, respectively, and is incorporated in this report by reference.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERSThe information required by Item 201(d) of Regulation S-K is set forth in our 2019 definitive Proxy Statement under thecaption “EQUITY COMPENSATION PLAN INFORMATION”, and is incorporated in this report by reference. The informationrequired by Item 403 of Regulation S-K is set forth in our 2019 definitive Proxy Statement under the caption “OWNERSHIP OFCOMMON STOCK BY DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS”, and is incorporated in this report byreference.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required by Items 404 and Item 407(a) of Regulation S-K is set forth in our 2019 definitive Proxy Statementunder the captions “MEETINGS AND COMMITTEES OF THE BOARD” and “CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS”, respectively, and is incorporated in this report by reference.ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICESThe information required by Item 9(e) of Rule 14a-101 of the Exchange Act is set forth in our 2019 definitive Proxy Statementunder the captions “Fees Paid to the Independent Registered Public Accounting Firm” and “AUDIT COMMITTEE REPORT”, andis incorporated in this report by reference.63TABLE OF CONTENTSPART IVITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULESThe following documents are filed as part of this report: PageNo. 1.Financial Statements: See “INDEX TO CONSOLIDATED FINANCIAL STATEMENTS” in Part II, Item 8 of thisForm 10-K. 32 2.Financial Statement Schedule: Report of Independent Registered Public Accounting Firm on Financial Statement Schedule 65 Schedule II - Valuation and Qualifying Accounts for the years ended October 31, 2018, October 29, 2017 andOctober 30, 2016 66 All other schedules are omitted because they are not applicable. 3.Exhibits 67 64TABLE OF CONTENTSREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON SUPPLEMENTAL SCHEDULETo Shareholders and the Board of Directors of Photronics, Inc.Brookfield, ConnecticutWe have audited the consolidated financial statements of Photronics, Inc. (the “Company”) as of and for the years ended October31, 2018 and October 29, 2017 and have issued our report thereon dated December 21, 2018, which contained an unqualifiedopinion on those consolidated financial statements. The financial statement schedule in Item 15 has been subjected to auditprocedures performed in conjunction with the audit of the Company’s consolidated financial statements. The supplementalschedule is the responsibility of the Company’s management. Our audit procedures included determining whether thesupplemental schedule reconciles to the consolidated financial statements or the underlying accounting and other records, asapplicable, and performing procedures to test the completeness and accuracy of the information presented in the supplementalschedule. In our opinion, such schedule is fairly stated, in all material respects, in relation to the consolidated financial statementsas a whole./s/ Deloitte & Touche LLPHartford, ConnecticutDecember 21, 201865TABLE OF CONTENTSSchedule IIValuation and Qualifying Accountsfor the Years Ended October 31, 2018, October 29, 2017and October 30, 2016(in $ thousands) Balance atBeginning ofYearChargedtoCosts andExpensesDeductionsBalance atEnd ofYearAllowance for Doubtful Accounts Year-ended October 31, 2018$2,319 $(809)$16(a) $1,526 Year-ended October 29, 2017$3,901 $(1,600)(b)$18(a) $2,319 Year ended October 30, 2016$3,301 $642 $(42)(a)$3,901 (a)Uncollectible accounts written off, net, and impact of foreign currency translation.(b)Reversal of valuation allowance.66TABLE OF CONTENTSEXHIBITS INDEXExhibitNumberDescription3.1Certificate of Incorporation as amended July 9, 1986, April 9, 1990, March 16, 1995, November 13, 1997, April 15,2002 and June 20, 2005 (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filedJanuary 3, 2014).3.2Amended and Restated By-laws of the Company dated as of September 7, 2016 (incorporated by reference to theCompany’s Current Report on Form 8-K filed on September 13, 2016).4.4Indenture dated January 22, 2015, by and between the Company and the Bank of New York Mellon Trust Company,N.A., as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed onJanuary 28, 2015).10.1The Company’s 1992 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Company’sAnnual Report on Form 10-K filed on December 20, 2017).+10.2Amendment to the Employee Stock Purchase Plan as of March 24, 2004 (incorporated by reference to Exhibit 10.2 tothe Company’s Annual Report on Form 10-K filed on January 6, 2017).+10.3Amendment to the Employee Stock Purchase Plan as of April 8, 2010 (incorporated by reference to Exhibit 10.4 to theCompany’s Annual Report on Form 10-K filed on January 7, 2016).+10.4Amendment to the Employee Stock Purchase Plan as of March 28, 2012.+*10.52016 Equity Incentive Compensation Plan (incorporated by reference to the Company’s Definitive Proxy Statementfiled on February 26, 2016).+10.6The Company’s 2007 Long-Term Equity Incentive Plan (incorporated by reference to the Company’s Definitive ProxyStatement filed on March 3, 2014).+10.7Amendment to the 2007 Long-Term Equity Incentive Plan as of April 8, 2010 (incorporated by reference to Exhibit10.7 to the Company’s Annual Report on Form 10-K Field on January 7, 2016).+10.8Amendment to the 2007 Long Term Equity Incentive Plan as of April 11, 2014 (incorporated by reference to Exhibit10.8 of the Company’s Annual Report on Form 10-K filed January 6, 2015).+10.92011 Executive Incentive Compensation Plan effective as of November 1, 2010 (incorporated by reference to Exhibit10.9 of the Company’s Annual Report on Form 10-K filed January 6, 2015).+10.10Joint Venture Framework Agreement dated November 20, 2013, between the Company and Dai Nippon Printing Co.,Ltd (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K/A filed July 8, 2015).#10.11Joint Venture Operating Agreement dated November 20, 2013, between the Company and Dai Nippon Printing Co.,Ltd. (incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K/A filed July 8,2015).#10.12Outsourcing Agreement dated November 20, 2013, among the Company, Dai Nippon Printing Co., Ltd and PhotronicsSemiconductor Mask Corporation (incorporated by reference to Exhibit 10.21 of the Company’s Annual Report onForm 10-K/A filed July 8, 2015).#10.13License Agreement dated November 20, 2013, between the Company and Photronics Semiconductor MaskCorporation (incorporated by reference to Exhibit 10.22 of the Company’s Annual Report on Form 10-K/A filed July8, 2015).#10.14License Agreement dated November 20, 2013, between Dai Nippon Printing Co., Ltd and Photronics SemiconductorMask Corporation (incorporated by reference to Exhibit 10.23 of the Company’s Annual Report on Form 10-K/A filedJuly 8, 2015).#10.15Margin Agreement dated November 20, 2013, among the Company, Dai Nippon Printing Co., Ltd and PhotronicsSemiconductor Mask Corporation (incorporated by reference to Exhibit 10.24 of the Company’s Annual Report onForm 10-K/A filed July 8, 2015).#10.16Merger Agreement dated January 16, 2014, between Photronics Semiconductor Mask Corporation and DNPPhotomask Technology Taiwan Co., Ltd. (incorporated by reference to Exhibit 10.25 of the Company’s Annual Reporton Form 10-K/A filed July 8, 2015).#10.17Executive Employment Agreement between the Company and Christopher J. Progler, Vice President, ChiefTechnology Officer dated September 10, 2007 (incorporated by reference to Exhibit 10.22 to the Company’s AnnualReport on Form 10-K filed on January 9, 2013).+67TABLE OF CONTENTSExhibitNumberDescription10.18Executive Employment Agreement between the Company and Peter S. Kirlin dated May 4, 2015 (incorporated byreference to Exhibit 10.28 of the Company’s Quarterly Report on Form 10-Q filed on September 9, 2015).+10.19Executive Employment Agreement between the Company and Richelle E. Burr dated May 21, 2010 (incorporated byreference to Exhibit 10.30 of the Company’s Annual Report on Form 10-K filed on January 7, 2016).+10.20Executive Employment Agreement between the Company and John P. Jordan dated September 5, 2017 (incorporatedby reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K filed on December 20, 2017).+10.21Consulting Agreement between the Company and DEMA Associates, LLC dated January 20, 2018.*10.22Form of Amendment to Executive Employment Agreement dated March 16, 2012 (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 16, 2012).+10.23Amendment No 4 dated as of August 17, 2018 to the Third Amended and Restated Credit Agreement dated as ofDecember 5, 2013.*10.24Fourth Amended and Restated Credit Agreement dated as of September 27, 2018 among Photronics, Inc. the ForeignSubsidiary Borrower Party Thereto, the Lender Party Thereto, JPMorgan Chase Bank, N.A. as Administrative andCollateral Agent and Bank of America, N.A. as syndication agent.*10.25Third Amended and Restated Security Agreement entered into as of September 27, 2018 by and among Photronics,Inc., the subsidiaries of the Company and JPMorgan Chase Bank N.A.*10.26Fixed Asset Loan Agreement between Photronics DNP Mask Corporation Xiamen and Industrial and CommercialBureau China Limited Xiamen Xiang’an Branch effective as of November 29, 2012.*10.27Working Capital Loan Agreement between Industrial and Commercial Bureau China Limited Xiamen Xiang’anBranch and Photronics DNP Mask Corporation Xiamen effective as of November 7, 2018.*10.28Investment Agreement between Xiamen Torch Hi-Tech Industrial Development Zone Management Committee andPhotronics Singapore Pte. Ltd. dated August 18, 2016 (incorporated by reference to Exhibit 10.35 to the Company’sQuarterly Report on Form 10-Q filed on September 2, 2016).10.29Contribution Agreement dated May 16, 2017 among Dai Nippon Printing Co., Ltd. (“DNP”), DNP Asia Pacific Pte. Ltd.(“DNP Asia Pacific”), Photronics, Inc. (“Photronics”), Photronics Singapore Pte. Ltd., (“Photronics Singapore”), andXiamen American Japan Photronics Mask Co., Ltd. (“PDMCX”) (incorporated by reference to Exhibit 10.26 to theCompany’s Quarterly Report on Form 10-Q/A filed on December 19, 2017).#10.30Joint Venture Operating Agreement dated May 16, 2017 among Photronics, Photronics Singapore, DNP and DNP AsiaPacific (incorporated by reference to Exhibit 10.27 to the Company’s Quarterly Report on Form 10-Q/A filed onDecember 19, 2017).#10.31Outsourcing Agreement dated May 16, 2017 among Photronics, DNP, Photronics DNP Photomask Corporation(“PDMC”), and PDMCX (incorporated by reference to Exhibit 10.28 to the Company’s Quarterly Report on Form 10-Q/A filed on December 19, 2017).#10.32Amended and Restated License Agreement dated May 16, 2017 between DNP and PDMC. (incorporated by referenceto Exhibit 10.29 to the Company’s Quarterly Report on Form 10-Q/A filed on December 19, 2017).#10.33Investment Cooperation Agreement between Hefei State Hi-tech Industry Development Zone and Photronics UK, Ltd.(incorporated by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K filed on December 20,2017).#21List of Subsidiaries of the Company.*23.1Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm*31.1Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002.*68TABLE OF CONTENTSExhibitNumberDescription32.2Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002.*101.INSXBRL Instance Document101.SCHXBRL Taxonomy Extension Schema Document101.CALXBRL Taxonomy Extension Calculation Linkbase Document101.DEFXBRL Taxonomy Extension Definition Linkbase Document101.LABXBRL Taxonomy Extension Label Linkbase Document101.PREXBRL Taxonomy Extension Presentation Linkbase Document+Represents a management contract or compensatory plan or arrangement.#Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.*Represents an exhibit that is filed with this Annual Report on Form 10-K.The Company will provide a copy of any exhibit upon receipt of a written request for the particular exhibit or exhibits desired. All requests shouldbe addressed to the Company’s general counsel at the address of the Company’s principal executive offices.69TABLE OF CONTENTSSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto duly authorized. PHOTRONICS, INC.(Registrant) By/s/ JOHN P. JORDANDecember 21, 2018 John P. JordanSenior Vice PresidentChief Financial Officer(Principal Accounting Officer/Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the followingpersons on behalf of the registrant and in the capacities and on the dates indicated.By/s/ PETER S. KIRLINDecember 21, 2018 Peter S. KirlinChief Executive OfficerDirector(Principal Executive Officer) By/s/ JOHN P. JORDANDecember 21, 2018 John P. JordanSenior Vice PresidentChief Financial Officer(Principal Accounting Officer/Principal Financial Officer) By/s/ CONSTANTINE S. MACRICOSTASDecember 21, 2018 Constantine S. MacricostasExecutive Chairman of the Board By/s/ WALTER M. FIEDEROWICZDecember 21, 2018 Walter M. FiederowiczDirector By/s/ JOSEPH A. FIORITA, JR.December 21, 2018 Joseph A. Fiorita, Jr.Director By/s/ LIANG-CHOO HSIADecember 21, 2018 Liang-Choo HsiaDirector By/s/ GEORGE MACRICOSTASDecember 21, 2018 George MacricostasDirector By/s/ MITCHELL G. TYSONDecember 21, 2018 Mitchell G. TysonDirector 70 EXHIBIT 10.4 EMPLOYEE STOCK PURCHASE PLAN(Amended and Current as ofMarch 28, 2012) ARTICLE I - General1.1The purpose of Photronics, Inc. Employee Stock Purchase Plan is to provide eligible employees of the Company and its designated subsidiaries (ifany) with an opportunity to acquire a proprietary interest in the Company by the purchase of shares of the Common Stock of the Company directlyfrom the Company through payroll deductions. It is felt that employee participation in the ownership of the Company will be to the mutual benefitof both the employees and the Company.1.2The Plan is intended to qualify as an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code of 1986, asamended (the "Code"). The provisions of the Plan shall, accordingly, be construed so as to extend and/or limit eligibility and participation in amanner consistent, and so as to otherwise comply, with the requirements of the Code.1.3Eligibility 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 inno way affect or in any manner limit the Company's right to discharge the Employee, which right is expressly reserved by the Company, or impairthe authority of the Plan Committee to limit the Employee's rights, claims or causes, as provided in the Plan.ARTICLE II - Definitions2.1The following words and phrases, when used in the Plan, shall have the following respective meanings, unless the context clearly indicatesotherwise:"Authorized Leave of Absence" Any leave of absence authorized under the Company's standard personnel practices, provided that all persons under similar circumstances must betreated equally in the granting of such Authorized Leave of Absence and provided further that the person returns to the employ of the Companyupon 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. 1 "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."Company" Photronics, Inc., a Connecticut corporation, or its successor or successors or any present or future subsidiary of Photronics, Inc., which may bedesignated 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 ofDirectors. In the absence of the adoption of specific procedures, Compensation of an Eligible Employee shall be the annualized salary or wages ofsuch Employee based on such Employee's current rate of pay and work schedule, but excluding any discretionary overtime, sick pay, vacation payor 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 isdefined as a physical or mental impairment or incapacity which, in the opinion of a physician selected by the Plan Committee, can be expected toresult 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 toengage 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 thestockholders of the Company as provided in Article XVII, the Plan and all rights granted hereunder shall be, and be deemed to have been, null andvoid."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 Section414[q] of the Code or any successor provision thereto) of the Company who are excluded from participation hereunder by action of the Board ofDirectors. A person who is or has been on an Authorized Leave of Absence, and who in the absence of such Authorized Leave of Absence wouldhave been classified as an Employee, shall in the discretion of the Plan Committee be considered to be an Employee, except to the extent that suchdetermination is inconsistent with Section 423 of the Code. Such determination by the Plan Committee shall be final and conclusive. 2 "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."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 thesingular, if the context so requires.ARTICLE III - Shares Subject to the Plan3.1Subject to the provisions of Article XIV hereof, the aggregate number of shares of Common Stock which may be issued under the Plan shall notexceed 1,500,000. The aggregate number of such shares which may be issued with respect to any Offering shall be determined by the PlanCommittee with respect to such Offering. Such shares may be authorized but unissued shares of Common Stock or issued shares of Common Stockwhich 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 ofsuch subscription shall (unless the Plan shall have terminated) be again available for issuance under the Plan.ARTICLE IV - Eligibility4.1Each Employee who has been continuously employed by the Company for the one complete calendar month (or such longer period as may bedetermined by the Plan Committee) ending immediately prior to an Offering Date shall be eligible to participate in the Offering under the Plan madeon such Offering Date. 3 4.2Notwithstanding the provisions of Section 4.1, no Employee shall be offered Shares if, immediately after he would subscribe for such Shares, suchEmployee would own capital stock (including shares of Common Stock which may be purchased under such subscription and under any otheroutstanding subscriptions under the Plan or options to purchase shares of Common Stock of the Company held by such Employee, as computed inaccordance with Section 423[b][3] of the Code or any successor provision thereto) possessing 5% or more of the total combined voting power orvalue of all classes of stock of the Company. For purposes of determining the stock ownership of any Employee, the provisions of Section 424[d] ofthe Code shall apply.ARTICLE V - Offering Under the Plan5.1Offerings under the Plan shall be made on such Offering Dates as shall be determined by the Plan Committee. Notwithstanding anything to thecontrary, no Offering shall be made on any date prior to the date that a required registration statement with respect to such Offering filed under theSecurities Act of 1933, as amended, has become effective. Nothing contained herein shall be deemed to require that an Offering be made in anyyear.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 thePlan, each Eligible Employee on an Offering Date shall be offered the right during the Subscription Period as provided in Section 6.2, tosubscribe to purchase such number of Shares as the percentage designated by the Plan Committee for such offering (not to exceed 5%) ofhis 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 tosubscribe for Shares in an Offering if, immediately after he would subscribe for such Shares, such subscription would permit his rights topurchase shares of Common Stock under all employee stock purchase plans of the Company to accrue at a rate which exceeds $25,000 (orsuch other maximum amounts as may be prescribed from time to time under the Code) of the fair market value of such shares (determined asof the Offering Date for such Offering) for each calendar year in which such subscription would be outstanding at any time. For purposes ofthis limitation the provisions of Section 423[b][8] of the Code shall be applicable.5.3The 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 CommonStock (determined in accordance with the provisions of Article XIII) on one of the following dates with respect to such Offering, with such date to bedetermined 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 thePurchase Date (whichever would result in a lower Purchase Price for the Common Stock). 4 5.4In order to participate in any Offering, an Eligible Employee entitled to subscribe for Shares in such Offering shall comply with the subscriptionprocedures set forth in Article VI.ARTICLE VI - Subscriptions for Shares6.1As soon as practicable after an Offering Date, the Company shall furnish to each Eligible Employee a Subscription Agreement setting forth themaximum number of Shares to which such Eligible Employee may subscribe in such Offering, the fair market value per share of Common Stock onthe Offering Date, the Purchase Price for Shares in such Offering and such other terms and conditions consistent with the Plan as shall be determinedby the Plan Committee.6.2Within fifteen (15) days after receipt of such Subscription Agreement, an Eligible Employee desiring to participate in the Offering shall notify thePlan Committee of the number of Shares for which he desires to subscribe. Such notification shall be effected by the Eligible Employee'scompleting, executing and returning to the Secretary of the Company the Subscription Agreement. All such subscriptions shall be deemed to havebeen made as of the Offering Date. No subscription shall be accepted from any person who is not an Eligible Employee on the date his subscriptionis received by the Company.6.3The minimum number of Shares for which an Eligible Employee will be permitted to subscribe in any Offering is ten (10) (or the number of Sharesoffered 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 EligibleEmployee is entitled to subscribe pursuant to Section 5.2 shall be reduced, pro rata, to such lower number as may be necessary to eliminate suchover-subscription.6.4If 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 topurchase Shares in that Offering. ARTICLE VII - Payment for Shares7.1The aggregate Purchase Price for the Shares for which a Participant subscribes in any Offering in accordance with the provisions of Article VI of thePlan 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 shorterperiod as shall be determined by the Plan Committee in accordance with the Plan) from the Offering Date. The period over which suchpayroll deductions are to be made in hereinafter referred to as the "Payment Period". 5 [b]Such payroll deductions with respect to an Offering shall commence as soon as practicable after the receipt of the Company of the executedSubscription Agreement authorizing such payroll deductions, and shall cease upon the earlier of the termination of the Payment Period orpayment in full of the Purchase Price for such Shares. A Participant may cancel his subscription to the extent provided for in Article X, butno other change in terms of his Subscription Agreement may be made during the Payment Period and, in particular, in no event may aParticipant change the amount of his payroll deductions under such Subscription Agreement. All payroll deductions withheld from aParticipant under a Subscription Agreement shall be credited to his account under the Plan. In the event that payroll deductions aresimultaneously being made with respect to more than one Subscription Agreement, the aggregate amount of such payroll deductions at anypayday shall be credited first toward the payment for Shares subscribed for in the earliest Offering. A Participant may not make any separatecash payment into his account, provided, however, that a Participant who has been deemed to be in the employ of the Company while on anAuthorized Leave of Absence without pay during the Payment Period, may upon his return to the actual employ of the Company, make acash payment into his account in an amount not exceeding the aggregate of the payroll deductions which would have been made duringsuch 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 generalfunds of the Company. No interest will be paid or accrued under any circumstances on any funds withheld by the Company as payrolldeductions pursuant to this Section 7.2 or on any other funds paid to the Company for purchases of Shares under the Plan.7.3Notwithstanding anything in this Article VII to the contrary, with respect to any Offering which is made prior to the approval of the Plan by thestockholders 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 circumstanceson 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 notapproved by the stockholders within the period specified in Article XVII, all such funds will thereupon be promptly refunded to the respectiveParticipants.7.4Failure to pay for subscribed Shares as provided in this Article VII shall constitute the cancellation of such subscription to the extent that any suchShares shall not have been so paid for.ARTICLE VIII - Issuance of Shares8.1At 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 theaccount of a Participant representing payroll deductions pursuant to a Subscription Agreement shall be applied to the purchase by the Participantfrom the Company of the number of Shares equal to the amount of such balance divided by the Purchase Price per share for such Shares applicableon such Purchase Date up to the number of Shares provided for in the respective Subscription Agreement. Any amount remaining in the Participant'saccount in excess of the sum required to purchase whole Shares on a Purchase Date shall be promptly refunded to the Participant. As soon aspracticable after a Purchase Date, the Company will issue and deliver to the Participant a certificate representing the Shares purchased by him fromthe Company on such Purchase Date. No fractional shares will be issued at any time. 6 8.2A 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 suchdisposition within thirty (30) days after such disposition.ARTICLE IX - Rights of Stockholders9.1A 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 Sharesshall have been issued to him as reflected by the books and records maintained by the Company's transfer agent relating to stockholders of theCompany. ARTICLE X - Voluntary Withdrawal/Termination of Employment10.1A Participant may discontinue his payroll deductions under a Subscription Agreement at any time by giving written notice thereof to the PlanCommittee, effective for all payroll periods commencing five (5) days after receipt of such notice by the Plan Committee. The balance in theaccount of such Participant following such discontinuance shall be promptly refunded to the Participant. Withdrawal from an Offering pursuant tothis Section 10.1 shall not affect an Eligible Employee's eligibility to participate in any other Offering under the Plan.10.2If the Participant's employment with the Company is terminated for any reason other than death while still an Employee, such Participant's rights topurchase Shares under any Subscription Agreement shall immediately terminate. Any balance remaining in his account as of the date of suchtermination of employment shall be promptly refunded to the Participant.10.3In 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 VIhereof, the person or persons who acquired by laws of descent and distribution (his "Estate") his rights to purchase Shares under his SubscriptionAgreement(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 PaymentPeriod) to purchase from the Company that number of Shares subscribed for and not issued to the Participant prior to his death which the balance inthe Participant's payroll deduction account is sufficient to purchase. The failure of the person or persons so acquiring his rights to so give notice ofintention 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 tothe termination of the Payment Period and his Estate elects to purchase the Shares subscribed for, the Purchase Price for his Shares shall be thepercentage, designated pursuant to Section 5.3, of the fair market value on the Offering Date, irrespective of the Purchase Price for other Participants. 7 ARTICLE XI - Non-Transferability of Subscription Rights11.1During the lifetime of a Participant, the Shares for which he subscribes may be purchased only by him. No Subscription Agreement of a Participantand no right under or interest in the Plan or any such Subscription Agreement (hereinafter collectively referred to as "Subscription Rights") may beassigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise), except by the Participant's will orby 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 SubscriptionRights, 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 Plan12.1The 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 beeligible to participate in the Plan. The members of the Plan Committee shall be appointed, and may be removed, by the Board of Directors. TheBoard 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 thePlan Committee.12.2Unless otherwise determined by the Board of Directors, the members of the Plan Committee shall serve without additional compensation for theirservices. All expenses in connection with the administration of the Plan, including, but not limited to, clerical, legal and accounting fees, and othercosts of administration, shall be paid by the Company.12.3The Chairman of the Plan Committee shall be designated by the Board of Directors. The Plan Committee shall select a Secretary who need not be amember of the Plan Committee. The Secretary, or in his absence, any member of the Plan Committee designated by the Chairman, shall keep theminutes of the proceedings of the Plan Committee and all data, records and documents relating to the administration of the Plan by the PlanCommittee. 8 12.4A 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 ofthe 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 shallbe the act of the Plan Committee. Members of the Plan Committee may participate in a meeting by means of telephone conference or similarcommunications procedure pursuant to which all persons participating in the meeting can hear each other. The Plan Committee may take actionwithout a meeting if such action is evidenced by a writing signed by at least a majority of the entire Plan Committee.12.5The 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 itspowers and its authority under the Plan, including the execution and delivery on its behalf of instruments, instructions and other documents. 12.6It shall be the sole and exclusive duty and authority of the Plan Committee to interpret and construe the provisions of the Plan, to decide anydisputes which may arise with regard to the status, eligibility and rights of Employees under the terms of the Plan, and any other persons claiming aninterest under the terms of the Plan, and, in general, to direct the administration of the Plan.12.7The Plan Committee may adopt, and from time to time amend, such rules and regulations consistent with the purposes and provisions of the Plan, asit deems necessary or advisable to administer and effectuate the Plan.12.8The 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 orother form under the Plan.12.9The discretionary powers granted hereunder to the Plan Committee shall in no event be exercised in any manner that will discriminate againstindividual employees or a class of employees or discriminate in favor of employees who are shareholders, officers, supervisors or highlycompensated employees of the Company.ARTICLE XIII - Valuation of Shares of Common Stock13.1For 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 ofCommon 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 ashare 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 nosale of shares of Common Stock on that date, the average of the high and low sales prices of Common Stock on the last preceding businessday on which shares of Common Stock were traded. 9 ARTICLE XIV - Adjustments in Certain Events14.1If (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 Companyshall 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 ofthe Board of Directors necessitates action by way of adjusting the terms of the outstanding Subscription Agreements, the Board of Directors shalltake any such action as in its judgment shall be appropriate to preserve Participant rights substantially proportionate to the rights existing prior tosuch event. To the extent that such action shall include an increase or decrease in the number of shares of Common Stock subject to outstandingSubscription Agreements, the aggregate number of shares available under Article III hereof for issuance under the Plan pursuant to outstandingSubscription Agreements and Subscription Agreements which may be entered into, and the aggregate number of shares available for issuance in anyOffering and the number which may be subscribed for, shall be proportionately increased or decreased, as the case may be. No action shall be takenby the Board of Directors under the provisions of this Article XIV which, in its judgment, would constitute a modification, extension or renewal ofthe Subscription Agreement (within the meaning of Section 424[h] of the Code), or would prevent the Plan from qualifying as an "employee stockpurchase plan" (within the meaning of Section 423 of the Code). The determination of the Board of Directors with respect to any matter referred toin this Article XIV shall be conclusive and binding upon each Participant.ARTICLE XV - Termination and Amendment of the Plan15.1The 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 theholders of a majority of the outstanding shares of Common Stock of the Company, amend or modify the Plan so as to (i) increase the maximumnumber of shares of Common Stock which may be issued under the Plan (except as contemplated in Article XIV hereof), (ii) extend the term duringwhich 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 mannerwhich would prevent the Plan from qualifying as an "employee stock purchase plan" (within the meaning of Section 423 of the Code). Notermination, amendment or modification of the Plan may, without the consent of a Participant, adversely affect the rights of such Participant underan outstanding Subscription Agreement. 10 ARTICLE XVI - Miscellaneous16.1Unless otherwise expressly provided in the Plan, all notices or other communications by a Participant to the Company under or in connection withthe 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 theCompany at the location and by the persons, designated by the Company for the receipt thereof.16.2Notwithstanding anything hereunder to the contrary, the offer, sale and delivery by the Company of Shares under the Plan to any Eligible Employeeis subject to compliance with all applicable securities regulation and other federal and state laws. The terms of this Plan shall be construed under thelaws of the State of Connecticut.ARTICLE XVII - Effective Date17.1The 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 theBoard 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 theCompany within twelve (12) months after the date on which the Plan is adopted by the Board of Directors. 11Exhibit 10.21This Agreement is entered into as of January 20, 2018 by and between Photronics, Inc., a Connecticut corporation (the “Company”) and DEMAAssociates, LLC (“Consultant”).WHEREAS, the Company believes that it will benefit from an ongoing consulting arrangement between Consultant and the Company, pursuant towhich Consultant will provide certain services on an independent contractor basis as outlined below and Consultant has agreed to provide certain consultingand advisory services to the Company pursuant to the terms set forth herein.NOW, THEREFORE, Consultant and the Company hereby agree as follows:1) Consulting ServicesDuring the term of this Agreement, Consultant agrees to make himself and or associates from DEMA Associates, LLC reasonably available to renderat the request of the Company, such consulting services as are reasonably requested by the Company. Consultant will devote a reasonable amount of time,not to exceed forty hours (40) per month, to the provision of the Services. Consultant will provide an invoice to the Company to indicate the forty hoursworked per month and the services provided to the Company. The form of invoice is attached hereto as Exhibit A. The Company will provide Consultantwith a paid cell phone and a laptop computer.2) CompensationAs compensation for Consultant’s services during the term of this Agreement, the Company agrees to provide consulting fees and benefits under theterms specified below:Fees: In consideration for the consulting services, the Company will pay a consulting fee in the amount of three hundred and ninety thousanddollars ($390,000) per year (“Consulting Fees”). The Company shall pay the Consulting Fees in equal monthly payments of thirty-two thousand fivehundred dollars ($32,500.00) throughout the Consulting Period. The Consulting Fees will be paid at the address set forth above.In the event that Consultant is required to travel in order to perform the Services under this Agreement, the Company will reimburse Consultant forsuch reasonable travel expenses incurred upon the presentation by Consultant of a detailed and itemized account of such expenses with properdocumentation and such other supporting information as the Company may reasonably request. Except as provided above with respect to travel expenses, theCompany will not be responsible for payment or reimbursement of Consultant’s expenses in his performance of the Services, unless such expense is approvedin advance by the Company. 3) TermThis Agreement will be effective as of January 20, 2018 and will continue in effect for a period of four (4) years.4) Non-Competition and Non-SolicitationConsultant hereby agrees that during the Consulting Period, and for a period of three (3) years after the termination of this Agreement, he will not,without first obtaining the Company’s prior written approval, directly or indirectly engage or prepare to engage in any activities in competition with theCompany or accept employment, provide services to, or establish a business relationship with a business or individual engaged in or preparing to engage incompetition with the Company. Consultant is free to engage in other work or business activities during the Consulting Period as long as they are notcompetitive with the Company. For purposes of this paragraph, the holding of less than one percent (1%) of the outstanding voting securities of any firm orbusiness organization in competition with the Company shall not constitute activities or services precluded by this paragraph. Consultant also agrees thatthrough the end of the Consulting Period and for a period of one (1) year thereafter, he will not, either directly or through others, solicit or attempt to solicitany employee or other personnel of the Company to terminate his or her relationship with the Company or to become an employee, consultant orindependent contractor to or for any other person or entity. Further, Consultant agrees not to disparage the Company in any manner likely to be harmful tothe Company’s business reputation, or the personal or business reputation of the Company’s directors, shareholders or employees. Consultant agrees that theConsulting Fees adequately compensate you for the restrictions of this paragraph.5) Liquidated Damages/Specific Performancea)Consultant agrees that it would be impracticable or extremely difficult to ascertain the amount of actual damages caused by breach of Article(4), Non-Competition and Non-Solicitation, of this Agreement. Therefore, Consultant agrees that, in the event of such a breach, the Companywill be entitled to withhold further payments of all Consulting Fees, recover all Consulting Fees already paid to Consultant, and obtain suchinjunctive and other relief as appropriate. Consultant further agree that this liquidated damage provision represents reasonable compensation forthe loss which would be incurred by the Company because of any such breach.b)In the event Consultant claims that the Company is in breach of this Agreement, in addition to any other remedies available to Consultant,Consultant shall be entitled to obtain specific performance of this Agreement. 6. Independent Contractor Status of Consultant.Consultant’s legal status is as an independent contractor of Company. Nothing in this Agreement makes Consultant the agent, partner, jointventurer, employee or legal representative of Company for any purpose whatsoever; nor shall Consultant hold himself out as such. Consultantwill have no authority to bind Company in any manner or for any purpose. Consultant will not be an employee of Company for any purpose,including for purposes of the Fair Labor Standards Act’s minimum wage and overtime provisions, nor any other provision of federal, state, orlocal law applicable to employees. Further, Consultant understands and agrees that he will not be entitled to any employment benefits that maybe made available by the Company to its employees, including but not limited to vacation pay, sick leave, retirement benefits, social security,workers’ compensation, health or disability benefits, and unemployment insurance benefits. The parties acknowledge that Consultant was anemployee of Company immediately prior to the commencement of this Agreement.Consultant understands that the Company will not be responsible for withholding or paying any federal or state income, social security or othertaxes in connection with any compensation paid under this Agreement, and Consultant agrees that he is solely responsible for any taxobligations which may arise from the payment of compensation to Consultant pursuant to this Agreement.7. Confidential Information.(a) Consultant acknowledges that during his engagement with Company he may have access to certain confidential and proprietary informationbelonging to the Company or third parties who may have furnished such information under obligations of confidentiality, relating to and used in theCompany’s business (collectively, “Confidential Information”). Consultant acknowledges that, unless otherwise available to the public, ConfidentialInformation includes, but is not limited to, the following categories of information and material, including all copies, notes, or other reproductions or replicasthereof: financial statements and information; budgets, forecasts, and projections; business and strategic plans; marketing strategies; research anddevelopment projects; records relating to any intellectual property developed by, owned by, controlled, licensed, or maintained by the Company;information related to the Company’s inventions, research, products, designs, methods, know-how, formulae, techniques, systems, processes; customer lists;non-public information relating to the Company’s customers, suppliers, employees, distributors, or investors; the specific terms of the Company’s agreementsor arrangements, whether oral or written, with any customer, supplier, vendor, or contractor with which the Company may be associated from time to time;and any and all information relating to the operation of the Company’s business which the Company may from time to time designate as confidential orproprietary or that Consultant reasonably knows should be, or has been, treated by the Company as confidential or proprietary. Confidential Informationencompasses all formats in which information is preserved, whether electronic, print, or any other form, including all originals, copies, notes, or otherreproductions or replicas thereof.(b) Confidential Information does not include any information that: (i) at the time of disclosure is generally known to, or readily ascertainable by,the public; (ii) becomes known to the public through no fault of Consultant or other violation of this Agreement; or (iii) is disclosed to Consultant by a thirdparty under no obligation to maintain the confidentiality of the information. (c) Consultant agrees that he will maintain the confidentiality of the Confidential Information at all times during and following his engagement bythe Company and will not, directly or indirectly, use or disclose any Confidential Information for any purpose other than to the extent necessary to performthe Services.(d) The restrictions in Section 7(c) above will not apply to any information that Consultant is required to disclose by law, provided that theConsultant (i) notifies the Company of the existence and terms of such obligation, (ii) gives the Company a reasonable opportunity to seek a protective orsimilar order to prevent or limit such disclosure, and (iii) only discloses that information actually required to be disclosed.(e) Upon termination of Consultant’s engagement with the Company for any reason, or at any time upon request of the Company, Consultant willpromptly deliver to the Company all Confidential Information in any form along with all personal property belonging to the Company that is in Consultant’spossession, custody, or control, including, without limitation, all files, memoranda, designs, correspondence, manuals, programs, data, records, notes,notebooks, reports, papers, equipment, computer software, proposals, or any other file, material, document or possession (whether in hard copy or anyelectronic format), however obtained, along with any reproductions or copies.8. Governing Law; Venue. This Agreement will be governed by and construed in accordance with the laws of the State of Connecticut, without regard tothat body of law known as choice of law. Each party (a) consents to the personal jurisdiction of said courts, (b) waives any venue or inconvenient forumdefense to any proceeding maintained in such courts, and (c) agrees not to bring any proceeding arising out of or relating to this Agreement in any othercourt.PHOTRONICS, INC. DEMA Associates, LLC By:/s/ Richelle E. Burr By:/s/ Constantine S. MacricostasTitle:Vice President Title:PresidentExhibit 10.23EXECUTION VERSIONAMENDMENT NO. 4Dated as of August 17, 2018toTHIRD AMENDED AND RESTATED CREDIT AGREEMENTDated as of December 5, 2013THIS AMENDMENT NO. 4 (“Amendment”) is made as of August 17, 2018 by and among Photronics, Inc. (the “Company”), the financialinstitutions listed on the signature pages hereof and JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) andas Collateral Agent (in such capacity, the “Collateral Agent”), under that certain Third Amended and Restated Credit Agreement dated as of December 5,2013 by and among the Company, the Foreign Subsidiary Borrowers party thereto from time to time, the Lenders party thereto from time to time, theCollateral Agent and the Administrative Agent (as may be further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.WHEREAS, the Company has requested that the Lenders and the Administrative Agent agree to certain amendments to the CreditAgreement;WHEREAS, the Lenders party hereto and the Administrative Agent have agreed to such amendments on the terms and conditions set forthherein;NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, the Lenders party hereto and the Administrative Agenthave agreed to enter into this Amendment.1. Amendments to Credit Agreement. Effective as of the date of satisfaction of the conditions precedent set forth in Section 2 below,the Credit Agreement is hereby amended as follows:(a) Section 6.03(a)(iii) of the Credit Agreement is amended and restated in its entirety as follows:“ (iii) (A) any Loan Party (other than the Company) or any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to, orotherwise dissolve into, a Loan Party and (B) the Company may sell, transfer, lease or otherwise dispose of its assets to, a Subsidiary Guarantor,”;2. Conditions of Effectiveness. The effectiveness of this Amendment is subject to the conditions precedent that (a) the AdministrativeAgent shall have received counterparts of (i) this Amendment duly executed by the Company, the Required Lenders and the Administrative Agent and (ii)the Consent and Reaffirmation attached hereto duly executed by the Subsidiary Guarantors and (b) the Company shall have paid, to the extent invoiced,reasonable attorneys’ fees and expenses of the Administrative Agent in connection with this Amendment and the other Loan Documents.3. Representations and Warranties of the Company and Acknowledgements and Confirmations. The Company hereby represents andwarrants as follows:(a) This Amendment and the Credit Agreement, as amended hereby, constitute legal, valid and binding obligations of the Companyand are enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or otherlaws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.(b) As of the date hereof and giving effect to the terms of this Amendment, (i) no Default shall have occurred and be continuing and (ii)the representations and warranties of the Company set forth in the Credit Agreement, as amended hereby, are true and correct as of the date hereof.4. Reference to and Effect on the Credit Agreement.(a) Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shallmean and be a reference to the Credit Agreement as amended hereby.(b) Except as specifically amended above, the Credit Agreement and all other documents, instruments and agreements executed and/ordelivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.(c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of theAdministrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreementsexecuted and/or delivered in connection therewith.(d) This Amendment shall constitute a Loan Document.5. Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York.6. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a partof this Amendment for any other purpose.7. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, andall of said counterparts taken together shall be deemed to constitute one and the same instrument. Signatures delivered by facsimile or PDF shall have thesame force and effect as manual signatures delivered in person.[Signature Pages Follow]2IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written. PHOTRONICS, INC., as the Company By: Name: Title: Signature Page to Amendment No. 4Photronics, Inc.Third Amended and Restated Credit Agreement dated as of December 5, 2013 JPMORGAN CHASE BANK, N.A., individually as a Lender and asAdministrative Agent By: Name: Title: Signature Page to Amendment No. 4Photronics, Inc.Third Amended and Restated Credit Agreement dated as of December 5, 2013 RBS CITIZENS, NATIONAL ASSOCIATION, as a Lender By: Name: Title: Signature Page to Amendment No. 4Photronics, Inc.Third Amended and Restated Credit Agreement dated as of December 5, 2013 TD BANK, N.A., as a Lender By: Name: Title: CONSENT AND REAFFIRMATIONEach of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 4 to the Third Amended and RestatedCredit Agreement dated as of December 5, 2013 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and amongPhotronics, Inc. (the “Company”), the Foreign Subsidiary Borrowers from time to time party thereto (together with the Company, the “Borrowers”), thefinancial institutions from time to time party thereto (the “Lenders”) and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”)and Collateral Agent, which Amendment No. 4 is dated as of August 17, 2018 (the “Amendment”). Capitalized terms used in this Consent and Reaffirmationand not defined herein shall have the meanings given to them in the Credit Agreement. Without in any way establishing a course of dealing by theAdministrative Agent or any Lender, each of the undersigned consents to the Amendment and reaffirms the terms and conditions of the Subsidiary Guarantyand any other Loan Document executed by it and acknowledges and agrees that such agreements and each and every such Loan Document executed by theundersigned in connection with the Credit Agreement remains in full force and effect and is hereby reaffirmed, ratified and confirmed. All references to theCredit Agreement contained in the above‑referenced documents shall be a reference to the Credit Agreement as so modified by the Amendment and as thesame may from time to time hereafter be amended, modified or restated.Dated: August 17, 2018[Signature Page Follows]PHOTRONICS IDAHO, INC. By: Name: Title: TRIANJA TECHNOLOGIES, INC. By: Name: Title: PHOTRONICS TEXAS ALLEN, INC. By: Name: Title: PHOTRONICS CALIFORNIA, INC. By: Name: Title: Signature Page to Consent and Reaffirmation to Signature Page to Amendment No. 4Photronics, Inc.Third Amended and Restated Credit Agreement dated as of December 5, 2013Exhibit 10.24EXECUTION COPYFOURTH AMENDED AND RESTATED CREDIT AGREEMENTdated as ofSeptember 27, 2018amongPHOTRONICS, INC.The Foreign Subsidiary Borrowers Party HeretoThe Lenders Party Hereto JPMORGAN CHASE BANK, N.A.as Administrative Agent and Collateral Agentand BANK OF AMERICA, N.A.as Syndication Agent JPMORGAN CHASE BANK, N.A. andMERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATEDas Joint Bookrunners and Joint Lead Arrangers TABLE OF CONTENTS Page ARTICLE I Definitions1 SECTION 1.01. Defined Terms1SECTION 1.02. Classification of Loans and Borrowings28SECTION 1.03. Terms Generally29SECTION 1.04. Accounting Terms; GAAP29SECTION 1.05. Status of Secured Obligations29SECTION 1.06. Amendment and Restatement of the Existing Credit Agreement30SECTION 1.07. Interest Rates30 ARTICLE II The Credits30 SECTION 2.01. Commitments30SECTION 2.02. Loans and Borrowings31SECTION 2.03. Requests for Revolving Borrowings32SECTION 2.04. Determination of Dollar Amounts32SECTION 2.05. Swingline Loans33SECTION 2.06. Letters of Credit34SECTION 2.07. Funding of Borrowings39SECTION 2.08. Interest Elections40SECTION 2.09. Termination and Reduction of Commitments41SECTION 2.10. Repayment of Loans; Evidence of Debt42SECTION 2.11. Prepayment of Loans43SECTION 2.12. Fees43SECTION 2.13. Interest44SECTION 2.14. Alternate Rate of Interest45SECTION 2.15. Increased Costs47SECTION 2.16. Break Funding Payments48SECTION 2.17. Taxes48SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs52SECTION 2.19. Mitigation Obligations; Replacement of Lenders53SECTION 2.20. Expansion Option54SECTION 2.21. Market Disruption55SECTION 2.22. Judgment Currency55SECTION 2.23. Designation of Foreign Subsidiary Borrowers55SECTION 2.24. Defaulting Lenders56 ARTICLE III Representations and Warranties57 SECTION 3.01. Organization; Powers; Subsidiaries57SECTION 3.02. Authorization; Enforceability58SECTION 3.03. Governmental Approvals; No Conflicts58SECTION 3.04. Financial Condition; No Material Adverse Change58SECTION 3.05. Properties58SECTION 3.06. Litigation and Environmental Matters58SECTION 3.07. Compliance with Laws and Agreements59SECTION 3.08. Investment Company Status59SECTION 3.09. Taxes59Table of Contents(continued) Page SECTION 3.10. ERISA59SECTION 3.11. Disclosure59SECTION 3.12. Federal Reserve Regulations60SECTION 3.13. Liens60SECTION 3.14. No Default60SECTION 3.15. Security Interest in Collateral60SECTION 3.16. Anti-Corruption Laws and Sanctions60SECTION 3.17. EEA Financial Institutions60 ARTICLE IV Conditions60 SECTION 4.01. Effective Date60SECTION 4.02. Each Credit Event61SECTION 4.03. Designation of a Foreign Subsidiary Borrower62 ARTICLE V Affirmative Covenants63 SECTION 5.01. Financial Statements and Other Information63SECTION 5.02. Notices of Material Events64SECTION 5.03. Existence; Conduct of Business64SECTION 5.04. Payment of Obligations64SECTION 5.05. Maintenance of Properties; Insurance65SECTION 5.06. Books and Records; Inspection Rights65SECTION 5.07. Compliance with Laws and Material Contractual Obligations65SECTION 5.08. Use of Proceeds66SECTION 5.09. Subsidiary Guarantors; Pledges; Additional Collateral; Further Assurances66 SECTION 5.10. Post-Closing Matters 67 ARTICLE VI Negative Covenants67 SECTION 6.01. Indebtedness67SECTION 6.02. Liens69SECTION 6.03. Fundamental Changes and Asset Sales70SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions71SECTION 6.05. Swap Agreements72SECTION 6.06. Restricted Payments72SECTION 6.07. Transactions with Affiliates73SECTION 6.08. Restrictive Agreements73SECTION 6.09. Issuances of Equity Interests by Subsidiaries73SECTION 6.10. Amendment of Material Documents73SECTION 6.11. Financial Covenants74SECTION 6.12. Anti-Corruption Laws and Sanctions74 ARTICLE VII Events of Default74 ARTICLE VIII The Administrative Agent and the Collateral Agent78 SECTION 8.01. Authorization and Action78SECTION 8.02. Agents’ Reliance, Indemnification, Etc80iiTable of Contents(continued) Page SECTION 8.03. Posting of Communications82SECTION 8.04. The Agents Individually83SECTION 8.05. Successor Agents.84SECTION 8.06. Acknowledgments of Lenders and Issuing Banks84SECTION 8.07. Collateral Matters85SECTION 8.08. Credit Bidding86SECTION 8.09. Certain ERISA Matters.87 ARTICLE IX Miscellaneous89 SECTION 9.01. Notices89SECTION 9.02. Waivers; Amendments90SECTION 9.03. Expenses; Indemnity; Damage Waiver93SECTION 9.04. Successors and Assigns94SECTION 9.05. Survival97SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution98SECTION 9.07. Severability98SECTION 9.08. Right of Setoff98SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process98SECTION 9.10. WAIVER OF JURY TRIAL100SECTION 9.11. Headings100SECTION 9.12. Confidentiality100SECTION 9.13. USA PATRIOT Act101SECTION 9.14. Appointment for Perfection101SECTION 9.15. Interest Rate Limitation101SECTION 9.16. No Advisory or Fiduciary Responsibility101SECTION 9.17. Releases of Subsidiary Guarantors102SECTION 9.18. Acknowledgement and Consent to Bail-In of EEA Financial Institutions103 ARTICLE X Company Guarantee103iiiTable of Contents(continued) PageSCHEDULES: Schedule 2.01A--CommitmentsSchedule 2.01B--Letter of Credit CommitmentsSchedule 2.06--Existing Letters of CreditSchedule 3.01--SubsidiariesSchedule 5.10--Post-Closing MattersSchedule 6.01--Existing IndebtednessSchedule 6.02--Existing LiensSchedule 6.04--Existing Investments, Loans and Advances; Taiwan JV TransactionsSchedule 6.07--Affiliate TransactionsSchedule 6.08--Existing Restrictions EXHIBITS: Exhibit A--Form of Assignment and AssumptionExhibit B--Form of Opinion of Loan Parties’ CounselExhibit C--Form of Increasing Lender SupplementExhibit D--Form of Augmenting Lender SupplementExhibit E--List of Closing DocumentsExhibit F-1--Form of Borrowing Subsidiary AgreementExhibit F-2--Form of Borrowing Subsidiary TerminationExhibit G--Form of Subsidiary GuarantyExhibit H--Form of Pledge AgreementExhibit I-1--Form of Borrowing RequestExhibit I-2--Form of Interest Election RequestExhibit J--Form of Promissory NoteExhibit K-1--Form of U.S. Tax Certificate (Foreign Lenders That Are Not Partnerships)Exhibit K-2--Form of U.S. Tax Certificate (Foreign Participants That Are Not Partnerships)Exhibit K-3--Form of U.S. Tax Certificate (Foreign Participants That Are Partnerships)Exhibit K-4--Form of U.S. Tax Certificate (Foreign Lenders That Are Partnerships)ivFOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) dated as of September 27, 2018 among PHOTRONICS,INC., the FOREIGN SUBSIDIARY BORROWERS from time to time party hereto, the LENDERS from time to time party hereto, BANK OF AMERICA, N.A.,as Syndication Agent, and JPMORGAN CHASE BANK, N.A., as Administrative Agent and Collateral Agent.WHEREAS, the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agentthereunder, are currently party to the Third Amended and Restated Credit Agreement, dated as of December 5, 2013 (as amended, supplemented or otherwisemodified prior to the date hereof, the “Existing Credit Agreement”).WHEREAS, the Company, the Lenders, the Administrative Agent and the Collateral Agent have agreed to enter into this Agreement inorder to (i) amend and restate the Existing Credit Agreement in its entirety; (ii) re-evidence the “Obligations” under, and as defined in, the Existing CreditAgreement, which shall be repayable in accordance with the terms of this Agreement; and (iii) set forth the terms and conditions under which the Lenderswill, from time to time, make loans and extend other financial accommodations to or for the benefit of the Borrowers.WHEREAS, it is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of the partiesunder the Existing Credit Agreement or be deemed to evidence or constitute full repayment of such obligations and liabilities, but that this Agreement amendand restate in its entirety the Existing Credit Agreement and re-evidence the obligations and liabilities of the Company and the Subsidiaries outstandingthereunder, which shall be payable in accordance with the terms hereof.WHEREAS, it is also the intent of the Company and the Subsidiary Guarantors to confirm that all obligations under the applicable “LoanDocuments” (as referred to and defined in the Existing Credit Agreement) shall continue in full force and effect as modified or restated by the LoanDocuments (as referred to and defined herein) and that, from and after the Effective Date, all references to the “Credit Agreement” contained in any suchexisting “Loan Documents” shall be deemed to refer to this Agreement.NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree that theExisting Credit Agreement is hereby amended and restated as follows:ARTICLE IDefinitionsSECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:“ABR”, when used in reference to any Loan or Borrowing, refers to such Loan, or the Loans comprising such Borrowing, bearing interest ata rate determined by reference to the Alternate Base Rate.“Adjusted LIBO Rate” means, with respect to any Eurocurrency Borrowing for any Interest Period, an interest rate per annum (roundedupwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.“Administrative Agent” means JPMorgan Chase Bank, N.A. (including its branches and affiliates), in its capacity as administrative agent forthe Lenders hereunder.“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.“Affected Foreign Subsidiary” means any Foreign Subsidiary to the extent such Foreign Subsidiary acting as a Subsidiary Guarantor wouldcause a Deemed Dividend Problem.“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controlsor is Controlled by or is under common Control with the Person specified.“Agents” means the Administrative Agent and the Collateral Agent.“Aggregate Commitment” means the aggregate of the Commitments of all of the Lenders, as reduced or increased from time to timepursuant to the terms and conditions hereof. As of the Effective Date, the Aggregate Commitment is $50,000,000.“Agreed Currencies” means (i) Dollars and (ii) any other currency (x) that is a lawful currency (other than Dollars) that is readily availableand freely transferable and convertible into Dollars, (y) for which a LIBOR Screen Rate is available in the Administrative Agent’s determination and (z) thatis agreed to by the Administrative Agent and each of the Lenders.“Agreement” has the meaning assigned to such term in the introductory paragraph.“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRBRate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period in Dollars on such day (or if such day is not aBusiness Day, the immediately preceding Business Day) plus 1%, provided that for the purpose of this definition, the Adjusted LIBO Rate for any day shallbe based on the LIBO Rate (or if the LIBO Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m.London time on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall beeffective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the AlternateBase Rate is being used as an alternate rate of interest pursuant to Section 2.14 hereof, then the Alternate Base Rate shall be the greater of clauses (a) and (b)above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as so determined would be lessthan zero, such rate shall be deemed to be zero for purposes of this Agreement.“Alternative Rate” has the meaning assigned to such term in Section 2.14(a).“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Company or its Subsidiaries from timeto time concerning or relating to bribery or corruption.“Applicable Party” has the meaning assigned to such term in Section 8.03(c).“Applicable Percentage” means, with respect to any Lender, the percentage equal to a fraction the numerator of which is such Lender’sCommitment and the denominator of which is the Aggregate Commitment (if the Commitments have terminated or expired, the Applicable Percentages shallbe determined based upon the Commitments most recently in effect, giving effect to any assignments); provided that, in the case of Section 2.24 when aDefaulting Lender shall exist, any such Defaulting Lender’s Commitment shall be disregarded in the calculation.2“Applicable Pledge Percentage” means 100% but 65% in the case of a pledge by the Company or any Domestic Subsidiary of its EquityInterests in an Affected Foreign Subsidiary.“Applicable Rate” means, for any day, with respect to any Eurocurrency Loan, or any ABR Loan or with respect to the commitment feespayable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Eurocurrency Spread”, “ABR Spread” or“Commitment Fee Rate”, as the case may be, based upon the Total Leverage Ratio applicable on such date: Total Leverage Ratio:CommitmentFee RateEurocurrencySpreadABRSpreadCategory 1:≤ 1.00 to 1.000.15%1.00%0%Category 2:> 1.00 to 1.00 but≤ 2.00 to 1.000.20%1.25%0.25%Category 3:> 2.00 to 1.000.25%1.50%0.50%For purposes of the foregoing,(i) if at any time the Company fails to deliver the Financials on or before the date the Financials are due pursuant to Section 5.01, Category3 shall be deemed applicable for the period commencing five (5) Business Days after the required date of delivery and ending on the date which is five (5)Business Days after the Financials are actually delivered, after which the Category shall be determined in accordance with the table above as applicable;(ii) adjustments, if any, to the Category then in effect shall be effective five (5) Business Days after the Administrative Agent has receivedthe applicable Financials (it being understood and agreed that each change in Category shall apply during the period commencing on the effective date ofsuch change and ending on the date immediately preceding the effective date of the next such change); and(iii) notwithstanding the foregoing, Category 1 shall be deemed to be applicable until the Administrative Agent’s receipt of the applicableFinancials for the Company’s first fiscal quarter ending after the Effective Date (unless such Financials demonstrate that Category 2 or 3 should have beenapplicable during such period, in which case such other Category shall be deemed to be applicable during such period) and adjustments to the Category thenin effect shall thereafter be effected in accordance with the preceding paragraphs.“Approved Electronic Platform” has the meaning assigned to such term in Section 8.03(a).“Approved Fund” has the meaning assigned to such term in Section 9.04.3“Arrangers” means each of JPMorgan Chase Bank, N.A. and Merrill, Lynch, Pierce, Fenner & Smith Incorporated (or any other registeredbroker-dealer wholly-owned by Bank of America Corporation to which all or substantially all of Bank of America Corporation’s or any of its subsidiaries’investment banking, commercial lending services or related businesses may be transferred following the date of this Agreement) in its capacity as a jointbookrunner and joint lead arranger hereunder.“Assignment and Assumption” means an assignment and assumption agreement entered into by a Lender and an assignee (with the consentof any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form (includingelectronic records generated by the use of an electronic platform) approved by the Administrative Agent.“Augmenting Lender” has the meaning assigned to such term in Section 2.20.“Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the dateof termination of the Commitments.“Available Revolving Commitment” means, at any time with respect to any Lender, the Commitment of such Lender then in effect minusthe Revolving Credit Exposure of such Lender at such time (excluding, for the purpose of calculating the commitment fee under Section 2.12, any Lender’sSwingline Exposure).“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect ofany liability of an EEA Financial Institution.“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the EuropeanParliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EUBail-In Legislation Schedule.“Banking Services” means each and any of the following bank services provided to the Company or any Subsidiary by any Lender or anyof its Affiliates: (a) credit cards for commercial customers (including, without limitation, commercial credit cards and purchasing cards), (b) stored valuecards, (c) merchant processing services and (d) treasury management services (including, without limitation, controlled disbursement, automatedclearinghouse transactions, return items, any direct debit scheme or arrangement, overdrafts and interstate depository network services).“Banking Services Agreement” means any agreement entered into by the Company or any Subsidiary in connection with Banking Services.“Banking Services Obligations” means any and all obligations of the Company or any Subsidiary, whether absolute or contingent andhowsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor)in connection with Banking Services.“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successorstatute.4“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy orinsolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged withthe reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action infurtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in suchproceeding entered in respect thereof, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of anyownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in orprovide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on itsassets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements madeby such Person.“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial OwnershipRegulation.“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (b) a“plan” as defined in Section 4975 of the Code to which Section 4975 of the Code applies, and (c) any Person whose assets include (for purposes of the PlanAsset Regulations or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.“Board” means the Board of Governors of the Federal Reserve System of the United States of America.“Borrower” means the Company or any Foreign Subsidiary Borrower.“Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of EurocurrencyLoans, as to which a single Interest Period is in effect or (b) a Swingline Loan.“Borrowing Request” means a request by any Borrower for a Revolving Borrowing in accordance with Section 2.03 in the form attachedhereto as Exhibit I-1.“Borrowing Subsidiary Agreement” means a Borrowing Subsidiary Agreement substantially in the form of Exhibit F-1.“Borrowing Subsidiary Termination” means a Borrowing Subsidiary Termination substantially in the form of Exhibit F-2.“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized orrequired by law to remain closed; provided that, when used in connection with a Eurocurrency Loan, the term “Business Day” shall also exclude any day onwhich banks are not open for dealings in the relevant Agreed Currency in the London interbank market or the principal financial center of such AgreedCurrency (and, if the Borrowings or LC Disbursements which are the subject of a borrowing, drawing, payment, reimbursement or rate selection aredenominated in euro, the term “Business Day” shall also exclude any day on which the TARGET2 payment system is not open for the settlement of paymentsin euro).“Capital Expenditures” means, without duplication, any cash expenditures for any purchase or other acquisition of any asset which wouldbe classified as a fixed or capital asset on a consolidated balance sheet of the Company and its Subsidiaries prepared in accordance with GAAP.5“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or otherarrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted foras capital leases or financing leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amountthereof determined in accordance with GAAP.“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (withinthe meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of Equity Interests representing morethan 40% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Company; (b) occupation of a majority ofthe seats (other than vacant seats) on the board of directors of the Company by Persons who were not (i) directors of the Company on the date of thisAgreement or (ii) nominated or appointed by the board of directors of the Company; (c) the acquisition of direct or indirect Control of the Company by anyPerson or group; (d) the occurrence of a change in control, or other similar provision, as defined in any agreement or instrument evidencing any MaterialIndebtedness (triggering a default or mandatory prepayment, which default or mandatory prepayment has not been waived in writing); or (e) the Companyceases to own, directly or indirectly, and Control 100% (other than directors’ qualifying shares) of the ordinary voting and economic power of any ForeignSubsidiary Borrower, other than, to the extent such Subsidiaries are Foreign Subsidiary Borrowers, PKL, PKLT and the Taiwan JV, in respect of which theCompany will continue to own and Control more than 50%.“Change in Law” means the occurrence, after the date of this Agreement (or with respect to any Lender, if later, the date on which suchLender becomes a Lender), of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule,regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (c) the making orissuance of any request, rules, guideline, requirement or directive (whether or not having the force of law) by any Governmental Authority;provided however, that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and allrequests, rules, guidelines, requirements and directives thereunder, issued in connection therewith or in implementation thereof, and (ii) all requests, rules,guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or anysuccessor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a“Change in Law” regardless of the date enacted, adopted, issued or implemented.“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, areRevolving Loans or Swingline Loans.“Code” means the Internal Revenue Code of 1986, as amended from time to time.“Collateral” means all Pledged Equity, all “Collateral” as defined in the Security Agreement and all other property pledged in favor of theCollateral Agent, on behalf of itself and the Holders of Secured Obligations, pursuant to the Collateral Documents from time to time. It is hereby understoodand agreed that “Collateral” shall not include any real property (including any leasehold interests therein and improvements or fixtures relating thereto) andthe Lenders hereby authorize the Collateral Agent to release its Liens on the real estate encumbered by the “Mortgages” pursuant to the Existing CreditAgreement.6“Collateral Agent” means JPMorgan Chase Bank, N.A. in its capacity as Collateral Agent for the Holders of Secured Obligations and anysuccessor Collateral Agent appointed pursuant to the terms of this Agreement.“Collateral Documents” means, collectively, the Security Agreement, the Pledge Agreements and all other agreements, instruments anddocuments executed in connection with this Agreement that are intended to create, evidence or perfect Liens to secure the Secured Obligations.“Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participationsin Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving CreditExposure hereunder, as such commitment may be (a) reduced or terminated from time to time pursuant to Section 2.09, (b) increased from time to timepursuant to Section 2.20 and (c) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initialamount of each Lender’s Commitment is set forth on Schedule 2.01A, or in the Assignment and Assumption or other documentation or record (as such term isdefined in Section 9-102(a)(70) of the New York Uniform Commercial Code) contemplated hereby pursuant to which such Lender shall have assumed itsCommitment, as applicable.“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successorstatute.“Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or onbehalf of any Borrower pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, anyLender or the Issuing Bank by means of electronic communications pursuant to Section 8.03(c), including through an Approved Electronic Platform.“Company” means Photronics, Inc., a Connecticut corporation.“Computation Date” is defined in Section 2.04.“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period, minus the aggregate amount of extraordinary,unusual or non-recurring income or gains for such period to the extent required to be separately stated in the Company’s financial statements in accordancewith GAAP, minus any unrealized non-cash gains or income attributable to the application of “mark to market” accounting rules in accordance with GAAPfor such period, plus, without duplication and to the extent deducted from revenues in determining Consolidated Net Income for such period, the sum of (a)the aggregate amount of Consolidated Interest Expense for such period, plus (b) the aggregate amount of income tax expense for such period, plus (c) theaggregate amount of depreciation and amortization for such period, plus (d) non-cash expenses related to stock-based compensation, plus (e) anyextraordinary or non-recurring non-cash expenses, write-downs, write-offs, or losses including impairment or restructuring charges or any unrealized non-cashlosses attributable to the application of “mark to market” accounting rules in accordance with GAAP for such period, plus (f) any write-downs, write-offs, orlosses incurred in connection with the repayment of the Existing Convertible Notes described in clause (i) of the definition thereof, plus (g) the aggregateamount of fees, costs and expenses paid on the Effective Date to the Administrative Agent and the Lenders, including for reimbursement of costs, fees orexpenses of the Administrative Agent or any Lender, in connection with the Loan Documents and/or the transactions contemplated thereby, all as determinedon a consolidated basis with respect to the Company and its consolidated Subsidiaries in accordance with GAAP, minus, to the extent included indetermining Consolidated Net Income for such period, any cash payments made during such period in respect of items described in clauses (d) and (e) abovesubsequent to the fiscal quarter in which the relevant non-cash expense or loss was reflected in a statement of Consolidated Net Income. For the purposes ofcalculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if at any time during such ReferencePeriod the Company or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced byan amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such ReferencePeriod or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, and (ii) if during suchReference Period the Company or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall becalculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition,“Material Acquisition” means any acquisition of property or series of related acquisitions of property (excluding, for the avoidance of doubt, the acquisitionof property pursuant to the Taiwan JV Transactions) that (a) constitutes (i) assets comprising all or substantially all or any significant portion of a business oroperating unit of a business, or (ii) all or substantially all of the common stock or other Equity Interests of a Person, and (b) involves the payment ofconsideration by the Company and its Subsidiaries in excess of $10,000,000; and “Material Disposition” means any sale, transfer or disposition of propertyor series of related sales, transfers, or dispositions of property that yields gross proceeds to the Company or any of its Subsidiaries in excess of $10,000,000.7“Consolidated Interest Expense” means, with reference to any period, the interest expense (including without limitation interest expenseunder Capital Lease Obligations that is treated as interest in accordance with GAAP but excluding the amortization of deferred financing costs or fees) of theCompany and its Subsidiaries calculated on a consolidated basis for such period with respect to (a) all outstanding Indebtedness of the Company and itsSubsidiaries allocable to such period in accordance with GAAP and (b) Swap Agreements (including, without limitation, all commissions, discounts andother fees and charges owed with respect to letters of credit and bankers acceptance financing and net costs under interest rate Swap Agreements to the extentsuch net costs are allocable to such period in accordance with GAAP).“Consolidated Net Income” means, with reference to any period, the net income (or loss) of the Company and its Subsidiaries calculated inaccordance with GAAP on a consolidated basis (without duplication) for such period; provided that there shall be excluded (a) the income (or deficit) of anyPerson (other than a Subsidiary of the Company) in which the Company or any of its Subsidiaries has an ownership interest, except to the extent that anysuch income is actually received by the Company or such Subsidiary in the form of dividends or similar distributions and (b) the undistributed earnings ofany Subsidiary of the Company to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the timepermitted by the terms of any contractual obligation (other than under any Loan Document) or any organizational or governing documents, any law, treaty,rule or regulation or any determination of an arbitrator or other Governmental Authority, in each case applicable to such Subsidiary.“Consolidated Total Assets” means, as of the date of any determination thereof, total assets of the Company and its Subsidiaries calculatedin accordance with GAAP on a consolidated basis as of such date.“Consolidated Total Indebtedness” means at any time the sum, without duplication, of (a) the aggregate Indebtedness of the Company andits Subsidiaries calculated on a consolidated basis as of such time in accordance with GAAP, (b) the aggregate amount of Indebtedness of the Company andits Subsidiaries relating to the maximum drawing amount of all letters of credit outstanding and bankers acceptances and (c) Indebtedness of the type referredto in clauses (a) or (b) hereof of another Person guaranteed by the Company or any of its Subsidiaries.8“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of aPerson, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.“Country Risk Event” means:(i) any law, action or failure to act by any Governmental Authority in any Borrower’s or Letter of Credit beneficiary’s country whichhas the effect of:(a) changing the obligations under the relevant Letter of Credit, this Agreement or any of the other Loan Documents asoriginally agreed or otherwise creating any additional liability, cost or expense to the Issuing Banks, the Lenders or the AdministrativeAgent,(b) changing the ownership or control by such Borrower or Letter of Credit beneficiary of its business, or(c) preventing or restricting the conversion into or transfer of the applicable Agreed Currency;(ii) force majeure; or(iii) any similar eventwhich, in relation to (i), (ii) and (iii), directly or indirectly, prevents or restricts the payment or transfer of any amounts owing under the relevant Letter ofCredit or other Loan Documents in the applicable Agreed Currency into an account designated by the Administrative Agent or the relevant Issuing Bank andfreely available to the Administrative Agent or the relevant Issuing Bank.“Credit Event” means a Borrowing, the issuance, amendment, renewal or extension of a Letter of Credit, an LC Disbursement or any of theforegoing.“Credit Party” means the Administrative Agent, any Issuing Bank, the Swingline Lender or any other Lender.“Deemed Dividend Problem” means, with respect to any Foreign Subsidiary, such Foreign Subsidiary’s accumulated and undistributedearnings and profits being deemed to be repatriated to the Company or the applicable parent Domestic Subsidiary under Section 956 of the Code or anysuccessor or similar law and the effect of such repatriation causing or expected to cause adverse tax consequences in excess of $1,000,000 in the aggregate tothe Company or such parent Domestic Subsidiary, in each case as determined by the Company in its commercially reasonable judgment acting in good faithand in consultation with its legal and tax advisors.“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unlesscured or waived, become an Event of Default.9“Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fundany portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swingline Loans or (iii) pay over to any Credit Party any otheramount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure isthe result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any)has not been satisfied, (b) has notified the Company or any Credit Party in writing, or has made a public statement to the effect, that it does not intend orexpect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based onsuch Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan underthis Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Daysafter request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with itsobligations to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans under this Agreement, provided that suchLender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substancesatisfactory to it and the Administrative Agent, or (d) has become the subject of (i) a Bankruptcy Event or (ii) a Bail-In Action.“Dollar Amount” of any amount of any currency means, at the time of determination thereof, (a) if such amount is expressed in Dollars, suchamount, (b) if such amount is expressed in a Foreign Currency, the equivalent of such amount in Dollars determined by using the rate of exchange for thepurchase of Dollars with such Foreign Currency in the London foreign exchange market at or about 11:00 a.m. London time (or New York time, asapplicable) on a particular day as displayed by ICE Data Services as the “ask price”, or as displayed on such other information service which publishes thatrate of exchange from time to time in place of ICE Data Services (or if such service ceases to be available, the equivalent of such amount in Dollars asdetermined by the Administrative Agent using any method of determination it deems appropriate in its sole discretion) and (c) if such amount is denominatedin any other currency, the equivalent of such amount in Dollars as determined by the Administrative Agent using any method of determination it deemsappropriate in its sole discretion.“Dollars” or “$” refers to lawful money of the United States of America.“Domestic Subsidiary” means a Subsidiary organized under the laws of a jurisdiction located in the United States of America.“ECP” means an “eligible contract participant” as defined in Section 1(a)(18) of the Commodity Exchange Act or any regulationspromulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or the SEC.“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision of anEEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition,or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and issubject to consolidated supervision with its parent.“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of anyEEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).10“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adoptedby a Person with the intent to sign, authenticate or accept such contract or record.“Eligible Foreign Subsidiary” means any Foreign Subsidiary that is approved from time to time by the Administrative Agent and each ofthe Lenders.“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or bindingagreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation ofnatural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmentalremediation, fines, penalties or indemnities), of the Company or any Subsidiary directly or indirectly resulting from or based upon (a) violation of anyEnvironmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to anyHazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensualarrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficialinterests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquireany of the foregoing. Notwithstanding the foregoing, neither Permitted Convertible Notes nor Permitted Call Spread Swap Agreements shall constituteEquity Interests.“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Company, is treated as a singleemployer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employerunder Section 414 of the Code.“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect toa Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency”(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Company or any of itsERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Company or any ERISA Affiliatefrom the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)the incurrence by the Company or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Company or any ofits ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of any notice, or the receipt by anyMultiemployer Plan from the Company or any ERISA Affiliate of any notice, concerning the imposition upon the Company or any of its ERISA Affiliates ofWithdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV ofERISA.11“EU” means the European Union.“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successorPerson), as in effect from time to time.“euro” and/or “EUR” means the single currency of the Participating Member States.“Eurocurrency”, when used in reference to a currency means an Agreed Currency and when used in reference to any Loan or Borrowing,means that such Loan, or the Loans comprising such Borrowing, bears interest at a rate determined by reference to the Adjusted LIBO Rate.“Eurocurrency Payment Office” of the Administrative Agent shall mean, for each Foreign Currency, the office, branch, affiliate orcorrespondent bank of the Administrative Agent for such currency as specified from time to time by the Administrative Agent to the Company and eachLender.“Event of Default” has the meaning assigned to such term in Article VII.“Excluded Swap Obligation” means, with respect to any Loan Party, any Specified Swap Obligation if, and to the extent that, all or aportion of the Guarantee of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Specified Swap Obligation (or anyGuarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission(or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an ECP at the time the Guaranteeof such Loan Party or the grant of such security interest becomes or would become effective with respect to such Specified Swap Obligation. If a SpecifiedSwap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Specified SwapObligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment tobe made by or on account of any obligation of any Loan Party hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by theUnited States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case ofany Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposedby any other jurisdiction in which the Company is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Companyunder Section 2.19(b)), any U.S. federal withholding tax that is imposed on amounts payable to such Foreign Lender pursuant to a law in effect on the date onwhich such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure tocomply with Section 2.17(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lendingoffice (or assignment), to receive additional amounts from the Company with respect to such withholding tax pursuant to Section 2.17(a), and (d) anywithholding Taxes imposed under FATCA.“Existing Convertible Notes” means the 3.25% Convertible Senior Notes due 2019 issued pursuant to the Indenture dated January 22,2015, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, as amended, restated, replaced, refinanced,supplemented or otherwise modified from time to time.“Existing Credit Agreement” is defined in the recitals hereof.“Existing Letters of Credit” is defined in Section 2.06(a).12“Existing Loans” is defined in Section 2.01.“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that issubstantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreemententered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmentalagreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code. “Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions bydepositary institutions, as determined in such manner as the NYFRB shall set forth on its public website from time to time, and published on the nextsucceeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be lessthan zero, such rate shall be deemed to be zero for the purposes of this Agreement.“Financial Officer” means the chief financial officer, any vice president of finance, principal accounting officer, treasurer or controller of theCompany.“Financials” means the annual or quarterly financial statements, and accompanying certificates and other documents, of the Company andits Subsidiaries required to be delivered pursuant to Section 5.01(a) or 5.01(b).“First Tier Foreign Subsidiary” means each Foreign Subsidiary and with respect to which any one or more of the Company and its DomesticSubsidiaries directly owns or Controls more than 50% of such Foreign Subsidiary’s Equity Interests.“Foreign Borrower Sublimit” means $25,000,000.“Foreign Currencies” means Agreed Currencies other than Dollars.“Foreign Currency LC Exposure” means, at any time, the sum of (a) the Dollar Amount of the aggregate undrawn and unexpired amount ofall outstanding Foreign Currency Letters of Credit at such time plus (b) the aggregate principal Dollar Amount of all LC Disbursements in respect of ForeignCurrency Letters of Credit that have not yet been reimbursed at such time.“Foreign Currency Letter of Credit” means a Letter of Credit denominated in a Foreign Currency.“Foreign Currency Sublimit” means $25,000,000.“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Company is located. Forpurposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.“Foreign Subsidiary Borrower” means any Eligible Foreign Subsidiary that has been designated as a Foreign Subsidiary Borrower pursuantto Section 2.23 and that has not ceased to be a Foreign Subsidiary Borrower pursuant to such Section.13“GAAP” means generally accepted accounting principles in the United States of America.“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof,whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative,judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or havingthe economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly orindirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of)such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchaseor lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintainworking capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay suchIndebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness orobligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.“Guaranteed Obligations” has the meaning assigned to such term in Article X.“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or otherpollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious ormedical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.“Holders of Secured Obligations” means the Secured Parties.“Impacted Interest Period” has the meaning assigned to such term in the definition of “LIBO Rate”.“Increasing Lender” has the meaning assigned to such term in Section 2.20.“Incremental Term Loan” has the meaning assigned to such term in Section 2.20.“Incremental Term Loan Amendment” has the meaning assigned to such term in Section 2.20.“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to depositsor advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Personupon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating toproperty acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding currentaccounts payable and accrued expenses incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of suchIndebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not theIndebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person,(i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations,contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) all obligations of such Person under any Swap Agreement or under any similartype of agreement and (l) all obligations of such Person under Sale and Leaseback Transactions. The Indebtedness of any Person shall include theIndebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result ofsuch Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is notliable therefor. Notwithstanding the foregoing and for avoidance of doubt, obligations arising under any Permitted Call Spread Swap Agreement shall not beconsidered Indebtedness.14“Indemnified Taxes” means Taxes, other than Excluded Taxes, and Other Taxes, imposed on or with respect to any payment made by or onaccount of any obligation of any Loan Party under any Loan Document.“Ineligible Institution” has the meaning assigned to such term in Section 9.04(b)“Interest Election Request” means a request by the applicable Borrower to convert or continue a Revolving Borrowing in accordance withSection 2.08 in the form attached hereto as Exhibit I-2.“Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June,September and December and the Maturity Date, (b) with respect to any Eurocurrency Loan, the last day of each Interest Period applicable to the Borrowingof which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months’ duration, each day prior to thelast day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and the Maturity Date and (c) withrespect to any Swingline Loan, the day that such Loan is required to be repaid and the Maturity Date.“Interest Period” means with respect to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending onthe numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the applicable Borrower (or the Company onbehalf of the applicable Borrower) may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shallbe extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case suchInterest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency Borrowing that commences on the lastBusiness Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shallend on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date onwhich such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as theLIBOR Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to therate that results from interpolating on a linear basis between: (a) the LIBOR Screen Rate for the longest period (for which the LIBOR Screen Rate is availablefor the applicable currency) that is shorter than the Impacted Interest Period and (b) the LIBOR Screen Rate for the shortest period (for which the LIBORScreen Rate is available for the applicable currency) that exceeds the Impacted Interest Period, in each case, at such time.15“Issuing Bank” means each of JPMorgan Chase Bank, N.A., Bank of America, N.A., Citizens Bank, N.A. and TD Bank, N.A., in its capacityas the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.06(i). Any Issuing Bank may, in its discretion, arrangefor one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate withrespect to Letters of Credit issued by such Affiliate. Each reference herein to the “Issuing Bank” in connection with a Letter of Credit or other matter shall bedeemed to be a reference to the relevant Issuing Bank with respect thereto, and, further, references herein to “the Issuing Bank” shall be deemed to refer toeach of the Issuing Banks or the relevant Issuing Bank, as the context requires.“Joint Venture” means any corporation, partnership, limited liability company or other legal entity or arrangement in which the Companyor any Subsidiary has an equity investment and direct or indirect Control.“LC Collateral Account” has the meaning assigned to such term in Section 2.06(j).“LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter of Credit.“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn Dollar Amount of all outstanding Letters of Credit at such timeplus (b) the aggregate Dollar Amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Company at such time. The LCExposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.“Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.“Lenders” means the Persons listed on Schedule 2.01A and any other Person that shall have become a Lender hereunder pursuant to Section2.20 or pursuant to an Assignment and Assumption or other documentation contemplated hereby, other than any such Person that ceases to be a party heretopursuant to an Assignment and Assumption or other documentation contemplated hereby. Unless the context otherwise requires, the term “Lenders” includesthe Swingline Lender and the Issuing Banks.“Letter of Credit” means any letter of credit issued pursuant to this Agreement.“Letter of Credit Commitment” means, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of Credithereunder. The initial amount of each Issuing Bank’s Letter of Credit Commitment is set forth on Schedule 2.01B, or if an Issuing Bank has entered into anAssignment and Assumption, the amount set forth for such Issuing Bank as its Letter of Credit Commitment in the Register maintained by the AdministrativeAgent.“Letter of Credit Agreement” has the meaning assigned to such term in Section 2.06(b).“LIBO Rate” means, for any day and time, with respect to any Eurocurrency Borrowing denominated in any Agreed Currency and for anyInterest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administrationof such rate) for such Agreed Currency for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02of the Reuters screen that displays such rate or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on suchscreen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as shall be selected bythe Administrative Agent in its reasonable discretion (in each case the “LIBOR Screen Rate”) at approximately 11:00 a.m., London time, on the QuotationDay for such Agreed Currency and Interest Period; provided that, if the LIBOR Screen Rate as so determined would be less than zero, such rate shall bedeemed to be zero for the purposes of this Agreement; provided, further, that if a LIBOR Screen Rate shall not be available at such time for such InterestPeriod (the “Impacted Interest Period”), then the LIBO Rate for such Agreed Currency and such Interest Period shall be the Interpolated Rate; provided, that,if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement. It is understood and agreed that all ofthe terms and conditions of this definition of “LIBO Rate” shall be subject to Section 2.14.16“LIBOR Screen Rate” has the meaning assigned to such term in the definition of “LIBO Rate”.“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or securityinterest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or anyfinancing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchaseoption, call or similar right of a third party with respect to such securities.“Liquidity” has the meaning assigned to such term in 6.11(c).“Loan Documents” means this Agreement, each Borrowing Subsidiary Agreement, each Borrowing Subsidiary Termination, the SubsidiaryGuaranty, the Collateral Documents (including, without limitation, the Pledge Agreements), any promissory notes executed and delivered pursuant toSection 2.10(e), any Letter of Credit applications and any agreements between the Borrower and an Issuing Bank regarding such Issuing Bank’s Letter ofCredit Commitment or the respective rights and obligations between the Borrower and such Issuing Bank in connection with the issuance of Letters of Creditand any and all other instruments and documents executed and delivered in connection with any of the foregoing.“Loan Parties” means, collectively, the Borrowers and the Subsidiary Guarantors.“Loans” means the loans made by the Lenders to the Borrowers, or otherwise incurred by the Borrowers, pursuant to this Agreement.“Local Time” means (i) New York City time in the case of a Loan, Borrowing or LC Disbursement denominated in Dollars and (ii) localtime in the case of a Loan, Borrowing or LC Disbursement denominated in a Foreign Currency (it being understood that such local time shall mean London,England time unless otherwise notified by the Administrative Agent).“Material Adverse Effect” means a material adverse effect on (a) the business, assets, property or condition (financial or otherwise) of theCompany and the Subsidiaries taken as a whole or (b) the ability of any Borrower or any other Loan Party to perform any of its obligations under thisAgreement or any other Loan Document or (c) the rights of or remedies available to the Lenders under this Agreement or any other Loan Document.“Material Indebtedness” means any Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more SwapAgreements, of any one or more of the Company and its Subsidiaries in an aggregate principal amount exceeding $15,000,000. For purposes of determiningMaterial Indebtedness, the “principal amount” of the obligations of the Company or any Subsidiary in respect of any Swap Agreement at any time shall bethe maximum aggregate amount (giving effect to any netting agreements) that the Company or such Subsidiary would be required to pay if such SwapAgreement were terminated at such time.17“Material Subsidiary” means each Subsidiary (i) which, as of the most recent fiscal year of the Company, for the period of four consecutivefiscal quarters then ended, for which financial statements have been delivered pursuant to Section 5.01, contributed greater than fifteen percent (15%) of theCompany’s Consolidated EBITDA for such period or (ii) which contributed greater than fifteen percent (15%) of the Company’s Consolidated Total Assetsas of such date; provided that, if at any time the aggregate amount of the Company’s Consolidated EBITDA or Company’s Consolidated Total Assetsattributable to Subsidiaries (other than Affected Foreign Subsidiaries) that are not Subsidiary Guarantors exceeds twenty percent (20%) of the Company’sConsolidated EBITDA for any such period or twenty percent (20%) of the Company’s Consolidated Total Assets as of the end of any such fiscal year, theCompany (or, in the event the Company has failed to do so within ten days, the Administrative Agent) shall designate sufficient Subsidiaries (other thanAffected Foreign Subsidiaries) as “Material Subsidiaries” to eliminate such excess, and such designated Subsidiaries shall for all purposes of this Agreementconstitute Material Subsidiaries; provided, that, in the case of a Person becoming a Subsidiary pursuant to an acquisition, the foregoing financial tests shallbe applied on a Pro Forma Basis immediately upon consummation of such acquisition and, assuming such Subsidiary would constitute a Material Subsidiaryon a Pro Forma Basis, the Company shall comply with Section 5.09.“Maturity Date” means September 27, 2023; provided, however, if such date is not a Business Day, the Maturity Date shall be the nextpreceding Business Day.“Moody’s” means Moody’s Investors Service, Inc.“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.“New Money Credit Event” means with respect to any Issuing Bank, any increase (directly or indirectly) in such Issuing Bank’s exposure(whether by way of additional credit or banking facilities or otherwise, including as part of a restructuring) to the Borrower or any Governmental Authority inthe Borrower’s or any applicable Letter of Credit beneficiary’s country occurring by reason of (i) any law, action or requirement of any GovernmentalAuthority in the Borrower’s or such Letter of Credit beneficiary’s country, or (ii) any request in respect of external indebtedness of borrowers in theBorrower’s or such Letter of Credit beneficiary’s country applicable to banks generally which conduct business with such borrowers, or (iii) any agreement inrelation to clause (i) or (ii), in each case to the extent calculated by reference to the aggregate Revolving Credit Exposures outstanding prior to such increase.“NYFRB” means the Federal Reserve Bank of New York.“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight BankFunding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of suchrates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m., New YorkCity time, on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if anyof the aforesaid rates as so determined would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.18“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued and unpaid feesand all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the pendency of anybankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), obligations and liabilitiesof any of the Company and its Subsidiaries to any of the Lenders, the Administrative Agent, any Issuing Bank or any indemnified party, individually orcollectively, existing on the Effective Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidatedor unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, arising or incurred under this Agreement or any of the other LoanDocuments or in respect of any of the Loans made or reimbursement or other obligations incurred or any of the Letters of Credit or other instruments at anytime evidencing any thereof.“OFAC” means the Office of Foreign Assets Control of the U.S. Department of Treasury.“Other Taxes” means any and all present or future stamp, court or documentary, intangible, recording, filing taxes or any other excise orproperty or similar taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwisewith respect to, this Agreement or any other Loan Document.“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollarborrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on its publicwebsite from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.“Overnight Foreign Currency Rate” means, for any amount payable in a Foreign Currency, the rate of interest per annum as determined bythe Administrative Agent at which overnight or weekend deposits in the relevant currency (or if such amount due remains unpaid for more than threeBusiness Days, then for such other period of time as the Administrative Agent may elect) for delivery in immediately available and freely transferable fundswould be offered by the Administrative Agent to major banks in the interbank market upon request of such major banks for the relevant currency asdetermined above and in an amount comparable to the unpaid principal amount of the related Credit Event, plus any taxes, levies, imposts, duties,deductions, charges or withholdings imposed upon, or charged to, the Administrative Agent by any relevant correspondent bank in respect of such amount insuch relevant currency.“Participant” has the meaning set forth in Section 9.04.“Participant Register” has the meaning set forth in Section 9.04.“Participating Member State” means any member state of the European Union that adopts or has adopted the euro as its lawful currency inaccordance with legislation of the European Union relating to economic and monetary union.“Patriot Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similarfunctions.19“Permitted Acquisition” means any acquisition (whether by purchase, merger, consolidation or otherwise) or series of related acquisitionsby the Company or any Subsidiary of all or substantially all the assets of, or more than a majority of the Equity Interests in, a Person or division or line ofbusiness of a Person if, at the time of and immediately after giving effect thereto, (a) no Default has occurred and is continuing or would arise after givingeffect thereto, (b) such Person or division or line of business is engaged in the same or a similar line of business as the Company and the Subsidiaries orbusiness reasonably related or complimentary thereto, (c) all actions required to be taken with respect to such acquired or newly formed Subsidiary underSections 5.09 and 5.10 shall have been taken, (d) the Company and the Subsidiaries are in compliance with the covenants contained in Section 6.11 on a ProForma Basis after giving effect to such acquisition and recomputed as of the last day of the most recently ended fiscal quarter of the Company for whichfinancial statements are available, as if such acquisition (and any related incurrence or repayment of Indebtedness, with any new Indebtedness being deemedto be amortized over the applicable testing period in accordance with its terms) had occurred on the first day of each relevant period for testing suchcompliance and, if the aggregate consideration (including the concurrent repayment or assumption of any indebtedness and related investments) paid inrespect of such acquisition exceeds $50,000,000, the Company shall have delivered to the Administrative Agent a certificate of a Financial Officer of theCompany to such effect, together with all relevant financial information, statements and projections requested by the Administrative Agent and (e) in the caseof an acquisition or merger involving the Company or a Subsidiary, the Company or such Subsidiary is the surviving entity of such merger and/orconsolidation.“Permitted Call Spread Swap Agreements” means (a) any Swap Agreement (including, but not limited to, any bond hedge transaction orcapped call transaction) pursuant to which the Company acquires an option requiring the counterparty thereto to deliver to the Company shares of commonstock of the Company, the cash value of such shares or a combination thereof from time to time upon exercise of such option and (b) any Swap Agreementpursuant to which the Company issues to the counterparty thereto warrants to acquire common stock of the Company (whether such warrant is settled inshares, cash or a combination thereof), in each case entered into by the Company in connection with the issuance of Convertible Debt Securities; providedthat (i) the terms, conditions and covenants of each such Swap Agreement shall be such as are customary for Swap Agreements of such type (as determined bythe Board of Directors of the Company in good faith) and (ii) in the case of clause (b) above, such Swap Agreement would be classified as an equityinstrument in accordance with GAAP, and the settlement of such Swap Agreement does not require the Company to make any payment in cash or cashequivalents that would disqualify such Swap Agreement from so being classified as an equity instrument.“Permitted Convertible Notes” means (i) the Existing Convertible Notes and (ii) any unsecured notes issued by the Company or anySubsidiary that are convertible into common stock of the Company or any Subsidiary, cash or any combination thereof and (other than in the case ofintercompany Indebtedness) are permitted to be issued pursuant to the definition of Permitted Unsecured Indebtedness.“Permitted Encumbrances” means:(a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 5.04, or as to which the graceperiod, if any, related thereto has not expired;(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course ofbusiness and securing obligations that are not overdue by more than thirty (30) days or are not in excess of $10,000,000, individually, or in the aggregate, orare being contested in compliance with Section 5.04;20(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance andother social security laws or regulations;(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bondsand other obligations of a like nature, in each case in the ordinary course of business;(e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII; and(f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary courseof business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinaryconduct of business of the Company or any Subsidiary;provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.“Permitted Investments” means:(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States ofAmerica (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each casematuring within one year from the date of acquisition thereof;(b) investments in commercial paper maturing within one year from the date of acquisition thereof and having, at such date of acquisition,the credit rating of A1 from S&P or P1 from Moody’s;(c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisitionthereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercialbank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profitsof not less than $500,000,000;(d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and enteredinto with a financial institution satisfying the criteria described in clause (c) above;(e) investments in taxable or tax exempt obligations of any state of the United States of America or any municipality thereof maturingwithin three years of the date of acquisition thereof and which is rated “A1” or higher by Moody’s or “AA” or higher by S&P;(f) investments in fixed income securities maturing within one year of the date of acquisition thereof and which are rated “A” or higher byMoody’s or S&P;(g) to the extent the aggregate amount of such investments does not exceed 10% of Permitted Investments, investments in fixed incomesecurities maturing within two years of the date of acquisition thereof and which are rated between “BBB-” and “BBB+” by S&P;(h) investments in money market mutual funds having assets in excess of $1,000,000,000 whose sole investments are any securitiesdescribed in clauses (a) through (g) above; and21(i) in the case of any Foreign Subsidiary, investments of comparable tenure and credit quality to those described in the foregoing clauses (a)through (h) or other high quality short term investments, in each case, customarily utilized in countries in which such Foreign Subsidiary operatesfor short term cash management purposes.“Permitted Unsecured Indebtedness” means any unsecured Indebtedness of the Company (including (x) any Permitted Convertible Notesand (y) unsecured Subordinated Indebtedness to the extent subordinated to the Secured Obligations on terms reasonably acceptable to the AdministrativeAgent) so long as (i) the Indebtedness thereunder does not mature, and is otherwise not subject to any mandatory prepayment, redemption, defeasance,scheduled amortization or other scheduled payments of principal, in each case prior to the date that is six (6) months after the Maturity Date (it beingunderstood that neither (x) any provision requiring an offer to purchase such Indebtedness as a result of change of control or asset sale or other fundamentalchange nor (y) any early conversion of any Permitted Convertible Notes in accordance with the terms thereof shall violate the foregoing restriction), (ii) bothimmediately prior to and after giving effect (including giving effect on a Pro Forma Basis) thereto, (x) no Default or Event of Default shall exist or wouldresult therefrom and (y) the Company shall be in compliance with the covenants contained in Section 6.11, (iii) such Indebtedness is not guaranteed by anySubsidiary of the Company other than the Subsidiary Guarantors (which guarantees, if such Indebtedness is subordinated, shall be expressly subordinated tothe Secured Obligations on terms not less favorable to the Lenders than the subordination terms of such Subordinated Indebtedness) and (iv) the covenantsapplicable to such Indebtedness are not more onerous or more restrictive in any material respect (taken as a whole) than the applicable covenants set forth inthis Agreement.“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership,Governmental Authority or other entity.“PKL” means PKL, Ltd., a Korean corporation.“PKLT” means PKLT Co., Ltd., a Taiwanese corporation.“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA orSection 412 of the Code or Section 302 of ERISA, and in respect of which the Company or any ERISA Affiliate is (or, if such plan were terminated, wouldunder Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.“Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system.“Pledge Agreements” means that certain Second Amended and Restated Pledge Agreement substantially in the form of Exhibit H(including any and all supplements thereto) dated as of the Effective Date and executed by the relevant Loan Parties, and, in the case of any pledge of EquityInterests of a Foreign Subsidiary, any other pledge agreements, share mortgages, charges and comparable instruments and documents from time to timeexecuted pursuant to the terms of Section 5.09 in favor of the Collateral Agent for the benefit of the Holders of Secured Obligations as amended, restated,supplemented or otherwise modified from time to time.“Pledge Subsidiary” means (i) each Domestic Subsidiary and (ii) each First Tier Foreign Subsidiary that is a Material Subsidiary.22“Pledged Equity” means all pledged Equity Interests in or upon which a security interest or Lien is from time to time granted to theCollateral Agent, for the benefit of the Holders of Secured Obligations, under the Pledge Agreements.“Pounds Sterling” means the lawful currency of the United Kingdom.“PRC Subsidiary” means any Subsidiary that (i) is organized under the laws of the People’s Republic of China (“PRC”) or (ii) has itsprincipal place of business in PRC.“PRC Transactions” means the sale of up to 49.99% of the shares of the PRC Subsidiary to a third party in connection with the formationand operation of a joint venture.“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journalceases to quote such rate, the highest per annum interest rate published by the Board in Federal Reserve Statistical Release H.15 (519) (Selected InterestRates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) orany similar release by the Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the datesuch change is publicly announced or quoted as being effective.“Pro Forma Basis” means on a basis in accordance with GAAP and Regulation S-X and otherwise reasonably satisfactory to theAdministrative Agent.“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amendedfrom time to time.“Quotation Day” means, with respect to any Eurocurrency Borrowing for any Interest Period, (i) if the currency is Pounds Sterling, the firstday of such Interest Period, (ii) if the currency is euro, the day that is two (2) TARGET2 Days before the first day of such Interest Period, and (iii) for any othercurrency, two Business Days prior to the commencement of such Interest Period (unless, in each case, market practice differs in the relevant market where theLIBO Rate for such currency is to be determined, in which case the Quotation Day will be determined by the Administrative Agent in accordance with marketpractice in such market (and if quotations would normally be given on more than one day, then the Quotation Day will be the last of those days)).“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) supplied to the AdministrativeAgent at its request by the Reference Banks (as the case may be) as of the applicable time on the Quotation Day for Loans in the applicable currency and theapplicable Interest Period as the rate at which the relevant Reference Bank could borrow funds in the London (or other applicable) interbank market in therelevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers in reasonable market size in that currency andfor that period.“Reference Banks” means such banks as may be appointed by the Administrative Agent in consultation with the Company. No Lendershall be obligated to be a Reference Bank without its consent.“Register” has the meaning set forth in Section 9.04.“Regulation S-X” means Regulation S-X under the Securities Act of 1933, as amended.23“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees,agents and advisors of such Person and such Person’s Affiliates.“Required Lenders” means, subject to Section 2.24, at any time, two (2) or more unaffiliated Lenders having Revolving Credit Exposuresand unused Commitments representing more than 50% of the sum of the Total Revolving Credit Exposure and unused Commitments at such time; providedthat for purposes of declaring the Loans to be due and payable pursuant to Article VII, and for all purposes after the Loans become due and payable pursuantto Article VII or the Commitments expire or terminate, then, as to each Lender, clause (a) of the definition of Swingline Exposure shall only be applicable forpurposes of determining its Revolving Credit Exposure to the extent such Lender shall have funded its participation in the outstanding Swingline Loans tothe extent required under Section 2.05(c).“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any EquityInterests in the Company or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, onaccount of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Company or any Subsidiary orany option, warrant or other right to acquire any such Equity Interests in the Company or any Subsidiary. Notwithstanding the foregoing, and for theavoidance of doubt, (i) the conversion of (including any cash payment upon conversion), or payment of any principal or premium on, or payment of anyinterest with respect to, any Permitted Convertible Notes shall not constitute a Restricted Payment and (ii) any payment with respect to, or early unwind orsettlement of, any Permitted Call Spread Swap Agreement shall not constitute a Restricted Payment. Notwithstanding the foregoing, any cash payment madeto repurchase any Equity Interests of the Company issued in connection with the conversion of any Permitted Convertible Notes at the maturity thereof shallnot be considered a “Restricted Payment” so long as (x) such repurchases are made at then prevailing market prices and (y) the aggregate amount of cashdelivered by the Company with respect to such conversions, including the related repurchases, does not exceed the par value of such converted PermittedConvertible Notes plus any accrued and unpaid interest thereon through the date of such conversions plus the net cash proceeds, if any, received by theCompany pursuant to the related exercise or early unwind or termination of the related Permitted Call Spread Swap Agreements.“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’sRevolving Loans and its LC Exposure and Swingline Exposure at such time.“Revolving Loan” means a Loan made pursuant to Section 2.01. “S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business. “Sale and Leaseback Transaction” means any sale or other transfer of property by any Person with the intent to lease such property aslessee.“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time ofthis Agreement, Crimea, Cuba, Iran, North Korea and Syria).“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, theU.S. Department of State, the United Nations Security Council, the European Union, any EU member state, Her Majesty’s Treasury of the United Kingdom orother relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled by any suchPerson or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject of any Sanctions.24“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S.government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union, any EUmember state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority.“SEC” means the United States Securities and Exchange Commission.“Secured Obligations” means all Obligations, together with all (i) Banking Services Obligations and (ii) Swap Obligations owing to one ormore Secured Parties or their respective Affiliates ; provided that (i) obligations arising under Permitted Call Spread Swap Agreements shall not be consideredSecured Obligations and (ii) the definition of “Secured Obligations” shall not create or include any guarantee by any Loan Party of (or grant of securityinterest by any Loan Party to support, as applicable) any Excluded Swap Obligations of such Loan Party for purposes of determining any obligations of anyLoan Party.“Secured Parties” means the holders of the Secured Obligations from time to time and shall include (i) each Lender and each Issuing Bankin respect of its Loans and LC Exposure respectively, (ii) the Administrative Agent, the Issuing Banks and the Lenders in respect of all other present andfuture obligations and liabilities of the Company and each Subsidiary of every type and description arising under or in connection with this Agreement orany other Loan Document, (iii) each Lender and affiliate of such Lender in respect of Swap Agreements and Banking Services Agreements entered into withsuch Person by the Company or any Subsidiary, (iv) each indemnified party under Section 9.03 in respect of the obligations and liabilities of the Borrowersto such Person hereunder and under the other Loan Documents, and (v) their respective successors and (in the case of a Lender, permitted) transferees andassigns.“Security Agreement” means that certain Third Amended and Restated Security Agreement (including any and all supplements thereto),dated as of the Effective Date, between the Loan Parties and the Collateral Agent, for the benefit of the Collateral Agent and the other Holders of SecuredObligations, as the same may be amended, restated or otherwise modified from time to time.“Specified Ancillary Obligations” means all obligations and liabilities (including interest and fees accruing during the pendency of anybankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) of any of the Subsidiaries,existing on the Effective Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated orunliquidated, secured or unsecured, arising by contract, operation of law or otherwise, to the Lenders or any of their Affiliates under any Swap Agreement orany Banking Services Agreement; provided that the definition of “Specified Ancillary Obligations” shall not create or include any guarantee by any LoanParty of (or grant of security interest by any Loan Party to support, as applicable) any Excluded Swap Obligations of such Loan Party for purposes ofdetermining any obligations of any Loan Party.“Specified Capital Expenditures” means, solely for purposes of calculating the Interest Coverage Ratio for each period of four (4)consecutive fiscal quarters ending October 31, 2018, January 31, 2019 and April 30, 2019, Capital Expenditures made by or on behalf of the PRCSubsidiaries.25“Specified Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract ortransaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act or any rules or regulations promulgatedthereunder.“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator ofwhich is the number one minus the aggregate of the maximum reserve, liquid asset, fees or similar requirements (including any marginal, special, emergencyor supplemental reserves or other requirements) established by any central bank, monetary authority, the Board, the Financial Conduct Authority, thePrudential Regulation Authority, the European Central Bank or other Governmental Authority for any category of deposits or liabilities customarily used tofund loans in the applicable currency, expressed in the case of each such requirement as a decimal. Such reserve, liquid asset, fees or similar requirementsshall include those imposed pursuant to Regulation D of the Board. Eurocurrency Loans shall be deemed to be subject to such reserve, liquid asset, fee orsimilar requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under anyapplicable law, rule or regulation, including Regulation D of the Board. The Statutory Reserve Rate shall be adjusted automatically on and as of theeffective date of any change in any reserve, liquid asset or similar requirement.“Subordinated Indebtedness” of the Company or any Subsidiary means any Indebtedness of such Person the payment of which issubordinated to payment of the obligations under the Loan Documents to the written satisfaction of, and the terms and conditions of which are otherwisesatisfactory to, the Administrative Agent.“Subordinated Indebtedness Documents” means any document, agreement or instrument evidencing any Subordinated Indebtedness orentered into in connection with any Subordinated Indebtedness.“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership,association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if suchfinancial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership,association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinaryvoting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, Controlled or held, or (b) that is,as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.“Subsidiary” means any subsidiary of the Company.“Subsidiary Guarantor” means each Subsidiary (other than Affected Foreign Subsidiaries) that is a party to the Subsidiary Guaranty. TheSubsidiary Guarantors on the Effective Date are identified as such in Schedule 3.01 hereto.“Subsidiary Guaranty” means that certain Third Amended and Restated Guaranty, dated as of the Effective Date, in the form of Exhibit G(including any and all supplements thereto) and executed by each Subsidiary Guarantor party thereto, and, in the case of any guaranty by a ForeignSubsidiary, any other guaranty agreements as are requested by the Administrative Agent and its counsel, in each case as amended, restated, supplemented orotherwise modified from time to time.26“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreementinvolving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricingindices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that nophantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultantsof the Company or the Subsidiaries shall be a Swap Agreement.“Swap Obligations” means any and all obligations of the Company or any Subsidiary, whether absolute or contingent and howsoever andwhensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) anyand all Swap Agreements permitted hereunder with a Lender or an Affiliate of a Lender, and (b) any and all cancellations, buy backs, reversals, terminationsor assignments of any such Swap Agreement transaction“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The SwinglineExposure of any Lender at any time shall be the sum of (a) its Applicable Percentage of the total Swingline Exposure at such time other than with respect toany Swingline Loans made by such Lender in its capacity as a Swingline Lender and (b) the aggregate principal amount of all Swingline Loans made by suchLender as a Swingline Lender outstanding at such time (less the amount of participations funded by the other Lenders in such Swingline Loans).“Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of Swingline Loans hereunder.“Swingline Loan” means a Loan made pursuant to Section 2.05.“Swingline Sublimit” means $10,000,000.“Syndication Agent” means Bank of America, N.A., in its capacity as syndication agent for the credit facility evidenced by this Agreement.“Taiwan JV” means the Joint Venture between the Company and Dai Nippon Printing Co., Ltd.“Taiwan JV Transactions” means the transactions described in Schedule 6.04 hereto related to the creation and operation of the Taiwan JV.“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET2) payment system (or, if suchpayment system ceases to be operative, such other payment system (if any) reasonably determined by the Administrative Agent to be a suitable replacement)for the settlement of payments in euro.“TARGET2 Day” means a day that TARGET2 is open for the settlement of payments in euro.“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value addedtaxes, or any other goods and services, use or sales taxes, assessments, fees or other charges imposed by any Governmental Authority, including any interest,additions to tax or penalties applicable thereto.“Total Leverage Ratio” has the meaning assigned to such term in Section 6.11(b).27“Total Revolving Credit Exposure” means, at any time, the sum of the outstanding principal amount of all Lenders’ Revolving Loans, theirLC Exposure and their Swingline Exposure at such time; provided, that clause (a) of the definition of Swingline Exposure shall only be applicable to theextent Lenders shall have funded their respective participations in the outstanding Swingline Loans.“Transactions” means the execution, delivery and performance by the Loan Parties of this Agreement and the other Loan Documents, theborrowing of Loans and other credit extensions, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprisingsuch Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which arerequired to be applied in connection with the issue of perfection of security interests.“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(e)(ii)(B)(3).“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such MultiemployerPlan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers ofsuch EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversionpowers are described in the EU Bail-In Legislation Schedule.SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class(e.g., a “Revolving Loan”) or by Type (e.g., a “Eurocurrency Loan”) or by Class and Type (e.g., a “Eurocurrency Revolving Loan”). Borrowings also may beclassified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurocurrency Borrowing”) or by Class and Type (e.g., a “EurocurrencyRevolving Borrowing”).28SECTION 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and“including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect asthe word “shall”. The word “law” shall be construed as referring to all statutes, rules, regulations, codes and other laws (including official rulings andinterpretations thereunder having the force of law or with which affected Persons customarily comply), and all judgments, orders and decrees, of allGovernmental Authorities. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document hereinshall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified(subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (b) any definition of or reference to any statute,rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwise modified (including by succession ofcomparable successor laws), (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to anyrestrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded toany or all functions thereof, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in itsentirety and not to any particular provision hereof, (e) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articlesand Sections of, and Exhibits and Schedules to, this Agreement, (f) any reference to any law, rule or regulation herein shall, unless otherwise specified, refer tosuch law, rule or regulation as amended, modified or supplemented from time to time and (g) the words “asset” and “property” shall be construed to have thesame meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial natureshall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Company notifies the Administrative Agent that theCompany requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the applicationthereof on the operation of such provision (or if the Administrative Agent notifies the Company that the Required Lenders request an amendment to anyprovision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then suchprovision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such noticeshall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of anaccounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without givingeffect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial AccountingStandard having a similar result or effect) to value any Indebtedness or other liabilities of the Company or any Subsidiary at “fair value”, as defined thereinand (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20(or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in areduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof. Notwithstanding anything to the contrary contained in this Section 1.04 or in the definition of “Capital Lease Obligations,” in the event of an accountingchange requiring all leases to be capitalized, only those leases (assuming for purposes hereof that such leases were in existence on the date hereof) that wouldconstitute capital leases in conformity with GAAP on the date hereof shall be considered capital leases, and all calculations and deliverables under thisAgreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith.SECTION 1.05. Status of Secured Obligations In the event that the Company or any other Loan Party shall at any time issue or haveoutstanding any Subordinated Indebtedness, the Company shall take or cause such other Loan Party to take all such actions as shall be necessary to cause theSecured Obligations to constitute senior indebtedness (however denominated) in respect of such Subordinated Indebtedness and to enable the AdministrativeAgent and the Lenders to have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtednessunder the terms of such Subordinated Indebtedness. Without limiting the foregoing, the Secured Obligations are hereby designated as “senior indebtedness”and as “designated senior indebtedness” and words of similar import under and in respect of any indenture or other agreement or instrument under which suchother Subordinated Indebtedness is outstanding and are further given all such other designations as shall be required under the terms of any suchSubordinated Indebtedness in order that the Lenders may have and exercise any payment blockage or other remedies available or potentially available toholders of senior indebtedness under the terms of such Subordinated Indebtedness.29SECTION 1.06. Amendment and Restatement of the Existing Credit Agreement. The parties to this Agreement agree that, upon (i) theexecution and delivery by each of the parties hereto of this Agreement and (ii) satisfaction of the conditions set forth in Section 4.01, the terms andprovisions of the Existing Credit Agreement shall be and hereby are amended, superseded and restated in their entirety by the terms and provisions of thisAgreement. This Agreement is not intended to and shall not constitute a novation. All Loans made and Secured Obligations incurred under the ExistingCredit Agreement which are outstanding on the Effective Date shall continue as Loans and Secured Obligations under (and shall be governed by the terms of)this Agreement and the other Loan Documents. Without limiting the foregoing, upon the effectiveness hereof: (a) all references in the “Loan Documents” (asdefined in the Existing Credit Agreement) to the “Administrative Agent”, the “Credit Agreement” and the “Loan Documents” shall be deemed to refer to theAdministrative Agent, this Agreement and the Loan Documents, (b) the Existing Letters of Credit which remain outstanding on the Effective Date shallcontinue as Letters of Credit under (and shall be governed by the terms of) this Agreement, (c) all obligations constituting “Secured Obligations” with anyLender or any Affiliate of any Lender which are outstanding on the Effective Date shall continue as Secured Obligations under this Agreement and the otherLoan Documents, (d) the Administrative Agent shall administer such reallocations, sales, assignments or other relevant actions in respect of each Lender’scredit and loan exposure under the Existing Credit Agreement as are necessary in order that each such Lender’s Revolving Credit Exposure and outstandingRevolving Loans hereunder reflect such Lender’s Applicable Percentage of the outstanding aggregate Revolving Credit Exposures on the Effective Date and(e) the Company hereby agrees to compensate each Lender for any and all losses, costs and expenses incurred by such Lender in connection with the sale andassignment of any Eurocurrency Loans (including the “Eurocurrency Loans” under the Existing Credit Agreement) and such reallocation described above, ineach case on the terms and in the manner set forth in Section 2.16 hereof.SECTION 1.07. Interest Rates. The Administrative Agent does not warrant or accept responsibility for, and shall not have any liabilitywith respect to, the administration, submission or any other matter related to the rates in the definition of “LIBO Rate” or with respect to any comparable orsuccessor rate thereto, or replacement rate therefor.ARTICLE IIThe CreditsSECTION 2.01. Commitments. Prior to the Effective Date, certain revolving loans were previously made to the Company under theExisting Credit Agreement which remain outstanding as of the date of this Agreement (such outstanding revolving loans being hereinafter referred to as the“Existing Loans”). Subject to the terms and conditions set forth in this Agreement, the Borrowers and each of the Lenders agree that on the Effective Date butsubject to the satisfaction of the conditions precedent set forth in Section 4.01 and the reallocation and other transactions described in Section 1.05, theExisting Loans shall be reevidenced as Revolving Loans under this Agreement and the terms of the Existing Loans shall be restated in their entirety and shallbe evidenced by this Agreement. Subject to the terms and conditions set forth herein, each Lender (severally and not jointly) agrees to make RevolvingLoans to any Borrower in Agreed Currencies from time to time during the Availability Period in an aggregate principal amount that will not result (aftergiving effect to any application of proceeds of such Borrowing to any Swingline Loans outstanding pursuant to Section 2.10(a)) in (i) subject to Sections2.04 and 2.11(b), the Dollar Amount of such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment, (ii) subject to Sections 2.04 and2.11(b), the Dollar Amount of the Total Revolving Credit Exposure exceeding the Aggregate Commitment, (iii) subject to Sections 2.04 and 2.11(b), theDollar Amount of the total outstanding Revolving Loans and LC Exposure, in each case denominated in Foreign Currencies, exceeding the Foreign CurrencySublimit or (iv) subject to Section 2.04, the Dollar Amount of the total outstanding Revolving Loans made to Foreign Subsidiary Borrowers exceeding theForeign Borrower Sublimit. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay andreborrow Revolving Loans.30SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan (other than a Swingline Loan) shall be made as part of a Borrowingconsisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loanrequired to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and noLender shall be responsible for any other Lender’s failure to make Loans as required. Any Swingline Loan shall be made in accordance with the proceduresset forth in Section 2.05.(b) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurocurrency Loans as the relevantBorrower may request in accordance herewith; provided that each ABR Loan shall only be made in Dollars. Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of anAffiliate, the provisions of Sections 2.14, 2.15, 2.16 and 2.17 shall apply to such Affiliate to the same extent as to such Lender); provided that any exercise ofsuch option shall not affect the obligation of the relevant Borrower to repay such Loan in accordance with the terms of this Agreement.(c) At the commencement of each Interest Period for any Eurocurrency Revolving Borrowing, such Borrowing shall be in an aggregateamount that is an integral multiple of $500,000 (or, if such Borrowing is denominated in a Foreign Currency, 500,000 units of such currency) and not lessthan $3,000,000 (or, if such Borrowing is denominated in a Foreign Currency 3,000,000 units of such currency). At the time that each ABR RevolvingBorrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $1,000,000; provided that anABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Aggregate Commitment or that is required tofinance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e). Each Swingline Loan shall be in an amount that is an integralmultiple of $100,000 and not less than $1,000,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that thereshall not at any time be more than a total of ten (10) Eurocurrency Revolving Borrowings outstanding.(d) Notwithstanding any other provision of this Agreement, no Borrower shall be entitled to request, or to elect to convert or continue, anyBorrowing if the Interest Period requested with respect thereto would end after the Maturity Date.31SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving Borrowing, the applicable Borrower, or the Company onbehalf of the applicable Borrower, shall notify the Administrative Agent of such request (a) by irrevocable written notice (via a written Borrowing Requestsigned by the Company (on its own behalf or, as applicable, on behalf of a Foreign Subsidiary Borrower)) in the case of a Eurocurrency Borrowing, not laterthan 11:00 a.m., Local Time, three (3) Business Days (in the case of a Eurocurrency Borrowing denominated in Dollars) or by irrevocable written notice (via awritten Borrowing Request signed by the Company (on its own behalf or, as applicable, on behalf of a Foreign Subsidiary Borrower)) not later than 11:00a.m., Local Time, four (4) Business Days (in the case of a Eurocurrency Borrowing denominated in a Foreign Currency), in each case before the date of theproposed Borrowing or (b) by irrevocable written notice (via a written Borrowing Request signed by the Company (on its own behalf or, as applicable, onbehalf of a Foreign Subsidiary Borrower)) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposedBorrowing. Each such Borrowing Request shall specify the following information in compliance with Section 2.02:(i) the name of the applicable Borrower;(ii) the aggregate principal amount of the requested Borrowing;(iii) the date of such Borrowing, which shall be a Business Day;(iv) whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;(v) in the case of a Eurocurrency Borrowing, the Agreed Currency and initial Interest Period to be applicable thereto, which shall be aperiod contemplated by the definition of the term “Interest Period”; and(vi) the location and number of the applicable Borrower’s account to which funds are to be disbursed, which shall comply with therequirements of Section 2.07.If no election as to the Type of Revolving Borrowing is specified, then, in the case of a Borrowing denominated in Dollars, the requested RevolvingBorrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Revolving Borrowing, then the relevantBorrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordancewith this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of therequested Borrowing.SECTION 2.04. Determination of Dollar Amounts. The Administrative Agent will determine the Dollar Amount of:(a) each Eurocurrency Borrowing as of the date three (3) Business Days prior to the date of such Borrowing or, if applicable, the date ofconversion/continuation of any Borrowing as a Eurocurrency Borrowing,(b) the LC Exposure as of the date of each request for the issuance, amendment, renewal or extension of any Letter of Credit, and(c) all outstanding Credit Events on and as of the last Business Day of each calendar quarter and, during the continuation of an Event ofDefault, on any other Business Day elected by the Administrative Agent in its discretion or upon instruction by the Required Lenders.Each day upon or as of which the Administrative Agent determines Dollar Amounts as described in the preceding clauses (a), (b) and (c) is herein described asa “Computation Date” with respect to each Credit Event for which a Dollar Amount is determined on or as of such day.32SECTION 2.05. Swingline Loans. (a) Subject to the terms and conditions set forth herein, the Swingline Lender may in its sole discretionmake Swingline Loans in Dollars to the Company from time to time during the Availability Period, in an aggregate principal amount at any time outstandingthat will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding the Swingline Sublimit, (ii) the Swingline Lender’sRevolving Credit Exposure exceeding its Commitment or (iii) the Dollar Amount of the Total Revolving Credit Exposure exceeding the AggregateCommitment; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within theforegoing limits and subject to the terms and conditions set forth herein, the Company may borrow, prepay and reborrow Swingline Loans.(b) To request a Swingline Loan, the Company shall notify the Administrative Agent of such request by irrevocable written notice (via awritten Borrowing Request in a form approved by the Administrative Agent and signed by the Company), not later than 12:00 noon, New York City time, onthe day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) andamount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from theCompany. The Swingline Lender shall make each Swingline Loan available to the Company by means of a credit to the general deposit account of theCompany with the Administrative Agent designated for such purpose (or, in the case of a Swingline Loan made to finance the reimbursement of an LCDisbursement as provided in Section 2.06(e), by remittance to such Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such SwinglineLoan.(c) The Swingline Lender may by written notice given to the Administrative Agent require the Lenders to acquire participations in all or aportion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate. Promptlyupon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender’s Applicable Percentageof such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, promptly upon receipt of such notice from the AdministrativeAgent (and in any event, if such notice is received by 12:00 noon, New York City time, on a Business Day, no later than 5:00 p.m., New York City time, onsuch Business Day and if received after 12:00 noon, New York City time, on a Business Day, no later than 10:00 a.m., New York City time, on theimmediately succeeding Business Day), to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Applicable Percentage ofsuch Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to theAdministrative Agent, for the account of the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans. Notwithstanding theforegoing, upon the occurrence of (i) the Maturity Date, (ii) any Event of Default described in clause (h), (i) or (j) of Article VII, (iii) the date on which theLoans are accelerated, or (iv) the termination of the Commitments, each Lender shall be deemed to absolutely and unconditionally acquire participations inall of the Swingline Loans outstanding at such time in an amount equal to its Applicable Percentage of such Swingline Loans in each case without notice orany further action from the Swingline Lender, any Lender or the Administrative Agent (such occurrence an “Automatic Participation Event”). Upon theoccurrence of an Automatic Participation Event, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender’sApplicable Percentage of such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, promptly upon receipt of such noticefrom the Administrative Agent (and in any event, if such notice is received by 12:00 noon, New York City time, on a Business Day, no later than 5:00 p.m.,New York City time, on such Business Day and if received after 12:00 noon, New York City time, on a Business Day, no later than 10:00 a.m., New York Citytime, on the immediately succeeding Business Day), to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s ApplicablePercentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuantto this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of aDefault or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reductionwhatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner asprovided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of theLenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders. The AdministrativeAgent shall notify the Company of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of suchSwingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from theCompany (or other party on behalf of the Company) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale ofparticipations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptlyremitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as theirinterests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, ifand to the extent such payment is required to be refunded to the Company for any reason. The purchase of participations in a Swingline Loan pursuant tothis paragraph shall not relieve the Company of any default in the payment thereof.33(d) The Swingline Lender may be replaced at any time by written agreement among the Company, the Administrative Agent, the replacedSwingline Lender and the successor Swingline Lender. The Administrative Agent shall notify the Lenders of any such replacement of the Swingline Lender. At the time any such replacement shall become effective, the Company shall pay all unpaid interest accrued for the account of the replaced Swingline Lenderpursuant to Section 2.13(a). From and after the effective date of any such replacement, (i) the successor Swingline Lender shall have all the rights andobligations of the replaced Swingline Lender under this Agreement with respect to Swingline Loans made thereafter and (ii) references herein to the term“Swingline Lender” shall be deemed to refer to such successor or to any previous Swingline Lender, or to such successor and all previous Swingline Lenders,as the context shall require. After the replacement of a Swingline Lender hereunder, the replaced Swingline Lender shall remain a party hereto and shallcontinue to have all the rights and obligations of a Swingline Lender under this Agreement with respect to Swingline Loans made by it prior to itsreplacement, but shall not be required to make additional Swingline Loans.(e) Subject to the appointment and acceptance of a successor Swingline Lender, the Swingline Lender may resign as a Swingline Lender atany time upon thirty (30) days’ prior written notice to the Administrative Agent, the Company and the Lenders, in which case, such Swingline Lender shallbe replaced in accordance with Section 2.05(d) above.SECTION 2.06. Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Company may request the issuanceof Letters of Credit denominated in Agreed Currencies for the support of its or its Subsidiaries’ obligations, in a form reasonably acceptable to theAdministrative Agent and the relevant Issuing Bank, at any time and from time to time during the Availability Period, and such Issuing Bank may agree, butshall have no obligation, to issue such Letters of Credit. In the event of any inconsistency between the terms and conditions of this Agreement and the termsand conditions of any Letter of Credit Agreement, the terms and conditions of this Agreement shall control; provided, however, if such Issuing Bank isrequested to issue Letters of Credit with respect to a jurisdiction the relevant Issuing Bank deems, in its reasonable judgment, may at any time subject it to aNew Money Credit Event or a Country Risk Event, the Company shall, at the request of an Issuing Bank, guaranty and indemnify the requesting IssuingBank against any and all costs, liabilities and losses resulting from such New Money Credit Event or Country Risk Event, in each case in a form andsubstance reasonably satisfactory to the relevant Issuing Bank. The letters of credit identified on Schedule 2.06 (the “Existing Letters of Credit”) shall bedeemed to be “Letters of Credit” issued on the Effective Date for all purposes of the Loan Documents. Notwithstanding anything herein to the contrary, noIssuing Bank shall have any obligation hereunder to issue, and shall not issue, any Letter of Credit the proceeds of which would be made available to anyPerson (i) to fund any activity or business of or with any Sanctioned Person, or in any country or territory that, at the time of such funding, is the subject ofany Sanctions, (ii) in any manner that would result in a violation of any Sanctions by any party to this Agreement or (iii) in any manner that would result in aviolation of one or more policies of such Issuing Bank applicable to letters of credit generally. The Company unconditionally and irrevocably agrees that, inconnection with any Letter of Credit issued for the support of any Subsidiary’s obligations as provided in the first sentence of this paragraph, the Companywill be fully responsible for the reimbursement of LC Disbursements in accordance with the terms hereof, the payment of interest thereon and the payment offees due under Section 2.12(b) to the same extent as if it were the sole account party in respect of such Letter of Credit (the Company hereby irrevocablywaiving any defenses that might otherwise be available to it as a guarantor or surety of the obligations of such a Subsidiary that is an account party in respectof any such Letter of Credit).34(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or theamendment, renewal or extension of an outstanding Letter of Credit), the Company shall hand deliver or telecopy (or transmit by electronic communication,if arrangements for doing so have been approved by the relevant Issuing Bank) to an Issuing Bank and the Administrative Agent (reasonably in advance ofthe requested date of issuance, amendment, renewal or extension, but in any event no less than three (3) Business Days) a notice requesting the issuance of aLetter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal orextension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), theamount of such Letter of Credit, the Agreed Currency applicable thereto, the name and address of the beneficiary thereof and such other information as shallbe necessary to prepare, amend, renew or extend such Letter of Credit. In addition, as a condition to any such Letter of Credit issuance, the Company shallhave entered into a continuing agreement (or other letter of credit agreement) for the issuance of letters of credit and/or shall submit a letter of creditapplication, in each case, as required by the relevant Issuing Bank and using such Issuing Bank’s standard form (each, a “Letter of Credit Agreement”). ALetter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit theCompany shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, subject to Sections 2.04 and2.11(b), (i) the Dollar Amount of the LC Exposure shall not exceed $15,000,000, (ii) the sum of (x) the aggregate undrawn amount of all outstanding Lettersof Credit issued by any Issuing Bank at such time plus (y) the aggregate amount of all LC Disbursements made by such Issuing Bank that have not yet beenreimbursed by or on behalf of the Company at such time shall not exceed such Issuing Bank’s Letter of Credit Commitment, (iii) the Dollar Amount of theTotal Revolving Credit Exposure shall not exceed the Aggregate Commitment, (iv) the Dollar Amount of each Lender’s Revolving Credit Exposure shall notexceed such Lender’s Commitment and (v) the Dollar Amount of the total outstanding Revolving Loans and LC Exposure, in each case denominated inForeign Currencies, shall not exceed the Foreign Currency Sublimit. The Company may, at any time and from time to time, reduce the Letter of CreditCommitment of any Issuing Bank with the consent of such Issuing Bank; provided that the Company shall not reduce the Letter of Credit Commitment ofany Issuing Bank if, after giving effect of such reduction, the conditions set forth in the immediately preceding clauses (i) through (v) shall not be satisfied.(c) Expiration Date. Each Letter of Credit shall expire (or be subject to termination by notice from the relevant Issuing Bank to thebeneficiary thereof) at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in thecase of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five (5) Business Days prior to the Maturity Date.(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and withoutany further action on the part of any Issuing Bank or the Lenders, each Issuing Bank hereby grants to each Lender, and each Lender hereby acquires fromeach Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn undersuch Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to theAdministrative Agent, for the account of the relevant Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such IssuingBank and not reimbursed by the Company on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to berefunded to the Company for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph inrespect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal orextension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such paymentshall be made without any offset, abatement, withholding or reduction whatsoever.35(e) Reimbursement. If any Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Company shall reimbursesuch LC Disbursement by paying to the Administrative Agent in Dollars the Dollar Amount equal to such LC Disbursement, calculated as of the date suchIssuing Bank made such LC Disbursement (or if an Issuing Bank shall so elect in its sole discretion by notice to the Company, in such other Agreed Currencywhich was paid by such Issuing Bank pursuant to such LC Disbursement in an amount equal to such LC Disbursement) not later than 12:00 noon, LocalTime, on the date that such LC Disbursement is made, if the Company shall have received notice of such LC Disbursement prior to 10:00 a.m., Local Time,on such date, or, if such notice has not been received by the Company prior to such time on such date, then not later than 12:00 noon, Local Time, on (i) theBusiness Day that the Company receives such notice, if such notice is received prior to 10:00 a.m., Local Time, on the day of receipt, or (ii) the Business Dayimmediately following the day that the Company receives such notice, if such notice is not received prior to such time on the day of receipt; provided thatthe Company may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.05 that such payment be financedwith (i) to the extent such LC Disbursement was made in Dollars, an ABR Revolving Borrowing, Eurocurrency Revolving Borrowing or Swingline Loan inDollars in an amount equal to such LC Disbursement or (ii) to the extent that such LC Disbursement was made in a Foreign Currency, a EurocurrencyRevolving Borrowing in such Foreign Currency in an amount equal to such LC Disbursement and, in each case, to the extent so financed, the Company’sobligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing, Eurocurrency Revolving Borrowing orSwingline Loan, as applicable. If the Company fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicableLC Disbursement, the payment then due from the Company in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receiptof such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Company, in the same manneras provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of theLenders), and the Administrative Agent shall promptly pay to the relevant Issuing Bank the amounts so received by it from the Lenders. Promptly followingreceipt by the Administrative Agent of any payment from the Company pursuant to this paragraph, the Administrative Agent shall distribute such payment tothe relevant Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lendersand such Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse an Issuing Bank for any LCDisbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relievethe Company of its obligation to reimburse such LC Disbursement. If the Company’s reimbursement of, or obligation to reimburse, any amounts in anyForeign Currency would subject the Administrative Agent, any Issuing Bank or any Lender to any stamp duty, ad valorem charge or similar tax that wouldnot be payable if such reimbursement were made or required to be made in Dollars, the Company shall, at its option, either (x) pay the amount of any such taxrequested by the Administrative Agent, the relevant Issuing Bank or the relevant Lender or (y) reimburse each LC Disbursement made in such ForeignCurrency in Dollars, in an amount equal to the Dollar Amount thereof calculated on the date such LC Disbursement is made.36(f) Obligations Absolute. The Company’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall beabsolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstanceswhatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any termor provision therein or herein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect orany statement therein being untrue or inaccurate in any respect, (iii) any payment by an Issuing Bank under a Letter of Credit against presentation of a draftor other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar toany of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, theCompany’s obligations hereunder. Neither the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their Related Parties, shall have anyliability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any paymentthereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission ordelivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawingthereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the relevant Issuing Bank; providedthat the foregoing shall not be construed to excuse any Issuing Bank from liability to the Company to the extent of any direct damages (as opposed tospecial, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Company to the extent permitted by applicable law)suffered by the Company that are caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presentedunder a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct onthe part of any Issuing Bank (as finally determined by a court of competent jurisdiction), such Issuing Bank shall be deemed to have exercised care in eachsuch determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presentedwhich appear on their face to be in substantial compliance with the terms of a Letter of Credit, each Issuing Bank may, in its sole discretion, either accept andmake payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse toaccept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.(g) Disbursement Procedures. Each Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting torepresent a demand for payment under a Letter of Credit. Each Issuing Bank shall promptly notify the Administrative Agent and the Company by telephone(confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided thatany failure to give or delay in giving such notice shall not relieve the Company of its obligation to reimburse such Issuing Bank and the Lenders with respectto any such LC Disbursement.(h) Interim Interest. If any Issuing Bank shall make any LC Disbursement, then, unless the Company shall reimburse such LC Disbursementin full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LCDisbursement is made to but excluding the date that the Company reimburses such LC Disbursement, at the rate per annum then applicable to ABRRevolving Loans (or in the case such LC Disbursement is denominated in a Foreign Currency, at the Overnight Foreign Currency Rate for such AgreedCurrency plus the then effective Applicable Rate with respect to Eurocurrency Loans); provided that, if the Company fails to reimburse such LCDisbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply. Interest accrued pursuant to this paragraph shall be for theaccount of such Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section toreimburse such Issuing Bank shall be for the account of such Lender to the extent of such payment.37(i) Replacement of an Issuing Bank. (A) Any Issuing Bank may be replaced at any time by written agreement among the Company, theAdministrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacementof an Issuing Bank. At the time any such replacement shall become effective, the Company shall pay all unpaid fees accrued for the account of the replacedIssuing Bank pursuant to Section 2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rightsand obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “IssuingBank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shallrequire. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rightsand obligations of an Issuing Bank under this Agreement with respect to Letters of Credit then outstanding and issued by it prior to such replacement, butshall not be required to issue additional Letters of Credit.(B) Subject to the appointment and acceptance of a successor Issuing Bank, any Issuing Bank may resign as an Issuing Bank at anytime upon thirty days’ prior written notice to the Administrative Agent, the Company and the Lenders, in which case, such Issuing Bank shall be replaced inaccordance with Section 2.06(i)(A) above.(j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Company receives noticefrom the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, from two (2) or more Lenders with LC Exposurerepresenting greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Company shall deposit in anaccount with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders (the “LC Collateral Account”), an amountin cash equal to the Dollar Amount of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that (i) the portions of suchamount attributable to undrawn Foreign Currency Letters of Credit or LC Disbursements in a Foreign Currency that the Company is not late in reimbursingshall be deposited in the applicable Foreign Currencies in the actual amounts of such undrawn Letters of Credit and LC Disbursements and (ii) the obligationto deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or othernotice of any kind, upon the occurrence of any Event of Default with respect to the Company described in clause (h) or (i) of Article VII. For the purposes ofthis paragraph, the Dollar Amount of the Foreign Currency LC Exposure shall be calculated on the date notice demanding cash collateralization is deliveredto the Company. The Company also shall deposit cash collateral pursuant to this paragraph as and to the extent required by Section 2.11(b). Such depositshall be held by the Administrative Agent as collateral for the payment and performance of the Secured Obligations. The Administrative Agent shall haveexclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of suchdeposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Company’s risk and expense, suchdeposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied bythe Administrative Agent to reimburse the relevant Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied,shall be held for the satisfaction of the reimbursement obligations of the Company for the LC Exposure at such time or, if the maturity of the Loans has beenaccelerated (but subject to the consent of Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy otherSecured Obligations. If the Company is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, suchamount (to the extent not applied as aforesaid) shall be returned to the Company within three Business Days after all Events of Default have been cured orwaived.38(k) Conversion. In the event that the Loans become immediately due and payable on any date pursuant to Article VII, all amounts (i) thatthe Company is at the time or thereafter becomes required to reimburse or otherwise pay to the Administrative Agent in respect of LC Disbursements madeunder any Foreign Currency Letter of Credit (other than amounts in respect of which the Company has deposited cash collateral pursuant to paragraph (j)above, if such cash collateral was deposited in the applicable Foreign Currency to the extent so deposited or applied), (ii) that the Lenders are at the time orthereafter become required to pay to the Administrative Agent and the Administrative Agent is at the time or thereafter becomes required to distribute to anIssuing Bank pursuant to paragraph (e) of this Section in respect of unreimbursed LC Disbursements made under any Foreign Currency Letter of Credit and(iii) of each Lender’s participation in any Foreign Currency Letter of Credit under which an LC Disbursement has been made shall, automatically and with nofurther action required, be converted into the Dollar Amount, calculated using the Administrative Agent’s currency exchange rates on such date (or in thecase of any LC Disbursement made after such date, on the date such LC Disbursement is made), of such amounts. On and after such conversion, all amountsaccruing and owed to the Administrative Agent, any Issuing Bank or any Lender in respect of the obligations described in this paragraph shall accrue and bepayable in Dollars at the rates otherwise applicable hereunder.(l) Issuing Bank Agreements. Each Issuing Bank agrees that, unless otherwise requested by the Administrative Agent, such Issuing Bankshall report in writing to the Administrative Agent (i) on the first Business Day of each week, the daily activity (set forth by day) in respect of its Letters ofCredit during the immediately preceding week, including all issuances, extensions, amendments and renewals, all expirations and cancellations and alldisbursements and reimbursements (it being understood and agreed that no such reports shall be required at any time during which such Issuing Bank doesnot have Letters of Credit outstanding hereunder), (ii) on or prior to each Business Day on which such Issuing Bank expects to issue, amend, renew or extendany Letter of Credit, the date of such issuance, amendment, renewal or extension, and the aggregate face amount of the Letters of Credit to be issued,amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension occurred (and whether the amountthereof changed), (iii) on each Business Day on which such Issuing Bank makes any LC Disbursement, the date of such LC Disbursement and the amount ofsuch LC Disbursement, (iv) on any Business Day on which the Borrower fails to reimburse an LC Disbursement required to be reimbursed to such IssuingBank on such day, the date of such failure and the amount and currency of such LC Disbursement and (v) on any other Business Day, such other informationas the Administrative Agent shall reasonably request.SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof bywire transfer of immediately available funds (i) in the case of Loans denominated in Dollars, by 12:00 noon, New York City time, to the account of theAdministrative Agent most recently designated by it for such purpose by notice to the Lenders and (ii) in the case of each Loan denominated in a ForeignCurrency, by 12:00 noon, Local Time, in the city of the Administrative Agent’s Eurocurrency Payment Office for such currency and at such EurocurrencyPayment Office for such currency; provided that Swingline Loans shall be made as provided in Section 2.05. Except in respect of the provisions of thisAgreement covering the reimbursement of Letters of Credit, the Administrative Agent will make such Loans available to the relevant Borrower by promptlycrediting the funds so received in the aforesaid account of the Administrative Agent to (x) an account of such Borrower maintained with the AdministrativeAgent in New York City and designated by the relevant Borrower in the applicable Borrowing Request, in the case of Loans denominated in Dollars and (y)an account of such Borrower maintained with the Administrative Agent in the relevant jurisdiction and designated by such Borrower in the applicableBorrowing Request, in the case of Loans denominated in a Foreign Currency; provided that ABR Revolving Loans made to finance the reimbursement of anLC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the relevant Issuing Bank.39(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing (or in the case ofan ABR Borrowing, prior to 12:00 noon, New York City time, on the date of such Borrowing) that such Lender will not make available to the AdministrativeAgent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date inaccordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the relevant Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender andsuch Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day fromand including the date such amount is made available to such Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case ofsuch Lender, the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbankcompensation (including without limitation the Overnight Foreign Currency Rate in the case of Loans denominated in a Foreign Currency) or (ii) in the caseof such Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitutesuch Lender’s Loan included in such Borrowing.SECTION 2.08. Interest Elections. (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, inthe case of a Eurocurrency Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the relevant Borrower mayelect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Borrowing, may elect Interest Periodstherefor, all as provided in this Section. A Borrower may elect different options with respect to different portions of the affected Borrowing, in which caseeach such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portionshall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.(b) To make an election pursuant to this Section, a Borrower, or the Company on its behalf, shall notify the Administrative Agent of suchelection (by irrevocable written notice (via an Interest Election Request signed by such Borrower or the Company, as applicable)) by the time that aBorrowing Request would be required under Section 2.03 if such Borrower were requesting a Revolving Borrowing of the Type resulting from such electionto be made on the effective date of such election. Notwithstanding any contrary provision herein, this Section shall not be construed to permit any Borrowerto (i) change the currency of any Borrowing, (ii) elect an Interest Period for Eurocurrency Loans that does not comply with Section 2.02(d) or (iii) convert anyBorrowing to a Borrowing of a Type not available under such Borrowing.40(c) Each Interest Election Request shall specify the following information in compliance with Section 2.02:(i) the name of the applicable Borrower and the Borrowing to which such Interest Election Request applies and, if different options arebeing elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case theinformation to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; and(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period and Agreed Currency to be applicable thereto after givingeffect to such election, which Interest Period shall be a period contemplated by the definition of the term “Interest Period”.If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the applicable Borrower shall bedeemed to have selected an Interest Period of one month’s duration.(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof andof such Lender’s portion of each resulting Borrowing.(e) If the relevant Borrower fails to deliver a timely Interest Election Request with respect to a Eurocurrency Borrowing prior to the end ofthe Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period (i) in the case of aBorrowing denominated in Dollars, such Borrowing shall be converted to an ABR Borrowing and (ii) in the case of a Borrowing denominated in a ForeignCurrency, such Borrowing shall automatically continue as a Eurocurrency Borrowing in the same Agreed Currency with an Interest Period of one monthunless (x) such Eurocurrency Borrowing is or was repaid in accordance with Section 2.11 or (y) such Borrower shall have given the Administrative Agent anInterest Election Request requesting that, at the end of such Interest Period, such Eurocurrency Borrowing continue as a Eurocurrency Borrowing for the sameor another Interest Period. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the AdministrativeAgent, at the request of the Required Lenders, so notifies the Company, then, so long as an Event of Default is continuing (i) no outstanding Borrowingdenominated in Dollars may be converted to or continued as a Eurocurrency Borrowing , (ii) unless repaid, each Eurocurrency Borrowing denominated inDollars shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto and (iii) unless repaid, each Eurocurrency Borrowingdenominated in a Foreign Currency shall automatically be continued as a Eurocurrency Borrowing with an Interest Period of one month.SECTION 2.09. Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminate on theMaturity Date.(b) The Company may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of theCommitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $1,000,000 and (ii) the Company shall not terminate orreduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the Dollar Amount of the TotalRevolving Credit Exposure would exceed the Aggregate Commitment.41(c) The Company shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of thisSection at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Companypursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Company may state that such noticeis conditioned upon the effectiveness of other credit facilities or other transactions specified therein, in which case such notice may be revoked by theCompany (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction ofthe Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respectiveCommitments.SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) Each Borrower hereby unconditionally promises to pay (i) to theAdministrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan made to such Borrower on the Maturity Datein the currency of such Loan and (ii) in the case of the Company, to the Administrative Agent for the account of the Swingline Lender the then unpaidprincipal amount of each Swingline Loan on the earlier of the Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day ofa calendar month and is at least two Business Days after such Swingline Loan is made; provided that on each date that a Revolving Borrowing is made, theCompany shall repay all Swingline Loans then outstanding and the proceeds of any such Borrowing shall be applied by the Administrative Agent to repayany Swingline Loans outstanding.(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrowerto such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time totime hereunder.(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class,Agreed Currency and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become dueand payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account ofthe Lenders and each Lender’s share thereof.(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of theexistence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts orany error therein shall not in any manner affect the Obligations.(e) Any Lender may request that Loans made by it to any Borrower be evidenced by a promissory note. In such event, the relevantBorrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and itsregistered assigns) and in the form attached hereto as Exhibit J. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at alltimes (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form.42SECTION 2.11. Prepayment of Loans.(a) Any Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior noticein accordance with the provisions of this Section 2.11(a). The applicable Borrower, or the Company on behalf of the applicable Borrower, shall notify theAdministrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by written notice (promptly followed by telephonicconfirmation of such request) of any prepayment hereunder (i) in the case of prepayment of a Eurocurrency Revolving Borrowing, not later than 11:00 a.m.,Local Time, three (3) Business Days (in the case of a Eurocurrency Borrowing denominated in Dollars) or four (4) Business Days (in the case of aEurocurrency Borrowing denominated in a Foreign Currency), in each case, before the date of prepayment, (ii) in the case of prepayment of an ABRBorrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a SwinglineLoan, not later than 12:00 noon, New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment dateand the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with aconditional notice of termination of the Commitments as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice oftermination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a Revolving Borrowing, theAdministrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount thatwould be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02. Each prepayment of a RevolvingBorrowing shall be applied ratably to the Loans included in the prepaid Revolving Borrowing. Prepayments shall be accompanied by (i) accrued interest tothe extent required by Section 2.13 and (ii) break funding payments pursuant to Section 2.16.(b) If at any time, (i) other than as a result of fluctuations in currency exchange rates, (A) the aggregate principal Dollar Amount of the TotalRevolving Credit Exposure (calculated, with respect to those Credit Events denominated in Foreign Currencies, as of the most recent Computation Date withrespect to each such Credit Event) exceeds the Aggregate Commitment, (B) the aggregate principal Dollar Amount of the Total Revolving Credit Exposuredenominated in Foreign Currencies (the “Foreign Currency Exposure”) (so calculated), as of the most recent Computation Date with respect to each suchCredit Event, exceeds the Foreign Currency Sublimit or (C) the sum of the aggregate principal Dollar Amount of all Loans (so calculated) outstanding to theForeign Subsidiary Borrowers exceeds the Foreign Borrower Sublimit or (ii) solely as a result of fluctuations in currency exchange rates, (A) the aggregateprincipal Dollar Amount of the Total Revolving Credit Exposure (so calculated) exceeds 105% of the Aggregate Commitment, (B) the Foreign CurrencyExposure, as of the most recent Computation Date with respect to each such Credit Event, exceeds 105% of the Foreign Currency Sublimit or (C) the sum ofthe aggregate principal Dollar Amount of all Loans (so calculated) outstanding to the Foreign Subsidiary Borrowers exceeds 105% of the Foreign BorrowerSublimit, the Borrowers shall in each case immediately repay Borrowings or cash collateralize LC Exposure in an account with the Administrative Agentpursuant to Section 2.06(j), as applicable, in an aggregate principal amount sufficient to eliminate any such excess.SECTION 2.12. Fees. (a) The Company agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, whichshall accrue at the Applicable Rate on the average daily amount of the Available Revolving Commitment of such Lender during the period from andincluding the Effective Date to but excluding the date on which such Commitment terminates; provided that, if such Lender continues to have anyRevolving Credit Exposure after its Commitment terminates, then such commitment fee shall continue to accrue on the amount of such Lender’s RevolvingCredit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have anyRevolving Credit Exposure. Commitment fees accrued through and including the last day of March, June, September and December of each year shall bepayable in arrears on the fifteenth (15th) day following such last day and on the date on which the Commitments terminate, commencing on the first such dateto occur after the date hereof; provided that any commitment fees accruing after the date on which the Commitments terminate shall be payable on demand. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first daybut excluding the last day).43(b) The Company agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to itsparticipations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurocurrency Loans on theaverage daily Dollar Amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during theperiod from and including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the date on whichsuch Lender ceases to have any LC Exposure, and (ii) to the relevant Issuing Bank for its own account a fronting fee, which shall accrue at a rate per annumseparately agreed upon between the Company and the relevant Issuing Bank on the average daily Dollar Amount of the LC Exposure (excluding any portionthereof attributable to unreimbursed LC Disbursements) attributable to Letters of Credit issued by such Issuing Bank during the period from and includingthe Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as wellas such Issuing Bank’s standard fees and commissions with respect to the issuance, amendment, cancellation, negotiation, transfer, presentment, renewal orextension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day ofMarch, June, September and December of each year shall be payable on the fifteenth (15th) day following such last day, commencing on the first such date tooccur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing afterthe date on which the Commitments terminate shall be payable on demand. Any other fees payable to any Issuing Bank pursuant to this paragraph shall bepayable within ten (10) days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payablefor the actual number of days elapsed (including the first day but excluding the last day). Participation fees and fronting fees in respect of Letters of Creditdenominated in Dollars shall be paid in Dollars, and participation fees and fronting fees in respect of Letters of Credit denominated in a Foreign Currencyshall be paid in such Foreign Currency.(c) The Company agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separatelyagreed upon between the Company and the Administrative Agent.(d) All fees payable hereunder shall be paid on the dates due, in Dollars (except as otherwise expressly provided in this Section) andimmediately available funds, to the Administrative Agent (or to the relevant Issuing Bank, in the case of fees payable to it) for distribution, in the case ofcommitment fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances.SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at theAlternate Base Rate plus the Applicable Rate.(b) The Loans comprising each Eurocurrency Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect forsuch Borrowing plus the Applicable Rate.(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by any Borrowerhereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as beforejudgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in thepreceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of thisSection.(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of theCommitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment orprepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principalamount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Loanprior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.44(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest (i) computed by reference to theAlternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in aleap year) and (ii) for Borrowings denominated in Pounds Sterling shall be computed on the basis of a year of 365 days, and in each case shall be payable forthe actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rateshall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.SECTION 2.14. Alternate Rate of Interest.(a) If at the time that the Administrative Agent shall seek to determine the LIBOR Screen Rate on the Quotation Day for any Interest Periodfor a Eurocurrency Borrowing, the LIBOR Screen Rate shall not be available for such Interest Period and/or for the applicable currency with respect to suchEurocurrency Borrowing for any reason, and the Administrative Agent shall reasonably determine that it is not possible to determine the Interpolated Rate(which conclusion shall be conclusive and binding absent manifest error), then the Reference Bank Rate shall be the LIBO Rate for such Interest Period forsuch Eurocurrency Borrowing; provided that if the Reference Bank Rate shall be less than zero, such rate shall be deemed to be zero for purposes of thisAgreement; provided, further, however, that if less than two (2) Reference Banks shall supply a rate to the Administrative Agent for purposes of determiningthe LIBO Rate for such Eurocurrency Borrowing, (i) if such Borrowing shall be requested in Dollars, then such Borrowing shall be made as an ABRBorrowing at the Alternate Base Rate and (ii) if such Borrowing shall be requested in any Foreign Currency, the LIBO Rate shall be equal to the ratedetermined by the Administrative Agent in its reasonable discretion after consultation with the Company and consented to in writing by the RequiredLenders (the “Alternative Rate”); provided, however, that until such time as the Alternative Rate shall be determined and so consented to by the RequiredLenders, Borrowings shall not be available in such Foreign Currency. It is hereby understood and agreed that, notwithstanding anything to the foregoing setforth in this Section 2.14(a), if at any time the conditions set forth in Section 2.14(c)(i) or (ii) are in effect, the provisions of this Section 2.14(a) shall nolonger be applicable for any purpose of determining any alternative rate of interest under this Agreement and Section 2.14(c) shall instead be applicable forall purposes of determining any alternative rate of interest under this Agreement.(b) If prior to the commencement of any Interest Period for a Eurocurrency Borrowing:(i) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate andreasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable (including because the LIBOR Screen Rate isnot available or published on a current basis), for the applicable currency and such Interest Period; or(ii) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for theapplicable currency and such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loansincluded in such Borrowing for the applicable currency and such Interest Period;45then the Administrative Agent shall give notice thereof to the applicable Borrower and the Lenders by telephone or telecopy as promptly as practicablethereafter and, until the Administrative Agent notifies the applicable Borrower and the Lenders that the circumstances giving rise to such notice no longerexist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurocurrency Borrowingshall be ineffective and, unless repaid (A) in the case of a Eurocurrency Borrowing denominated in Dollars, such Borrowing shall be made as an ABRBorrowing and (B) in the case of a Eurocurrency Borrowing denominated in a Foreign Currency, such Eurocurrency Borrowing shall be repaid on the last dayof the then current Interest Period applicable thereto and (ii) if any Borrowing Request requests a Eurocurrency Borrowing in Dollars, such Borrowing shallbe made as an ABR Borrowing (and if such Borrowing Request requests a Eurocurrency Revolving Borrowing denominated in a Foreign Currency, suchBorrowing Request shall be ineffective); provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the otherType of Borrowings shall be permitted.(c) Notwithstanding the foregoing, if at any time the Administrative Agent determines (which determination shall be conclusive absentmanifest error) that (i) the circumstances set forth in Section 2.14(b)(i) have arisen and such circumstances are unlikely to be temporary or (ii) thecircumstances set forth in Section 2.14(b)(i) have not arisen but (w) the supervisor for the administrator of the LIBOR Screen Rate has made a publicstatement that the administrator of the LIBOR Screen Rate is insolvent (and there is no successor administrator that will continue publication of the LIBORScreen Rate), (x) the administrator of the LIBOR Screen Rate has made a public statement identifying a specific date after which the LIBOR Screen Rate willpermanently or indefinitely cease to be published by it (and there is no successor administrator that will continue publication of the LIBOR Screen Rate), (y)the supervisor for the administrator of the LIBOR Screen Rate has made a public statement identifying a specific date after which the LIBOR Screen Rate willpermanently or indefinitely cease to be published or (z) the supervisor for the administrator of the LIBOR Screen Rate or a Governmental Authority havingjurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the LIBOR Screen Rate may no longer be usedfor determining interest rates for loans, then the Administrative Agent and the Company shall endeavor to establish an alternate rate of interest to the LIBORate that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at suchtime, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may beapplicable (but for the avoidance of doubt, such related changes shall not include a reduction of the Applicable Rate); provided that, if such alternate rate ofinterest as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement. Notwithstanding anything to thecontrary in Section 9.02, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as theAdministrative Agent shall not have received, within five (5) Business Days of the date notice of such alternate rate of interest is provided to the Lenders, awritten notice from the Required Lenders stating that such Required Lenders object to such amendment. Until an alternate rate of interest shall be determinedin accordance with this Section 2.14(c) (but, in the case of the circumstances described in clause (ii) of the first sentence of this Section 2.14(c), only to theextent the LIBOR Screen Rate for the applicable currency and such Interest Period is not available or published at such time on a current basis), (x) anyInterest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurocurrency Borrowing in the applicablecurrency or for the applicable Interest Period, as the case may be, shall be ineffective, (y) if any Borrowing Request requests a Eurocurrency Borrowing inDollars, such Borrowing shall be made as an ABR Borrowing and (z) if any Borrowing Request requests a Eurocurrency Borrowing in a Foreign Currency,then such request shall be ineffective.46SECTION 2.15. Increased Costs. (a) If any Change in Law shall:(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loanrequirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (exceptany such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank;(ii) impose on any Lender or any Issuing Bank or the London interbank market any other condition, cost or expense affecting thisAgreement or Loans made by such Lender or any Letter of Credit or participation therein; or(iii) subject the Administrative Agent, any Lender or any Issuing Bank to any Taxes (other than (A) Indemnified Taxes, (B) ExcludedTaxes and (C) Other Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilitiesor capital attributable thereto;and the result of any of the foregoing shall be to increase the cost to the Administrative Agent or such Lender of making, continuing, converting into ormaintaining any Loan or of maintaining its obligation to make any such Loan or to increase the cost to the Administrative Agent, such Lender or suchIssuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by the AdministrativeAgent, such Lender or such Issuing Bank hereunder, whether of principal, interest or otherwise, then the applicable Borrower will pay to the AdministrativeAgent, such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate the Administrative Agent, such Lenderor such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.(b) If any Lender or any Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have theeffect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holdingcompany, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Creditissued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company couldhave achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or suchIssuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the applicable Borrower will pay to such Lender orsuch Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or suchIssuing Bank’s holding company for any such reduction suffered.(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such IssuingBank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Company and shall beconclusive absent manifest error. The Company shall pay, or cause the other Borrowers to pay, such Lender or such Issuing Bank, as the case may be, theamount shown as due on any such certificate within 10 days after receipt thereof.(d) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall not constitute awaiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that the Company shall not be required to compensate a Lenderor an Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or suchIssuing Bank, as the case may be, notifies the Company of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or suchIssuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions isretroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.47SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any principal of any Eurocurrency Loan other than on the lastday of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepayment pursuant to Section 2.11), (b) theconversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepayany Eurocurrency Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section2.11(a) and is revoked in accordance therewith) or (d) the assignment of any Eurocurrency Loan other than on the last day of the Interest Period applicablethereto as a result of a request by the Company pursuant to Section 2.19 or 9.02(e), then, in any such event, the Borrowers shall compensate each Lender forthe loss, cost and expense attributable to such event. Such loss, cost or expense to any Lender shall be deemed to include an amount determined by suchLender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, atthe Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current InterestPeriod therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) theamount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at thecommencement of such period, for deposits in the relevant currency of a comparable amount and period from other banks in the eurocurrency market. Acertificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to theapplicable Borrower and shall be conclusive absent manifest error. The applicable Borrower shall pay such Lender the amount shown as due on any suchcertificate within thirty (30) days after receipt thereof.SECTION 2.17. Taxes. (a) Any and all payments by or on account of any obligation of each Borrower hereunder or any other LoanDocuments shall be made free and clear of and without deduction for any Taxes, except as required by applicable law. If any applicable law (as determined inthe good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholdingagent, then the applicable withholding agent shall (i) make such deductions and (ii) pay the full amount deducted to the relevant Governmental Authority inaccordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Borrower shall be increased as necessary sothat after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, relevantLender receives an amount equal to the sum it would have received had no such deductions been made.(b) In addition, each Borrower shall pay any Other Taxes related to such Borrower and imposed on or incurred by the Administrative Agentor a Lender to the relevant Governmental Authority in accordance with applicable law.(c) The relevant Borrower shall indemnify the Administrative Agent and each Lender, within ten (10) days after written demand therefor,for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender on or with respect to any payment by or onaccount of any obligation of such Borrower hereunder or any other Loan Documents (including Indemnified Taxes or Other Taxes imposed or asserted on orattributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether ornot such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to theamount of such payment or liability delivered to the Company by a Lender or by the Administrative Agent on its own behalf or on behalf of a Lender, shallbe conclusive absent manifest error.48(d) As soon as practicable after any payment of Taxes by any Borrower to a Governmental Authority, such Borrower shall deliver to theAdministrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the returnreporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.(e) (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any LoanDocument shall deliver to the Borrowers and the Administrative Agent, at the time or times reasonably requested by the Borrowers or the AdministrativeAgent, such properly completed and executed documentation reasonably requested by the Borrowers or the Administrative Agent as will permit suchpayments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrowers or theAdministrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrowers or the AdministrativeAgent as will enable the Borrowers or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or informationreporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of suchdocumentation (other than such documentation set forth in Section 2.17(e)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonablejudgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudicethe legal or commercial position of such Lender.(ii) Without limiting the generality of the foregoing:(A) any Lender that is a U.S. Person shall deliver to such Borrower and the Administrative Agent on or prior to the date onwhich such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borroweror the Administrative Agent), an executed copy of IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backupwithholding tax;(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to such Borrower and the AdministrativeAgent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes aLender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower or the Administrative Agent),whichever of the following is applicable:(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) withrespect to payments of interest under any Loan Document, an executed copy of IRS Form W-8BEN or IRS Form W-8BEN-Eestablishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treatyand (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-Eestablishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income”article of such tax treaty;49(2) in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, anexecuted copy of IRS Form W-8ECI;(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code,(x) a certificate substantially in the form of Exhibit K-1 to the effect that such Foreign Lender is not a “bank” within the meaningof Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of such Borrower within the meaning of Section 881(c)(3)(B) of theCode, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”)and (y) an executed copy of IRS Form W-8BEN or IRS Form W-8BEN-E; or(4) to the extent a Foreign Lender is not the beneficial owner, an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI,IRS Form W-8BEN or IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-2 or ExhibitK-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the ForeignLender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interestexemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-4 on behalfof each such direct and indirect partner;(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to such Borrower and the AdministrativeAgent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes aLender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower or the Administrative Agent),executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federalwithholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit suchBorrower or the Administrative Agent to determine the withholding or deduction required to be made; and(D) if a payment made to a Lender under any Loan Document would be subject to U.S. Federal withholding Tax imposed byFATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to such Borrower and the Administrative Agent at the time ortimes prescribed by law and at such time or times reasonably requested by such Borrower or the Administrative Agent such documentationprescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentationreasonably requested by such Borrower or the Administrative Agent as may be necessary for such Borrower and the Administrative Agent tocomply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCAor to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include anyamendments made to FATCA after the date of this Agreement.50Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall updatesuch form or certification or promptly notify the Company and the Administrative Agent in writing of its legal inability to do so.(f) If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as towhich it has been indemnified by the Borrowers or with respect to which a Borrower has paid additional amounts pursuant to this Section 2.17, it shall payover such refund to such Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by such Borrower under this Section 2.17with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of the Administrative Agent or suchLender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that such Borrower,upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to such Borrower (plus any penalties, interest or othercharges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lenderis required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (f), in no event will theAdministrative Agent or a Lender be required to pay any amount to a Borrower pursuant to this paragraph (f) the payment of which would place theAdministrative Agent or such Lender, as applicable, in a less favorable net after-Tax position than it would have been in if the Tax subject to indemnificationand giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respectto such Tax had never been paid. This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (orany other information relating to its taxes which it deems confidential) to any Borrower or any other Person.(g) Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any IndemnifiedTaxes or Other Taxes attributable to such Lender (but only to the extent that the Borrowers have not already indemnified the Administrative Agent for suchIndemnified Taxes or Other Taxes and without limiting the obligation of the Borrowers to do so), (ii) any Taxes attributable to such Lender’s failure tocomply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender,in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom orwith respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to theamount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender herebyauthorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwisepayable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (g).(h) For purposes of determining withholding Taxes imposed under FATCA, the Loan Parties and the Administrative Agent shall treat (andthe Lenders hereby authorize the Administrative Agent to treat) this Agreement and the Loans as not qualifying as “grandfathered obligations” within themeaning of Treasury Regulation Section 1.1471-2(b)(2)(i).(i) For purposes of this Section 2.17, the term “Lender” includes any Issuing Bank.51SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.(a) Each Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LCDisbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to (i) in the case of payments denominated in Dollars, 12:00 noon,New York City time and (ii) in the case of payments denominated in a Foreign Currency, 12:00 noon, Local Time, in the city of the Administrative Agent’sEurocurrency Payment Office for such currency, in each case on the date when due, in immediately available funds, without set-off, recoupment orcounterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on thenext succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made (i) in the same currency in which the applicableCredit Event was made (or where such currency has been converted to euro, in euro) and (ii) to the Administrative Agent at its offices at 10 South DearbornStreet, Chicago, Illinois 60603 or, in the case of a Credit Event denominated in a Foreign Currency, the Administrative Agent’s Eurocurrency Payment Officefor such currency, except payments to be made directly to an Issuing Bank or Swingline Lender as expressly provided herein and except that paymentspursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any suchpayments denominated in the same currency received by it for the account of any other Person to the appropriate recipient promptly following receiptthereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding BusinessDay, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. Notwithstanding the foregoingprovisions of this Section, if, after the making of any Credit Event in any Foreign Currency, currency control or exchange regulations are imposed in thecountry which issues such currency with the result that the type of currency in which the Credit Event was made (the “Original Currency”) no longer exists orany Borrower is not able to make payment to the Administrative Agent for the account of the Lenders in such Original Currency, then all payments to bemade by such Borrower hereunder in such currency shall instead be made when due in Dollars in an amount equal to the Dollar Amount (as of the date ofrepayment) of such payment due, it being the intention of the parties hereto that the Borrowers take all risks of the imposition of any such currency control orexchange regulations.(b) Subject at all times to the terms and conditions of the final paragraph of Article VII, if at any time insufficient funds are received by andavailable to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such fundsshall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amountsof interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratablyamong the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of orinterest on any of its Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion ofthe aggregate amount of its Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received byany other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations inLC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lendersratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements andSwingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, suchparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shallnot be construed to apply to any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or any paymentobtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements and SwinglineLoans to any assignee or participant, other than to the Company or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shallapply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring aparticipation pursuant to the foregoing arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to such participationas fully as if such Lender were a direct creditor of such Borrower in the amount of such participation.52(d) Unless the Administrative Agent shall have received notice from the relevant Borrower prior to the date on which any payment is due tothe Administrative Agent for the account of the Lenders or the Issuing Banks hereunder that such Borrower will not make such payment, the AdministrativeAgent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute tothe Lenders or the Issuing Banks, as the case may be, the amount due. In such event, if such Borrower has not in fact made such payment, then each of theLenders or each of the Issuing Banks, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount sodistributed to such Lender or such Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to butexcluding the date of payment to the Administrative Agent, at the greater of the NYFRB Rate and a rate determined by the Administrative Agent inaccordance with banking industry rules on interbank compensation (including without limitation the Overnight Foreign Currency Rate in the case of Loansdenominated in a Foreign Currency).(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b), 2.18(d) or9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received bythe Administrative Agent for the account of such Lender and for the benefit of the Administrative Agent, the Swingline Lender or the Issuing Banks to satisfysuch Lender’s obligations to it under such Section until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregatedaccount as cash collateral for, and application to, any future funding obligations of such Lender under any such Section; in the case of each of clauses (i) and(ii) above, in any order as determined by the Administrative Agent in its discretion.SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if anyBorrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lenderpursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or toassign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment(i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender toany unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Company hereby agrees to pay all reasonable costs andexpenses incurred by any Lender in connection with any such designation or assignment.(b) If (i) any Lender requests compensation under Section 2.15, (ii) any Borrower is required to pay any Indemnified Taxes or additionalamounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or (iii) any Lender becomes a DefaultingLender, then the Company may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign anddelegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights (other than its existing rightsto payments pursuant to Sections 2.15 or 2.17) and obligations under the Loan Documents to an assignee that shall assume such obligations (which assigneemay be another Lender, if a Lender accepts such assignment); provided that (i) the Company shall have received the prior written consent of theAdministrative Agent (and if a Commitment is being assigned, the Issuing Banks and the Swingline Lender), which consent shall not unreasonably bewithheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursementsand Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of suchoutstanding principal and accrued interest and fees) or the Company (in the case of all other amounts) and (iii) in the case of any such assignment resultingfrom a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction insuch compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by suchLender or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply. Each party hereto agrees that (a) anassignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Company, the AdministrativeAgent and the assignee (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an ApprovedElectronic Platform as to which the Administrative Agent and such parties are participants), and (b) the Lender required to make such assignment need not bea party thereto in order for such assignment to be effective and shall be deemed to have consented to and be bound by the terms thereof; provided that,following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidencesuch assignment as reasonably requested by the applicable Lender, provided that any such documents shall be without recourse to or warranty by the partiesthereto.53SECTION 2.20. Expansion Option. The Company may from time to time elect to increase the Commitments or enter into one or moretranches of term loans (each an “Incremental Term Loan”), in each case, in minimum increments of $5,000,000 so long as, after giving effect thereto, theaggregate amount of such increases and all such Incremental Term Loans does not exceed $50,000,000. The Company may arrange for any such increase ortranche to be provided by one or more Lenders (each Lender so agreeing to an increase in its Commitment or to participate in such Incremental Term Loans,an “Increasing Lender”), or by one or more new banks, financial institutions or other entities (each such new bank, financial institution or other entity, an“Augmenting Lender”; provided that no Ineligible Institution may be an Augmenting Lender), to increase their existing Commitments, or to participate insuch Incremental Term Loans, or extend Commitments, as the case may be; provided that (i) each Augmenting Lender, shall be subject to the approval of theCompany and the Administrative Agent and (ii) (x) in the case of an Increasing Lender, the Company and such Increasing Lender execute an agreementsubstantially in the form of Exhibit C hereto, and (y) in the case of an Augmenting Lender, the Company and such Augmenting Lender execute an agreementsubstantially in the form of Exhibit D hereto. No consent of any Lender (other than the Lenders participating in the increase or any Incremental Term Loan)shall be required for any increase in Commitments and/or Incremental Term Loan pursuant to this Section 2.20. Increases and new Commitments andIncremental Term Loans created pursuant to this Section 2.20 shall become effective on the date agreed by the Company, the Administrative Agent and therelevant Increasing Lenders or Augmenting Lenders, and the Administrative Agent shall notify each Lender thereof. Notwithstanding the foregoing, noincrease in the Commitments (or in the Commitment of any Lender) or tranche of Incremental Term Loans shall become effective under this paragraph unless,(i) on the proposed date of the effectiveness of such increase or Incremental Term Loans, (A) the conditions set forth in paragraphs (a) and (b) of Section 4.02shall be satisfied or waived by the Required Lenders and the Administrative Agent shall have received a certificate to that effect dated such date andexecuted by a Financial Officer of the Company and (B) the Company shall be in compliance (on a Pro Forma Basis reasonably acceptable to theAdministrative Agent) with the covenants contained in Section 6.11 and (ii) the Administrative Agent shall have received documents and opinionsconsistent with those delivered on the Effective Date as to the organizational power and authority of the Borrowers to borrow hereunder after giving effect tosuch increase or Incremental Term Loan. On the effective date of any increase in the Commitments or any Incremental Term Loans being made, (i) eachrelevant Increasing Lender and Augmenting Lender shall make available to the Administrative Agent such amounts in immediately available funds as theAdministrative Agent shall determine, for the benefit of the other Lenders, as being required in order to cause, after giving effect to such increase and the useof such amounts to make payments to such other Lenders, each Lender’s portion of the outstanding Revolving Loans of all the Lenders to equal itsApplicable Percentage of such outstanding Revolving Loans, and (ii) except in the case of any Incremental Term Loans, the Borrowers shall be deemed tohave repaid and reborrowed all outstanding Revolving Loans as of the date of any increase in the Commitments (with such reborrowing to consist of theTypes of Revolving Loans, with related Interest Periods if applicable, specified in a notice delivered by the applicable Borrower, or the Company on behalfof the applicable Borrower, in accordance with the requirements of Section 2.03). The deemed payments made pursuant to clause (ii) of the immediatelypreceding sentence shall be accompanied by payment of all accrued interest on the amount prepaid and, in respect of each Eurocurrency Loan, shall besubject to indemnification by the Borrowers pursuant to the provisions of Section 2.16 if the deemed payment occurs other than on the last day of the relatedInterest Periods. The Incremental Term Loans (a) shall rank pari passu in right of payment with the Revolving Loans, (b) shall not mature earlier than theMaturity Date (but may have amortization prior to such date) and (c) shall be treated substantially the same as (and in any event no more favorably than) theRevolving Loans; provided that (i) the terms and conditions applicable to any tranche of Incremental Term Loans maturing after the Maturity Date mayprovide for material additional or different financial or other covenants or prepayment requirements applicable only during periods after the Maturity Dateand (ii) the Incremental Term Loans may be priced differently than the Revolving Loans. Incremental Term Loans may be made hereunder pursuant to anamendment or restatement (an “Incremental Term Loan Amendment”) of this Agreement and, as appropriate, the other Loan Documents, executed by theBorrowers, each Increasing Lender participating in such tranche, each Augmenting Lender participating in such tranche, if any, and the AdministrativeAgent. The Incremental Term Loan Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the otherLoan Documents as may be necessary or appropriate in the reasonable opinion of the Administrative Agent, to effect the provisions of this Section 2.20. Nothing contained in this Section 2.20 shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitmenthereunder, or provide Incremental Term Loans, at any time.54SECTION 2.21. Market Disruption. Notwithstanding the satisfaction of all conditions referred to in Article II and Article IV with respect toany Credit Event to be effected in any Foreign Currency, if (i) there shall occur on or prior to the date of such Credit Event any change in national orinternational financial, political or economic conditions or currency exchange rates or exchange controls which would in the reasonable opinion of theAdministrative Agent, the Issuing Banks (if such Credit Event is a Letter of Credit) or the Required Lenders make it impracticable for the EurocurrencyBorrowings or Letters of Credit comprising such Credit Event to be denominated in the Agreed Currency specified by the applicable Borrower or (ii) anEquivalent Amount of such currency is not readily calculable, then the Administrative Agent shall forthwith give notice thereof to such Borrower, theLenders and, if such Credit Event is a Letter of Credit, the Issuing Banks, and such Credit Events shall not be denominated in such Agreed Currency but shall,except as otherwise set forth in Section 2.07, be made on the date of such Credit Event in Dollars, (a) if such Credit Event is a Borrowing, in an aggregateprincipal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Credit Event Request or Interest Election Request, asthe case may be, as ABR Loans, unless such Borrower notifies the Administrative Agent at least one Business Day before such date that (i) it elects not toborrow on such date or (ii) it elects to borrow on such date in a different Agreed Currency, as the case may be, in which the denomination of such Loanswould in the reasonable opinion of the Administrative Agent and the Required Lenders be practicable and in an aggregate principal amount equal to theDollar Amount of the aggregate principal amount specified in the related Credit Event Request or Interest Election Request, as the case may be or (b) if suchCredit Event is a Letter of Credit, in a face amount equal to the Dollar Amount of the face amount specified in the related request or application for suchLetter of Credit, unless such Borrower notifies the Administrative Agent at least one (1) Business Day before such date that (i) it elects not to request theissuance of such Letter of Credit on such date or (ii) it elects to have such Letter of Credit issued on such date in a different Agreed Currency, as the case maybe, in which the denomination of such Letter of Credit would in the reasonable opinion of the Issuing Banks, the Administrative Agent and the RequiredLenders be practicable and in face amount equal to the Dollar Amount of the face amount specified in the related request or application for such Letter ofCredit, as the case may be.SECTION 2.22. Judgment Currency. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from anyBorrower hereunder in the currency expressed to be payable herein (the “specified currency”) into another currency, the parties hereto agree, to the fullestextent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the AdministrativeAgent could purchase the specified currency with such other currency at the Administrative Agent’s main New York City office on the Business Daypreceding that on which final, non‑appealable judgment is given. The obligations of each Borrower in respect of any sum due to any Lender or theAdministrative Agent hereunder shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that onthe Business Day following receipt by such Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currencysuch Lender or the Administrative Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currencywith such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Administrative Agent,as the case may be, in the specified currency, each Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation andnotwithstanding any such judgment, to indemnify such Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of thespecified currency so purchased exceeds (a) the sum originally due to any Lender or the Administrative Agent, as the case may be, in the specified currencyand (b) any amounts shared with other Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under Section 2.18, suchLender or the Administrative Agent, as the case may be, agrees to remit such excess to such Borrower.SECTION 2.23. Designation of Foreign Subsidiary Borrowers. The Company may at any time and from time to time designate any EligibleForeign Subsidiary as a Foreign Subsidiary Borrower by delivery to the Administrative Agent of a Borrowing Subsidiary Agreement executed by suchSubsidiary and the Company and the satisfaction of the other conditions precedent set forth in Section 4.03, and upon such delivery and satisfaction suchSubsidiary shall for all purposes of this Agreement be a Foreign Subsidiary Borrower and a party to this Agreement until the Company shall have executedand delivered to the Administrative Agent a Borrowing Subsidiary Termination with respect to such Subsidiary, whereupon such Subsidiary shall cease to bea Foreign Subsidiary Borrower and a party to this Agreement. Notwithstanding the preceding sentence, no Borrowing Subsidiary Termination will becomeeffective as to any Foreign Subsidiary Borrower at a time when any principal of or interest on any Loan to such Borrower shall be outstanding hereunder,provided that such Borrowing Subsidiary Termination shall be effective to terminate the right of such Foreign Subsidiary Borrower to make furtherBorrowings under this Agreement. As soon as practicable upon receipt of a Borrowing Subsidiary Agreement, the Administrative Agent shall furnish a copythereof to each Lender.55SECTION 2.24. Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a DefaultingLender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:(a) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.12(a);(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether all Lenders orthe Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant toSection 9.02); provided that, except as otherwise provided in Section 9.02, this clause (b) shall not apply to the vote of a Defaulting Lender in the case of anamendment, waiver or other modification requiring the consent of such Lender or each Lender directly affected thereby;(c) if any Swingline Exposure or LC Exposure exists at the time such Lender becomes a Defaulting Lender then:(i) all or any part of the Swingline Exposure and LC Exposure of such Defaulting Lender (other than the portion of such SwinglineExposure referred to in clause (b) of the definition of such term) shall be reallocated among the non-Defaulting Lenders in accordance with theirrespective Applicable Percentages but only to the extent (A) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus suchDefaulting Lender’s Swingline Exposure and LC Exposure does not exceed the total of all non-Defaulting Lenders’ Commitments, (B) each non-Defaulting Lender’s Revolving Credit Exposure does not exceed such non-Defaulting Lender’s Commitment and (C) no Event of Default hasoccurred and is continuing;(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Company shall within one (1) BusinessDay following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and (y) second, cash collateralize for the benefit of theIssuing Banks only the Company’s obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partialreallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.06(j) for so long as such LC Exposure isoutstanding;(iii) if the Company cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii) above, the Companyshall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect to such Defaulting Lender’s LC Exposureduring the period such Defaulting Lender’s LC Exposure is cash collateralized;(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenderspursuant to Section 2.12(a) and Section 2.12(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralized pursuant to clause (i) or (ii)above, then, without prejudice to any rights or remedies of the Issuing Banks or any other Lender hereunder, all letter of credit fees payable underSection 2.12(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Banks until and to the extent that such LCExposure is reallocated and/or cash collateralized; and(d) so long as such Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and no IssuingBank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s thenoutstanding LC Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Companyin accordance with Section 2.24(c), and participating interests in any such newly made Swingline Loan or any newly issued or increased Letter of Credit shallbe allocated among non-Defaulting Lenders in a manner consistent with Section 2.24(c)(i) (and such Defaulting Lender shall not participate therein).56If (i) a Bankruptcy Event or a Bail-In Action with respect to a Lender Parent shall occur following the date hereof and for so long as suchevent shall continue or (ii) the Swingline Lender or any Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations underone or more other agreements in which such Lender commits to extend credit, the Swingline Lender shall not be required to fund any Swingline Loan andsuch Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless the Swingline Lender or such Issuing Bank, as the case maybe, shall have entered into arrangements with the Company or such Lender, satisfactory to the Swingline Lender or such Issuing Bank, as the case may be, todefease any risk to it in respect of such Lender hereunder.In the event that the Administrative Agent, the Company, the Swingline Lender and the Issuing Banks each agrees that a Defaulting Lenderhas adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and LC Exposure of the Lenders shallbe readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders(other than Swingline Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance withits Applicable Percentage.ARTICLE IIIRepresentations and WarrantiesEach Borrower represents and warrants to the Lenders that:SECTION 3.01. Organization; Powers; Subsidiaries. Each of the Company and its Subsidiaries is duly organized, validly existing and ingood standing (to the extent such concept is applicable in the relevant jurisdiction) under the laws of the jurisdiction of its organization, has all requisitepower and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonablybe expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing (to the extent such concept is applicable) in, everyjurisdiction where such qualification is required. Schedule 3.01 hereto (as supplemented from time to time) identifies each Subsidiary, if such Subsidiary is aMaterial Subsidiary, the jurisdiction of its incorporation or organization, as the case may be, the percentage of issued and outstanding shares of each class ofits capital stock or other equity interests owned by the Company and the other Subsidiaries and, if such percentage is not 100% (excluding directors’qualifying shares as required by law), a description of each class issued and outstanding. All of the outstanding shares of capital stock and other equityinterests of each Subsidiary are validly issued and outstanding and fully paid and nonassessable and all such shares and other equity interests indicated onSchedule 3.01 (as supplemented from time to time but, in the case of any Subsidiary, as permitted by Section 6.09) as owned by the Company or anotherSubsidiary are owned, beneficially and of record, by the Company or any Subsidiary free and clear of all Liens, other than Liens created under the LoanDocuments. Except as set forth in Schedule 3.01 (as supplemented from time to time but, in the case of any Subsidiary, as permitted by Section 6.09), thereare no outstanding commitments or other obligations of the Company or any Subsidiary to issue, and no options, warrants or other rights of any Person toacquire, any shares of any class of capital stock or other equity interests of the Company or any Subsidiary.57SECTION 3.02. Authorization; Enforceability. The Transactions are within each Loan Party’s organizational powers and have been dulyauthorized by all necessary organizational actions and, if required, shareholder action. The Loan Documents to which each Loan Party is a party have beenduly executed and delivered by such Loan Party and constitute a legal, valid and binding obligation of such Loan Party, enforceable in accordance with theirterms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to generalprinciples of equity, regardless of whether considered in a proceeding in equity or at law.SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration orfiling with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, and except wherethe failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, (b) will not violate anyapplicable law or regulation or the charter, by-laws or other organizational documents of the Company or any of its Subsidiaries or any order of anyGovernmental Authority, except for violations, individually or in the aggregate, which could not reasonably be expected to result in a Material AdverseEffect, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Company or any of its Subsidiaries or itsassets, or give rise to a right thereunder to require any payment to be made by the Company or any of its Subsidiaries, except for violations or defaults,individually or in the aggregate, which could not reasonably be expected to result in a Material Adverse Effect, and (d) will not result in the creation orimposition of any Lien on any asset of the Company or any of its Subsidiaries, other than Liens created under the Loan Documents.SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Company has heretofore furnished to the Lenders itsconsolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended October 29, 2017 reported onby Deloitte & Touche LLP, independent public accountants and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended January 28, 2018and April 29, 2018, in each case certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial positionand results of operations and cash flows of the Company and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP,subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.(b) Since October 29, 2017, there has been no material adverse change in the business, assets, operations or condition, financial orotherwise, of the Company and its Subsidiaries, taken as a whole.SECTION 3.05. Properties (a) Each of the Company and its Subsidiaries has good title to, or valid leasehold interests in, all its real andpersonal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conductedor to utilize such properties for their intended purposes. There are no Liens on any of the real or personal properties of the Company or any Subsidiary exceptfor Liens permitted by Section 6.02.(b) Each of the Company and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and otherintellectual property material to its business, and the use thereof by the Company and its Subsidiaries does not infringe upon the rights of any other Person,except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions, suits, proceedings or investigations by or before anyarbitrator or Governmental Authority pending against or, to the knowledge of any Borrower, threatened against or affecting the Company or any of itsSubsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected,individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve this Agreement or the Transactions. There are no laborcontroversies pending against or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries (i) which couldreasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, or (ii) that involve this Agreement or the Transactions.58(b) Except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a MaterialAdverse Effect, neither the Company nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply withany permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received noticeof any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.(c) Neither the Company nor any Subsidiary is party or subject to any law, regulation, rule or order, or any obligation under any agreementor instrument, that has a Material Adverse Effect.SECTION 3.07. Compliance with Laws and Agreements. Each of the Company and its Subsidiaries is in compliance with all laws,regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it orits property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.SECTION 3.08. Investment Company Status. Neither the Company nor any of its Subsidiaries is an “investment company” as defined in,or subject to regulation under, the Investment Company Act of 1940.SECTION 3.09. Taxes Each of the Company and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports requiredto have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith byappropriate proceedings and for which the Company or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent thatthe failure to do so could not reasonably be expected to result in a Material Adverse Effect.SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other suchERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.SECTION 3.11. Disclosure. The Company has disclosed to the Lenders all agreements, instruments and corporate or other restrictions towhich it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result ina Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Company or anySubsidiary to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified orsupplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make thestatements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financialinformation, the Borrowers represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. Asof the Effective Date, to the knowledge of the Company, the information included in the Beneficial Ownership Certification provided on or prior to theEffective Date to any Lender in connection with this Agreement is true and correct in all material respects.59SECTION 3.12. Federal Reserve Regulations. No part of the proceeds of any Loan have been used or will be used, whether directly orindirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.SECTION 3.13. Liens. There are no Liens on any of the real or personal properties of the Company or any Subsidiary except for Lienspermitted by Section 6.02.SECTION 3.14. No Default Each Borrower is in full compliance with this Agreement and no Default or Event of Default has occurred andis continuing.SECTION 3.15. Security Interest in Collateral. The provisions of this Agreement and the other Loan Documents create legal and validLiens on all the Collateral covered thereby in favor of the Collateral Agent, for the benefit of the Holders of Secured Obligations, and (i) when all appropriatefilings, recordings, registrations, stampings or notifications are made and (ii) upon the taking of possession or control by the Collateral Agent of suchCollateral with respect to which a security interest may be perfected only by possession or control, such Liens shall constitute perfected and continuing Lienson the Collateral, securing the Secured Obligations, and having priority over all other Liens on the Collateral except in the case of (a) PermittedEncumbrances, to the extent any such Permitted Encumbrances would have priority over the Liens in favor of the Collateral Agent pursuant to any applicablelaw and (b) Liens perfected only by possession (including possession of any certificate of title) to the extent the Collateral Agent has not obtained or does notmaintain possession of such Collateral.SECTION 3.16. Anti-Corruption Laws and Sanctions. The Company has implemented and maintains in effect policies and proceduresdesigned to ensure compliance in all material respects by the Company, its Subsidiaries and their respective directors, officers, employees and agents withAnti-Corruption Laws and applicable Sanctions, and the Company, its Subsidiaries and their respective officers and directors and to the knowledge of theCompany its employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) theCompany, any Subsidiary or to the knowledge of the Company or such Subsidiary any of their respective directors, officers or employees, or (b) to theknowledge of the Company, any agent of the Company or any Subsidiary that will act in any capacity in connection with or benefit from the credit facilityestablished hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other Transactions will violate Anti-Corruption Laws orapplicable Sanctions.SECTION 3.17. EEA Financial Institutions. No Loan Party is an EEA Financial Institution.ARTICLE IVConditionsSECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereundershall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):(a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed onbehalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy or electronic transmission of asigned signature page of this Agreement) that such party has signed a counterpart of this Agreement.60(b) The Administrative Agent shall have received favorable written opinions (addressed to the Administrative Agent and the Lenders anddated the Effective Date) of (i) Richelle Burr, General Counsel of the Company, and (ii) Withers Bergman LLP, outside counsel for the initial LoanParties, in each case substantially in the form of Exhibit B, and covering such other matters relating to the Loan Parties, the Loan Documents or theTransactions as the Administrative Agent shall reasonably request. The Company hereby requests such counsel to deliver such opinion.(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel mayreasonably request relating to the organization, existence and good standing of the initial Loan Parties, the authorization of the Transactions andany other legal matters relating to such Loan Parties, the Loan Documents or the Transactions, all in form and substance satisfactory to theAdministrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E.(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or aFinancial Officer of the Company, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02.(e) (i) The Administrative Agent shall have received, at least five (5) days prior to the Effective Date, all documentation and otherinformation regarding the Borrower requested in connection with applicable “know your customer” and anti-money laundering rules andregulations, including the Patriot Act, to the extent requested in writing of the Company at least ten (10) days prior to the Effective Date and (ii) tothe extent the Company qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least five (5) days prior to the EffectiveDate, any Lender that has requested, in a written notice to the Company at least ten (10) days prior to the Effective Date, a Beneficial OwnershipCertification in relation to the Company shall have received such Beneficial Ownership Certification (provided that, upon the execution anddelivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (e) shall be deemed to be satisfied).(f) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, tothe extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Company hereunder.The Administrative Agent shall notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding.SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the IssuingBanks to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:(a) The representations and warranties of the Borrowers set forth in this Agreement shall be true and correct on and as of the date of suchBorrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable.(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter ofCredit, as applicable, no Default shall have occurred and be continuing.61(c) No law or regulation shall prohibit, and no order, judgment or decree of any Governmental Authority shall enjoin, prohibit or restrain,any Lender from making the requested Loan or any Issuing Bank or any Lender from issuing, renewing, extending or increasing the face amount ofor participating in the Letter of Credit requested to be issued, renewed, extended or increased.Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by theBorrowers on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.SECTION 4.03. Designation of a Foreign Subsidiary Borrower. The designation of a Foreign Subsidiary Borrower pursuant to Section 2.23is subject to the condition precedent that the Company or such proposed Foreign Subsidiary Borrower shall have furnished or caused to be furnished to theAdministrative Agent:(a) Copies, certified by the Secretary or Assistant Secretary of such Subsidiary, of its Board of Directors’ resolutions (and resolutions ofother bodies, if any are deemed necessary by counsel for the Administrative Agent) approving the Borrowing Subsidiary Agreement and any otherLoan Documents to which such Subsidiary is becoming a party and such documents and certificates as the Administrative Agent or its counsel mayreasonably request relating to the organization, existence and, if applicable, good standing of such Subsidiary;(b) An incumbency certificate, executed by the Secretary or Assistant Secretary of such Subsidiary, which shall identify by name and titleand bear the signature of the officers of such Subsidiary authorized to request Borrowings hereunder and sign the Borrowing Subsidiary Agreementand the other Loan Documents to which such Subsidiary is becoming a party, upon which certificate the Administrative Agent and the Lenders shallbe entitled to rely until informed of any change in writing by the Company or such Subsidiary;(c) Opinions of counsel to such Subsidiary, in form and substance reasonably satisfactory to the Administrative Agent and its counsel, withrespect to the laws of its jurisdiction of organization and such other matters as are reasonably requested by counsel to the Administrative Agent andaddressed to the Administrative Agent and the Lenders;(d) Any promissory notes requested by any Lender, and any other instruments and documents reasonably requested by the AdministrativeAgent;(e) Any documentation and other information that is reasonably requested by the Administrative Agent or any of the Lenders and that isrequired by regulatory authorities under applicable “know-your-customer” and Anti-Money Laundering Laws, including the Patriot Act and theBeneficial Ownership Regulation.62ARTICLE VAffirmative CovenantsUntil the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shallhave been paid in full and all Letters of Credit shall have expired or terminated, in each case, without any pending draw, and all LC Disbursements shall havebeen reimbursed, the Company covenants and agrees with the Lenders that:SECTION 5.01. Financial Statements and Other Information. The Company will furnish to the Administrative Agent for distribution toeach Lender:(a) as soon as the same is available but in any event within ninety (90) days after the end of each fiscal year of the Company, its auditedconsolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forthin each case in comparative form the figures for the previous fiscal year, all reported on by Deloitte & Touche LLP or other independent publicaccountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification orexception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financialcondition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistentlyapplied;(b) as soon as the same is available but in any event within forty five (45) days after the end of each of the first three fiscal quarters of eachfiscal year of the Company, its consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end ofand for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for thecorresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its FinancialOfficers as presenting fairly in all material respects the financial condition and results of operations of the Company and its consolidatedSubsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence offootnotes;(c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Company(i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to betaken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.11 and (iii) stating whetherany change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, ifany such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;(d) within 75 days of the commencement of each fiscal year of the Company, projected consolidated balance sheets, income statements andcash flow statements of the Company and its consolidated Subsidiaries for such fiscal year;(e) promptly after the same become publicly available, copies of all 10-Ks, 10-Qs and 8-Ks filed by the Company or any Subsidiary withthe SEC, or any Governmental Authority succeeding to any or all of the functions of the SEC, or with any national securities exchange, ordistributed by the Company to its shareholders generally, as the case may be; and(f) promptly following any request therefor, (x) such other information regarding the operations, business affairs and financial condition ofthe Company or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably requestand (y) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable“know your customer” and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation.63Documents required to be delivered pursuant to clauses (a), (b) or (e) of this Section 5.01 may be delivered electronically and if so delivered, shall be deemedto have been delivered on the date (i) on which the Company posts such documents, or provides a link thereto on the Company’s website on the Internet atthe website address ; (ii) on which such documents are posted on the Company’s behalf on IntraLinks™ or a substantially similarelectronic platform, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsoredby the Administrative Agent); or (iii) on which such documents are filed for public availability on the SEC’s Electronic Data Gathering and Retrieval System;provided that the Company shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents andprovide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein,in every instance the Company shall be required to provide paper or electronic copies of the compliance certificates required by clause (c) of this Section5.01 to the Administrative Agent.SECTION 5.02. Notices of Material Events. The Company will furnish to the Administrative Agent prompt written notice of the following:(a) the occurrence of any Default;(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affectingthe Company or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably beexpected to result in a Material Adverse Effect; and(d) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Company setting forththe details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.SECTION 5.03. Existence; Conduct of Business. The Company will, and will cause each of its Subsidiaries to, do or cause to be done allthings necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material tothe conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.SECTION 5.04. Payment of Obligations. The Company will, and will cause each of its Subsidiaries to, pay its obligations, including Taxliabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity oramount thereof is being contested in good faith by appropriate proceedings, (b) the Company or such Subsidiary has set aside on its books adequate reserveswith respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in aMaterial Adverse Effect.64SECTION 5.05. Maintenance of Properties; Insurance.(a) The Company will, and will cause each of its Subsidiaries to, (i) keep and maintain all property material to the conduct of its business ingood working order and condition, ordinary wear and tear excepted, and (ii) maintain with financially sound and reputable carriers (1) insurance in suchamounts (with no greater risk retention) and against such risks (including loss or damage by fire and loss in transit; theft, burglary, pilferage, larceny,embezzlement, and other criminal activities; business interruption; and general liability) and such other hazards, as is customarily maintained by companiesof established repute engaged in the same or similar businesses operating in the same or similar locations and (2) all insurance required pursuant to theCollateral Documents. The Company will furnish to the Lenders, upon request of the Collateral Agent, information in reasonable detail as to the insurance somaintained.(b) The Company shall deliver to the Collateral Agent endorsements (x) to all “All Risk” physical damage insurance policies on the LoanParties’ tangible personal property and assets located in the United States of America and business interruption insurance policies naming the CollateralAgent as lender loss payee, and (y) to all general liability and other liability policies naming the Collateral Agent an additional insured. Each policy forliability insurance shall provide for all losses to be paid on behalf of the Collateral Agent and the Company or its Subsidiaries as their interests may appear. In the event the Company or any of its Subsidiaries at any time or times hereafter shall fail to obtain or maintain any of the policies or insurance requiredherein or to pay any premium in whole or in part relating thereto, then the Collateral Agent, without waiving or releasing any obligations or resulting Defaulthereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain and maintain such policies of insurance and pay suchpremiums and take any other action with respect thereto which the Collateral Agent deems advisable. All sums so disbursed by the Collateral Agent shallconstitute part of the Secured Obligations, payable as provided in this Agreement. The Company will furnish to the Collateral Agent prompt written noticeof any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of anymaterial portion of the Collateral or interest therein under power of eminent domain or by condemnation or similar proceeding.(c) So long as no Event of Default shall have occurred and be continuing, all insurance payments received by the Collateral Agent inconnection with any loss, damage or destruction of any property of the Company or any of its Subsidiaries will be released by the Collateral Agent to theapplicable Company or such Subsidiary for the repair, replacement or restoration thereof.SECTION 5.06. Books and Records; Inspection Rights. The Company will, and will cause each of its Subsidiaries to, keep proper books ofrecord and account in which entries that are full, true and correct in all material respects are made of all dealings and transactions in relation to its businessand activities. The Company will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or anyLender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its relevant books and records, includingenvironmental assessment reports and Phase I or Phase II studies, and to discuss its affairs, finances and condition with its officers and independentaccountants, all at such reasonable times and as often as reasonably requested. The Company acknowledges that the Administrative Agent, after exercisingits rights of inspection, may prepare and distribute to the Lenders certain reports pertaining to the Company and its Subsidiaries’ assets for internal use by theAdministrative Agent and the Lenders.SECTION 5.07. Compliance with Laws and Material Contractual Obligations. The Company will, and will cause each of its Subsidiariesto, (i) comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property (including without limitationEnvironmental Laws) and (ii) perform in all material respects its obligations under material agreements to which it is a party, in each case except where thefailure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Company will maintain ineffect and enforce policies and procedures designed to ensure compliance in all material respects by the Company, its Subsidiaries and their respectivedirectors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.65SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used only to repay certain existing Indebtedness, finance the workingcapital needs, and for general corporate purposes, of the Company and its Subsidiaries in the ordinary course of business. No part of the proceeds of any Loanwill be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.SECTION 5.09. Subsidiary Guarantors; Pledges; Additional Collateral; Further Assurances.(a) As promptly as possible but in any event within forty-five (45) days (or such later date as may be agreed upon by the AdministrativeAgent) after any Person becomes a Subsidiary or any Subsidiary qualifies independently as, or is designated by the Company or the Administrative Agent as,a Material Subsidiary pursuant to the definition of “Material Subsidiary”, the Company shall provide the Administrative Agent with written notice thereofsetting forth information in reasonable detail describing the earnings and material assets of such Person and shall cause each such Subsidiary which alsoqualifies as a Material Subsidiary to deliver to the Administrative Agent a joinder to the Subsidiary Guaranty and the Security Agreement (in each case in theform contemplated thereby) pursuant to which such Subsidiary agrees to be bound by the terms and provisions thereof, such joinders to the SubsidiaryGuaranty and the Security Agreement to be accompanied by appropriate corporate resolutions, other corporate documentation and legal and joinder opinionsin form and substance reasonably satisfactory to the Administrative Agent and its counsel.(b) The Company will cause, and will cause each other Subsidiary qualifying as a Loan Party to cause all of its owned property (whetherpersonal, tangible, intangible, or mixed, but excluding real property) to be subject at all times to first priority and perfected (subject in each case to thequalifications specified in Section 3.15 with respect to priority and perfection) Liens in favor of the Collateral Agent for the benefit of the Holders of SecuredObligations to secure the Secured Obligations in accordance with the terms and conditions of the Collateral Documents (including amendments,restatements, supplements or other modifications to the Collateral Documents in effect prior to the Effective Date, in each case to the extent, and within suchtime period, as is reasonably requested by the Collateral Agent), subject in any case to Liens permitted by Section 6.02. Without limiting the generality ofthe foregoing, the Company (i) will cause the Applicable Pledge Percentage of the issued and outstanding Equity Interests of each Pledge Subsidiary directlyowned by the Company or any other Subsidiary qualifying as a Loan Party to be subject at all times to a first priority and perfected (subject in each case tothe qualifications specified in Section 3.15 with respect to priority and perfection) Lien in favor of the Collateral Agent to secure the Secured Obligations inaccordance with the terms and conditions of the Collateral Documents; provided that no such pledge of the Equity Interests of, or provision of Collateral by,a Foreign Subsidiary shall be required hereunder to the extent such pledge or Collateral would create a Deemed Dividend Problem, is prohibited byapplicable law or the Collateral Agent and its counsel reasonably determine that, in light of the cost and expense associated therewith, such pledge orCollateral would be unduly burdensome or not provide material Pledged Equity or Collateral for the benefit of the Holders of Secured Obligations pursuantto legally binding, valid and enforceable Pledge Agreements, and (ii) will, and will cause each other Subsidiary qualifying as a Loan Party to, deliveramendments, restatements, supplements or other modifications to foreign law governed Pledge Agreements existing on the Effective Date, in each case to theextent, and within such time period as is, reasonably required by the Collateral Agent. Notwithstanding the foregoing, no new foreign law governed PledgeAgreements and no amendments, restatements, supplements or other modifications to foreign law governed Pledge Agreements existing on the EffectiveDate, in each case are required to be delivered hereunder until the date that is sixty (60) days after the Effective Date or such later date as the Collateral Agentmay agree in the exercise of its reasonable discretion with respect thereto.66(c) Without limiting the foregoing, the Company will, and will cause each Subsidiary to, execute and deliver, or cause to be executed anddelivered, to the Collateral Agent such documents, agreements and instruments, and will take or cause to be taken such further actions (including the filingand recording of financing statements and other documents and such other actions or deliveries of the type required by Section 4.01, as applicable), whichmay be required by law or which the Collateral Agent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement andthe other Loan Documents and to ensure perfection and priority of the Liens created or intended to be created by the Collateral Documents, all at the expenseof the Company.(d) Effective as of the Effective Date, all of the parties hereto acknowledge and agree that each of the “Mortgages” entered into prior to theEffective Date pursuant to (and as defined in) the Existing Credit Agreement, shall be terminated and of no further force or effect (other than any provisionsthereof which expressly survive such termination in accordance with the terms thereof), and the Collateral Agent’s Liens under such Mortgages shall bereleased, in each case as of the Effective Date. Each of the Lenders agree that the Agents may execute and deliver all such documents and take all suchactions as may be reasonably necessary or appropriate in order to more effectively confirm or carry out such release of the Collateral Agent’s Liens under suchMortgages, and the Agents agree to so execute such documents, without recourse or warranty and to take such actions, all at the Company’s expense.SECTION 5.10. Post-Closing Matters. As promptly as practicable, and in any event by no later than the applicable date set forth in Schedule 5.10(or such later date as the Administrative Agent may agree to in its reasonable discretion), deliver all documents and take all actions set forth on Schedule5.10.ARTICLE VINegative CovenantsUntil the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have beenpaid in full and all Letters of Credit have expired or terminated, in each case, without any pending draw, and all LC Disbursements shall have beenreimbursed, the Company covenants and agrees with the Lenders that:SECTION 6.01. Indebtedness. The Company will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist anyIndebtedness, except:(a) the Secured Obligations and any other Indebtedness created under the Loan Documents;(b) subject to the limitations applicable to Purchase Money Indebtedness set forth in clause (e) below, Indebtedness existing on the datehereof and set forth in Schedule 6.01 and extensions, renewals and replacements of any such Indebtedness with Indebtedness of a similar type thatdoes not increase the outstanding principal amount thereof;(c) intercompany Indebtedness permitted by Section 6.04(d) or Section 6.04(m);67(d) Guarantees by the Company of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the Company or any otherSubsidiary;(e) Indebtedness of the Company or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capitalassets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by aLien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase theoutstanding principal amount thereof (collectively, “Purchase Money Indebtedness”); provided that (i) such Purchase Money Indebtedness is (or, inthe case of any extension, renewal or replacement, originally was) incurred prior to or within 90 days after such acquisition or the completion of suchconstruction or improvement and (ii) the aggregate outstanding principal amount of Purchase Money Indebtedness permitted by this clause (e),when aggregated with the aggregate outstanding principal amount of Purchase Money Indebtedness permitted under Section 6.01(b) and otherPurchase Money Indebtedness outstanding on the Effective Date, shall not exceed $150,000,000 at any time outstanding;(f) Subordinated Indebtedness so long as, after giving effect to the incurrence thereof, no Default shall have occurred and be continuingand the Borrowers shall be in compliance, on a pro forma basis after giving effect to such incurrence, with the covenants contained in Section 6.11recomputed as if such incurrence had occurred on the first day of the period for testing such compliance;(g) Indebtedness of the Company or any Subsidiary as an account party in respect of trade letters of credit;(h) (i) Indebtedness of the Company or any Subsidiary under any Swap Agreement otherwise permitted under Section 6.05, (ii) theGuarantee of any Loan Party of any such Indebtedness and (iii) the Guarantee of any Loan Party of the obligations of the Taiwan JV, PKL or any oftheir respective subsidiaries under any Swap Agreement entered into in the ordinary course of business;(i) [intentionally omitted];(j) obligations of the Company or any Subsidiary arising out of interest rate, foreign currency, and commodity hedging agreements enteredinto with financial institutions in connection with bona fide hedging activities in the ordinary course of business and not for speculative purposes;(k) unsecured Indebtedness in an aggregate principal amount not exceeding $20,000,000 at any time outstanding;(l) Permitted Unsecured Indebtedness of the Company;(m) Indebtedness securing a Lien permitted under Section 6.02(c);(n) unsecured or secured Indebtedness of PRC Subsidiaries in an aggregate principal amount not exceeding $125,000,000 at any timeoutstanding so long as any Liens securing such Indebtedness are only permitted by Section 6.02(g); and68(o) Indebtedness of the Company or any Subsidiary incurred to finance the acquisition of minority interests in Joint Ventures in anaggregate principal amount not exceeding $25,000,000, so long as the Borrowers are in compliance, on a pro forma basis after giving effect to suchincurrence, with the covenants contained in Section 6.11 recomputed as if such incurrence had occurred on the first day of the period for testing suchcompliance.SECTION 6.02. Liens. The Company will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien onany property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect ofany thereof, except:(a) (i) Permitted Encumbrances, (ii) Liens created under any Loan Document and (iii) Liens granted by any Foreign Subsidiary (includingthe Taiwan JV and any PRC Subsidiary) to the Company or any other Subsidiary;(b) any Lien on any property or asset of the Company or any Subsidiary existing on the date hereof and set forth in Schedule 6.02;provided that (i) such Lien shall not apply to any other property or asset of the Company or any Subsidiary and (ii) such Lien shall secure only thoseobligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principalamount thereof;(c) any Lien existing on any property or asset prior to the acquisition thereof by the Company or any Subsidiary or existing on anyproperty or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i)such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii)such Lien shall not apply to any other property or assets of the Company or any Subsidiary and (iii) such Lien shall secure only those obligationswhich it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be and extensions, renewals andreplacements thereof that do not increase the outstanding principal amount thereof;(d) Liens on fixed or capital assets acquired, constructed or improved by the Company or any Subsidiary; provided that (i) such securityinterests secure Indebtedness permitted by clause (e) of Section 6.01, (ii) such security interests and the Indebtedness secured thereby are incurredprior to or within ninety (90) days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness securedthereby does not exceed 100% of the cost of acquiring, constructing, installing or improving such fixed or capital assets and (iv) such securityinterests shall not apply to any other property or assets of the Company or any Subsidiary; and(e) customary bankers’ Liens and rights of setoff arising by operation of law and incurred on deposits made in the ordinary course ofbusiness;(f) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding $1,000,000 in the aggregate arising inconnection with court proceedings; provided, that the execution or other enforcement of such Liens is effectively stayed and the claims securedthereby are being contested in good faith and by appropriate proceedings and adequate reserves in respect thereof have been established on thebooks of the Company to the extent required by GAAP;(g) Liens on assets of PRC Subsidiaries securing Indebtedness permitted by Section 6.01(n); and69(h) Liens on assets (not constituting Collateral) of the Company and its Subsidiaries not otherwise permitted above so long as theaggregate principal amount of the Indebtedness and other obligations subject to such Liens does not at any time exceed $2,500,000.SECTION 6.03. Fundamental Changes and Asset Sales. (a) The Company will not, and will not permit any Subsidiary to, merge into orconsolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in onetransaction or in a series of transactions) any of its assets, (including pursuant to a Sale and Leaseback Transaction), or all or any of the Equity Interests of anyof its Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately aftergiving effect thereto no Default shall have occurred and be continuing (i) any Person may merge into the Company in a transaction in which the Company isthe surviving corporation, (ii) any Subsidiary may merge into a Loan Party in a transaction in which the surviving entity is such Loan Party (provided thatany such merger involving the Company must result in the Company as the surviving entity), (iii) (A) any Loan Party (other than the Company) or anySubsidiary may sell, transfer, lease or otherwise dispose of its assets to, or otherwise dissolve into, a Loan Party and (B) the Company may sell, transfer, leaseor otherwise dispose of its assets to, a Subsidiary Guarantor, and (iv) the Company and its Subsidiaries may (A) sell inventory, used or surplus equipment andPermitted Investments in the ordinary course of business and real estate located in Dresden, Germany not currently used in the operation of the Company’sbusiness, (B) effect sales, trade-ins or dispositions of used equipment for value in the ordinary course of business consistent with past practice, (C) enter intolicenses of technology in the ordinary course of business and (D) make any other sales, transfers, leases or dispositions of assets with an aggregate book valuethat, together with the aggregate book value of all other assets of the Company and its Subsidiaries previously leased, sold or disposed of as permitted by thisclause (D) (1) during any fiscal year of the Company, does not exceed 10% of Consolidated Total Assets and (2) during the term of this Agreement, does notexceed 25% of Consolidated Total Assets (in the case of each of the foregoing clauses (1) and (2), as reflected in the most recent consolidated balance sheetof the Company delivered to the Lenders) and (v) any Subsidiary (other than a Foreign Subsidiary Borrower or a Material Subsidiary) may liquidate ordissolve if the Company determines in good faith that such liquidation or dissolution is in the best interests of the Company and is not materiallydisadvantageous to the Lenders; provided that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such mergershall not be permitted unless also permitted by Section 6.04.(b) The Company will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other thanbusinesses of the type conducted by the Company and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto,including semi-conductor application processes.(c) The Company will not change its fiscal year from the annual period which ends on October 31 or its first three fiscal quarters which,during the term of this Agreement, consist of equal 13 week periods.70SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The Company will not, and will not permit any of itsSubsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger)any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make orpermit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, orpurchase or otherwise acquire (in one transaction or a series of transactions) any Person or any assets of any other Person constituting a business unit, except:(a) Permitted Investments;(b) [intentionally omitted];(c) loans, advances or investments existing on the date hereof by the Company and the Subsidiaries to or in their respective subsidiaries;(d) investments, loans or advances made (i) by the Company in or to any Subsidiary Guarantor and made by any Subsidiary Guarantor in orto the Company or any other Subsidiary Guarantor, (ii) by any Subsidiary that is not a Subsidiary Guarantor in or to any other Subsidiary that is not aSubsidiary Guarantor and (iii) by any Subsidiary to the Company or any Subsidiary Guarantor;(e) Guarantees constituting Indebtedness permitted by Section 6.01 and Guarantees by the Company of rental obligations or accountspayable of any Subsidiary;(f) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with,customers and suppliers, in each case in the ordinary course of business;(g) investments made in connection with a sale of assets permitted by Section 6.03 to the extent of the non-cash consideration received bythe Company or a Subsidiary;(h) Permitted Acquisitions;(i) Investments, loans and advances existing on the date hereof and set forth in Schedule 6.04 and extensions, renewals and replacements ofany such investments, loans or advances with investments, loans or advances of a similar type that do not increase the outstanding amount thereof;(j) investments by the Company or any Subsidiary made solely in the form of Equity Interests of the Company or any Subsidiary (includingthe investment by the Company in the form of Equity Interests in the Taiwan JV);(k) investments, loans and advances by the Company or any Subsidiary in the Taiwan JV or any other Joint Venture in an aggregateoutstanding amount not to exceed $100,000,000 (provided that the outstanding amount of any investment, loan or advance made in reliance on this clause(k) shall be reduced by any amount paid, repaid, returned, distributed or otherwise received in cash by the Company or such Subsidiary in respect of suchinvestment, loan or advance) so long as immediately prior to and after giving effect (including giving effect on a Pro Forma Basis) to any such investment,loan or advance, the Company shall be in compliance with the covenants contained in Section 6.11;(l) the Taiwan JV Transactions; and(m) any other investment (other than acquisitions), loan or advance (including intercompany investments, loans and advances andinvestments made to meet minimum capital requirements of foreign jurisdictions) so long as the aggregate amount of all such investments, loans andadvances during any fiscal year of the Company does not exceed $50,000,000; provided that such Dollar limitation shall not be applicable if at the time ofthe making of such investment, loan or advance and immediately after giving effect (including giving effect on a Pro Forma Basis) thereto, the TotalLeverage Ratio is less than 2.25 to 1.00.71SECTION 6.05. Swap Agreements. The Company will not, and will not permit any of its Subsidiaries to, enter into any Swap Agreement,except (a) Swap Agreements entered into to hedge or mitigate risks to which the Company or any Subsidiary has actual exposure (other than those in respectof Equity Interests of the Company or any of its Subsidiaries), (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates(from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of theCompany or any Subsidiary and (c) the Company may enter into, and perform its obligations under, Permitted Call Spread Swap Agreements.SECTION 6.06. Restricted Payments. (a) The Company will not, and will not permit any of its Subsidiaries to, declare or make, or agree topay or make, directly or indirectly, any Restricted Payment, except (i) the Company may declare and pay dividends with respect to its Equity Interestspayable solely in additional shares of its common stock, (ii) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (iii) theCompany may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of theCompany and its Subsidiaries, (iv) the Company or any Subsidiary may repurchase Equity Interests in any PRC Subsidiary from the applicable joint venturepartner with respect to such PRC Subsidiary so long as, at the time of making such repurchase and immediately after giving effect (including giving effect ona Pro Forma Basis) thereto, the Total Leverage Ratio is less than 2.25 to 1.00, (v) the Company or any other Subsidiary may make any other RestrictedPayment (including, for the avoidance of doubt, dividends made in cash) so long as (1) no Default or Event of Default has occurred and is continuing prior tomaking such Restricted Payment or would arise after giving effect (including pro forma effect) thereto and (2) the aggregate amount of such RestrictedPayments made by the Company or any Subsidiary does not exceed (A) $50,000,000 during the fiscal year of the Company ending October 31, 2018, (B)$100,000,000 during the fiscal year of the Company ending October 31, 2019 and (C) $50,000,000 during any fiscal year of the Company ending on or afterOctober 31, 2020 and (vi) the Company may enter into, exercise its rights and perform its obligations under Permitted Call Spread Swap Agreements.(b) The Company will not, and will not permit any Subsidiary to, make or agree to pay or make, directly or indirectly, any payment or otherdistribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, or any payment or other distribution(whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition,cancellation or termination of any Indebtedness, except: (i) payment of Indebtedness created under the Loan Documents; (ii) payment of regularly scheduledinterest and principal payments as and when due in respect of any Indebtedness (subject to any subordination provisions thereof); (iii) payment of securedIndebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; (iv) prepayment of anyPermitted Unsecured Indebtedness from the proceeds of any other Permitted Unsecured Indebtedness (including premiums and fees associated therewith); (v)prepayment, purchase, redemption, retirement or other acquisition of any Permitted Unsecured Indebtedness by exchange for or out of the proceeds receivedfrom a substantially concurrent issue of (1) new shares of its non-mandatorily redeemable Equity Interests pursuant to the conversion terms (if any) describedin the agreements related to such Permitted Unsecured Indebtedness or (2) Subordinated Indebtedness or other Permitted Unsecured Indebtedness; (vi) theCompany may issue Equity Interests or make cash payments in connection with or as part of the conversion, redemption, retirement, prepayment orcancellation of any Permitted Convertible Notes; and (vii) prepayment, purchase, redemption, retirement or other acquisitions of the Existing ConvertibleNotes so long as, at the time thereof and after giving effect thereto (including on a Pro Forma Basis), Liquidity shall not be less than $50,000,000.72SECTION 6.07. Transactions with Affiliates. The Company will not, and will not permit any of its Subsidiaries to, sell, lease or otherwisetransfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, anyof its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Company or such Subsidiary thancould be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Company and its wholly owned Subsidiariesnot involving any other Affiliate, (c) Indebtedness permitted by Sections 6.01(b) and 6.01(c), investments permitted by Section 6.04 and fundamentalchanges permitted by Section 6.03 so long as each such transaction is at a price and on terms and conditions not less favorable to the Company or suchSubsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (d) any Restricted Payment permitted by Section 6.06, (e)transactions existing on the date hereof and set forth in Schedule 6.07 and (f) any Affiliate who is an individual may serve as a director, officer or employee ofthe Company or such Subsidiary and receive compensation (including stock options) for his or her services in such capacity.SECTION 6.08. Restrictive Agreements. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, enterinto, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Company or anySubsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or otherdistributions with respect to holders of its Equity Interests or to make or repay loans or advances to the Company or any other Subsidiary or to GuaranteeIndebtedness of the Company or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by thisAgreement, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.08 (but shall apply to anyextension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply tocustomary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions andconditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) the foregoing shall not apply to restrictions andconditions contained in agreements relating to Permitted Unsecured Indebtedness, (v) clause (a) of the foregoing shall not apply to restrictions or conditionsimposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assetssecuring such Indebtedness, (vi) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignmentthereof and (vii) clause (b) of the foregoing shall not apply to restrictions or conditions imposed by the organizational documents of the Taiwan JV orimposed by any formation agreement related to a Joint Venture, including but not limited to the operating agreement or shareholders agreement of any JointVenture, to the extent that an investment in such Joint Venture is not prohibited by Section 6.04.SECTION 6.09. Issuances of Equity Interests by Subsidiaries. The Company will not permit any Subsidiary to issue any additional sharesof its Equity Interests other than (a) to the Company or a wholly-owned Subsidiary, (b) any such issuance that does not change the Company’s direct orindirect percentage ownership interest in such Subsidiary, (c) any such issuance that is permitted pursuant to Section 6.03 or 6.04 and (d) any such issuanceby PKL, PKLT, the Taiwan JV or any PRC Subsidiary, so long as the Company or any wholly-owned Subsidiary continues to own and control more than 50%of the voting and economic power of such Subsidiary.SECTION 6.10. Amendment of Material Documents. The Company will not, and will not permit any Subsidiary to, amend, modify orwaive (a) any of its rights under its certificate of incorporation, by-laws or other organizational documents, in each case in any respect adverse to the Lendersor (b) any of the terms of any Subordinated Indebtedness, in each case in any respect adverse to the Lenders (for the purposes of this Section 6.10(b) andwithout limitation of the scope of the definition of “adverse”, any amendment to increase the principal amount, the interest rate or fees or other amountspayable, to advance the dates upon which payments are made or to alter any subordination provision (or any definition related thereto) shall be deemed to be“adverse”).73SECTION 6.11. Financial Covenants.(a) Minimum Interest Coverage Ratio. The Company will not permit the ratio (the “Interest Coverage Ratio”), determined as of the end ofeach of its fiscal quarters, of (i) Consolidated EBITDA less (with respect to the fiscal quarters ending October 31, 2018, January 31, 2019 and April 30, 2019)that portion of Consolidated EBITDA that is attributable to the PRC Subsidiaries less Capital Expenditures (other than, if applicable, any Specified CapitalExpenditures) to (ii) Consolidated Interest Expense, in each case for the period of 4 consecutive fiscal quarters ending with the end of such fiscal quarter, allcalculated for the Company and its Subsidiaries on a consolidated basis, to be less than 2.50 to 1.00.(b) Total Leverage Ratio. The Company will not permit the ratio (the “Total Leverage Ratio”), determined as of the end of each of its fiscalquarters, of (i) Consolidated Total Indebtedness to (ii) Consolidated EBITDA, in each case for the period of 4 consecutive fiscal quarters ending with the endof such fiscal quarter, all calculated for the Company and its Subsidiaries on a consolidated basis, to be greater than 2.50 to 1.00.(c) Minimum Unrestricted Cash Balances. The Company will not permit the aggregate amount of unrestricted and unencumbered cashbalances and Permitted Investments maintained by the Company and its Subsidiaries (collectively, “Liquidity”) to be less than $50,000,000. Furthermore,and in addition to the foregoing, at all times during any six-month period immediately prior to (x) any date on which the holders of any Permitted UnsecuredIndebtedness have the option to require the Company to repurchase such securities and (y) the maturity date of any Permitted Unsecured Indebtedness, ineach case the Company will not permit Liquidity to be less than $50,000,000 on a Pro Forma Basis after giving effect to the repayment or conversion of suchPermitted Unsecured Indebtedness. For the avoidance of doubt, any cash deposited with the Collateral Agent pursuant to the terms of the CollateralDocuments shall be deemed to be unrestricted or unencumbered cash.SECTION 6.12. Anti-Corruption Laws and Sanctions. No Borrower will request any Borrowing or Letter of Credit, and no Borrower shalluse, and the Company shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of anyBorrowing or Letter of Credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else ofvalue, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transactionof or with any Sanctioned Person, or in any Sanctioned Country or (iii) in any manner that would result in the violation of any Sanctions applicable to anyparty hereto.ARTICLE VIIEvents of DefaultIf any of the following events (“Events of Default”) shall occur:(a) any Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when andas the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;74(b) any Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) ofthis Article) payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period ofthree (3) Business Days;(c) any representation or warranty made or deemed made by or on behalf of any Borrower or any Subsidiary in or in connection with thisAgreement or any other Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement orother document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification thereof or waiverthereunder, shall prove to have been incorrect in any material respect when made or deemed made;(d) (i) the Company shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.03 (with respect toany Borrower’s existence), 5.08, 5.09 or 5.10, in Article VI or in Article X or (ii) any Loan Document shall for any reason not be or shall cease to be in fullforce and effect or is declared to be null and void, or the Company or any Subsidiary takes any action for the purpose of terminating, repudiating orrescinding any Loan Document or any of its obligations thereunder;(e) any Borrower or any Subsidiary Guarantor, as applicable, shall fail to observe or perform any covenant, condition or agreementcontained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article) or any other Loan Document, and such failure shall continueunremedied for a period of thirty (30) days after notice thereof from the Administrative Agent to the Company (which notice will be given at the request ofany Lender);(f) the Company or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect ofany Material Indebtedness, when and as the same shall become due and payable;(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables orpermits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its ortheir behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to itsscheduled maturity; provided that this clause (g) shall not apply to (x) secured Indebtedness that becomes due as a result of the voluntary sale or transfer ofthe property or assets securing such Indebtedness, (y) any redemption, repurchase, conversion or settlement with respect to any Permitted Convertible Notespursuant to their terms unless such redemption, repurchase, conversion or settlement results from a default thereunder or an event of the type that constitutesan Event of Default or (z) any early payment requirement or unwinding or termination with respect to any Permitted Call Spread Swap Agreement;(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or otherrelief in respect of the Company or any Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency,receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for theCompany or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60)days or an order or decree approving or ordering any of the foregoing shall be entered;75(i) the Company or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganizationor other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institutionof, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to theappointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Subsidiary or for a substantial part of itsassets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefitof creditors or (vi) take any action for the purpose of effecting any of the foregoing;(j) the Company or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;(k) one or more judgments for the payment of money in an aggregate amount in excess of $15,000,000 shall be rendered against theCompany, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during whichexecution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Company or anySubsidiary to enforce any such judgment;(l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events thathave occurred, could reasonably be expected to result in a Material Adverse Effect;(m) a Change in Control shall occur; or(n) any Collateral Document shall for any reason fail to create a valid and perfected first priority security interest in any material portion ofthe Collateral purported to be covered thereby, except as permitted by the terms of any Loan Document;then, and in every such event (other than an event with respect to the Company described in clause (h) or (i) of this Article), and at any time thereafter duringthe continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Company, take any or all ofthe following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, (ii)declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable maythereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interestthereon and all fees and other Secured Obligations of the Borrowers accrued hereunder and under the other Loan Documents, shall become due and payableimmediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers, (iii) require cash collateralfor the LC Exposure in accordance with Section 2.06(j), and (iv) exercise on behalf of itself, the Lenders and the Issuing Banks all rights and remediesavailable to it, the Lenders and the Issuing Banks under the Loan Documents and applicable law; and in case of any event with respect to any Borrowerdescribed in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding and cashcollateral for the LC Exposure, together with accrued interest thereon and all fees and other Secured Obligations accrued hereunder and under the other LoanDocuments, shall automatically become due and payable, and the obligation of the Borrower to cash collateralize the LC Exposure as provided in clause (iii)above shall automatically become effective, in each case, without presentment, demand, protest or other notice of any kind, all of which are hereby waived bythe Borrowers. Upon the occurrence and during the continuance of an Event of Default, any Agent may exercise any rights and remedies provided to suchAgent under the Loan Documents or at law or equity, including all remedies provided under the UCC.76In addition to any other rights and remedies granted to the Administrative Agent and the Lenders in the Loan Documents, the Administrative Agent on behalfof the Lenders may exercise all rights and remedies of a secured party under the New York Uniform Commercial Code or any other applicable law. Withoutlimiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement ornotice of any kind (except any notice required by law referred to below) to or upon any Loan Party or any other Person (all and each of which demands,defenses, advertisements and notices are hereby waived by the Company on behalf of itself and its Subsidiaries), may in such circumstances forthwith collect,receive, appropriate and realize upon the Collateral, or any part thereof, or consent to the use by any Loan Party of any cash collateral arising in respect of theCollateral on such terms as the Administrative Agent deems reasonable, and/or may forthwith sell, lease, assign give an option or options to purchase orotherwise dispose of and deliver, or acquire by credit bid on behalf of the Secured Parties, the Collateral or any part thereof (or contract to do any of theforegoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Administrative Agent or any Lender orelsewhere, upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery, allwithout assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extentpermitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption inany Loan Party, which right or equity is hereby waived and released by the Company on behalf of itself and its Subsidiaries. The Company further agrees onbehalf of itself and its Subsidiaries, at the Administrative Agent’s request, to assemble the Collateral and make it available to the Administrative Agent atplaces which the Administrative Agent shall reasonably select, whether at the premises of the Company, another Loan Party or elsewhere. The AdministrativeAgent shall apply the net proceeds of any action taken by it pursuant to this Article VII, after deducting all reasonable costs and expenses of every kindincurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any other way relating to the Collateral or the rights ofthe Administrative Agent and the Lenders hereunder, including reasonable attorneys’ fees and disbursements, to the payment in whole or in part of theSecured Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agentof any other amount required by any provision of law, including Section 9-615(a)(3) of the New York Uniform Commercial Code, need the AdministrativeAgent account for the surplus, if any, to any Loan Party. To the extent permitted by applicable law, the Company on behalf of itself and its Subsidiarieswaives all claims, damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rightshereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper ifgiven at least 10 days before such sale or other disposition.Notwithstanding anything herein to the contrary, following the occurrence and during the continuance of an Event of Default, and noticethereof to the Administrative Agent by the Company or the Required Lenders, all payments received on account of the Secured Obligations shall, subject toSection 2.24, be applied by the Administrative Agent ratably first, to pay any reasonable out-of-pocket fees, indemnities, or expense reimbursementsincluding amounts then due to the Administrative Agent and the Issuing Banks from the Loan Parties, second, to pay any fees or expense reimbursementsthen due to the Lenders from the Loan Parties, third, to pay interest then due and payable on the Loans ratably, fourth, to prepay principal on the Loans andunreimbursed LC Disbursements, to pay an amount to the Administrative Agent equal to one hundred five percent (105%) of the aggregate undrawn faceamount of all outstanding Letters of Credit and the aggregate amount of any unpaid LC Disbursements to be held as cash collateral for such SecuredObligations, to payment of any amounts owing with respect to Banking Services Obligations and Swap Obligations, and fifth, to the payment of any otherSecured Obligations due to the Administrative Agent or any Lender by the Loan Parties. Notwithstanding the foregoing, amounts received from any LoanParty shall not be applied to any Excluded Swap Obligation of such Loan Party. The Administrative Agent and the Lenders shall have the continuing andexclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.77ARTICLE VIIIThe Administrative Agent and the Collateral AgentSECTION 8.01. Authorization and Action.(a) Each Lender and Issuing Bank hereby irrevocably appoints the entity named as Administrative Agent and Collateral Agent in theheading of this Agreement and its successors and assigns to serve as the administrative agent and collateral agent under the Loan Documents and each Lenderand Issuing Bank authorizes each Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other LoanDocuments as are delegated to such Agent under such agreements and to exercise such powers as are reasonably incidental thereto. In addition, to the extentrequired under the laws of any jurisdiction other than within the United States, each Lender and Issuing Bank hereby grants to each Agent any requiredpowers of attorney to execute and enforce any Collateral Document governed by the laws of such jurisdiction on such Lender’s or such Issuing Bank’sbehalf. Without limiting the foregoing, each Lender and Issuing Bank hereby authorizes each Agent to execute and deliver, and to perform its obligationsunder, each of the Loan Documents to which such Agent is a party, to exercise all rights, powers and remedies that such Agent may have under such LoanDocuments.(b) As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or collection), noAgent shall be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in soacting or refraining from acting) upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall benecessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender andIssuing Bank; provided, however, that no Agent shall be required to take any action that (i) such Agent in good faith believes exposes it to liability unlesssuch Agent receives an indemnification satisfactory to it from the Lenders and the Issuing Banks with respect to such action or (ii) is contrary to thisAgreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any requirement of lawrelating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a DefaultingLender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that such Agent mayseek clarification or direction from the Required Lenders prior to the exercise of any such instructed action and may refrain from acting until suchclarification or direction has been provided. Except as expressly set forth in the Loan Documents, no Agent shall have any duty to disclose, and shall not beliable for the failure to disclose, any information relating to the Company, any Subsidiary or any Affiliate of any of the foregoing that is communicated to orobtained by the Person serving as an Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require any Agent to expend or risk itsown funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shallhave reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.78(c) In performing its functions and duties hereunder and under the other Loan Documents, each Agent is acting solely on behalf of theLenders and the Issuing Banks (except in limited circumstances expressly provided for herein relating to the maintenance of the Register), and its duties areentirely mechanical and administrative in nature. Without limiting the generality of the foregoing:(i) no Agent assumes and shall not be deemed to have assumed any obligation or duty or any other relationship as the agent,fiduciary or trustee of or for any Lender, any Issuing Bank or any Secured Party other than as expressly set forth herein and in the other LoanDocuments, regardless of whether a Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of theterm “agent” (or any similar term) herein or in any other Loan Document with reference to any Agent is not intended to connote any fiduciary dutyor other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market customand is intended to create or reflect only an administrative relationship between contracting parties); additionally, each Lender agrees that it will notassert any claim against any Agent based on an alleged breach of fiduciary duty by such Agent in connection with this Agreement and thetransactions contemplated hereby;(ii) where any Agent is required or deemed to act as a trustee in respect of any Collateral over which a security interest hasbeen created pursuant to a Loan Document expressed to be governed by the laws of any jurisdiction other than the United States of America, theobligations and liabilities of such Agent to the Secured Parties in its capacity as trustee shall be excluded to the fullest extent permitted byapplicable law; and(iii) nothing in this Agreement or any Loan Document shall require any Agent to account to any Lender for any sum or theprofit element of any sum received by such Agent for its own account.(d) Each Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Loan Document by orthrough any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any of their respective duties and exercisetheir respective rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and tothe Related Parties of such Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. No Agent shall beresponsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final andnonappealable judgment that such Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.(e) None of any Syndication Agent, any Documentation Agent or any Arranger shall have obligations or duties whatsoever in suchcapacity under this Agreement or any other Loan Document and shall incur no liability hereunder or thereunder in such capacity, but all such persons shallhave the benefit of the indemnities provided for hereunder.(f) In case of the pendency of any proceeding with respect to any Loan Party under any federal, state or foreign bankruptcy,insolvency, receivership or similar law now or hereafter in effect, each Agent (irrespective of whether the principal of any Loan or any reimbursementobligation in respect of any LC Disbursement shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whethersuch Agent shall have made any demand on any Loan Party) shall be entitled and empowered (but not obligated) by intervention in such proceeding orotherwise:(i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LCDisbursements and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order tohave the claims of the Lenders, the Issuing Banks and such Agent (including any claim under Sections 2.12, 2.13, 2.15, 2.17 and 9.03) allowed insuch judicial proceeding; and(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;79and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender,each Issuing Bank and each other Secured Party to make such payments to such Agent and, in the event that such Agent shall consent to the making of suchpayments directly to the Lenders, the Issuing Banks or the other Secured Parties, to pay to such Agent any amount due to it, in its capacity as such Agent,under the Loan Documents (including under Section 9.03). Nothing contained herein shall be deemed to authorize such Agent to authorize or consent to oraccept or adopt on behalf of any Lender or Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or therights of any Lender or Issuing Bank or to authorize such Agent to vote in respect of the claim of any Lender or Issuing Bank in any such proceeding.(g) The provisions of this Article VIII are solely for the benefit of the Agents, the Lenders and the Issuing Banks, and, except solely to theextent of the Company’s rights to consent pursuant to and subject to the conditions set forth in this Article VIII, none of the Company or any Subsidiary, orany of their respective Affiliates, shall have any rights as a third party beneficiary under any such provisions. Each Secured Party, whether or not a partyhereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guarantees of the Obligations provided under the Loan Documents, tohave agreed to the provisions of this Article VIII.SECTION 8.02. Agents’ Reliance, Indemnification, Etc.(a) No Agent nor any of its Related Parties shall be (i) liable for any action taken or omitted to be taken by it under or in connectionwith this Agreement or the other Loan Documents (x) with the consent of or at the request of the Required Lenders (or such other number or percentage of theLenders as shall be necessary, or as such Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or (y)in the absence of its own gross negligence or willful misconduct (such absence to be presumed unless otherwise determined by a court of competentjurisdiction by a final and nonappealable judgment) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations orwarranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement orother document referred to or provided for in, or received by such Agent under or in connection with, this Agreement or any other Loan Document or for thevalue, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party toperform its obligations hereunder or thereunder.(b) No Agent shall be deemed to have knowledge of any Default unless and until written notice thereof (stating that it is a “notice ofdefault”) is given to such Agent by the Company, a Lender or an Issuing Bank, and such Agent shall not be responsible for or have any duty to ascertain orinquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or otherdocument delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms orconditions set forth in any Loan Document or the occurrence of any Default, (iv) the sufficiency, validity, enforceability, effectiveness or genuineness of anyLoan Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in Article IV or elsewhere in any LoanDocument, other than to confirm receipt of items expressly required to be delivered to such Agent or satisfaction of any condition that expressly refers to thematters described therein being acceptable or satisfactory to such Agent or (vi) the creation, perfection or priority of Liens on the Collateral. Notwithstandinganything herein to the contrary, such Agent shall not be liable for, or be responsible for any loss, cost or expense suffered by the Company, any Subsidiary,any Lender or Issuing Bank as a result of, any determination of the Credit Exposure, any of the component amounts thereof or any portion thereof attributableto each Lender or Issuing Bank or any Dollar Amount thereof.80(c) Without limiting the foregoing, each Agent (i) may treat the payee of any promissory note as its holder until such promissory notehas been assigned in accordance with Section 9.04, (ii) may rely on the Register to the extent set forth in Section 9.04(b), (iii) may consult with legal counsel(including counsel to the Company), independent public accountants and other experts selected by it, and shall not be liable for any action taken or omittedto be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (iv) makes no warranty or representation to any Lenderor Issuing Bank and shall not be responsible to any Lender or Issuing Bank for any statements, warranties or representations made by or on behalf of anyLoan Party in connection with this Agreement or any other Loan Document, (v) in determining compliance with any condition hereunder to the making of aLoan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Bank, may presume that suchcondition is satisfactory to such Lender or such Issuing Bank unless such Agent shall have received notice to the contrary from such Lender or such IssuingBank sufficiently in advance of the making of such Loan or the issuance of such Letter of Credit and (vi) shall be entitled to rely on, and shall incur noliability under or in respect of this Agreement or any other Loan Document by acting upon, any notice, consent, certificate or other instrument or writing(which writing may be a fax, any electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or bytelephone and believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person in factmeets the requirements set forth in the Loan Documents for being the maker thereof).SECTION 8.03. Posting of Communications.(a) The Company agrees that the Administrative Agent may, but shall not be obligated to, make any Communications available to theLenders and the Issuing Banks by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen bythe Administrative Agent to be its electronic transmission system (the “Approved Electronic Platform”).(b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security proceduresand policies implemented or modified by the Administrative Agent from time to time (including, as of the Effective Date, a user ID/password authorizationsystem) and the Approved Electronic Platform is secured through a per-deal authorization method whereby each user may access the Approved ElectronicPlatform only on a deal-by-deal basis, each of the Lenders, the Issuing Banks and the Company acknowledges and agrees that the distribution of materialthrough an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives orcontacts of any Lender that are added to the Approved Electronic Platform, and that there are confidentiality and other risks associated with such distribution.Each of the Lenders, the Issuing Banks and the Company hereby approves distribution of the Communications through the Approved Electronic Platformand understands and assumes the risks of such distribution.81(c) THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “ASAVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THECOMMUNICATIONS, OR THE ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORSOR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIEDOR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OFTHIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTIONWITH THE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT, ANYARRANGER, ANY SYNDICATION AGENT, ANY DOCUMENTATION AGENT OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY,“APPLICABLE PARTIES”) HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER, ANY ISSUING BANK OR ANY OTHER PERSON OR ENTITYFOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OREXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’STRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE APPROVED ELECTRONIC PLATFORM.(d) Each Lender and each Issuing Bank agrees that notice to it (as provided in the next sentence) specifying that Communicationshave been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the LoanDocuments. Each Lender and each Issuing Bank agrees (i) to notify the Administrative Agent in writing (which could be in the form of electroniccommunication) from time to time of such Lender’s or such Issuing Bank’s (as applicable) email address to which the foregoing notice may be sent byelectronic transmission and (ii) that the foregoing notice may be sent to such email address.(e) Each of the Lenders, each of the Issuing Banks and the Company agrees that the Administrative Agent may, but (except as may berequired by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the AdministrativeAgent’s generally applicable document retention procedures and policies.(f) Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any Issuing Bank to give any notice or othercommunication pursuant to any Loan Document in any other manner specified in such Loan Document.SECTION 8.04. The Agents Individually With respect to its Commitment, Loans and Letters of Credit, the Person serving as theAdministrative Agent or the Collateral Agent, as applicable, shall have and may exercise the same rights and powers hereunder and is subject to the sameobligations and liabilities as and to the extent set forth herein for any other Lender or Issuing Bank, as the case may be. The terms “Issuing Bank”, “Lenders”,“Required Lenders” and any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent or the Collateral Agent, asapplicable, in its individual capacity as a Lender, an Issuing Bank or as one of the Required Lenders, as applicable. The Person serving as the AdministrativeAgent or the Collateral Agent, as applicable, and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or inany other advisory capacity for and generally engage in any kind of banking, trust or other business with, the Company, any Subsidiary or any Affiliate ofany of the foregoing as if such Person was not acting as the Administrative Agent or the Collateral Agent, as applicable, and without any duty to accounttherefor to the Lenders or the Issuing Banks.82SECTION 8.05. Successor Agents.(a) Either Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, the Issuing Banks and theCompany, whether or not a successor Agent has been appointed. Upon any such resignation, the Required Lenders shall have the right to appoint a successorAgent. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after theretiring Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Agent,which shall be a bank with an office in New York, New York or an Affiliate of any such bank. In either case, such appointment shall be subject to the priorwritten approval of the Company (which approval may not be unreasonably withheld and shall not be required while an Event of Default has occurred and iscontinuing). Upon the acceptance of any appointment as Administrative Agent or as Collateral Agent, as applicable, by a successor Agent, such successorAgent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Agent. Upon the acceptance of appointment asAdministrative Agent or Collateral Agent, as applicable, by a successor Agent, the retiring Agent shall be discharged from its duties and obligations underthis Agreement and the other Loan Documents. Prior to any retiring Agent’s resignation hereunder as Agent, the retiring Agent shall take such action as maybe reasonably necessary to assign to the successor Agent its rights as Agent under the Loan Documents.(b) Notwithstanding paragraph (a) of this Section, in the event no successor Agent shall have been so appointed and shall haveaccepted such appointment within 30 days after the retiring Agent gives notice of its intent to resign, the retiring Agent may give notice of the effectivenessof its resignation to the Lenders, the Issuing Banks and the Company, whereupon, on the date of effectiveness of such resignation stated in such notice, (i) theretiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents; provided that, solely for purposes ofmaintaining any security interest granted to the Agent under any Collateral Document for the benefit of the Secured Parties, the retiring Agent shall continueto be vested with such security interest as collateral agent for the benefit of the Secured Parties, and continue to be entitled to the rights set forth in suchCollateral Document and Loan Document, and, in the case of any Collateral in the possession of the Agent, shall continue to hold such Collateral, in eachcase until such time as a successor Agent is appointed and accepts such appointment in accordance with this Section (it being understood and agreed that theretiring Agent shall have no duty or obligation to take any further action under any Collateral Document, including any action required to maintain theperfection of any such security interest) and (ii) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties ofthe retiring Agent; provided that (A) all payments required to be made hereunder or under any other Loan Document to the Agent for the account of anyPerson other than the Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given ormade to the applicable Agent shall directly be given or made to each Lender and each Issuing Bank. Following the effectiveness of such Agent’s resignationfrom its capacity as such, the provisions of this Article VIII and Section 9.03, as well as any exculpatory, reimbursement and indemnification provisions setforth in any other Loan Document, shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respectof any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Administrative Agent or Collateral Agent, as applicable,and in respect of the matters referred to in the proviso under clause (i) above.83SECTION 8.06. Acknowledgments of Lenders and Issuing Banks.(a) Each Lender represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business andthat it has, independently and without reliance upon any Agent, any Arranger or any other Lender, or any of the Related Parties of any of the foregoing, andbased on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender,and to make, acquire or hold Loans hereunder. Each Lender also acknowledges that it will, independently and without reliance upon any Agent, any Arrangeror any other Lender, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Company and its Affiliates) as it shall from time to time deemappropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any relatedagreement or any document furnished hereunder or thereunder.(b) Each Lender, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignmentand Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, andconsented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Agents or theLenders on the Effective Date.SECTION 8.07. Collateral Matters.(a) Except with respect to the exercise of setoff rights in accordance with Section 9.08 or with respect to a Secured Party’s right to file aproof of claim in an insolvency proceeding, no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce anyGuarantee of the Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by theCollateral Agent on behalf of the Secured Parties in accordance with the terms thereof. In its capacity, the Collateral Agent is a “representative” of theSecured Parties within the meaning of the term “secured party” as defined in the UCC. In the event that any Collateral is hereafter pledged by any Person ascollateral security for the Secured Obligations, the Collateral Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver onbehalf of the Secured Parties any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of the Collateral Agent onbehalf of the Secured Parties.(b) In furtherance of the foregoing and not in limitation thereof, no Banking Services Agreement or Swap Agreement will create (or bedeemed to create) in favor of any Secured Party that is a party thereto any rights in connection with the management or release of any Collateral or of theobligations of any Loan Party under any Loan Document. By accepting the benefits of the Collateral, each Secured Party that is a party to any such BankingServices Agreement or Swap Agreement, as applicable, shall be deemed to have appointed the Agents to serve as administrative agent and collateral agent, asapplicable, under the Loan Documents and agreed to be bound by the Loan Documents as a Secured Party thereunder, subject to the limitations set forth inthis paragraph.(c) The Secured Parties irrevocably authorize the Collateral Agent, at its option and in its discretion, to subordinate any Lien on anyproperty granted to or held by the Collateral Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(b)(i). The Collateral Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, valueor collectability of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon or any certificate prepared by any Loan Party inconnection therewith, nor shall the Collateral Agent be responsible or liable to the Lenders or any other Secured Party for any failure to monitor or maintainany portion of the Collateral.(d) Each Borrower, on its behalf and on behalf of its Subsidiaries, and each Lender, on its behalf and on the behalf of its affiliatedHolders of Secured Obligations, hereby irrevocably constitute the Collateral Agent as the holder of an irrevocable power of attorney (fondé de pouvoir withinthe meaning of Article 2692 of the Civil Code of Québec) in order to hold hypothecs and security granted by each Borrower or any Subsidiary on propertypursuant to the laws of the Province of Quebec to secure obligations of any Borrower or any Subsidiary under any bond, debenture or similar title ofindebtedness issued by any Borrower or any Subsidiary in connection with this Agreement, and agree that the Collateral Agent may act as the bondholderand mandatary with respect to any bond, debenture or similar title of indebtedness that may be issued by any Borrower or any Subsidiary and pledged infavor of the Holder of Secured Obligations in connection with this Agreement. Notwithstanding the provisions of Section 32 of the An Act respecting thespecial powers of legal persons (Quebec), JPMorgan Chase Bank, N.A. as Collateral Agent may acquire and be the holder of any bond issued by any Borroweror any Subsidiary in connection with this Agreement (i.e., the fondé de pouvoir may acquire and hold the first bond issued under any deed of hypothec byany Borrower or any Subsidiary).84(e) The Collateral Agent is hereby authorized to execute and deliver any documents necessary or appropriate to create and perfect therights of pledge for the benefit of the Holders of Secured Obligations including a right of pledge with respect to the entitlements to profits, the balance leftafter winding up and the voting rights of the Company as ultimate parent of any subsidiary of the Company which is organized under the laws of theNetherlands and the Equity Interests of which are pledged in connection herewith (a “Dutch Pledge”). Without prejudice to the provisions of this Agreementand the other Loan Documents, the parties hereto acknowledge and agree with the creation of parallel debt obligations of the Company or any relevantSubsidiary as will be described in any Dutch Pledge (the “Parallel Debt”), including that any payment received by the Collateral Agent in respect of theParallel Debt will - conditionally upon such payment not subsequently being avoided or reduced by virtue of any provisions or enactments relating tobankruptcy, insolvency, preference, liquidation or similar laws of general application - be deemed a satisfaction of a pro rata portion of the correspondingamounts of the Secured Obligations, and any payment to the Holders of Secured Obligations in satisfaction of the Secured Obligations shall - conditionallyupon such payment not subsequently being avoided or reduced by virtue of any provisions or enactments relating to bankruptcy, insolvency, preference,liquidation or similar laws of general application - be deemed as satisfaction of the corresponding amount of the Parallel Debt. The parties heretoacknowledge and agree that, for purposes of a Dutch Pledge, any resignation by the Collateral Agent is not effective until its rights under the Parallel Debt areassigned to the successor Collateral Agent.(f) The parties hereto acknowledge and agree for the purposes of taking and ensuring the continuing validity of German law governedpledges (Pfandrechte) with the creation of parallel debt obligations of the Borrowers as will be further described in a separate German law governed paralleldebt undertaking. The Collateral Agent shall (i) hold such parallel debt undertaking as fiduciary agent (Treuhaender) and (ii) administer and hold asfiduciary agent (Treuhaender) any pledge created under a German law governed Collateral Document which is created in favor of any Holder of the SecuredObligations or transferred to any Holder of the Secured Obligations due to its accessory nature (Akzessorietaet), in each case in its own name and for theaccount of the Holders of the Secured Obligations. Each Lender, on its own behalf and on behalf of its affiliated Holders of Secured Obligations, herebyauthorizes the Collateral Agent to enter as its agent in its name and on its behalf into any German law governed Collateral Document, to accept as its agent inits name and on its behalf any pledge under such Collateral Document and to agree to and execute as agent in its name and on its behalf any amendments,supplements and other alterations to any such Collateral Document and to release any such Collateral Document and any pledge created under any suchCollateral Document in accordance with the provisions herein and/or the provisions in any such Collateral Document.85SECTION 8.08. Credit Bidding. The Secured Parties hereby irrevocably authorize the Collateral Agent, at the direction of the Required Lenders, tocredit bid all or any portion of the Secured Obligations (including by accepting some or all of the Collateral in satisfaction of some or all of the SecuredObligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles)all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Loan Party is subject, or (b) at any other sale, foreclosure oracceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Collateral Agent (whether by judicial action or otherwise)in accordance with any applicable law. In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall beentitled to be, and shall be, credit bid by the Collateral Agent at the direction of the Required Lenders on a ratable basis (with Secured Obligations withrespect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation ofsuch claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset orassets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). Inconnection with any such bid (i) the Collateral Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid tosuch acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable interests in the Secured Obligations which were credit bid shall be deemedwithout any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (iii) the Collateral Agent shallbe authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Collateral Agent withrespect to such acquisition vehicle or vehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by,and the governing documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of this Agreement orthe governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and withoutgiving effect to the limitations on actions by the Required Lenders contained in Section 9.02 of this Agreement), (iv) the Collateral Agent on behalf of suchacquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Secured Obligations which werecredit bid, interests, whether as equity, partnership, limited partnership interests or membership interests, in any such acquisition vehicle and/or debtinstruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to theextent that Secured Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid beinghigher or better, because the amount of Secured Obligations assigned to the acquisition vehicle exceeds the amount of Secured Obligations credit bid by theacquisition vehicle or otherwise), such Secured Obligations shall automatically be reassigned to the Secured Parties pro rata with their original interest insuch Secured Obligations and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Secured Obligations shallautomatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratableportion of the Secured Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, eachSecured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which willreceive interests in or debt instruments issued by such acquisition vehicle) as the Collateral Agent may reasonably request in connection with the formationof any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.86SECTION 8.09. Certain ERISA Matters.(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from thedate such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Agents, and each Arrangerand their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Company or any other Loan Party, that at least one of thefollowing is and will be true:(i) such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more Benefit Plans inconnection with the Loans, the Letters of Credit or the Commitments,(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactionsdetermined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurancecompany general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactionsdetermined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of andperformance of the Loans, the Letters of Credit, the Commitments and this Agreement, and the conditions for exemptive relief thereunder are andwill continue to be satisfied in connection therewith,(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of PartVI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in,administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administrationof and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through(g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied withrespect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments andthis Agreement, or(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in itssole discretion, and such Lender.(b) In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has notprovided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x)represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender partyhereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Agents, and each Arranger and their respective Affiliates, and not, forthe avoidance of doubt, to or for the benefit of the Company or any other Loan Party, that:(i) none of the Agents, or any Arranger or any of their respective Affiliates is a fiduciary with respect to the assets of suchLender (including in connection with the reservation or exercise of any rights by any Agent under this Agreement, any Loan Document or anydocuments related hereto or thereto).(ii) the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in,administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is independent (within the meaning of29 CFR § 2510.3-21, as amended from time to time) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person thatholds, or has under management or control, total assets of at least $50,000,000, in each case as described in 29 CFR § 2510.3-21(c)(1)(i)(A)-(E),(iii) the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in,administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is capable of evaluating investmentrisks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Obligations),87(iv) the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in,administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is a fiduciary under ERISA or the Code,or both, with respect to the Loans, the Letters of Credit, the Commitments and this Agreement and is responsible for exercising independentjudgment in evaluating the transactions hereunder, and(v) no fee or other compensation is being paid directly to any Agent, or any Arranger or any their respective Affiliates forinvestment advice (as opposed to other services) in connection with the Loans, the Letters of Credit, the Commitments or this Agreement.The Agents and each Arranger hereby informs the Lenders that each such Person is not undertaking to provide impartial investment advice,or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in thetransactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters ofCredit, the Commitments and this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount lessthan the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other paymentsin connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees,facility fees, commitment fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent fees or collateral agent fees, utilization fees,minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’sacceptance fees, breakage or other early termination fees or fees similar to the foregoing.ARTICLE IXMiscellaneousSECTION 9.01. Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (andsubject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnightcourier service, mailed by certified or registered mail or sent by telecopy, as follows:(i) if to any Borrower, to it c/o Photronics, Inc., 15 Secor Road, Brookfield, Connecticut 06804, Attention of John P. Jordan (Telecopy No.(203) 775-5601; Telephone No. (203) 740-5671), with a copy (in the case of notices of Default) to Attention of Richelle Burr, Esq. (Telecopy No.(203) 775-5601; Telephone No. (203) 740-5285);(ii) if to the Administrative Agent or Collateral Agent, (A) in the case of Borrowings denominated in Dollars, to JPMorgan Chase Bank,N.A., 10 South Dearborn Street, 7th Floor, Chicago, Illinois 60603, Attention of Darren Cunningham (Telecopy No. (888) 292-9533) and (B) in thecase of Borrowings denominated in Foreign Currencies, to J.P. Morgan Europe Limited, 25 Bank Street, Canary Wharf, London E14 5JP, Attentionof The Manager, Loan & Agency Services (Telecopy No. 44 207 777 2360), and in each case with a copy to JPMorgan Chase Bank, N.A., 270 ParkAvenue, 43rd Floor, New York, New York 10017, Attention of Daglas Panchal (Telecopy No. (917) 464-8969);(iii) if to JPMorgan in its capacity as an Issuing Bank, to it at JPMorgan Chase Bank N.A., Sarjapur Outer Ring Rd, Vathur Hobli, Floor 04,Bangalore, 560 087, India, Attention Ajay Prabhu (Telecopy No. (+91-80) 66762387), or in the case of any other Issuing Bank, to it at the addressand telecopy number specified from time to time by such Issuing Bank to the Company and the Administrative Agent;88(iv) if to the Swingline Lender, to it at JPMorgan Chase Bank, N.A., 10 South Dearborn Street, 7th Floor, Chicago, Illinois 60603, Attentionof Darren Cunningham (Telecopy No. (888) 292-9533)); and(v) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sentby facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to havebeen given at the opening of business on the next business day for the recipient). Notices delivered through Approved Electronic Platforms, to the extentprovided in paragraph (b) below, shall be effective as provided in said paragraph (b).(b) Notices and other communications to the Lenders and the Issuing Banks hereunder may be delivered or furnished by using ApprovedElectronic Platforms pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to ArticleII unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Company may, in its discretion, agree toaccept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval ofsuch procedures may be limited to particular notices or communications.(c) Unless any Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received uponthe sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or otherwritten acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt bythe intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available andidentifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during thenormal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business dayfor the recipient.(d) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the otherparties hereto.SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in exercisingany right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right orpower, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of anyother right or power. The rights and remedies of the Administrative Agent, the Issuing Banks and the Lenders hereunder and under the other Loan Documentsare cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent toany departure by any Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then suchwaiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, themaking of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, anyLender or any Issuing Bank may have had notice or knowledge of such Default at the time.89(b) Except as provided in Section 2.20 with respect to an Incremental Term Loan Amendment or as provided in Section 2.14(c), neither thisAgreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by theBorrowers and the Required Lenders or by the Borrowers and the Administrative Agent with the consent of the Required Lenders; provided that no suchagreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LCDisbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly affected thereby(except that neither (A) any amendment or modification of the financial covenants in this Agreement (or defined terms used in the financial covenants in thisAgreement) or (B) any amendment entered into pursuant to the terms of Section 2.14(c) shall constitute a reduction in the rate of interest or fees for purposesof this clause (ii)), (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any feespayable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, withoutthe written consent of each Lender directly affected thereby, (iv) change Section 2.09(c) or 2.18(b) or (c) in a manner that would alter the ratable reduction ofCommitments or the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change the payment waterfall provisionsof the last paragraph of Article VII without the written consent of each Lender, (vi) change any of the provisions of this Section or the definition of “RequiredLenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make anydetermination or grant any consent hereunder, without the written consent of each Lender (it being understood that, solely with the consent of the partiesprescribed by Section 2.20 to be parties to an Incremental Term Loan Amendment, Incremental Term Loans may be included in the determination ofRequired Lenders on substantially the same basis as the Commitments and the Revolving Loans are included on the Effective Date), or (vii) release theCompany or all or substantially all of the Subsidiary Guarantors from their obligations under Article X or the Subsidiary Guaranty or release all orsubstantially all of the Collateral, as applicable, without the written consent of each Lender; provided further that no such agreement shall amend, modify orotherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, any Issuing Bank or the Swingline Lender hereunder without the priorwritten consent of the Administrative Agent, the Collateral Agent, such Issuing Bank or the Swingline Lender, as the case may be (it being understood thatany change to Section 2.24 shall require the consent of the Administrative Agent, the Issuing Banks and the Swingline Lender). Notwithstanding theforegoing, no consent with respect to any amendment, waiver or other modification of this Agreement shall be required of any Defaulting Lender, except withrespect to any amendment, waiver or other modification referred to in clause (i), (ii) or (iii) of the first proviso of this paragraph and then only in the eventsuch Defaulting Lender shall be directly affected by such amendment, waiver or other modification.(c) Notwithstanding the foregoing, this Agreement and any other Loan Document may be amended (or amended and restated) with thewritten consent of the Required Lenders, the Administrative Agent and the Borrowers (x) to add one or more credit facilities (in addition to the IncrementalTerm Loans pursuant to an Incremental Term Loan Amendment) to this Agreement and to permit extensions of credit from time to time outstandingthereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with theRevolving Loans, Incremental Term Loans and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding suchcredit facilities in any determination of the Required Lenders and Lenders.90(d) The Lenders hereby irrevocably authorize the Collateral Agent, at its option and in its sole discretion, to release any Liens granted tothe Collateral Agent by the Loan Parties on any Collateral (i) upon the termination of all the Commitments, payment and satisfaction in full in cash of allSecured Obligations (other than Banking Services Obligations not yet due and payable, Swap Obligations not yet due and payable, and other Obligationsexpressly stated to survive such payment and termination), and the cash collateralization of all LC Exposure in a manner satisfactory to the AdministrativeAgent, (ii) constituting property being sold or disposed of if the Company certifies to the Administrative Agent that the sale or disposition is made incompliance with the terms of this Agreement (and the Administrative Agent may rely conclusively on any such certificate, without further inquiry), (iii)constituting property leased to the Company or any Subsidiary under a lease which has expired or been terminated in a transaction permitted under thisAgreement, or (iv) as required to effect any sale or other disposition of such Collateral in connection with any exercise of remedies of the Agents and theLenders pursuant to Article VII. Any such release shall not in any manner discharge, affect, or impair the Secured Obligations or any Liens (other than thoseexpressly being released) upon (or obligations of the Loan Parties in respect of) all interests retained by the Loan Parties, including the proceeds of any sale,all of which shall continue to constitute part of the Collateral.(e) If, in connection with any proposed amendment, waiver or consent requiring the consent of “each Lender” or “each Lender directlyaffected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is not obtained (any such Lender whoseconsent is necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then the Company may elect to replace a Non-ConsentingLender as a Lender party to this Agreement, provided that, concurrently with such replacement, (i) another bank or other entity which is reasonablysatisfactory to the Company and the Administrative Agent shall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under this Agreement and to assume all obligationsof the Non-Consenting Lender to be terminated as of such date and to comply with the requirements of clause (b) of Section 9.04, (ii) the Company shall payto such Non-Consenting Lender in same day funds on the day of such replacement (1) all interest, fees and other amounts then accrued but unpaid to suchNon-Consenting Lender by the Company hereunder to and including the date of termination, including without limitation payments due to such Non-Consenting Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the payment which would have been due to such Lender on the day ofsuch replacement under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the replacement Lenderand (iii) such Non-Consenting Lender shall have received the outstanding principal amount of its Loans and participations in LC Disbursements. Each partyhereto agrees that (a) an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by theCompany, the Administrative Agent and the assignee (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by referencepursuant to an Approved Electronic Platform as to which the Administrative Agent and such parties are participants), and (b) the Lender required to makesuch assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to and be bound by the termsthereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documentsnecessary to evidence such assignment as reasonably requested by the applicable Lender, provided that any such documents shall be without recourse to orwarranty by the parties thereto.(f) Notwithstanding anything to the contrary herein the Administrative Agent may, with the consent of the Company only, amend, modifyor supplement this Agreement or any of the other Loan Documents to cure any ambiguity, omission, mistake, defect or inconsistency.91SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Company shall pay (i) all reasonable out-of-pocket expenses incurred bythe Agents and their Affiliates, including the reasonable fees, charges and disbursements of counsel for each Agent, in connection with the syndication of thecredit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modificationsor waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demandfor payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Agents, any Issuing Bank or any Lender, including the fees, chargesand disbursements of any counsel for either Agent, any Issuing Bank or any Lender, in connection with the enforcement or protection of its rights inconnection with the Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder,including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.(b) The Company shall indemnify the Agents, each Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons(each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and relatedexpenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, inconnection with, or as a result of (i) the execution or delivery of the Loan Documents or any agreement or instrument contemplated hereby or thereby, theperformance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplatedhereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by any Issuing Bank to honor a demand for payment undera Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actualor alleged presence or release of Hazardous Materials on or from any property owned or operated by the Company or any of its Subsidiaries, or anyEnvironmental Liability related in any way to the Company or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation orproceeding relating to any of the foregoing, whether or not such claim, litigation, investigation or proceeding is brought by the Company or any other LoanParty or its or their respective equity holders, Affiliates, creditors or any other third Person and whether based on contract, tort or any other theory andregardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that suchlosses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to haveresulted from the gross negligence or willful misconduct of such Indemnitee or from the material breach of such Indemnitee’s obligations under the LoanDocuments pursuant to a claim initiated by the Company.(c) To the extent that the Company fails to pay any amount required to be paid by it to the Agents, any Issuing Bank or the SwinglineLender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the relevant Agent, any Issuing Bank or the Swingline Lender, as thecase may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) ofsuch unpaid amount (it being understood that the Company’s failure to pay any such amount shall not relieve the Company of any default in the paymentthereof); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by orasserted against the relevant Agent, any Issuing Bank or the Swingline Lender in its capacity as such.(d) To the extent permitted by applicable law, no Borrower shall assert, and each Borrower hereby waives, any claim against anyIndemnitee (i) for any damages arising from the use by others of information or other materials obtained through telecommunications, electronic or otherinformation transmission systems (including the Internet), or (ii) on any theory of liability, for special, indirect, consequential or punitive damages (asopposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement orinstrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.92(e) All amounts due under this Section shall be payable not later than fifteen (15) days after written demand therefor.SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the partieshereto and their respective successors and assigns permitted hereby (including any Affiliate of the relevant Issuing Bank that issues any Letter of Credit),except that (i) no Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (andany attempted assignment or transfer by any Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer itsrights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer uponany Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the relevant Issuing Bank thatissues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, theRelated Parties of each of the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason ofthis Agreement.(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an IneligibleInstitution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the timeowing to it) with the prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) of:(A) the Company (provided that the Company shall be deemed to have consented to any such assignment unless it shall objectthereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof), provided that noconsent of the Company shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event ofDefault under clause (a), (b), (h), (i) or (j) of Article VII has occurred and is continuing, any other assignee;(B) the Administrative Agent;(C) the Issuing Banks; and(D) the Swingline Lender.(ii) Assignments shall be subject to the following additional conditions:(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund or an assignment of the entireremaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigningLender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment isdelivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Company and the Administrative Agentotherwise consent, provided that no such consent of the Company shall be required if an Event of Default under clause (a), (b), (h), (i) or (j)of Article VII has occurred and is continuing;93(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights andobligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of allthe assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;(C) the parties to each assignment shall execute and deliver to the Administrative Agent (x) an Assignment and Assumption or (y)to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved ElectronicPlatform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, together with aprocessing and recordation fee of $3,500, such fee to be paid by either the assigning Lender or the assignee Lender or shared between suchLenders; and(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which theassignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-publicinformation about the Company and its affiliates and their Related Parties or their respective securities) will be made available and whomay receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and statesecurities laws.For the purposes of this Section 9.04(b), the terms “Approved Fund” and “Ineligible Institution” have the following meanings:“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loansand similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) anentity or an Affiliate of an entity that administers or manages a Lender.“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) the Company, any of its Subsidiaries orany of its Affiliates, or (d) a company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof.(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified ineach Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment andAssumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interestassigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumptioncovering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to beentitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that doesnot comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations inaccordance with paragraph (c) of this Section.94(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of each Borrower, shall maintain at one of its offices a copyof each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, andprincipal amount (and stated interest) of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the“Register”). The entries in the Register shall be conclusive, and the Borrowers, the Administrative Agent, the Issuing Banks and the Lenders may treat eachPerson whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding noticeto the contrary. The Register shall be available for inspection by the Company, any Issuing Bank and any Lender, at any reasonable time and from time totime upon reasonable prior notice.(v) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and an assignee or (y) to theextent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which theAdministrative Agent and the parties to the Assignment and Assumption are participants, the assignee’s completed Administrative Questionnaire (unless theassignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to suchassignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the informationcontained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by itpursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment andAssumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interestthereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.(c) (i) Any Lender may, without the consent of the Company, the Administrative Agent, the Issuing Banks or the Swingline Lender,sell participations to one or more banks or other entities (a “Participant”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and/orobligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (A) such Lender’s obligationsunder this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of suchobligations and (C) the Borrowers, the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and directly with suchLender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such aparticipation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver ofany provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant,agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (c)(ii) ofthis Section, each Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the requirements andlimitations therein, including the requirements under Sections 2.17(e) (it being understood that the documentation required under Section 2.17(e) shall bedelivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of thisSection. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided suchParticipant agrees to be subject to Section 2.18(c) as though it were a Lender.95(ii) A Participant (x) agrees to be subject to the provisions of Sections 2.18 and 2.19 as if it were an assignee under paragraph (b) of thisSection and (y) shall not be entitled to receive any greater payment under Section 2.15 or 2.17 than the applicable Lender would have been entitled toreceive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Company’s priorwritten consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 unless the Company isnotified of the participation sold to such Participant and such Participant agrees, for the benefit of the Company, to comply with Section 2.17(e) as though itwere a Lender (it being understood that the documentation required under Section 2.17(e) shall be delivered to the participating Lender).Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of each Borrower, maintain a register on which it enters thename and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under theLoan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register(including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its otherobligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letterof Credit or other obligation is in registered form under Treasury Regulations Section 5f.103-1(c) and Proposed Treasury Regulations Section 1.163-5(b) (orany amended or successor version). The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Personwhose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to thecontrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining aParticipant Register.(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secureobligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall notapply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender fromany of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.SECTION 9.05. Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents andin the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to havebeen relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuanceof any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, anyIssuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extendedhereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payableunder this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have notexpired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of theconsummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and theCommitments or the termination of this Agreement or any other Loan Document or any provision hereof or thereof.96SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution. This Agreement may be executed in counterparts (and bydifferent parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a singlecontract. This Agreement, the other Loan Documents and any separate letter agreements with respect to (i) fees payable to the Administrative Agent and (ii)the reduction of the Letter of Credit Commitment of any Issuing Bank constitute the entire contract among the parties relating to the subject matter hereofand supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01,this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have receivedcounterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to thebenefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement bytelecopy, e-mailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of amanually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include Electronic Signatures,deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executedsignature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicablelaw, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or anyother similar state laws based on the Uniform Electronic Transactions Act.SECTION 9.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as tosuch jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of theremaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any otherjurisdiction.SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates ishereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, timeor demand, provisional or final and in whatever currency denominated) at any time held and other obligations at any time owing by such Lender or Affiliateto or for the credit or the account of any Borrower or any Subsidiary Guarantor against any of and all of the Secured Obligations held by such Lender,irrespective of whether or not such Lender shall have made any demand under the Loan Documents and although such obligations may be unmatured. Therights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. EachLender and each Issuing Bank agrees to notify the Company and the Administrative Agent promptly after any such setoff and application; provided that thefailure to give such notice shall not affect the validity of such setoff and application.SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance withand governed by the law of the State of New York.(b) Each Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the UnitedStates District Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the SupremeCourt of the State of New York sitting in the Borough of Manhattan), and any appellate court from any thereof, in any action or proceeding arising out of orrelating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, or for recognition or enforcement of any judgment, andeach of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may (and any such claims,cross-claims or third party claims brought against the Administrative Agent or any of its Related Parties may only) be heard and determined in such Federal(to the extent permitted by law) or New York State court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall beconclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or anyother Loan Document shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action orproceeding relating to this Agreement or any other Loan Document against any Borrower or its properties in the courts of any jurisdiction.97(c) Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objectionwhich it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other LoanDocument in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted bylaw, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. EachForeign Subsidiary Borrower irrevocably designates and appoints the Company, as its authorized agent, to accept and acknowledge on its behalf, service ofany and all process which may be served in any suit, action or proceeding of the nature referred to in Section 9.09(b) in any federal or New York State courtsitting in New York City. The Company hereby represents, warrants and confirms that the Company has agreed to accept such appointment (and any similarappointment by a Subsidiary Guarantor which is a Foreign Subsidiary). Said designation and appointment shall be irrevocable by each such ForeignSubsidiary Borrower until all Loans, all reimbursement obligations, interest thereon and all other amounts payable by such Foreign Subsidiary Borrowerhereunder and under the other Loan Documents shall have been paid in full in accordance with the provisions hereof and thereof and such Foreign SubsidiaryBorrower shall have been terminated as a Borrower hereunder pursuant to Section 2.23. Each Foreign Subsidiary Borrower hereby consents to process beingserved in any suit, action or proceeding of the nature referred to in Section 9.09(b) in any federal or New York State court sitting in New York City by serviceof process upon the Company as provided in this Section 9.09(d); provided that, to the extent lawful and possible, notice of said service upon such agentshall be mailed by registered or certified air mail, postage prepaid, return receipt requested, to the Company and (if applicable to) such Foreign SubsidiaryBorrower at its address set forth in the Borrowing Subsidiary Agreement to which it is a party or to any other address of which such Foreign SubsidiaryBorrower shall have given written notice to the Administrative Agent (with a copy thereof to the Company). Each Foreign Subsidiary Borrower irrevocablywaives, to the fullest extent permitted by law, all claim of error by reason of any such service in such manner and agrees that such service shall be deemed inevery respect effective service of process upon such Foreign Subsidiary Borrower in any such suit, action or proceeding and shall, to the fullest extentpermitted by law, be taken and held to be valid and personal service upon and personal delivery to such Foreign Subsidiary Borrower. To the extent anyForeign Subsidiary Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether from service ornotice, attachment prior to judgment, attachment in aid of execution of a judgment, execution or otherwise), each Foreign Subsidiary Borrower herebyirrevocably waives such immunity in respect of its obligations under the Loan Documents. Nothing in this Agreement or any other Loan Document willaffect the right of any party to this Agreement to serve process in any other manner permitted by law.SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BYAPPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OFOR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, INTHE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIESHERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS ANDCERTIFICATIONS IN THIS SECTION.98SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, arenot part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing Banks and the Lenders agrees to maintain theconfidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees andagents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of theconfidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any Governmental Authority(including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws orregulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies underthis Agreement or any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement ofrights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (1) any assignee of orParticipant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (2) any actual or prospectivecounterparty (or its advisors) to any swap or derivative transaction relating to any Borrower and its obligations, (g) on a confidential basis to (1) any ratingagency in connection with rating the Company or its Subsidiaries or the credit facilities provided for herein or (2) the CUSIP Service Bureau or any similaragency in connection with the issuance and monitoring of identification numbers with respect to the credit facilities provided for herein, (h) with the consentof the Company or (i) to the extent such Information (1) becomes publicly available other than as a result of a breach of this Section or (2) becomes availableto the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis from a source other than the Company or any of its Subsidiaries. Forthe purposes of this Section, “Information” means all information received from the Company relating to the Company or its business, other than any suchinformation that is available to the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Company andother than information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve thelending industry; provided that, in the case of information received from the Company after the date hereof, such information is clearly identified at the timeof delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to havecomplied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Personwould accord to its own confidential information.EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THE IMMEDIATELY PRECEDING PARAGRAPHFURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THECOMPANY AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCEPROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATESECURITIES LAWS.99ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE COMPANY OR THEADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVELINFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE COMPANY, THE OTHER LOAN PARTIESAND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE COMPANYAND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHOMAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCEPROCEDURES AND APPLICABLE LAW.SECTION 9.13. USA PATRIOT Act. Each Lender that is subject to the requirements of the Patriot Act hereby notifies each Loan Party thatpursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies such Loan Party, which informationincludes the name and address of such Loan Party and other information that will allow such Lender to identify such Loan Party in accordance with thePatriot Act.SECTION 9.14. Appointment for Perfection. Each Lender hereby appoints each other Lender as its agent for the purpose of perfectingLiens, for the benefit of the Collateral Agent and the Holders of Secured Obligations, in assets which, in accordance with Article 9 of the UCC or any otherapplicable law can be perfected only by possession. Should any Lender (other than the Collateral Agent) obtain possession of any such Collateral, suchLender shall notify the Collateral Agent thereof, and, promptly upon the Collateral Agent’s request therefor shall deliver such Collateral to the CollateralAgent or otherwise deal with such Collateral in accordance with the Collateral Agent’s instructions.SECTION 9.15. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to anyLoan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shallexceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loanin accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall belimited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payableas a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shallbe increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate tothe date of repayment, shall have been received by such Lender.SECTION 9.16. No Advisory or Fiduciary Responsibility. Each Borrower acknowledges and agrees, and acknowledges its Subsidiaries’understanding, that no Credit Party will have any obligations except those obligations expressly set forth herein and in the other Loan Documents and eachCredit Party is acting solely in the capacity of an arm’s length contractual counterparty to such Borrower with respect to the Loan Documents and thetransaction contemplated therein and not as a financial advisor or a fiduciary to, or an agent of, such Borrower or any other person. Each Borrower agrees thatit will not assert any claim against any Credit Party based on an alleged breach of fiduciary duty by such Credit Party in connection with this Agreement andthe transactions contemplated hereby. Additionally, each Borrower acknowledges and agrees that no Credit Party is advising such Borrower as to any legal,tax, investment, accounting, regulatory or any other matters in any jurisdiction. Each Borrower shall consult with its own advisors concerning such mattersand shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Credit Parties shallhave no responsibility or liability to any Borrower with respect thereto.100Each Borrower further acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party, together with itsAffiliates, is a full service securities or banking firm engaged in securities trading and brokerage activities as well as providing investment banking and otherfinancial services. In the ordinary course of business, any Credit Party may provide investment banking and other financial services to, and/or acquire, holdor sell, for its own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and otherobligations) of, such Borrower, its Subsidiaries and other companies with which such Borrower or any of its Subsidiaries may have commercial or otherrelationships. With respect to any securities and/or financial instruments so held by any Credit Party or any of its customers, all rights in respect of suchsecurities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.In addition, each Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party and itsAffiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of whichsuch Borrower or any of its Subsidiaries may have conflicting interests regarding the transactions described herein and otherwise. No Credit Party will useconfidential information obtained from the Borrower by virtue of the transactions contemplated by the Loan Documents or its other relationships with theBorrower in connection with the performance by such Credit Party of services for other companies, and no Credit Party will furnish any such information toother companies. Each Borrower also acknowledges that no Credit Party has any obligation to use in connection with the transactions contemplated by theLoan Documents, or to furnish to such Borrower or any of its Subsidiaries, confidential information obtained from other companies.SECTION 9.17. Releases of Subsidiary Guarantors.(a) A Subsidiary Guarantor shall automatically be released from its obligations under the Subsidiary Guaranty upon the consummation ofany transaction permitted by this Agreement as a result of which such Subsidiary Guarantor ceases to be a Subsidiary; provided that, if so required by thisAgreement, the Required Lenders shall have consented to such transaction and the terms of such consent shall not have provided otherwise. In connectionwith any termination or release pursuant to this Section, the Administrative Agent shall (and is hereby irrevocably authorized by each Lender to) execute anddeliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release. Upon any sale or other disposition (other than any lease or license) by any Loan Party (other than to any other Loan Party) of any Collateral in a transactionpermitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Collateral Documentin any Collateral pursuant to Section 9.02, the security interests in such Collateral created by the Collateral Documents shall be automatically released andterminated. Any execution and delivery of documents pursuant to this Section shall be without recourse to or warranty by the Administrative Agent.(b) At such time as the principal and interest on the Loans, all LC Disbursements, the fees, expenses and other amounts payable under theLoan Documents and the other Secured Obligations (other than Banking Services Obligations not yet due and payable, Swap Obligations not yet due andpayable, and other Obligations expressly stated to survive such payment and termination) shall have been paid in full in cash, the Commitments shall havebeen terminated and no Letters of Credit shall be outstanding, the Subsidiary Guaranty and all obligations (other than those expressly stated to survive suchtermination) of each Subsidiary Guarantor thereunder shall automatically terminate, all without delivery of any instrument or performance of any act by anyPerson.101SECTION 9.18. Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in anyLoan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of anyEEA Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority andagrees and consents to, and acknowledges and agrees to be bound by:(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunderwhich may be payable to it by any party hereto that is an EEA Financial Institution; and(b) the effects of any Bail-In Action on any such liability, including, if applicable:(i) a reduction in full or in part or cancellation of any such liability;(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA FinancialInstitution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments ofownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of anyEEA Resolution Authority.ARTICLE XCompany GuaranteeIn order to induce the Lenders to extend credit to the other Borrowers hereunder, the Company hereby irrevocably and unconditionallyguarantees, as a primary obligor and not merely as a surety, the payment when and as due of the Secured Obligations of such other Borrowers and theSpecified Ancillary Obligations (collectively, the “Guaranteed Obligations”). The Company further agrees that the due and punctual payment of suchGuaranteed Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon itsguarantee hereunder notwithstanding any such extension or renewal of any such Guaranteed Obligation.102The Company waives presentment to, demand of payment from and protest to any Subsidiary of any of the Guaranteed Obligations, andalso waives notice of acceptance of its obligations and notice of protest for nonpayment. The obligations of the Company hereunder shall not be affected by(a) the failure of either Agent, any Issuing Bank or any Lender (or any of its Affiliates) to assert any claim or demand or to enforce any right or remedy againstany Subsidiary under the provisions of this Agreement, any Swap Agreement, any Banking Services Agreement, any other Loan Document or otherwise; (b)any extension or renewal of any of the Guaranteed Obligations; (c) any rescission, waiver, amendment or modification of, or release from, any of the terms orprovisions of this Agreement, any Swap Agreement, any Banking Services Agreement or any other Loan Document or agreement; (d) any default, failure ordelay, willful or otherwise, in the performance of any of the Guaranteed Obligations; (e) the failure of either Agent (or any applicable Lender (or any of itsAffiliates)) to take any steps to perfect and maintain any security interest in, or to preserve any rights to, any security or collateral for the GuaranteedObligations, if any; (f) any change in the corporate, partnership or other existence, structure or ownership of any Subsidiary or any other guarantor of any ofthe Guaranteed Obligations; (g) the enforceability or validity of the Guaranteed Obligations or any part thereof or the genuineness, enforceability or validityof any agreement relating thereto or with respect to any collateral securing the Guaranteed Obligations or any part thereof, or any other invalidity orunenforceability relating to or against any Subsidiary or any other guarantor of any of the Guaranteed Obligations, for any reason related to this Agreement,any Swap Agreement, any Banking Services Agreement, any other Loan Document, or any provision of applicable law, decree, order or regulation of anyjurisdiction purporting to prohibit the payment by such Subsidiary or any other guarantor of the Guaranteed Obligations, of any of the GuaranteedObligations or otherwise affecting any term of any of the Guaranteed Obligations; or (h) any other act, omission or delay to do any other act which may ormight in any manner or to any extent vary the risk of the Company or otherwise operate as a discharge of a guarantor as a matter of law or equity or whichwould impair or eliminate any right of the Company to subrogation.The Company further agrees that its agreement hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy orsimilar proceeding shall have stayed the accrual or collection of any of the Guaranteed Obligations or operated as a discharge thereof) and not merely ofcollection, and waives any right to require that any resort be had by either Agent, any Issuing Bank or any Lender (or any of its Affiliates) to any balance ofany deposit account or credit on the books of either Agent, any Issuing Bank or any Lender in favor of any Subsidiary or any other Person.The obligations of the Company hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, andshall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever, by reason of the invalidity, illegality or unenforceabilityof any of the Guaranteed Obligations, any impossibility in the performance of any of the Guaranteed Obligations or otherwise, except for the priorindefeasible payment in full in cash of all the Guaranteed Obligations. Nothing contained in this Article X is intended to, or shall limit, restrict or precludethe Company from pursuing and maintaining a separate legal action based on the acts or omissions of any Agent or any Lender in connection with any suchPerson’s gross negligence or willful misconduct.The Company further agrees that its obligations hereunder shall constitute a continuing and irrevocable guarantee of all GuaranteedObligations now or hereafter existing and shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of anyGuaranteed Obligation (including a payment effected through exercise of a right of setoff) is rescinded, or is or must otherwise be restored or returned byeither Agent, any Issuing Bank or any Lender (or any of its Affiliates) upon the insolvency, bankruptcy or reorganization of any Subsidiary or otherwise(including pursuant to any settlement entered into by a Secured Party in its discretion).103In furtherance of the foregoing and not in limitation of any other right which either Agent, any Issuing Bank or any Lender (or any of itsAffiliates) may have at law or in equity against the Company by virtue hereof, upon the failure of any other Subsidiary to pay any Guaranteed Obligationwhen and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Company hereby promises to andwill, upon receipt of written demand by any Agent, any Issuing Bank or any Lender (or any of its Affiliates), forthwith pay, or cause to be paid, to the relevantAgent, the relevant Issuing Bank or any Lender (or any of such Lender’s Affiliates) in cash an amount equal to the unpaid principal amount of suchGuaranteed Obligations then due, together with accrued and unpaid interest thereon. The Company further agrees that if payment in respect of anyGuaranteed Obligation shall be due in a currency other than Dollars and/or at a place of payment other than New York or any other Eurocurrency PaymentOffice and if, by reason of any Change in Law, disruption of currency or foreign exchange markets, war or civil disturbance or other event, payment of suchGuaranteed Obligation in such currency or at such place of payment shall be impossible or, in the reasonable judgment of either Agent, any Issuing Bank orany Lender (or any of its Affiliates), disadvantageous to the relevant Agent, the relevant Issuing Bank or such Lender (or any of such Lender’s Affiliates) inany material respect, then, at the election of the relevant Agent or such Lender, the Company shall make payment of such Guaranteed Obligation in Dollars(based upon the applicable Equivalent Amount in effect on the date of payment) and/or in New York or such other Eurocurrency Payment Office as isdesignated by the Administrative Agent or such Lender and, as a separate and independent obligation, shall indemnify the Agents, any Issuing Bank andsuch Lender (and such Lender’s Affiliates), as applicable, against any losses or reasonable out-of-pocket expenses that it shall sustain as a result of suchalternative payment.Upon payment by the Company of any sums as provided above, all rights of the Company against any Subsidiary arising as a result thereofby way of right of subrogation or otherwise shall in all respects be subordinated and junior in right of payment to the prior indefeasible payment in full incash of all the Guaranteed Obligations owed by such Subsidiary.Nothing shall discharge or satisfy the liability of the Company hereunder except the full performance and payment in cash of theGuaranteed Obligations.The Company hereby absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be neededfrom time to time by each Subsidiary Guarantor to honor all of its obligations under the Subsidiary Guaranty in respect of Specified Swap Obligations(provided, however, that the Company shall only be liable under this paragraph for the maximum amount of such liability that can be hereby incurredwithout rendering its obligations under this paragraph or otherwise under this Article X voidable under applicable law relating to fraudulent conveyance orfraudulent transfer, and not for any greater amount). The Company intends that this paragraph constitute, and this paragraph shall be deemed to constitute, a“keepwell, support, or other agreement” for the benefit of each Subsidiary Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity ExchangeAct.For the avoidance of doubt, Section 2.17 of this Agreement shall be applicable, mutatis mutandis, to all payments required to be made bythe Company under this Article X.[Signature Pages Follow]104IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of theday and year first above written.PHOTRONICS, INC., as the Company By Name: Title:Signature Page to Fourth Amended and Restated Credit AgreementPhotronics, Inc. JPMORGAN CHASE BANK, N.A., individually as a Lender, as SwinglineLender, as an Issuing Bank, as Collateral Agent and as Administrative Agent By Name: Title:Signature Page to Fourth Amended and Restated Credit AgreementPhotronics, Inc. BANK OF AMERICA, N.A., individually as a Lender, as an Issuing Bank andas Syndication Agent By Name: Title: CITIZENS BANK, N.A., individually as a Lender and as an Issuing Bank By Name: Title: TD BANK, N.A., individually as a Lender and as an Issuing Bank By Name: Title:Signature Page to Fourth Amended and Restated Credit AgreementPhotronics, Inc.SCHEDULE 2.01ACOMMITMENTSLENDERCOMMITMENT JPMORGAN CHASE BANK, N.A.$14,000,000 BANK OF AMERICA, N.A.$14,000,000 CITIZENS BANK, N.A.$11,000,000 TD BANK, N.A.$11,000,000 AGGREGATE COMMITMENT$50,000,000SCHEDULE 2.01BLETTER OF CREDIT COMMITMENTSLENDERLETTER OF CREDIT COMMITMENT JPMORGAN CHASE BANK, N.A.$3,750,000 BANK OF AMERICA, N.A.$3,750,000 CITIZENS BANK, N.A.$3,750,000 TD BANK, N.A.$3,750,000 TOTAL LETTER OF CREDIT COMMITMENTS$15,000,000SCHEDULE 2.06EXISTING LETTERS OF CREDITNone.SCHEDULE 5.10POST-CLOSING MATTERS1. Delivery to the Administrative Agent of certificates of insurance listing the Collateral Agent as (x) lender loss payee for the property casualtyinsurance policies of the Company and its Subsidiaries, together with separate lender loss payable endorsements in respect thereof and (y) additional insuredwith respect to the liability insurance policies of the Company and its Subsidiaries, together with separate additional insured endorsements in respect thereof,in form and substance reasonably acceptable to the Administrative Agent, on or prior to the date that is thirty (30) days after the Effective Date.Exhibit 10.25EXECUTION COPYTHIRD AMENDED AND RESTATED SECURITY AGREEMENTTHIS THIRD AMENDED AND RESTATED SECURITY AGREEMENT (as the same may be amended, restated, supplemented or otherwise modifiedfrom time to time, this “Security Agreement”) is entered into as of September 27, 2018 by and among PHOTRONICS, INC., a Connecticut corporation (the“Company”), the Subsidiaries of the Company listed on the signature pages hereto (together with the Company, the “Initial Grantors,” and together with anyadditional Subsidiaries, whether now existing or hereafter formed or acquired which become parties to this Security Agreement from time to time byexecuting a Supplement hereto in substantially the form of Annex I, the “Grantors”), and JPMORGAN CHASE BANK, N.A., a national banking association,in its capacity as contractual representative (the “Collateral Agent”) for itself and for the Holders of Secured Obligations (as defined in the Credit Agreementidentified below). Capitalized terms used herein (including, without limitation, Article I hereof) and not otherwise defined herein shall have the respectivemeanings ascribed to such terms in the Credit Agreement.PRELIMINARY STATEMENTWHEREAS, the Company, certain Subsidiaries of the Company from time to time parties thereto as borrowers (together with the Company, the“Borrowers”), the financial institutions from time to time party thereto as lenders (collectively, the “Lenders”), and JPMorgan Chase Bank, N.A., asadministrative agent thereunder (the “Administrative Agent”) have entered into that certain Fourth Amended and Restated Credit Agreement of even dateherewith (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement” and the agreements,documents and instruments executed and/or delivered pursuant thereto or in connection therewith, including, without limitation, any guaranty delivered inconnection therewith, the “Loan Documents”), which Credit Agreement amends and restates in its entirety the Existing Credit Agreement (as defined in theCredit Agreement), providing, subject to the terms and conditions thereof, for extensions of credit and other financial accommodations to be made by theLenders to or for the benefit of the Borrowers;WHEREAS, the Credit Agreement, among other things, re-evidences the Borrowers’ outstanding obligations under the Existing Credit Agreementand provides, subject to the terms thereof, for future extensions from time to time of credit and other financial accommodations by the Lenders to theBorrowers;WHEREAS, as a condition precedent to the effectiveness of an amendment to the Existing Credit Agreement, the Initial Grantors entered into theSecond Amended and Restated Security Agreement, dated as of December 5, 2013, with the Collateral Agent (the “Existing Security Agreement”);WHEREAS, each Initial Grantor party to the Existing Security Agreement wishes to affirm its obligations under the terms of the Existing SecurityAgreement and wishes to amend and restate the terms of the Existing Security Agreement;WHEREAS, the Grantors wish to secure their obligations to the Holders of Secured Obligations pursuant to the terms of this Security Agreement; andWHEREAS, it is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of the parties underthe Existing Security Agreement, but that this Agreement amend and restate in its entirety the Existing Security Agreement and re-evidence the obligationsand liabilities of each Grantor outstanding thereunder, which shall be set forth in accordance with the terms hereof;ACCORDINGLY, the Grantors and the Collateral Agent, on behalf of the Holders of Secured Obligations, hereby agree as follows:ARTICLE IDEFINITIONS1.1. Terms Defined in the Credit Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings assigned tosuch terms in the Credit Agreement.1.2. Terms Defined in New York UCC. Terms defined in the New York UCC which are not otherwise defined in this Security Agreement are usedherein as defined in the New York UCC.1.3. Definitions of Certain Terms Used Herein. As used in this Security Agreement, in addition to the terms defined in the Preliminary Statement,the following terms shall have the following meanings:“Accounts” shall have the meaning set forth in Article 9 of the New York UCC.“Article” means a numbered article of this Security Agreement, unless another document is specifically referenced.“Chattel Paper” shall have the meaning set forth in Article 9 of the New York UCC.“Collateral” means all Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Equipment, Farm Products, GeneralIntangibles, Goods, Instruments, Intellectual Property Collateral, Inventory, Investment Property, letters of credit, Letter-of-Credit Rights, Pledged Deposits,Supporting Obligations and Other Collateral, wherever located, in which any Grantor now has or hereafter acquires any right or interest, and the proceeds(including Stock Rights), insurance proceeds and products thereof, together with all books and records, customer lists, credit files, computer files, programs,printouts and other computer materials and records related thereto; provided that in no event shall “Collateral” include or the security interest granted underArticle II hereof attach to (a) any lease, license, permit, contract, property rights or agreement to which any Grantor is a party, any of its rights or intereststhereunder or any Trademark or other Intellectual Property, if and for so long as the grant of such security interest shall (i) give any other Person party to suchlease, license, permit, contract, property rights or agreement the right to terminate its obligations thereunder, (ii) constitute or result in the abandonment,cancellation, invalidation or unenforceability of any material right, title or interest of any Grantor therein or (iii) result in a breach or termination pursuant tothe terms of, or a default under, any such lease, license, contract property rights or agreement (other than, in the case of each of the foregoing clauses (i), (ii)and (iii), to the extent that any such right or term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform CommercialCode of any relevant jurisdiction or any other applicable law (including the U.S. Bankruptcy Code) or principles of equity), provided, however, that theCollateral shall include and such security interest shall attach immediately at such time as the condition causing such abandonment, cancellation,invalidation or unenforceability shall be remedied and to the extent severable, shall attach immediately to any portion of such lease, license, contract,property rights, agreement or Trademark that does not result in any of the consequences specified in (i), (ii) or (iii) above; (b) any license, permit or othergovernmental authorization that, under the terms and conditions of such governmental authorization or under applicable law, cannot be subjected to a Lienin favor of the Collateral Agent for the benefit of the Holders of Secured Obligations without the consent of the relevant governmental authority and suchconsent has not been obtained; (c) any of the capital stock of a Foreign Subsidiary; (d) those assets as to which the Collateral Agent reasonably determines (inconsultation with, and with written notice to, the Company) that the cost of obtaining such a security interest or perfection thereof (including taxconsequences) are excessive in relation to the benefit to the Holders of Secured Obligations of the security to be afforded thereby; (e) any item of personalproperty, tangible or intangible, to the extent the grant by any Grantor of a security interest pursuant to this Security Agreement in its right, title and interestin such item of property is prohibited by any law or governmental rule or regulation or by effective and enforceable contractual provisions (including licenserestrictions) in any agreement to which the Grantor is a party (so long as no such agreement shall be entered into for the purposes of circumventing thesecurity interest granted herein and excluding any such provision to the extent such provision would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of any relevant jurisdiction or any other applicable law (including the U.S. Bankruptcy Code) orprinciples of equity); (f) intellectual property in relation to which any law or governmental rule or regulation, or any agreement with a domain name registraror any other Person entered into by the Grantor in the ordinary course of business and existing on the date hereof, prohibits the creation of a security interesttherein or would otherwise invalidate such Grantor’s right, title or interest therein (other than to the extent any such agreement would be rendered ineffectivepursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of any relevant jurisdiction or any other applicable law (including theU.S. Bankruptcy Code) or principles of equity); (g) any Equipment owned by any Grantor that is subject to a purchase money Lien or a capital leasepermitted by the Credit Agreement if the agreement in which such Lien is granted (or in the document providing for such capital lease) validly prohibits orrequires the consent of any Person other than any Grantor as a condition to the creation of any other Lien on such equipment (other than to the extent anysuch agreement would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of any relevantjurisdiction or any other applicable law (including the U.S. Bankruptcy Code) or principles of equity), but only, in each case, to the extent, and for so long as,the Indebtedness secured by the applicable Lien or capital lease has not been repaid in full or the applicable prohibition (or consent required) has not beenotherwise removed or terminated; (h) motor vehicles and other assets subject to certificates of title or ownership; or (i) any real property held by a Grantor as alessee under a lease; provided that the parties hereby agree, for the avoidance of doubt (without limitation with respect to any assets not so listed), that theassets listed in Schedule 1 to this Agreement are prohibited by contractual restrictions with third parties from being included as “Collateral” hereunder exceptto the extent such restrictions would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of anyrelevant jurisdiction.2“Commercial Tort Claims” means commercial tort claims, as defined in the New York UCC of any Grantor, including each commercial tort claimspecifically described in Exhibit “E”.“Confirmatory Grant of Security Interest” means, with respect to any Grantor and its Patents, Trademarks, or Copyrights, an agreement with a list ofsuch Patents, Trademarks or Copyrights attached as an exhibit thereto, in form and substance satisfactory to the Collateral Agent, duly executed by suchGrantor, to be filed in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, evidencing the Collateral Agent’sLien on such Patents, Trademarks or Copyrights, as applicable.“Control” shall have the meaning set forth in Article 8 or, if applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the New York UCC.“Copyrights” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all copyrights, rights andinterests in copyrights, works protectable by copyright, copyright registrations, and copyright applications; (b) all extensions of any of the foregoing; (c) allincome, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages orpayments for past or future infringements for any of the foregoing; (d) the right to sue for past, present, and future infringements of any of the foregoing; and(e) all rights corresponding to any of the foregoing throughout the world.“Deposit Accounts” shall have the meaning set forth in Article 9 of the New York UCC.“Documents” shall have the meaning set forth in Article 9 of the New York UCC.“Equipment” shall have the meaning set forth in Article 9 of the New York UCC.“Event of Default” shall have the meaning set forth in the Credit Agreement.“Exhibit” refers to a specific exhibit to this Security Agreement, unless another document is specifically referenced.“Farm Products” shall have the meaning set forth in Article 9 of the New York UCC.“General Intangibles” shall have the meaning set forth in Article 9 of the New York UCC and, in any event, includes payment intangibles, contractrights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill (including the goodwill associatedwith any Grantor owned Trademark), Intellectual Property, URLs and domain names, other industrial or intellectual property or rights therein or applicationstherefor, whether under license or otherwise, programs, programming materials, blueprints, drawings, purchase orders, customer lists, monies due orrecoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, including Licenses, infringementclaims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, pension plan refunds, pension planrefund claims, insurance premium rebates, tax refunds, and tax refund claims, interests in a partnership or limited liability company which do not constitute asecurity under Article 8 of the Code, and any other personal property other than Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts,Goods, Investment Property, negotiable Collateral, and oil, gas, or other minerals before extraction.“Goods” shall have the meaning set forth in Article 9 of the New York UCC.“Instruments” shall have the meaning set forth in Article 9 of the New York UCC.“Intellectual Property” means all Patents, Trademarks and Copyrights as defined herein.“Intellectual Property Collateral” means all domain names, Intellectual Property and Licenses.3“Inventory” shall have the meaning set forth in Article 9 of the New York UCC.“Investment Property” shall have the meaning set forth in Article 9 of the New York UCC.“Letter of Credit Rights” shall have the meaning set forth in Article 9 of the New York UCC.“Licenses” means, with respect to any Person, all of such Person’s right, title, and interest in and to (a) any and all licensing agreements or similararrangements in and to its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now or hereafter due or payable underand with respect thereto, including, without limitation, damages and payments for past and future breaches thereof, and (c) all rights to sue for past, present,and future breaches thereof.“New York UCC” means the New York Uniform Commercial Code as in effect from time to time.“Other Collateral” means any property of the Grantors, not included within the defined terms Accounts, Chattel Paper, Commercial Tort Claims,Deposit Accounts, Documents, Equipment, Farm Products, General Intangibles, Goods, Instruments, Intellectual Property Collateral, Inventory, InvestmentProperty, Letter-of-Credit Rights, Pledged Deposits and Supporting Obligations, including, without limitation, all cash on hand, letters of credit, StockRights or any other deposits (general or special, time or demand, provisional or final) with any bank or other financial institution, it being intended that theCollateral include all personal property of the Grantors.“Patents” means, with respect to any Person, all of such Person’s right, title, and interest in and to: (a) any and all patents and patent applications; (b)all inventions and improvements described and claimed therein; (c) all reissues, divisions, continuations, extensions, and continuations-in-part thereof; (d)all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damagesand payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements thereof; and (f) all rights correspondingto any of the foregoing throughout the world.“Pledged Deposits” means all time deposits of money (other than Deposit Accounts and Instruments), whether or not evidenced by certificates,which a Grantor may from time to time designate as pledged to the Collateral Agent or to any Holder of Secured Obligations as security for any SecuredObligations, and all rights to receive interest on said deposits.“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property, Instruments or Pledged Deposits, and any other rights or claimsto receive money which are General Intangibles or which are otherwise included as Collateral.“Registered” means issued by, registered with, renewed by or the subject of a pending application before any governmental authority or internetdomain name registrar.“Section” means a numbered section of this Security Agreement, unless another document is specifically referenced.“Security” shall have the meaning set forth in Article 8 of the New York UCC.4“Stock Rights” means any securities, dividends or other distributions and any other right or property which any Grantor shall receive or shallbecome entitled to receive for any reason whatsoever with respect to, in substitution for or in exchange for any securities or other ownership interests in acorporation, partnership, joint venture or limited liability company constituting Collateral and any securities, any right to receive securities and any right toreceive earnings, in which any Grantor now has or hereafter acquires any right, issued by an issuer of such securities.“Supporting Obligation” shall have the meaning set forth in Article 9 of the New York UCC.“Trademarks” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all trademarks (includingservice marks), trade names, trade dress, and trade styles and the registrations and applications for registration thereof and the goodwill of the businesssymbolized by the foregoing; (b) all licenses of the foregoing, whether as licensee or licensor; (c) all renewals of the foregoing; (d) all income, royalties,damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and futureinfringements thereof; (e) all rights to sue for past, present, and future infringements of the foregoing, including the right to settle suits involving claims anddemands for royalties owing; and (f) all rights corresponding to any of the foregoing throughout the world.The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.ARTICLE IIREAFFIRMATION AND GRANT OF SECURITY INTERESTEach Initial Grantor party to the Existing Security Agreement reaffirms the security interest granted under the terms and conditions of the ExistingSecurity Agreement and agrees that such security interest remains in full force and effect and is hereby ratified, reaffirmed and confirmed. Each Initial Grantorparty to the Existing Security Agreement acknowledges and agrees with the Collateral Agent that the Existing Security Agreement is amended, restated, andsuperseded in its entirety pursuant to the terms hereof.Each of the Grantors hereby pledges, assigns and grants to the Collateral Agent, on behalf of and for the benefit of the Holders of SecuredObligations, a security interest in all of such Grantor’s right, title and interest, whether now owned or hereafter acquired, in and to the Collateral to secure theprompt and complete payment and performance of the Secured Obligations. For the avoidance of doubt, the grant of a security interest herein shall not bedeemed to be an assignment of intellectual property rights owned by the Grantors.ARTICLE IIIREPRESENTATIONS AND WARRANTIESEach of the Initial Grantors represents and warrants to the Collateral Agent and the Holders of Secured Obligations, and each Grantor that becomes aparty to this Security Agreement pursuant to the execution of a Security Agreement Supplement in substantially the form of Annex I represents and warrants(after giving effect to supplements to each of the Exhibits hereto with respect to such subsequent Grantor as attached to such Security AgreementSupplement), that, as of the date hereof or as of the date any additional Grantor becomes party to this Security Agreement pursuant to a Security AgreementSupplement:3.1. Title, Authorization, Validity and Enforceability. Such Grantor has (other than the Intellectual Property Collateral, with respect to whichSection 3.11 shall apply) (a) good and valid rights in or the power to transfer the Collateral owned by it and (b) title to the Collateral with respect to which ithas purported to grant a security interest hereunder, free and clear of all Liens except for Liens permitted under Section 4.1.6 hereof. Such Grantor has fullcorporate, limited liability company or partnership, as applicable, power and authority to grant to the Collateral Agent the security interest in the Collateralpursuant hereto. The execution and delivery by such Grantor of this Security Agreement have been duly authorized by proper corporate, limited liabilitycompany, limited partnership or partnership, as applicable, proceedings, and this Security Agreement constitutes a legal, valid and binding obligation ofsuch Grantor and creates a security interest which is enforceable against such Grantor in all Collateral it now owns or hereafter acquires, except asenforceability may be limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws relating to or affecting the enforcement ofcreditors’ rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law), and (iii) requirements of reasonableness,good faith and fair dealing. When financing statements have been filed in the appropriate offices against such Grantor in the locations listed in Exhibit “D”,the Collateral Agent will have a perfected first priority security interest in the Collateral owned by such Grantor in which a security interest may be perfectedby filing of a financing statement under the New York UCC, subject only to Liens permitted under Section 4.1.6 hereof.53.2. Conflicting Laws and Contracts. Neither the execution and delivery by such Grantor of this Security Agreement, the creation and perfectionof the security interest in the Collateral granted hereunder, nor compliance with the terms and provisions hereof will violate (i) any law, rule, regulation,order, writ, judgment, injunction, decree or award binding on such Grantor, or (ii) such Grantor’s charter, articles or certificate of incorporation, partnershipagreement or by-laws (or similar constitutive documents), or (iii) the provisions of any indenture, instrument or agreement to which such Grantor is a party oris subject, or by which it, or its property may be bound or affected, or conflict with or constitute a default thereunder, or result in or require the creation orimposition of any Lien in, of or on the property of such Grantor pursuant to the terms of any such indenture, instrument or agreement (other than any Lien ofthe Collateral Agent on behalf of the Holders of Secured Obligations) except, in each case, which could not reasonably be expected to result in a MaterialAdverse Effect.3.3. Principal Location. Such Grantor’s mailing address and the location of its place of business (if it has only one) or its chief executive office(if it has more than one place of business), is disclosed in Exhibit “A”.3.4. Property Locations. The Inventory and Equipment of each Grantor are located solely at the locations of such Grantor described in Exhibit“A”. All of said locations are owned by such Grantor except for locations (i) which are leased by such Grantor as lessee and designated in Part B of Exhibit“A” and (ii) at which Inventory is held in a public warehouse or is otherwise held by a bailee or on consignment by such Grantor as designated in Part C ofExhibit “A”.3.5. No Other Names; Etc.. Within the five-year period ending as of the date such Person becomes a Grantor hereunder, such Grantor has notconducted business under any name, changed its jurisdiction of formation, merged with or into or consolidated with any other Person, except as disclosed inExhibit “A”. The name in which such Grantor has executed this Security Agreement is the exact name as it appears in such Grantor’s organizationaldocuments, as amended, as filed with such Grantor’s jurisdiction of organization as of the date such Person becomes a Grantor hereunder.3.6. Accounts and Chattel Paper. The names of the obligors, amounts owing, due dates and other information with respect to the Accounts andChattel Paper owned by such Grantor are and will be correctly stated in all material respects in all material records of such Grantor relating thereto and in allmaterial invoices and reports with respect thereto furnished to the Collateral Agent by such Grantor from time to time.3.7. Filing Requirements. None of the Equipment owned by such Grantor is covered by any certificate of title. None of the Collateral owned bysuch Grantor is of a type for which security interests or liens may be perfected by filing under any federal statute except for Patents, Trademarks andCopyrights held by such Grantor and described in Exhibit “B”.3.8. No Financing Statements. No financing statement describing all or any portion of the Collateral which has not lapsed or been terminatednaming such Grantor as debtor has been filed in any jurisdiction except financing statements (i) naming the Collateral Agent on behalf of the Holders ofSecured Obligations as the secured party and (ii) in respect of Liens permitted by Section 6.02 of the Credit Agreement; provided, that nothing herein shall bedeemed to constitute an agreement to subordinate any of the Liens of the Collateral Agent under the Loan Documents to any Liens otherwise permitted underSection 6.02 of the Credit Agreement.3.9. Federal Employer Identification Number; State Organization Number; Jurisdiction of Organization. Such Grantor’s federal employeridentification number is, and if such Grantor is a registered organization, such Grantor’s State of organization, type of organization and State of organizationidentification number are, listed in Exhibit “F”.3.10. Pledged Securities and Other Investment Property. Exhibit “C” sets forth a complete and accurate list of the Instruments, Securities andother Investment Property constituting Collateral and delivered to the Collateral Agent. Each Grantor is the direct and beneficial owner of each Instrument,Security and other type of Investment Property listed in Exhibit “C” as being owned by it, free and clear of any Liens, except for the security interest grantedto the Collateral Agent for the benefit of the Holders of Secured Obligations hereunder or as permitted by Section 6.02 of the Credit Agreement.63.11. Intellectual Property.3.11.1 Exhibit “B” contains a complete and accurate listing as of the date hereof of all Registered U.S. Intellectual Property Collateral(other than intellectual property excluded from the definition of Collateral), including: (i) U.S. trademark registrations and U.S. applications fortrademark registration, (ii) U.S. patents and U.S. patents applications, together with all U.S. reissuances, continuations, continuations in part,revisions, extensions and reexaminations thereof, (iii) U.S. copyright registrations and applications for registration and (iv) U.S. domain names. Grantor has all right, title and interest to the Intellectual Property Collateral listed in Exhibit “B”. When Confirmatory Grants of Security Interesthave been filed with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, the Collateral Agent willhave a perfected first priority security interest in the Registered U.S. Intellectual Property Collateral owned by such Grantor in which a securityinterest may be perfected by making such filings, subject only to Liens permitted under Section 4.1.6 hereof.3.11.2 Except as set forth on Exhibit “B”, no Person other than the respective Grantor has any right or interest of any kind or nature in or tothe Intellectual Property Collateral, including any right to sell, license, lease, transfer, distribute, use or otherwise exploit the Intellectual Property orany portion thereof outside of the ordinary course of the respective Grantor’s business.3.11.3 No Grantor has received any written notice that remains outstanding challenging the validity, enforceability, or ownership of anyIntellectual Property Collateral except where those challenges could not reasonably be expected to result in a Material Adverse Effect.3.11.4 Each Grantor has enforced and currently enforces reasonable quality control measures in connection with such Grantor’s licensing ofthe trademarks listed on Exhibit “B” to third parties, except (i) with respect to trademarks not currently in use and (ii) where the failure to use suchreasonable quality control measures could not reasonably be expected to result in a Material Adverse Effect.3.11.5 The consummation of the transactions contemplated by the Loan Documents will not result in the termination or materialimpairment of any of the material Intellectual Property.ARTICLE IVCOVENANTSFrom the date of this Security Agreement and thereafter until this Security Agreement is terminated, each of the Initial Grantors agrees, and from andafter the effective date of any Security Agreement Supplement applicable to any Grantor (and after giving effect to supplements to each of the Exhibits heretowith respect to such subsequent Grantor as attached to such Security Agreement Supplement) and thereafter until this Security Agreement is terminated eachsuch subsequent Grantor agrees:4.1. General.4.1.1 Inspection. Each Grantor will permit the Collateral Agent or any Holder of Secured Obligations, by its representatives and agents(upon reasonable prior notice so long as no Event of Default has occurred and is continuing) (i) to inspect the Collateral, (ii) to examine and makecopies of the records of such Grantor relating to the Collateral and (iii) to discuss the Collateral and the related records of such Grantor with suchGrantor’s officers and employees (so long as an Event of Default has occurred and is continuing, in the case of any Receivable, with any person orentity which is or may be obligated thereon), all at such reasonable times and intervals as the Collateral Agent or such Holder of Secured Obligationsmay determine, and all at such Grantor’s expense.74.1.2 Taxes. Such Grantor will timely file or cause to be filed all tax returns and reports required to be filed and will pay or cause to be paidall taxes required to be paid by it with respect to the Collateral, except (i) those that are being contested in good faith by appropriate proceedingsand for which such Grantor has set aside on its books adequate reserves or (ii) to the extent that failure to do so could not reasonably be expected toresult in a Material Adverse Effect.4.1.3 Records and Reports; Notification of Default. Each Grantor shall keep and maintain complete, accurate and proper books and recordswith respect to the Collateral owned by such Grantor, and furnish to the Collateral Agent, with sufficient copies for each of the Holders of SecuredObligations, such reports relating to the Collateral as the Collateral Agent shall from time to time reasonably request. Each Grantor will give promptnotice in writing to the Collateral Agent of the occurrence of any development which could reasonably be expected to materially and adverselyaffect the Collateral, taken as a whole.4.1.4 Financing Statements and Other Actions; Defense of Title. Each Grantor hereby authorizes the Collateral Agent to file, and ifrequested will execute and deliver to the Collateral Agent, all financing statements describing the Collateral owned by such Grantor and otherdocuments and take such other actions as may from time to time reasonably be requested by the Collateral Agent in order to maintain a first priority,perfected security interest in and, if applicable, Control of, the Collateral owned by such Grantor, subject to Liens permitted under Section 6.02 ofthe Credit Agreement, provided that nothing herein shall be deemed to constitute an agreement to subordinate any of the Liens of the CollateralAgent under the Loan Documents to any Liens otherwise permitted under Section 6.02 of the Credit Agreement. Such financing statements maydescribe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such propertyin any other manner as the Collateral Agent may determine, in its reasonable discretion, is necessary, advisable or prudent to ensure that theperfection of the security interest in the Collateral granted to the Collateral Agent herein, including, without limitation, describing such property as“all assets” or “all personal property, whether now owned or hereafter acquired.” Each Grantor will use commercially reasonable efforts to defendtitle to the Collateral owned by such Grantor against all persons in a manner materially consistent with past practices and to defend the securityinterest of the Collateral Agent in such Collateral and the priority thereof against any Lien not expressly permitted hereunder, unless (i) suchCollateral has a book value of less than $500,000 or (ii) the Collateral Agent shall have provided its written consent with respect thereto.4.1.5 Disposition of Collateral. No Grantor will sell, lease or otherwise dispose of the Collateral owned by such Grantor except (i)dispositions specifically permitted pursuant to Section 6.03 of the Credit Agreement and (ii) until such time as such Grantor receives a notice fromthe Collateral Agent pursuant to Article VII, proceeds of Inventory and Accounts collected in the ordinary course of business.4.1.6 Liens. No Grantor will create, incur, or suffer to exist any Lien on the Collateral owned by such Grantor except Liens permittedpursuant to Section 6.02 of the Credit Agreement, provided, that nothing herein shall be deemed to constitute an agreement to subordinate any ofthe Liens of the Collateral Agent under the Loan Documents to any Liens otherwise permitted under Section 6.02 of the Credit Agreement.4.1.7 Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name. Each Grantor will:(i)preserve its existence and corporate structure as in effect on the date hereof, except as otherwise permitted under Section 6.03 ofthe Credit Agreement; (ii)not change its jurisdiction of organization; (iii)not maintain its place of business (if it has only one) or its chief executive office (if it has more than one place of business) at alocation other than a location specified in Exhibit “A”; and (iv)not (i) have any Inventory or Equipment or proceeds or products thereof (other than Inventory and proceeds thereof disposed of aspermitted by Section 4.1.5) at a location other than a location specified in Exhibit “A” or (ii) change its name or taxpayeridentification number, unless, in each such case, such Grantor shall have given the Collateral Agent not less than thirty (30) days’prior written notice of such event or occurrence and the Collateral Agent shall have either (x) determined that such event oroccurrence will not adversely affect the validity, perfection or priority of the Collateral Agent’s security interest in the Collateral,or (y) taken such steps (with the cooperation of such Grantor to the extent necessary or advisable) as are necessary or advisable toproperly maintain the validity, perfection and priority of the Collateral Agent’s security interest in the Collateral owned by suchGrantor.84.1.8 Other Financing Statements. No Grantor will suffer to exist or authorize the filing of any financing statement naming it as debtorcovering all or any portion of the Collateral owned by such Grantor, except any financing statement authorized under Section 4.1.4 hereof. EachGrantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financingstatement filed in connection herewith without the prior written consent of the Collateral Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the New York UCC.4.2. Receivables.4.2.1 Certain Agreements on Receivables. After written notice from the Collateral Agent during the occurrence and continuation of anEvent of Default, no Grantor will make or agree to make any discount, credit, rebate or other reduction in the original amount owing on a Receivableor accept in satisfaction of a Receivable less than the original amount thereof (other than discounting of receivables owing from distressed customersin a manner consistent with prudent business practices).4.2.2 Collection of Receivables. Except as otherwise provided in this Security Agreement, each Grantor will collect and enforce, at suchGrantor’s sole expense, all amounts due or hereafter due to such Grantor under the Receivables owned by such Grantor; provided that each Grantormay adjust, settle, compromise or release the amount or payment of any Receivable or amount due on any contract relating thereto, or allow anycredit or discount thereon, in the ordinary course of its business and consistent with its normal business practices.4.2.3 Delivery of Invoices. Each Grantor will deliver to the Collateral Agent immediately upon its request after the occurrence of an Eventof Default duplicate invoices with respect to each Account owned by such Grantor bearing such language of assignment as the Collateral Agentshall specify.4.3. Maintenance of Goods. Each Grantor will do all things necessary to maintain, preserve, protect and keep the Inventory and the Equipmentowned by such Grantor in good repair, working order and saleable condition (ordinary wear and tear excepted) and make all necessary and proper repairs,renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times, except where the failure to do so,individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.4.4. Instruments, Securities, Chattel Paper, Documents and Pledged Deposits. Each Grantor will (i) deliver to the Collateral Agent immediatelyupon execution of this Security Agreement, or upon acquisition by the Grantor thereafter, the originals of all Chattel Paper, Securities (to the extentcertificated) and Instruments constituting Collateral (if any then exist), (ii) hold in trust for the Collateral Agent upon receipt and immediately thereafterdeliver to the Collateral Agent any Chattel Paper, Securities and Instruments constituting Collateral, (iii) upon the designation of any Pledged Deposits (asset forth in the definition thereof), deliver to the Collateral Agent such Pledged Deposits which are evidenced by certificates included in the Collateralendorsed in blank, marked with such legends and assigned as the Collateral Agent shall specify, and (iv) upon the Collateral Agent’s request, after theoccurrence and during the continuance of an Event of Default, deliver to the Collateral Agent (and thereafter hold in trust for the Collateral Agent uponreceipt and immediately deliver to the Collateral Agent) any Document evidencing or constituting Collateral.4.5. Uncertificated Securities and Certain Other Investment Property. Each Grantor will permit the Collateral Agent from time to time to causethe appropriate issuers (and, if held with a securities intermediary, such securities intermediary) of uncertificated securities or other types of InvestmentProperty not represented by certificates which are Collateral owned by such Grantor to mark their books and records with the numbers and face amounts of allsuch uncertificated securities or other types of Investment Property not represented by certificates and all rollovers and replacements therefor to reflect theLien of the Collateral Agent granted pursuant to this Security Agreement. Each Grantor will use all commercially reasonable efforts, with respect toInvestment Property constituting Collateral owned by such Grantor held with a financial intermediary, to cause such financial intermediary to enter into acontrol agreement with the Collateral Agent in form and substance reasonably satisfactory to the Collateral Agent.4.6. Stock and Other Ownership Interests.4.6.1 Changes in Capital Structure of Issuers. Except as permitted in the Credit Agreement, no Grantor will (i) permit or suffer any issuer ofprivately held corporate securities or other ownership interests in a corporation, partnership, joint venture or limited liability company constitutingCollateral owned by such Grantor to dissolve, liquidate, retire any of its capital stock or other Instruments or Securities evidencing ownership,reduce its capital or merge or consolidate with any other entity, or (ii) vote any of the Instruments, Securities or other Investment Property in favor ofany of the foregoing except to the extent permitted under Section 6.03 of the Credit Agreement.94.6.2 Issuance of Additional Securities. No Grantor will permit or suffer any Domestic Subsidiary to issue any such securities or otherownership interests, any right to receive the same or any right to receive earnings, except to such Grantor or another Grantor.4.6.3 Registration of Pledged Securities and other Investment Property. Each Grantor will permit any registrable Collateral owned by suchGrantor to be registered in the name of the Collateral Agent or its nominee at any time at the option of the Required Lenders following theoccurrence and during the continuance of an Event of Default and without any further consent of such Grantor.4.6.4 Exercise of Rights in Pledged Securities and other Investment Property. Each Grantor will permit the Collateral Agent or its nomineeat any time during the continuance of an Event of Default, without notice, to exercise or refrain from exercising any and all voting and otherconsensual rights pertaining to the Collateral owned by such Grantor or any part thereof, and to receive all dividends and interest in respect of suchCollateral.4.7. Deposit Accounts. Each Grantor will (i) upon the Collateral Agent’s reasonable request, use commercially reasonable efforts to cause eachbank or other financial institution in which it maintains (a) a Deposit Account to enter into a control agreement with the Collateral Agent, in form andsubstance reasonably satisfactory to the Collateral Agent in order to give the Collateral Agent Control of the Deposit Account or (b) other deposits (generalor special, time or demand, provisional or final) to be notified of the security interest granted to the Collateral Agent hereunder and cause each such bank orother financial institution to acknowledge such notification in writing and (ii) upon the Collateral Agent’s request after the occurrence and during thecontinuance of an Event of Default, deliver to each such bank or other financial institution a letter, in form and substance reasonably acceptable to theCollateral Agent, transferring ownership of the Deposit Account to the Collateral Agent or transferring dominion and control over each such other deposit tothe Collateral Agent until such time as no Event of Default exists. In the case of deposits maintained with Lenders, the terms of such letter shall be subject tothe provisions of the Credit Agreement regarding setoffs.4.8. Letter-of-Credit Rights. Each Grantor will, upon the Collateral Agent’s request, use commercially reasonable efforts to cause each issuer of aletter of credit, to consent to the assignment of proceeds of any letter of credit with respect to which such Grantor is the beneficiary in an amount in excess of$1,000,000 in order to give the Collateral Agent Control of the letter-of-credit rights to such letter of credit.4.9. Federal, State or Municipal Claims. Each Grantor will notify the Collateral Agent of any Collateral owned by such Grantor whichconstitutes a claim against the United States government or any state or local government or any instrumentality or agency thereof in excess of $1,000,000,the assignment of which claim is restricted by federal, state or municipal law. Furthermore, each Grantor will execute and deliver to the Collateral Agentsuch documents, agreements and instruments, and will take such further actions (including, without limitation, the taking of necessary actions under theFederal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.)), which the Collateral Agent may, from time totime, reasonably request, to ensure perfection and priority of the Liens hereunder in respect of Accounts and General Intangibles owing by any government orinstrumentality or agency thereof, all at the expense of the Company.4.10. Intellectual Property.4.10.1 If, after the date hereof, any Grantor obtains rights to, including, but not limited to filing and acceptance of a statement of use or anamendment to allege use with the United States Patent and Trademark Office, or applies for or seeks registration of, any new patentable invention,Trademark or Copyright in addition to the Intellectual Property described in Exhibit “B”, which are all of such Grantor’s Intellectual Property as ofthe date hereof, then such Grantor shall give the Collateral Agent notice thereof concurrently with any delivery of financial statements under Section5.01(a) or 5.01(b) of the Credit Agreement. Each Grantor agrees promptly upon request by the Collateral Agent to execute and deliver to theCollateral Agent any supplement to this Security Agreement, Confirmatory Grants of Security Interest or any other document reasonably requestedby the Collateral Agent to evidence such security interest in a form appropriate for recording in the applicable federal office. Each Grantor alsohereby authorizes the Collateral Agent to modify this Security Agreement unilaterally (i) by amending Exhibit “B” to include any future IntellectualProperty of which the Collateral Agent receives notification from such Grantor pursuant hereto and (ii) by recording with the United States Patentand Trademark Office and/or the United States Copyright Office, in addition to and not in substitution for this Security Agreement, ConfirmatoryGrants of Security Interest containing a schedule of such future Patents, Trademarks and/or Copyrights.4.11. Commercial Tort Claims. If, after the date hereof, any Grantor identifies the existence of a commercial tort claim in excess of $1,000,000belonging to such Grantor that has arisen in the course of such Grantor’s business in addition to the commercial tort claims described in Exhibit “E”, whichare all of such Grantor’s commercial tort claims in excess of $1,000,000 as of the date hereof, then such Grantor shall give the Collateral Agent prompt noticethereof, but in any event not less frequently than quarterly. Each Grantor agrees promptly upon request by the Collateral Agent to execute and deliver to theCollateral Agent any supplement to this Security Agreement or any other document reasonably requested by the Collateral Agent to evidence the grant of asecurity interest therein in favor of the Collateral Agent.4.12. Updating of Exhibits to Security Agreement. The Company will provide to the Collateral Agent, concurrently with the delivery of thefinancial statements required by Section 5.01(a) of the Credit Agreement, updated versions of the Exhibits to this Security Agreement (provided that if therehave been no changes to any such Exhibits since the previous updating thereof required hereby, the Company shall indicate that there has been “no change”to the applicable Exhibit(s)).10ARTICLE VREMEDIES5.1. Remedies. Upon the occurrence and continuance of an Event of Default, the Collateral Agent may, in accordance with the terms of the LoanDocuments, exercise any or all of the following rights and remedies:5.1.1 Those rights and remedies provided in this Security Agreement, the Credit Agreement or any other Loan Document, provided that thisSection 5.1.1 shall not be understood to limit any rights or remedies available to the Collateral Agent and the Holders of Secured Obligations priorto an Event of Default.5.1.2 Those rights and remedies available to a secured party under the New York UCC (whether or not the New York UCC applies to theaffected Collateral) or under any other applicable law (including, without limitation, any law governing the exercise of a bank’s right of setoff orbankers’ lien).5.1.3 Without notice except as specifically provided in Section 8.1 hereof or elsewhere herein, sell, lease, assign, grant an option or optionsto purchase or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, for cash, on credit or for futuredelivery, and upon such other terms as the Collateral Agent may deem commercially reasonable.The Collateral Agent, on behalf of the Holders of Secured Obligations, may comply with any applicable state or federal law requirements in connection witha disposition of the Collateral, and such compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.If, after the Credit Agreement has terminated by its terms and all of the Secured Obligations have been paid in full, there remain outstanding SwapObligations or Banking Services Obligations, the Required Lenders may exercise the remedies provided in this Section 5.1 upon the occurrence of any eventwhich would allow or require the termination or acceleration of any Swap Obligations or Banking Services Obligations.Notwithstanding the foregoing, neither the Collateral Agent nor any other Holder of Secured Obligations shall be required to (i) make any demand upon, orpursue or exhaust any of their rights or remedies against, any Grantor, any other obligor, guarantor, pledgor or any other Person with respect to the payment ofthe Secured Obligations or to pursue or exhaust any of their rights or remedies with respect to any Collateral therefor or any direct or indirect guaranteethereof, (ii) marshal the Collateral or any guarantee of the Secured Obligations or to resort to the Collateral or any such guarantee in any particular order, or(iii) effect a public sale of any Collateral.5.2. Grantors’ Obligations Upon an Event of Default. Upon the request of the Collateral Agent after the occurrence of an Event of Default, eachGrantor will:5.2.1 Assembly of Collateral. Assemble and make available to the Collateral Agent the Collateral and all records relating thereto at anyplace or places reasonably specified by the Collateral Agent.5.2.2 Secured Party Access. Permit the Collateral Agent, by the Collateral Agent’s representatives and agents, to enter any premises whereall or any part of the Collateral, or the books and records relating thereto, or both, are located, to take possession of all or any part of the Collateraland to remove all or any part of the Collateral.5.3. License. The Collateral Agent is hereby granted a license or other right to use, following the occurrence and during the continuance of anEvent of Default, without charge, each Grantor’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks,customer lists and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, andselling any Collateral, and, following the occurrence and during the continuance of an Event of Default, such Grantor’s rights under all licenses and allfranchise agreements shall inure to the Collateral Agent’s benefit for such purpose. In addition, each Grantor hereby irrevocably agrees that the CollateralAgent may, following the occurrence and during the continuance of an Event of Default, sell any of such Grantor’s Inventory directly to any person,including without limitation persons who have previously purchased such Grantor’s Inventory from such Grantor and in connection with any such sale orother enforcement of the Collateral Agent’s rights under this Security Agreement, may sell Inventory which bears any trademark owned by or licensed to suchGrantor and any Inventory that is covered by any copyright owned by or licensed to such Grantor and the Collateral Agent may finish any work in processand affix any trademark owned by or licensed to such Grantor and sell such Inventory as provided herein.11ARTICLE VIWAIVERS, AMENDMENTS AND REMEDIESNo delay or omission of the Collateral Agent or any Holder of Secured Obligations to exercise any right or remedy granted under this SecurityAgreement shall impair such right or remedy or be construed to be a waiver of any Event of Default or an acquiescence therein, and any single or partialexercise of any such right or remedy shall not preclude any other or further exercise thereof or the exercise of any other right or remedy. No waiver,amendment or other variation of the terms, conditions or provisions of this Security Agreement whatsoever shall be valid unless in writing signed by (a) theCollateral Agent and (b) each Grantor, and then only to the extent in such writing specifically set forth, provided that the addition of any Subsidiary as aGrantor hereunder by execution of a Security Agreement Supplement in the form of Annex I (with such modifications as shall be reasonably acceptable to theCollateral Agent) shall not require receipt of any consent from or execution of any documentation by any other Grantor party hereto. All rights and remediescontained in this Security Agreement or by law afforded shall be cumulative and all shall be available to the Collateral Agent and the Holders of SecuredObligations until the Secured Obligations have been paid in full.ARTICLE VIIPROCEEDS; COLLECTION OF RECEIVABLES7.1. Lockboxes. Upon request of the Collateral Agent after the occurrence of an Event of Default, each Grantor shall execute and deliver to theCollateral Agent irrevocable lockbox agreements in the form provided by or otherwise reasonably acceptable to the Collateral Agent, which agreements shallbe accompanied by an acknowledgment by the bank where the lockbox is located of the Lien of the Collateral Agent granted hereunder and of irrevocableinstructions to wire all amounts collected therein to a special collateral account at the Collateral Agent.7.2. Collection of Receivables. The Collateral Agent may at any time after the occurrence of an Event of Default, by giving each Grantor writtennotice, elect to require that the Receivables be paid directly to the Collateral Agent for the benefit of the Holders of Secured Obligations. In such event, eachGrantor shall, and shall permit the Collateral Agent to, promptly notify the account debtors or obligors under the Receivables owned by such Grantor of theCollateral Agent’s interest therein and direct such account debtors or obligors to make payment of all amounts then or thereafter due under such Receivablesdirectly to the Collateral Agent. Upon receipt of any such notice from the Collateral Agent, each Grantor shall thereafter hold in trust for the CollateralAgent, on behalf of the Holders of Secured Obligations, all amounts and proceeds received by it with respect to the Receivables and Other Collateral andimmediately and at all times thereafter deliver to the Collateral Agent all such amounts and proceeds in the same form as so received, whether by cash, check,draft or otherwise, with any necessary endorsements. The Collateral Agent shall hold and apply funds so received as provided by the terms of Section 7.3hereof.7.3. Application of Proceeds. The proceeds of the Collateral received by the Collateral Agent hereunder shall be applied by the Collateral Agentto payment of the Secured Obligations pursuant to the terms of the Credit Agreement.ARTICLE VIIIGENERAL PROVISIONS8.1. Notice of Disposition of Collateral; Condition of Collateral. Each Grantor hereby waives notice of the time and place of any public sale orthe time after which any private sale or other disposition of all or any part of the Collateral may be made. To the extent such notice may not be waived underapplicable law, any notice made shall be deemed reasonable if sent to the Company, addressed as set forth in Article IX, at least ten (10) days prior to (i) thedate of any such public sale or (ii) the time after which any such private sale or other disposition may be made. The Collateral Agent shall have no obligationto clean-up or otherwise prepare the Collateral for sale. To the maximum extent permitted by applicable law, each Grantor waives all claims, damages, anddemands against the Collateral Agent or any other Holder of Secured Obligations arising out of the repossession, retention or sale of the Collateral, exceptsuch as arise solely out of the gross negligence or willful misconduct of the Collateral Agent or such other Holder of Secured Obligations as finallydetermined by a court of competent jurisdiction. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes thebenefit and advantage of, and covenants not to assert against the Collateral Agent or any other Holder of Secured Obligations, any valuation, stay, appraisal,extension, moratorium, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for thisprovision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of saleconferred by this Security Agreement, or otherwise. Except as otherwise specifically provided herein, each Grantor hereby waives presentment, demand,protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral.128.2. Compromises and Collection of Collateral. Each Grantor and the Collateral Agent recognize that setoffs, counterclaims, defenses and otherclaims may be asserted by obligors with respect to certain of the Receivables, that certain of the Receivables may be or become uncollectible in whole or inpart and that the expense and probability of success in litigating a disputed Receivable may exceed the amount that reasonably may be expected to berecovered with respect to a Receivable. In view of the foregoing, each Grantor agrees that the Collateral Agent may at any time and from time to time, if anEvent of Default has occurred and is continuing, compromise with the obligor on any Receivable, accept in full payment of any Receivable such amount asthe Collateral Agent in its reasonable discretion shall determine or abandon any Receivable, and any such action by the Collateral Agent shall becommercially reasonable so long as the Collateral Agent acts in good faith based on information known to it at the time it takes any such action.8.3. Secured Party Performance of Grantor’s Obligations. Without having any obligation to do so, the Collateral Agent may perform or pay anyobligation which any Grantor has agreed to perform or pay in this Security Agreement if any Grantor fails to perform or pay such obligation and such Grantorshall reimburse the Collateral Agent for any reasonable amounts paid by the Collateral Agent pursuant to this Section 8.3. Each Grantor’s obligation toreimburse the Collateral Agent pursuant to the preceding sentence shall be a Secured Obligation payable on demand.8.4. Authorization for Secured Party to Take Certain Action. Each Grantor irrevocably authorizes the Collateral Agent at any time and from timeto time in the reasonable discretion of the Collateral Agent and appoints the Collateral Agent as its attorney in fact (i) to execute on behalf of such Grantor asdebtor and to file financing statements necessary or desirable in the Collateral Agent’s reasonable discretion to perfect and to maintain the perfection andpriority of the Collateral Agent’s security interest in the Collateral, (ii) to indorse and collect any cash proceeds of the Collateral during the continuance of anEvent of Default, (iii) to file a carbon, photographic or other reproduction of this Security Agreement or any financing statement with respect to the Collateralas a financing statement and to file any other financing statement or amendment of a financing statement (which does not add new collateral or add a debtor)in such offices as the Collateral Agent in its reasonable discretion deems necessary or desirable to perfect and to maintain the perfection and priority of theCollateral Agent’s security interest in the Collateral, (iv) during the continuance of an Event of Default, to contact and enter into one or more agreementswith the issuers of uncertificated securities which are Collateral owned by such Grantor and which are Securities or with financial intermediaries holdingother Investment Property as may be necessary or advisable to give the Collateral Agent Control over such Securities or other Investment Property, (v) duringthe continuance of an Event of Default, to enforce payment of the Instruments, Accounts and Receivables in the name of the Collateral Agent or such Grantor,(vi) to apply the proceeds of any Collateral received by the Collateral Agent to the Secured Obligations as provided in Article VII and (vii) to discharge pastdue taxes, assessments, charges, fees or Liens on the Collateral (except for such Liens as are specifically permitted hereunder or under any other LoanDocument), and each Grantor agrees to reimburse the Collateral Agent on demand for any reasonable payment made or any reasonable expense incurred bythe Collateral Agent in connection therewith, provided that this authorization shall not relieve any Grantor of any of its obligations under this SecurityAgreement or under the Credit Agreement.8.5. Specific Performance of Certain Covenants. Each Grantor acknowledges and agrees that a breach of any of the covenants contained inSections 4.1.5, 4.1.6, 4.4, 5.2, or 8.7 or in Article VII hereof will cause irreparable injury to the Collateral Agent and the Holders of Secured Obligations, thatthe Collateral Agent and Holders of Secured Obligations have no adequate remedy at law in respect of such breaches and therefore agrees, without limitingthe right of the Collateral Agent or the Holders of Secured Obligations to seek and obtain specific performance of other obligations of the Grantors containedin this Security Agreement, that the covenants of the Grantors contained in the Sections referred to in this Section 8.5 shall be specifically enforceable againstthe Grantors.8.6. Use and Possession of Certain Premises. Upon the occurrence of an Event of Default, the Collateral Agent shall be entitled to occupy anduse any premises owned or leased by the Grantors where any of the Collateral or any records relating to the Collateral are located until the SecuredObligations are paid or the Collateral is removed therefrom, whichever first occurs, without any obligation to pay any Grantor for such use and occupancy.8.7. Dispositions Not Authorized. No Grantor is authorized to sell or otherwise dispose of the Collateral except as set forth in Section 4.1.5hereof and notwithstanding any course of dealing between any Grantor and the Collateral Agent or other conduct of the Collateral Agent, no authorization tosell or otherwise dispose of the Collateral (except as set forth in Section 4.1.5 hereof) shall be binding upon the Collateral Agent or the Holders of SecuredObligations unless such authorization is in writing signed by the Collateral Agent.8.8. Benefit of Agreement. The terms and provisions of this Security Agreement shall be binding upon and inure to the benefit of the Grantors,the Collateral Agent and the Holders of Secured Obligations and their respective successors and assigns (including all persons who become bound as a debtorto this Security Agreement), except that the Grantors shall not have the right to assign their rights or delegate their obligations under this Security Agreementor any interest herein, without the prior written consent of the Collateral Agent. No sales of participations, assignments, transfers, or other dispositions of anyagreement governing the Secured Obligations or any portion thereof or interest therein shall in any manner impair the Lien granted to the Collateral Agent,for the benefit of the Collateral Agent and the other Holders of Secured Obligations, hereunder.138.9. Survival of Representations. All representations and warranties of the Grantors contained in this Security Agreement shall survive theexecution and delivery of this Security Agreement.8.10. Taxes and Expenses. Any taxes (including income taxes) payable or ruled payable by a Federal or State authority in respect of this SecurityAgreement shall be paid by the Grantors, together with interest and penalties, if any. The Grantors shall reimburse the Collateral Agent for any and allreasonable out-of-pocket expenses and internal charges (including reasonable attorneys’, auditors’ and accountants’ fees and reasonable time charges ofattorneys, paralegals, auditors and accountants who may be employees of the Collateral Agent) paid or incurred by the Collateral Agent in connection withthe preparation, execution, delivery, administration, collection and enforcement of this Security Agreement and in the audit, analysis, administration,collection, preservation or sale of the Collateral (including the expenses and charges associated with any periodic or special audit of the Collateral). Any andall costs and expenses incurred by the Grantors in the performance of actions required pursuant to the terms hereof shall be borne solely by the Grantors.8.11. Headings. The title of and section headings in this Security Agreement are for convenience of reference only, and shall not govern theinterpretation of any of the terms and provisions of this Security Agreement.8.12. Termination. This Security Agreement shall continue in effect (notwithstanding the fact that from time to time there may be no SecuredObligations outstanding) until (i) any and all commitments to extend credit under the Loan Documents have terminated and (ii) all of the SecuredObligations (other than contingent indemnity obligations) have been indefeasibly paid in cash and performed in full and no commitments of the CollateralAgent or the Holders of Secured Obligations which would give rise to any Secured Obligations are outstanding.8.13. Entire Agreement. This Security Agreement and the other Loan Documents embody the entire agreement and understanding between theGrantors and the Collateral Agent relating to the Collateral.8.14. Governing Law; Jurisdiction; Waiver of Jury Trial.8.14.1 THIS SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OFTHE STATE OF NEW YORK.8.14.2 Each Grantor hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the SupremeCourt of the State of New York sitting in New York County, Borough of Manhattan and of the United States District Court for the Southern Districtof New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Security Agreement or any otherLoan Document, or for recognition or enforcement of any judgment, and each Grantor hereby irrevocably and unconditionally agrees that all claimsin respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federalcourt. Each Grantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law. Nothing in this Security Agreement or any other Loan Document shall affect any rightthat the Collateral Agent may otherwise have to bring any action or proceeding relating to this Security Agreement or any other Loan Documentagainst any Grantor or its properties in the courts of any jurisdiction.8.14.3 Each Grantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objectionwhich it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Security Agreement inany court referred to in Section 8.14.2. Each Grantor hereby irrevocably waives, to the fullest extent permitted by law, the defense of aninconvenient forum to the maintenance of such action or proceeding in any such court.8.14.4 Each party to this Security Agreement irrevocably consents to service of process in the manner provided for notices in Article IX ofthis Security Agreement, and each of the Grantors hereby appoints the Company as its agent for service of process. Nothing in this SecurityAgreement will affect the right of any party to this Security Agreement to serve process in any other manner permitted by law.8.14.5 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BYAPPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLYARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT (WHETHER BASED ONCONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT ORATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THEOTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTSBY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.148.15. Indemnity. Each Grantor hereby agrees, jointly with the other Grantors and severally, to indemnify the Collateral Agent and the Holders ofSecured Obligations (collectively, the “Indemnitees”), and their respective successors, assigns, agents and employees, from and against any and all liabilities,damages, penalties, suits, costs and related expenses (including, without limitation, all reasonable expenses of litigation or preparation therefor whether ornot the Collateral Agent or any Holder of Secured Obligations is a party thereto) imposed on, incurred by or asserted against the Collateral Agent or theHolders of Secured Obligations, or their respective successors, assigns, agents and employees, in any way relating to or arising out of this Security Agreementor any other Loan Document, or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale,return or other disposition of any Collateral (including, without limitation, latent and other defects, whether or not discoverable by the Collateral Agent orthe Holders of Secured Obligations or any Grantor, and any claim for patent, trademark or copyright infringement); provided that such indemnity shall not, asto any Indemnitee, and its successors, assigns, agents and employees, be available to the extent that such liabilities, damages, penalties, suits, costs, andrelated expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence orwillful misconduct of such Indemnitee and its successors, assigns, agents and employees or from the material breach of such Indemnitee’s obligations underthe Loan Documents.8.16. Subordination of Intercompany Indebtedness. Each Grantor agrees that any and all claims of such Grantor against any other Grantor (eachan “Obligor”) with respect to any “Intercompany Indebtedness” (as hereinafter defined), any endorser, obligor or any other guarantor of all or any part of theSecured Obligations, or against any of its properties shall be subordinate and subject in right of payment to the prior payment, in full and in cash, of allSecured Obligations, provided that, and not in contravention of the foregoing, so long as no Event of Default has occurred and is continuing, such Grantormay make loans to and receive payments in the ordinary course of business with respect to such Intercompany Indebtedness from each such Obligor to theextent not prohibited by the terms of this Security Agreement and the other Loan Documents. Notwithstanding any right of any Grantor to ask, demand, suefor, take or receive any payment from any Obligor, all rights, liens and security interests of such Grantor, whether now or hereafter arising and howsoeverexisting, in any assets of any other Obligor shall be and are subordinated to the rights of the Holders of Secured Obligations and the Collateral Agent in thoseassets. No Grantor shall have any right to possession of any such asset or to foreclose upon any such asset, whether by judicial action or otherwise, unless anduntil this Security Agreement has terminated in accordance with Section 8.12 hereof. If all or any part of the assets of any Obligor, or the proceeds thereof, aresubject to any distribution, division or application to the creditors of such Obligor, whether partial or complete, voluntary or involuntary, and whether byreason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceeding, or if the business ofany such Obligor is dissolved or if substantially all of the assets of any such Obligor are sold, then, and in any such event (such events being herein referredto as an “Insolvency Event”), any payment or distribution of any kind or character, either in cash, securities or other property, which shall be payable ordeliverable upon or with respect to any indebtedness of any Obligor to any Grantor (“Intercompany Indebtedness”) shall be paid or delivered directly to theCollateral Agent for application on any of the Secured Obligations, due or to become due, until such Secured Obligations (other than contingent indemnityobligations) shall have first been fully paid and satisfied (in cash). Should any payment, distribution, security or instrument or proceeds thereof be receivedby the applicable Grantor upon or with respect to the Intercompany Indebtedness after any Insolvency Event and prior to the termination of this SecurityAgreement in accordance with Section 8.12 hereof, such Grantor shall receive and hold the same in trust, as trustee, for the benefit of the Holders of SecuredObligations and shall forthwith deliver the same to the Collateral Agent, for the benefit of the Holders of Secured Obligations, in precisely the form received(except for the endorsement or assignment of the Grantor where necessary), for application to any of the Secured Obligations, due or not due, and, until sodelivered, the same shall be held in trust by the Grantor as the property of the Holders of Secured Obligations. If any such Grantor fails to make any suchendorsement or assignment to the Collateral Agent, the Collateral Agent or any of its officers or employees is irrevocably authorized to make the same. EachGrantor agrees that until the termination of this Security Agreement in accordance with Section 8.12 hereof, no Grantor will assign or transfer to any Person(other than the Collateral Agent or the Company or another Grantor) any claim any such Grantor has or may have against any Obligor.8.17. Severability. Any provision in this Security Agreement that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, asto that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability,or validity of that provision in any other jurisdiction, and to this end the provisions of this Security Agreement are declared to be severable.8.18. Counterparts. This Security Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each ofwhich shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signaturepage of this Security Agreement by telecopy, e-mailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shallbe effective as delivery of a manually executed counterpart of this Security Agreement. The words “execution,” “signed,” “signature,” “delivery,” and wordsof like import in or relating to any document to be signed in connection with this Security Agreement and the transactions contemplated hereby shall bedeemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity orenforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extentand as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State ElectronicSignatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.158.19. Limitation on Collateral Agent’s and other Holders of Secured Obligations’ Duty with Respect to the Collateral. The Collateral Agent shallhave no obligation to clean-up or otherwise prepare the Collateral for sale. The Collateral Agent and each other Holder of Secured Obligations shall usereasonable care with respect to the Collateral in its possession or under its control. Neither the Collateral Agent nor any other Holder of Secured Obligationsshall have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Collateral Agent orsuch other Holder of Secured Obligations, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.To the extent that applicable law imposes duties on the Collateral Agent to exercise remedies in a commercially reasonable manner, each Grantoracknowledges and agrees that it is commercially reasonable for the Collateral Agent (i) to fail to incur expenses deemed significant by the Collateral Agent toprepare Collateral for disposition or otherwise to transform raw material or work in process into finished goods or other finished products for disposition, (ii)to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental orthird party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against accountdebtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies againstaccount debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertisedispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact otherPersons, whether or not in the same business as such Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one ormore professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateralby utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or thatmatch buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title,possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Collateral Agent against risks of loss, collection or dispositionof Collateral or to provide to the Collateral Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemedappropriate by the Collateral Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the CollateralAgent in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section 8.19 is to provide non-exhaustiveindications of what actions or omissions by the Collateral Agent would be commercially reasonable in the Collateral Agent’s exercise of remedies against theCollateral and that other actions or omissions by the Collateral Agent shall not be deemed commercially unreasonable solely on account of not beingindicated in this Section 8.19. Without limitation upon the foregoing, nothing contained in this Section 8.19 shall be construed to grant any rights to anyGrantor or to impose any duties on the Collateral Agent that would not have been granted or imposed by this Security Agreement or by applicable law in theabsence of this Section 8.19.8.20. Reinstatement. This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by oragainst any Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of any creditor or creditorsor should a receiver or trustee be appointed for all or any significant part of any Grantor’s assets, and shall continue to be effective or be reinstated, as the casemay be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced inamount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” orotherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restoredor returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.ARTICLE IXNOTICES9.1. Sending Notices. Any notice required or permitted to be given under this Security Agreement shall be sent (and deemed received) in themanner and to the addresses set forth in Section 9.01 of the Credit Agreement. Any notice delivered to the Company shall be deemed to have been deliveredto all of the Grantors.9.2. Change in Address for Notices. Each of the Grantors, the Collateral Agent and the Lenders may change the address for service of noticeupon it by a notice in writing to the other parties in accordance with Section 9.01 of the Credit Agreement.ARTICLE XTHE COLLATERAL AGENTJPMorgan Chase Bank, N.A. has been appointed Collateral Agent for the Holders of Secured Obligations hereunder pursuant to Article VIII of theCredit Agreement. It is expressly understood and agreed by the parties to this Security Agreement that any authority conferred upon the Collateral Agenthereunder is subject to the terms of the delegation of authority made by the Holders of Secured Obligations to the Collateral Agent pursuant to the CreditAgreement, and that the Collateral Agent has agreed to act (and any successor Collateral Agent shall act) as such hereunder only on the express conditionscontained in such Article VIII. Any successor Collateral Agent appointed pursuant to Article VIII of the Credit Agreement shall be entitled to all the rights,interests and benefits of the Collateral Agent hereunder.[Signature Pages Follow]16IN WITNESS WHEREOF, each of the Grantors and the Collateral Agent have executed this Third Amended and Restated Security Agreement as ofthe date first above written. PHOTRONICS, INC., as a Grantor By: Name: Title: PHOTRONICS IDAHO, INC., as a Grantor By: Name: Title: PHOTRONICS TEXAS ALLEN, INC., as a Grantor By: Name: Title: PHOTRONICS CALIFORNIA, INC., as a Grantor By: Name: Title: Signature Page toThird Amended and Restated Security AgreementAcknowledged and Agreedas of the date first written above:JPMORGAN CHASE BANK, N.A., as Collateral Agent By: Name: Title: Signature Page toThird Amended and Restated Security AgreementSCHEDULE 1(See defined term “Collateral” in the Security Agreement)All documents related to the Taiwan Joint Venture if inclusion would create a breach or default under such agreements.All documents related to the PRC subsidiary joint venture in Xiamen with DNP if inclusion would create a breach or default under such agreements.All documents related to the Photronics Hefei subsidiary including the Investment Agreement if inclusion would create a breach or default under suchagreements.1EXHIBIT “A”(See Sections 3.3, 3.4, 3.5 and 4.1.7 of Security Agreement)Prior names, jurisdiction of formation, place of business (if Grantor has only one place of business), chief executive office (if Grantor has more than one placeof business), mergers and mailing address:Photronics, Inc.Fed ID: 06-0854886Formerly Known As: Photronic Labs Incorporated in February 28, 1969 until July 9, 1986; Photronic Labs, Inc. from July 9, 1986 until April 9, 1990,when name was changed to Photronics, Inc.Principal Place of Business & Chief Executive Office: 15 Secor Road, Brookfield, CT 06804Incorporated: Connecticut Date of Incorporation: February 28, 1969CT Org No.: 0036597Photronics California, Inc.Fed ID: 77-0292539Principal Place of Business & Chief Executive Office: 15 Secor Road, Brookfield, CT 06804Incorporated: California Date of Incorporation: October 8, 1991CA ID: C1802687Photronics Texas Allen, Inc.Fed ID: 75-2502950Formerly Known As: Photronics-Toppan Texas, Inc. from September 3, 1993 until April 2,2009. Name change effective as of April 3, 2009.Principal Place of Business & Chief Executive Office: 601 Millennium Drive, Allen, TX 75013Incorporated: Texas Date of Incorporation: September 3, 1993TX Org No.: 01282940001Photronics Idaho, Inc.Fed ID: 61-1602099Principal Place of Business & Chief Executive Office: 15 Secor Road, Brookfield, CT 06804Incorporated: Idaho Date of Formation: July 17, 2009Idaho ID Number: C183842Locations of Inventory and Equipment: A.Owned Locations of Inventory and Equipment of the Grantors: Connecticut Building # 1 and #2 15 Secor Road Brookfield, CT 06804 Idaho 10136 South Federal Way (Nanofab) Boise, ID 83716 Texas 601 Millennium Drive Allen, TX 75013 B.Leased Locations of Inventory, Equipment and Fixtures of the Grantors (Include Landlord’s Name): California 830 Hillview Court, Suite 280 Milpitas, CA 95035 Florida 4630 Lipscomb Street, NE Suite #10 and #12 Palm Bay, FL 329062C.Public Warehouses or other Locations pursuant to Bailment or Consignment Arrangements (include name of warehouse operator or other bailee orconsignee of Inventory and Equipment of the Grantors): Ulcoat/Inabata hold photomask blanks stock for Brookfield and Allen at their SFO warehouse: Kintetsu World Express, Inc. (U.S.A.) 251 Lawrence Ave. South San Francisco, CA 94080 Hoya holds photomask blanks stock for the Nanofab at their SFO warehouse: Nippon Express USA, Inc. Import Division 250 Utah Avenue South San Francisco, CA 94080 A small quantity of chemistry (value ~ $6K) is held for Nanofab at: Univar USA Inc. 1804 North 20th Street Nampa, ID 83687 3rd party warehouse in Dallas: Imlach & Collins Brothers, LLC - Atlas Van Lines 4653 Leston St #706 Dallas, TX 75247 (800) 777-9835 3rd party warehouses in California: R.B. High Tech Transport, Inc. 38503 Cherry St Unit A Newark, CA 94560 S&M Moving Systems North, Inc. 48551 Warm Springs Blvd Fremont, CA 945393EXHIBIT “B”(See Sections 3.8 and 3.12 of Security Agreement)Patents, copyrights and trademarks protected under federal law and industrial designs:I. FEDERAL TRADEMARKS – U.S.A. Registered TrademarksMarkReg. DateReg. NumberOwnerCYBERMASK5/25/20042,845,577Photronics, Inc. MASKLINK6/1/20042,848,038Photronics, Inc.MASKPILOT6/1/20042,847,311Photronics, Inc.MASKTRAC9/17/20022,621,660Photronics, Inc. 11/6/20073,331,421Photronics, Inc. 7/25/19951,907,169Photronics, Inc.PHOTRONICS6/20/19951,900,475Photronics, Inc.PHOTRONICS2/19/20083,386,407Photronics, Inc. 6/20/19951,900,474Photronics, Inc.4B. Pending TrademarksNONEII. U.S. PatentsA. Pending U.S. Patent ApplicationsApplication NumberFiling DateTitleOwner115/960,9634/24/2018PELLICLE REMOVALTOOL Photronics, Inc.B. U.S. Issued Patents Patent NumberApplication NumberTitleFiling Date/Issue DateOwner16,933,08410/391,001ALTERNATING APERTURE PHASE SHIFTPHOTOMASK HAVING LIGHT ABSORPTION LAYER3/18/20038/23/2005Photronics, Inc.27,344,82411/024,268ALTERNATING APERTURE PHASE SHIFTPHOTOMASK HAVING LIGHT ABSORPTION LAYER12/28/20043/18/2008Photronics, Inc.36,760,64010/099,622AUTOMATED MANUFACTURING SYSTEM ANDMETHOD FOR PROCESSING PHOTOMASKS3/14/20027/6/2004Photronics, Inc.46,996,45010/852,532AUTOMATED MANUFACTURING SYSTEM ANDMETHOD FOR PROCESSING PHOTOMASKS5/24/20042/7/2006Photronics, Inc.57,480,53911/177,459AUTOMATED MANUFACTURING SYSTEM ANDMETHOD FOR PROCESSING PHOTOMASKS7/8/20051/20/2009Photronics, Inc.66,828,06810/349,629BINARY HALF TONE PHOTOMASKS ANDMICROSCOPIC THREE-DIMENSIONAL DEVICES ANDMETHOD OF FABRICATING THE SAME 1/23/200312/7/2004Photronics, Inc.5 Patent NumberApplication NumberTitleFiling Date/Issue DateOwner77,074,53010/975,293BINARY HALF TONE PHOTOMASKS ANDMICROSCOPIC THREE-DIMENSIONAL DEVICES ANDMETHOD OF FABRICATING THE SAME10/28/20047/11/2006Photronics, Inc87,473,50011/439,757BINARY HALF TONE PHOTOMASKS ANDMICROSCOPIC THREE-DIMENSIONAL DEVICES ANDMETHOD OF FABRICATING THE SAME5/24/20061/6/2009Photronics, Inc.97,356,37411/140,004COMPREHENSIVE FRONT END METHOD ANDSYSTEM FOR AUTOMATICALLY GENERATING ANDPROCESSING A PHOTOMASK ORDERS5/27/20054/8/2008Photronics, Inc.106,682,86110/370,408DISPOSABLE HARD MASK FOR PHASE SHIFTPHOTOMASK PLASMA ETCHING2/19/20031/27/2004Photronics, Inc.116,472,10709/409,454DISPOSABLE HARD MASK FOR PHOTOMASKPLASMA ETCHING9/30/199910/29/2002Photronics, Inc.126,749,97410/234,790DISPOSABLE HARD MASK FOR PHOTOMASKPLASMA ETCHING9/3/20026/15/2004Photronics, Inc.136,908,71610/839,025DISPOSABLE HARD MASK FOR PHOTOMASKPLASMA ETCHING5/4/20046/21/2005Photronics, Inc.146,537,70809/773,122ELECTRICAL CRITICAL DIMENSIONMEASUREMENTS ON PHOTOMASK1/31/20013/25/2003Photronics, Inc.157,312,00410/803,847EMBEDDED ATTENUATED PHASE SHIFT MASKWITH TUNABLE TRANSMISSION3/18/200412/25/2007Photronics, Inc.166,524,75409/766,907FUSED SILICA PELLICLE1/22/20012/25/2003Photronics, Inc.176,686,10310/322,858FUSED SILICA PELLICLE12/18/20022/3/2004Photronics, Inc.187,351,50310/733,723FUSED SILICA PELLICLE IN INTIMATE CONTACTWITH THE SURFACE OF A PHOTOMASK12/11/20034/1/2008 Photronics, Inc. 6 Patent NumberApplication NumberTitleFiling Date/Issue DateOwner196,567,58809/940,947METHOD FOR FABRICATING CHIRPED FIBERBRAGG GRATINGS8/28/20015/20/2003Photronics, Inc.206,868,20910/369,262METHOD FOR FABRICATING CHIRPED FIBERBRAGG GRATINGS2/19/20033/15/2005Photronics, Inc.216,534,22109/277,497METHOD FOR FABRICATING CONTINUOUS SPACEVARIANT ATTENUATING LITHOGRAPHY MASK FORFABRICATION OF DEVICES WITH THREE-DIMENSIONAL STRUCTURES ANDMICROELECTRONICS3/26/19993/18/2003Photronics, Inc.227,435,53310/920,475METHOD OF FORMING A SEMICONDUCTOR LAYERUSING A PHOTOMASK RETICLE HAVING MULTIPLEVERSIONS OF THE SAME MASK PATTERN WITHDIFFERENT BIASES8/18/200410/14/2008Photronics, Inc.236,406,81809/283,087METHOD OF MANUFACTURING PHOTOMASKS BYPLASMA ETCHING WITH RESIST STRIPPED3/31/19996/18/2002Photronics, Inc.246,562,54910/136,251METHOD OF MANUFACTURING PHOTOMASKS BYPLASMA ETCHING WITH RESIST STRIPPED4/29/20025/13/2003Photronics, Inc.259,304,33414/160,142MICROFLUIDIC THERMOPTIC ENERGY PROCESSOR1/21/20144/5/2016Photronics, Inc.269,933,61115/085,828MICROFLUIDIC THERMOPTIC ENERGY PROCESSOR3/30/20164/3/2018Photronics, Inc.279,005,84812/486,564PHOTOMASK HAVING A REDUCED FIELD SIZE ANDMETHOD OF USING THE SAME6/17/20094/14/2015Photronics, Inc.289,005,84912/820,905PHOTOMASK HAVING A REDUCED FIELD SIZE ANDMETHOD OF USING THE SAME6/22/20104/14/2015Photronics, Inc.296,855,46310/229,830PHOTOMASK HAVING AN INTERMEDIATEINSPECTION FILM LAYER8/27/20022/15/2005Photronics, Inc.307,049,03410/658,039PHOTOMASK HAVING AN INTERNALSUBSTANTIALLY TRANSPARENT ETCH STOPLAYER 9/9/20035/23/2006 Photronics, Inc.7 Patent NumberApplication NumberTitleFiling Date/Issue DateOwner317,396,61710/866,976PHOTOMASK RETICLE HAVING MULTIPLEVERSIONS OF THE SAME MASK PATTERN WITHDIFFERENT BIASES6/14/20047/8/2008Photronics, Inc.327,790,34011/788,473PHOTOMASK WITH DETECTOR FOR OPTIMIZING ANINTEGRATED CIRCUIT PRODUCTION PROCESS ANDMETHOD OF MANUFACTURING AN INTEGRATEDCIRCUIT USING THE SAME4/20/20079/7/2010Photronics, Inc.337,943,27312/106,014PHOTOMASK WITH DETECTOR FOR OPTIMIZING ANINTEGRATED CIRCUIT PRODUCTION PROCESS ANDMETHOD OF MANUFACTURING AN INTEGRATEDCIRCUIT USING THE SAME4/18/20085/17/2011Photronics, Inc.347,910,26912/727,342PHOTOMASK WITH DETECTOR FOR OPTIMIZING ANINTEGRATED CIRCUIT PRODUCTION PROCESS ANDMETHOD OF MANUFACTURING AN INTEGRATEDCIRCUIT USING THE SAME3/19/20103/22/2011Photronics, Inc.356,842,88110/209,254RULE BASED SYSTEM AND METHOD FORAUTOMATICALLY GENERATING PHOTOMASKORDERS IN A SPECIFIED ORDER FORMAT7/30/20021/11/2005Photronics, Inc.367,669,16710/877,001RULE BASED SYSTEM AND METHOD FORAUTOMATICALLY GENERATING PHOTOMASKORDERS BY CONDITIONING INFORMATION FROM ACUSTOMER'S COMPUTER SYSTEM6/25/20042/23/2010Photronics, Inc.377,851,11012/105,992SECURE PHOTOMASK WITH BLOCKING APERTURE4/18/200812/14/2010 Photronics, Inc.8 Patent NumberApplication NumberTitleFiling Date/Issue DateOwner388,102,03112/106,033SECURITY ELEMENT FOR AN INTEGRATEDCIRCUIT, INTEGRATED CIRCUIT INCLUDING THESAME, AND METHOD FOR SECURING ANINTEGRATED CIRCUIT4/18/20081/24/2012Photronics, Inc.396,472,76609/755,438STEP MASK1/5/200110/29/2002Photronics, Inc.406,139,99409/344,251USE OF INTERSECTING SUBRESOLUTION FEATURESFOR MICROLITHOGRAPHY6/25/199910/31/2000Photronics, Inc.417,640,52910/981,201USER-FRIENDLY RULE-BASED SYSTEM ANDMETHOD FOR AUTOMATICALLY GENERATINGPHOTOMASK ORDERS11/3/200412/29/2009Photronics, Inc.1 ●Does not include patents owned by Photronics jointly with a third partyC. CopyrightsCopyrightReg. DateCopyright NumberOwnerTemplate9/7/1993TXu000597428Photronics, Inc.9D. Domain NamesDomain NameAccount No.Expiration Datecybermask.com230239926/18/2012cybermask.info23023992 cybermask.net2302399211/15/2009cybermask.org23023992 maskpilot.com230239929/23/2009mymaskshop.com230239921/21/2012phototronics.biz2302399211/18/2011photronics.com2302399211/18/2012photronics.info2302399212/20/2009photronics.us230239924/18/2011yourvirtualmaskfab.com230239924/5/2010photronics.net.cn pkl.co.kr 10EXHIBIT “C”List of Pledged Securities(See Section 3.10 of Security Agreement)A. STOCKS: IssuerCertificate NumberNumber of SharesPhotronics California, Inc.11,000Photronics Texas Allen, Inc.11,000Photronics Idaho, Inc.31,000 B. BONDS: IssuerNumberFace AmountCoupon RateMaturity NONE. C. GOVERNMENT SECURITIES: IssuerNumberTypeFace AmountCoupon RateMaturity NONE. D. OTHER SECURITIES OR OTHER INVESTMENT PROPERTY(CERTIFICATED AND UNCERTIFICATED): IssuerDescription of Collateral Percentage Ownership Interest NONE.1EXHIBIT “D”(See Section 3.1 of Security Agreement)OFFICES IN WHICH FINANCING STATEMENTS HAVE BEEN FILEDPhotronics, Inc.ConnecticutPhotronics California, Inc.CaliforniaPhotronics Texas Allen, Inc.TexasPhotronics Idaho, Inc.Idaho2EXHIBIT “E”(See Definition of “Commercial Tort Claims”)COMMERCIAL TORT CLAIMS[Describe parties, case number (if applicable), nature of dispute]NONE.3EXHIBIT “F”(See Section 3.9 of Security Agreement”)FEDERAL EMPLOYER IDENTIFICATION NUMBER;STATE ORGANIZATION NUMBER; JURISDICTION OF INCORPORATIONGRANTORFederal EmployerIdentificationNumberType ofOrganizationState ofOrganization orIncorporationStateOrganizationNumberPhotronics, Inc.06-0854886CorporationConnecticut0036597Photronics Texas Allen, Inc.75-2502950CorporationTexas0128294000Photronics California, Inc.75-2502950CorporationCaliforniaC1802687Photronics Idaho, Inc.75-2502950CorporationIdahoC1838424ANNEX ItoSECURITY AGREEMENTReference is hereby made to the Third Amended and Restated Security Agreement (as amended, restated, supplemented or otherwisemodified from time to time, the “Agreement”), dated as of September 27, 2018, made by each of PHOTRONICS, INC., a Connecticut corporation (the“Company”) and the other Subsidiaries of the Company listed on the signature pages thereto (together with the Company, the “Initial Grantors”, and togetherwith any additional Subsidiaries, including the undersigned, which become parties thereto by executing a Supplement in substantially the form hereof, the“Grantors”), in favor of the Collateral Agent. Capitalized terms used herein and not defined herein shall have the meanings given to them in the Agreement.By its execution below, the undersigned, [NAME OF NEW GRANTOR], a [__________] [corporation/limited liability company/limitedpartnership] (the “New Grantor”) agrees to become, and does hereby become, a Grantor under the Agreement and agrees to be bound by the Agreement as iforiginally a party thereto. The New Grantor hereby collaterally assigns and pledges to the Collateral Agent for the benefit of the Holders of SecuredObligations, and grants to the Collateral Agent for the benefit of the Holders of Secured Obligations, a security interest in all of the New Grantor’s right, titleand interest in and to the Collateral, whether now owned or hereafter acquired, to secure the prompt and complete payment and performance of the SecuredObligations. For the avoidance of doubt, the grant of a security interest herein shall not be deemed to be an assignment of intellectual property rights ownedby the New Grantor.By its execution below, the undersigned represents and warrants as to itself that all of the representations and warranties contained in theAgreement are true and correct in all respects as of the date hereof. New Grantor represents and warrants that the supplements to the Exhibits to theAgreement attached hereto are true and correct in all respects and such supplements set forth all information required to be scheduled under the Agreement.New Grantor shall take all steps necessary and required under the Agreement to perfect, in favor of the Collateral Agent, a first-priority security interest in andlien against New Grantor’s Collateral.THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEWYORK.IN WITNESS WHEREOF, the New Grantor has executed and delivered this Annex I counterpart to the Agreement as of this ___________day of ____________, 20___. [NAME OF NEW GRANTOR] By: Title: 1Exhibit 10.26 No.:Fixed Assets Loan Contract(2016 Edition)　　　　　　　　　　 Special note: The Contract is negotiated by the lender and the borrower on an equal and voluntary basis. All contract terms are true representationsof the parties’ intentions. To protect the legitimate rights and interests of the Borrower, the Lender specifically invites the Borrower to take full notice ofthe full terms and conditions of the parties, in particular, the contents in bold.Lender: Industrial and Commercial Bank of China Limited Xiamen Xiang’an BranchPrincipal: Zhuang Youjie Contact: /Domicile (Address): 13 Xiangxi Fifth Lane, Maxiang Township, Xiang’an District, Xiamen Postal Code: 36101Telephone: 0592-7065287 Fax: / Email: /　Borrower: Photronics DNP Mask Corporation XiamenLegal Representative: PETER SCOTT KIRLIN Contact: Mobile No.:Domicile (Address): Postal Code:Telephone: Fax: Email: [Please ensure that the Borrower fills in the above information accurately and completely to ensure the timely delivery of relevant notices and legaldocuments.]　　Through equal negotiations, a consensus has been reached and the Contract has been entered into on the matters of the Lender’s issuance of lending tothe Borrower.Section 1 General Stipulations　　Article 1 Loan Purpose　　The purpose of loans under the Contract is: Project construction for the “Photronics DNP Mask Corporation Xiamen “New Project (X2017G07-G PlotPhase I Construction)”. Without the written consent of the Lender, the Borrower shall not use lending for other purposes The Lender is entitled to supervisionof the use of funds.　　　　Article 2 Lending Amount and Term　　2.1 The lending currency under the Contract is the RMB RMB, and the amount is the actual lending amount (in words: the actual withdrawal amount)(where the figure and the amount in words is not the same, the amount in the words shall prevail).　　2.2 The lending term under the Contract is no longer than eight years, from the actual withdrawal date (for multiple withdrawals, from the firstwithdrawal date); the actual withdrawal date shall be based on the loan receipt.　　　　Article 3 Interest Rate, Interest, and Fees　　3.1 [Method for determining the RMB lending rate]　　The RMB lending rate is determined according to the following method (3) below:　　(1) Fixed interest rate, at an annual interest rate of / %, with the interest rate remaining unchanged for the duration of the Contract.2　　(2) The lending rate is determined by the benchmark interest rate plus a floating range, wherein the benchmark interest rate is the benchmark lending rateof the People’s Bank of China on / (withdrawal date/contract effective date) that corresponds to the lending term stipulated in Article 2.2, and the floatingrange is (upward/downward/zero) / %. After the Borrower makes a withdrawal, the lending rate will remain the same for a period of / (1/3/6/12) month(s),to be adjusted once a period, with interest accounted for in segments. The date for determining the interest rate for the second period shall be the date thatcorresponds to the withdrawal date at the end of the first period; should the given month not have the given date that corresponds to the withdrawal date, thecorresponding date shall be the last day of the given month, and the same shall hold true for other periods. Should the Borrower make withdrawals ininstallments, the lending rate shall be adjusted according to method / listed below: A. Regardless of the number of withdrawals during a single period, the current lending rate determined on the date on which the interest rate for the currentperiod shall be used, to be adjusted at the next period. B. The lending rate shall be determined and adjusted for each withdrawal. (3) The lending rate for each withdrawal shall be determined based on the benchmark interest rate plus the floating range, wherein the benchmark interestrate shall be the annual (annual/monthly) loan promotion rate (LPR) by the National Interbank Funding Center published on the business day prior to thewithdrawal date (withdrawal date/effective date of the contract) for the current withdrawal, and the floating range shall be / (upward/downward/zero) / % orplus (plus/less/zero) 83.5 base points (with one base point being 0.01%). The lending rate after each withdrawal shall be adjusted according to method listedbelow: A. For a period of 1 (1/3/6/12) month(s), to be adjusted once a period, with interest accounted for in segments. The benchmark interest rate adjustment datefor the second period shall be the date that corresponds to the withdrawal date at the end of the first period; should the given month not have the given datethat corresponds to the withdrawal date, the corresponding date shall be the last day of the given month. Should the National Interbank Funding Center nothave published a loan benchmark interest rate for the corresponding term on the previous business day, the loan benchmark interest for the correspondingterm published on the last business day shall prevail, and so on and so forth. B. The lending rate shall not be adjusted for the entire lending term. (4) Other: / 　　3.2 [Method for determining the foreign exchange lending rate]　　The foreign exchange lending rate shall be determined according to method / below:　　(1) Fixed interest rate, at an annual interest rate of / %, with the interest rate remaining unchanged for the duration of the Contract.　　(2) Floating interest rate, with the lending rate determined by the spread of the / -month / (LIBOR/HIBOR) as the benchmark interest rate plus / basepoints (i.e., 0.01%). The spread will remain unchanged during the Contract term. After the Borrower makes a withdrawal, the benchmark interest rate shall beadjusted according to method / listed below, with interest accounted for in segments:　　A. For a period of / (1/3/6/12) month(s), to be adjusted once a period. The benchmark interest rate adjustment date for the second period shall be thedate that corresponds to the withdrawal date at the end of the first period; should the given month not have the given date that corresponds to the withdrawaldate, the corresponding date shall be the last day of the given month, and the same shall hold true for other periods.3　　B. The benchmark interest rate shall be adjusted on the first day of each interest-bearing period. (3) Other: / 3.3 Interest shall be calculated on lending under the Contract on a daily basis from the withdrawal date and settled every month (month/quarter/sixmonths/year). Interest shall be settled with principal when loans are due, and the daily interest rate = annual interest rate/360. 3.4 The penalty interest rate for overdue payments under the Contract shall be determined at 30 % of the original lending rate, and the penalty interest ratefor misuse of loans shall be determined at 50 % of the original lending rate. 3.5 In addition to interest, the Borrower shall also pay a commitment fee to the Lender. The commitment fee shall be the difference between the amount oflending stipulated in Article 2 and the Borrower’s withdrawals (the daily average balance during the billing period) and an annual rate of / %, to be paidaccording to method / below: (1) A single payment shall be made to the Lender on the last day of the billing period. (2) After the Contract enters into force, payments shall be made in installments to the Lender on the 20th day of every / (month/quarter/six months) upuntil the last day of the billing period. The billing period refers to the period between the signing date of the Contract and the withdrawal date of the last loan as stipulated in Article 4. The commitment fee is paid in installments; should the Borrower fail to pay the commitment fee on time, the Lender is entitled to the suspension ofthe issuance of loans or to cancel all amounts that the Borrower has not withdrawn.　　Article 4 Withdrawals The Borrower shall make withdrawals according to method listed below according to actual funding needs:[x1] (1) One-time loan request prior to ; (2) One or more loan requests after the Contract’s effective date and before ; (3) Withdrawals in installments on the dates below; the Borrower may, with the Lender’s consent, make changes to withdrawal dates or amountsbased on funding needs, though the Borrower must make loan requests no later than .Withdrawal DateWithdrawal Amount 4.2 Should the Borrower fail to make withdrawals as agreed, the Lender is entitled to cancel, in part or in full, lending that the Borrower has not yetwithdrawn.　　Article 5 Repayment 5.1 The Borrower shall repay lending according to the following repayment plan (when there is additional content, additional pages can be attached):4Planned Repayment DatePlanned Repayment Amount 　　For lending under the Contract under the following circumstances, the Borrower shall not be required to pay the early repayment penalty in casethe loan is returned immediately after the corresponding funds are in place, thus resulting in early repayment:　　 / 　　 / 　　　　Apart from the circumstances stipulated in Article 5.2, should loans be repaid early, the Borrower shall pay an early repayment penalty to theLender, with the early repayment penalty calculated according to the following criteria: early repayment amount × remaining lending term (months) × / %; if the remaining lending term is less than one month, the period shall be calculated as one month.　　　　Special Agreements on Revolving Loans (Optional clause; this Article □ is applicable ■ is not applicable) The Borrower may use lending under the Contract on a revolving basis every / (six months/one year/two years/three years/four years/five years)(hereinafter referred to as the unit lending period). After necessary procedures are performed, the outstanding principal of the loan during the previous unitborrowing period may continue to be used during the next unit borrowing period, but the maturity date of any withdrawal shall not exceed the expirationdate of the borrowing period mentioned in the preceding Article 2. Article 7 Guarantee[x2] The loan guarantee under the Contract is the maximum guarantee, and the corresponding maximum guarantee contract is as follows: Name of the maximum guarantee contract: Maximum Mortgage Contract (No.: ) Guarantor: Photronics DNP Mask Corporation Xiamen　　　　　Article 8 Financial Agreement (Optional clause; this Article □ is applicable ■ is not applicable)　　For the duration of the Contract, the Borrower shall be subject to the following financial metrics:　　　　 / 　　 / 5　　Article 9 Dispute Resolution　　　　The dispute resolution method under the Contract is (1): 　 (1) The dispute shall be submitted to the Xiamen Arbitration Commission, subject to the arbitration rules effective at the time in which theapplication for arbitration is submitted for arbitration in Xiamen (arbitral place). The arbitral award is final and binding upon the parties.　　(2) The dispute shall be resolved through litigation in the court of the Lender’s location.　　　　Article 10 Miscellaneous　　The Contract is in duplicate, with the Borrower, Lender, and , / / , each holding one original, each of equal legal effect.　　10.2 The following attachments and other attachments mutually agreed upon by the parties shall constitute an integral part of the Contract and have thesame legal effect as the Contract:　　Attachment 1: Withdrawal Notice (Format)　　Attachment 2: Entrusted Payment Agreement　　Attachment 3: /　　　　Article 11 Other Matters of Agreement　　11.1 The arbitral ruling is final and binding on both parties. The parties agree that the arbitration shall be conducted after the arbitration has been filed;the relevant legal documents (including the arbitration documents) shall be deemed to have been served on the day following mailing to the mailingaddresses of the parties as recorded in the Contract.　　11.2 The Borrower shall disclose related party relationships and related party transactions to the Lender in a timely, comprehensive, and accuratemanner; the total amount of financing that the Borrower applies to the Lender for shall not exceed the actual funding needs of Party B. Should the Borrowerviolate any of the stipulations in the two foregoing paragraphs, the Lender is entitled to take the breach of contract remedy measures as stipulated in thisagreement.　　11.3 Without the consent of the Lender, the Borrower shall not provide any guarantees or warranties to others or be deemed as in breach of contract,wherein the Lender is entitled to withdraw financing in advance.　　11.4 Without the written consent of the Lender, the Borrower shall not set up mortgages (pledges) on or provide guarantees or warranties for assets that iteffectively operates.　　11.5 The Borrower shall regularly submit reports to the Lender on external guarantees and promise that such information on external guarantee amountsis complete, true, and accurate.　　11.6 When the Borrower’s financial metrics during the existence of lending are inferior to those previously agreed to by the Lender (if any), the Lender isentitled to declare that the loan expire in advance, to suspend the issuance of unissued funds, to require that the Borrower repay some or all of the loansalready issued, or to require that the Borrower provide a legal and valid guarantee as recognized by the Lender.　　11.7 The Borrower’s operating income shall be collected in an account overseen by the Bank at a ratio no lower than the Bank’s interbank ratio, subjectto the Bank’s supervision, whereby such income is first used to repay loan principal and interest;　　11.8 During the existence of loans, without the written consent of the lending bank, the Borrower shall not use this project and the associated rights toadd financing, provide guarantees, or invest in others;　　11.9 Prior to settling all debts with the Bank, should the Borrower adjust its planning for project operations or otherwise cause significant matters thatmay adversely affect the interests of the Bank, the Borrower shall first notice the lending bank in advance and obtain their written consent.6Section 2 Specific Stipulations　　　　Article 1 Interest Rate and Interest　　1.1 For foreign currency borrowing, LIBOR is the interbank interest rate for the lending currency under the Contract displayed on the Reuters financialtelecommunications terminal “LIBO=” page two banking days (11: 00 am London time) prior to the withdrawal date or benchmark interest rate adjustmentdate; HIBOR is the interbank interest rate for the lending currency under the Contract displayed on the Reuters financial telecommunications terminal“HIBO=” page two banking days (11: 15 am Hong Kong time) prior to the withdrawal date or benchmark interest rate adjustment date.　　1.2 Should loan interest be settled on a monthly basis, the settlement date shall be the 20th of each month; should interest be settled quarterly, thesettlement date shall be the 20th day of the last month of each quarter; should interest be settled semi-annually, the settlement date shall be June 20 orDecember 20 of each year.　　1.3 The first interest-bearing period shall be from the actual date of withdrawal to the first settlement date; the last interest-bearing period shall be fromthe day after the end of the previous interest-bearing period to the final payment date; all other interest-bearing periods shall be from the date after the end ofthe previous interest-bearing period to the next settlement date.　　1.4 Loan Interest = Loan Principal × Daily Interest Rate × Actual Days of Use. Should the equal principal and interest repayment method beadopted, the formula for calculating the principal and interest shall be as follows: Total Principal and Interest Per Period = Loan Principle x Period Profit x (1 + Period Profit) Number of Repayment Installments(1 + Period Profit) Number of Repayment Installments - 1　　1.5 For lending under the Contract that adopts a floating interest rate, after a loan is overdue, the rules for interest rate adjustments shall remainunchanged.　　1.6 Should the People’s Bank of China adjust its measures for determining loan interest rates applicable to lending under the Contract, the relevant rulesof the People’s Bank of China shall be adopted, and the Lender shall not provide separate notice thereof to the Borrower.　　1.7 The lending rate determined at the signing of the Contract may float downward to a certain degree from the relevant loan benchmark interestrate published by the People’s Bank of China or the loan prime rate (LPR) published by the National Interbank Funding Center. The Lender is entitledto re-evaluate the Borrower’s interest rate concessions each year and determine whether to cancel, in part or in full, the interest rate concessionsgranted to the Borrower, based on national policies, the Borrower’s credit standing, lending guarantee changes, and other such circumstances, andpromptly notify the Borrower of such a cancellation.　　Article 2 Loan Issuance and Payments　　2.1 The Borrower must meet the withdrawal preconditions stipulated under the Contract in order to withdraw loans, otherwise the Lender is notobligated to issue any funds to the Borrower, unless the Lender has agreed to such an issuance in advance;　　2.2 Preconditions for initial withdrawal:　　(1) The loan project has been approved, accepted, or filed by state authorities; (unless, pursuant to relevant regulations, relevant approval, acceptance, orfiling is required prior to issuance of the loan);　　(2) Project capital or other funds to be raised have been fully paid at the prescribed times and proportions;7 (3) Apart from credit loans, the Borrower has provided corresponding guarantees as required by the Lender and has completed relevant guaranteeprocedures;　　(4) A withdrawal notice has been submitted to the Lender as stipulated under the Contract.　 (5) Other materials required by the Lender have been submitted.　　2.3 Prior to each withdrawal, in addition to meeting the preconditions for the initial withdrawal, the Borrower shall also meet the followingpreconditions: (1) Project capital is allocated, and the current capital has been sufficiently allocated for at the given ratio; (2) No cost overruns have occurred or cost overruns have been self-financed;　　(3) The progress of the project has been completed as planned, and the actual progress of the project matches the invested amount;　　(4) There has been no breach of contract under the Contract or other contracts with the Lender; (5) The proof of loan usage provided is consistent with the intended use.　　2.4 Written documents provided to the Lender by the Borrower at the time of withdrawal must be originals; if originals cannot be provided, with theLender’s consent, photocopies affixed with the Borrower’s corporate seal may be provided.　　2.5 The Borrower must provide the Lender with a withdrawal notice at least five banking days in advance of a withdrawal. Once the withdrawal noticehas been submitted, it cannot be revoked without the written consent of the Lender. Once the withdrawal notice has been submitted, it cannot be revokedwithout the written consent of the Lender.　　2.6 Once the Lender has approved of and agreed to the Borrower’s withdrawal, the Lender shall transfer the loan to the Borrower’s designated account,meaning that the Lender has issued the loan to the Borrower as stipulated under the Contract.　　2.7 Pursuant to relevant regulatory requirements and the Lender’s administrative requirements, lending exceeding a certain amount or meeting certainconditions shall be made with a Lender’s entrusted payment, whereby the Lender pays the loan amount to payment objects that comply with the usagestipulated under the Contract based on the Borrower’s withdrawal application and payment entrustment. To this end, the Borrower shall enter into a separateentrusted payment agreement with the Lender as an attachment to the Contract and open or designate an account at the Lender for entrusted payments.　　　　Article 3 Repayments　　3.1　The Borrower shall repay the principal, interest and other payables in full and on time as stipulated under the Contract. One banking day prior tothe repayment date and each settlement date, the Borrower shall deposit enough in its repayment account opened at the Lender for the current interest,principal, and other payables, and the Lender is entitled to actively collect payment there from on the repayment date or settlement date, or ask that theBorrower comply with relevant transfer procedures. Should the amount in the repayment account be insufficient to pay all payables due, the Lender has theright to determine the order of payment.　　3.2 Should the Borrower apply to repay loans early, in part or in full, the Borrower shall submit a written application to the Lender 10 banking days inadvance and pay the early repayment penalty to the Lender according to the standards stipulated under the Contract.　　3.3 Should the Lender agree to an early repayment, on the early repayment date, the Borrower shall also settle loan principal, interest, and otherpayments due as of the early repayment date, as stipulated under the Contract.8　　3.4 Should the actual loan period be shortened because of the Borrower’s early repayment or because the Lender withdraws the loan in advance asstipulated under the Contract, the corresponding interest rate grade shall not be adjusted, and the original lending rate shall still be used.　 Article 4 Revolving Loans　　4.1 Loans under the Contract may be used on a revolving basis, with the first unit lending period being the initial withdrawal date, and the starting dateof the second unit lending period being the date that corresponds to the withdrawal date at the end of the first period. Should the starting month of a certainunit lending period not have the date that corresponds to the initial withdrawal date, the last day of the given month shall be the corresponding date, and soon and so forth. Once the unit lending period is determined, it shall not be adjusted without the Lender’s consent.　　4.2 The lending balance of each unit lending period after the initial unit lending period shall be less than the loan balance of the previous unit lendingperiod, and at the end of each unit lending period, the Borrower shall repay lending according to the stipulated repayment plan. Lending cannot be used on arevolving basis within a single unit lending period.　　4.3 If a floating interest rate is used for RMB revolving loans, the benchmark interest rate shall be determined based on the benchmark lending rate ofthe People’s Bank of China for the lending grade that corresponds to the unit lending period.　　Article 5 Guarantees　　5.1 Apart from credit loans, the Borrower shall provide legal and valid guarantees recognized by the Lender for its performance of obligations under theContract. A guarantee contract shall be separately signed. A guarantee contract shall be separately signed.　　5.2 Should the collateral under the Contract be damaged, devalued, subject to an ownership dispute, seized or withheld, or should the mortgagerdispose of the collateral without authorization, or should the financial situation of the guarantor adversely change or change in a way that is not conducive tothe Lender’s claims, the Borrower shall promptly notify the Lender and provide additional guarantees as recognized by the Lender.　　5.3 The Lender is entitled to periodically or irregularly reassess the value of the collateral and the guarantor’s ability to guarantee. Should theassessment hold that the value of the collateral has declined or that the guarantor’s ability to guarantee has declined, the Borrower shall provideadditional guarantees equal to the reduced value or the reduced ability to guarantee and may provide other guarantees as recognized by the Lender.　　5.4 Should pledge guarantees for receivables be provided for loans under the Contract, for the duration of the Contract, in any one of the followingcircumstances, the Lender has the right to declare the early expiration of lending, require that the Borrower immediately repay loan principal and interest, inpart or in full, or add additional legal, valid, and sufficient guarantees recognized by the Lender: (1) The accounts receivable pledgor’s bad debt rate on the payer’s accounts receivable has increased for two consecutive months; (2) The accounts receivable pledgor’s accounts receivable for the payer that are overdue and have yet to be received account for over 5% of the payer’sbalance of accounts receivable; (3) The accounts receivable pledgor has entered into a trade dispute (including but not limited to quality, technology, or service disputes) or claimsdispute with the payer or another third party, such that the accounts receivable may not be payable on time.9　　Article 6 Insurance　　6.1 At the Lender’s request, the Borrower shall purchase insurance from an insurance company recognized by the Lender for project equipment, projectconstruction, and shipment of goods associated with the borrowing, as well as project construction and operations risks. The type of insurance and period ofinsurance shall meet the Lender’s requirements, and the amount of insurance shall cover the risk of the loan.　　6.2 For the duration of the Contract, the Borrower shall not interrupt insurance for any reason. Should insurance be interrupted, the Lender has the rightto renew the insurance or purchase insurance on its behalf, and the Borrower shall bear expenses. Should the Borrower and related parties make substantialchanges to the policy or terminate it in advance, the Lender shall be notified 30 days in advance, and the Lender’s consent must be obtained; otherwise, theBorrower shall be liable for compensation for losses suffered by the Lender from the interruption or termination of insurance or policy changes.　　6.3 The insurance policy shall indicate that the Lender is the priority recipient (primary beneficiary) at the time of insurance, and the insurer shoulddirectly pay insurance payouts to the Lender. There shall be no restrictions on the Lender’s interests in the insurance policy.　　6.4 The Borrower shall notify the Lender in writing within three days from the date on which it becomes aware or should be aware of an insured eventand shall make a timely claim with the insurance company in accordance with the relevant provisions of the insurance contract. Insurance compensation orpayouts shall be used to repay the loan in advance or to restore the value of the project with the Lender’s approval or shall be deposited into theLender’s designated account, as a margin to guarantee the Borrower’s performance of debt under the Contract.　　　　Article 7 Representations and Warranties　 The Borrower makes the following representations and warranties to the Lender, which shall be valid for the duration of the Contract:　　7.1 Borrowing and related matters comply with legal and regulatory requirements;　　7.2 The Borrower has the qualifications for borrowing and the qualifications and ability to sign and perform the Contract.　　7.3 All necessary authorizations or approvals have been obtained for signing the contract, and the signing and performance of the contract do notviolate the provisions of the company’s articles of incorporation or relevant laws and regulations and do not conflict with obligations under other contracts.　　7.4 Other debts payable have been paid on time, with no malicious defaults on bank loans or interest.　　7.5 There are sound organizations and financial management systems in place. In the past one year, there have been no major disciplinary violations orunlawful conduct, and current senior management have no significantly negative records.　　7.6 All documents and materials provided to the Lender are true, accurate, complete, and valid, and they are free of false records, material omissions, ormisleading statements.　　7.7 Financial accounting reports provided to the Lender have been prepared in accordance with PRC accounting standards, reflecting the Borrower’soperating conditions and liabilities in a true, fair, and complete manner. Since the latest financial accounting report, the Borrower’s financial position has notexperienced any significantly adverse changes.　　7.8 No litigation, arbitration, or claims have been concealed from the Lender.10　　Article 8 Borrower Commitments　　8.1 To withdraw and use loans according to the terms and purposes stipulated under the Contract and to ensure that borrowings, in any form, donot flow into the securities market, futures market, or other uses prohibited or restricted by relevant laws and regulations.　　8.2 To settle loan principal, interest, and other payables as stipulated under the Contract.　　8.3 To accept and actively cooperate with the Lender’s accounts analysis inspection and supervision of the use of loan funds, including by means ofaccount analysis, document inspection, and on-site investigations, and to regularly report the use of loan funds as required by the Lender.　　8.4 To accept the Lender’s credit checks, to provide financial accounting materials, such as balance sheets and income and loss statements, and othermaterials reflecting the Borrower’s solvency, as required by the Lender, and to assist and cooperate with the Lender’s investigations, inquiries, andsupervision of its productions, operations, and financial standing.　　8.5 To not distribute dividends or bonuses, in any form, when there are outstanding loan principal, interest, or other payables (including amountsthat are announced as due immediately) under the Contract.　　8.6 To first obtain the Lender’s written consent or to make arrangements that satisfy the Lender prior to Mergers, divisions, capital reductions,equity changes, equity pledges, transfers of major assets and claims, major foreign investments, substantial increases in debt financing, and otheractions that may adversely affect the Lender’s equity.　　8.7 In any one of the following events, to promptly notify the Lender: (1) changes to the company’s articles of incorporation, business scope, registered capital, or legal representative; (2) closure, dissolution, liquidation, suspension of business, business license suspended or revoked for rectification, or the company applies (is subject to)bankruptcy;　　(3) involvement or possible involvement in major economic disputes, litigation, or arbitration, or property is seized, detained or under supervision bylaw;　　(4) shareholder(s), director(s), and current senior management are suspect of major cases or economic disputes.　　8.8 To promptly, comprehensively, and accurately disclose of related party relationships and related party transactions to the Lender.　　8.9 To mail or otherwise send to the Lender and promptly receive various notices.　　8.10 To not dispose of its own assets in a manner that reduces solvency; to not use assets formed under the Contract, without obtaining the Lender’sconsent, to provide guarantees to third parties.　　8.11 If borrowing under the Contract is issued as credit, to completely, truthfully, and accurately report routinely to the Lender on external guaranteesand, as required by the Lender, sign an account supervision agreement; when external guarantees may affect performance of obligations under the contract,the Lender’s written consent must be obtained. when external guarantees may affect performance of obligations under the contract, the Lender’s writtenconsent must be obtained.　　8.12 To support the Lender’s participation in matters such as borrowing calculation (estimates, budgeting, and final accounts) reviews, project bidding,and project completion inspections.　　8.13 To bear expenses generated by the Lender to realize claims under the Contract, including but not limited to attorneys’ fees and auction fees.11　　8.14 To give priority to the Borrower’s debts to its shareholders in terms of the priority for settling debts under the Contract and to at least give suchdebts an equal footing as other similar debts of the Borrower’s other creditors.　 8.15 To strengthen environmental and social risk management and accept the Lender’s supervision and inspections in this regard. If required bythe Lender, to submit environmental and social risk reports to the Lender.　　　 Article 9 Lender Commitments　　9.1 　To issue loans to the Borrower as stipulated under the Contract.　　9.2 　To keep confidential non-public materials and information provided by the Borrower, unless laws and regulations require otherwise or theContract stipulates otherwise.　　　　Article 10 Breach of Contract　　10.1 Any one of the following events shall constitute breach of contract by the Borrower:　　(1) the Borrower fails to repay loan principal, interest, or other payables under the Contract according to stipulations under the Contract or acts contraryto representations, warranties, or commitments under the Contract;　　(2) changes occur to guarantees under the Contract that are not conducive to the Lender’s claims, and the Borrower fails to provide other guaranteesrecognized by the Lender;　　(3) the Borrower is unable to settle any other debts due (including debts declared due early) or fails to perform or violates obligations under otheragreements, such that it has affected or may affect its performance of obligations under the Contract;　　(4) the Borrower’s financial metrics, such as profitability, solvency, operating capacity, and cash flow, fail to meet agreed standards, or the deteriorationthereof has affected or may affect the performance of its obligations under the Contract;　　(5) the Borrower’s equity structure, production, operations, and foreign investments have undergone significantly adverse changes that have affected ormay affect the performance of its obligations under the Contract;　　(6) the Borrower is involved in or may be involved in major economic disputes, litigation, arbitration, or assets have been seized, detained or enforced,or is being investigated or dealt with by judicial or administrative organs in accordance with the law or subject to penalties in accordance with the law, or isexposed by the media for violating relevant state regulations or policies, such that it has affected or may affect the performance of its obligations under theContract;　　(7) the Borrower’s main investors and key management personnel make abnormal changes, go missing, or are investigated or restricted by judicialauthorities in accordance with the law, such that it has affected or may affect the performance of its obligations under the Contract;　　(8) the Borrower utilizes false contracts with related parties, utilizes transactions without actual trading to obtain funding or credit from the Lender, orintentionally evades the Lender’s claims through related transactions;　　(9) the Borrower has or may be closed, dissolved, liquidated, have its business suspended, have its business license rectified or revoked, or apply for (orbe subject to) bankruptcy;12　　(10) the Borrower has a liability incident or a major environmental or social risk incident for food safety, safety production, or environmental protectionviolations or violation other environmental or social risk management laws, regulations, or industry standards, such that it has affected or may affect theperformance of its obligations under the Contract;　　(11) project capital is not allocated as planned or at the stipulated ratio or is not paid up within the time prescribed by the Lender;　　(12) the project is not completed as scheduled or the project construction or the operating environment and conditions undergo significantly adversechanges;　　(13) if borrowing under the Contract is issued as credit, the Borrower’s credit rating, profitability, asset-liability ratio, cash flow from operating activities,or other metrics do not meet the Lender’s conditions for credit lending; or the Borrow sets up pledge/mortgage guarantees for others or provides guaranteesusing its validly operated assets without the written consent of the Lender, such that it has affected or may affect the performance of its obligations under theContract;　　(14) Other circumstances that may adversely affect the Lender’s realization of claims under the Contract.　　10.2 Should the Borrower breach the Contract, the Lender is entitled to take one or more of the following remedies:　　(1) to require that the Borrower rectify the breach of contract within a period of time;　　(2) to suspend the issuance of loans or other financing to the Borrower based on the Contract or other contracts between the Lender and theBorrower and cancel, in part or in full, loans or other financing that the Borrower has yet to withdraw;　　(3) to announce immediate expiration of lending or other financing under the Contract and other contracts between the Lender and the Borrowerand to immediately recover unpaid amounts;　　(4) to require that the Borrower compensate for losses suffered by the Lender from the breach of contract;　　(5) other remedies provided by laws or regulations, as stipulated under the Contract, or as deemed necessary by the Lender.　　10.3 For loans due yet unrepaid by the Borrower as agreed (including debts that are announced as due immediately), the Lender is entitled to chargepenalty interest from the date at the overdue penalty interest rate stipulated under the Contract from the date on which the amount was overdue. For interestthat the Borrower fails to pay on time (including penalty interest), compound interest shall be charged based on the overdue penalty interest rate. Penaltyinterest / compound interest shall be settled according to the interest settlement rules stipulated under the Contract.　　10.4 Should the Borrower fail to use loans according to the usage stipulated under the Contract, the Lender is entitled to charge penalty interest formisuse of funds according to the penalty interest rate stipulated in the Contract from the date in which funds are misused, and compound interest shall becharged according to the penalty interest rate for misuse of funds for interest (including penalty interest) not paid on time during the misuse of funds. Penaltyinterest / compound interest shall be settled according to the interest settlement rules stipulated under the Contract.　　10.5 　Should the Borrower simultaneously encounter the circumstances of Article 10.3 and Article 10.4, the greater penalty interest rate shall becharged and cannot be combined.　　10.6 Should the Borrower fail to repay loan principal, interest (including penalty interest and compound interest), or other payables on time, theLender is entitled to make an announcement through the media.　　10.7 Should the Borrower’s related parties’ controlling relationship with the Borrower change or should the Borrower’s related party encounter thecircumstances in Article 10.1 other than items (1) or (2), such that it has affected or may affect the Borrower’s performance of its obligations under theContract, the Lender is entitled to take various measures as stipulated under the Contract.13　　Article 11 Withholding　　11.1 Should the Borrower fail to repay debts due under the Contract as agreed (including debts announced as due immediately), the Borroweragrees that the Lender may withhold corresponding amounts from all foreign exchange and RMB accounts that the Borrower has opened at ICBC tosettle debts owed, until the Borrower’s debts under the Contract have been settled in full.　　11.2 Should the withheld amount be in a currency other than that of the Contract, the currency shall be exchanged at the Lender’s applicableexchange rate on the withholding date. The Borrower shall bear interest and other expenses incurred from the withholding date to the settlement date(the date on which the Lender converts the withheld amount into the currency of the Contract according to national foreign exchange managementpolicies and actually pays of the debts under the Contract), as well as differences from exchange rate volatility during this period.　　11.3 Should the amount withheld by the Lender be insufficient to settle all debts owed by the Borrower, the Lender has the right to decide on theorder of settlement.　　　　Article 12 Transfer of Rights and Obligations　　12.1 The Lender is entitled to transfer its rights under the Contract, in part or in full, to a third party, and the Lender’s transfer thereof does not requirethe Borrower’s consent. Without the written consent of the Lender, the Borrower shall not transfer any of its rights or obligations under the Contract. Withoutthe written consent of the Lender, the Borrower shall not transfer any of its rights or obligations under the Contract.　　12.2 The Lender or Industrial and Commercial Bank of China Limited (“ICBC”) may, based on its business management needs, authorize or entrustother ICBC branch agencies to perform rights and obligations under the Contract, or place loan claims under the Contract under the management of otherICBC branch agencies. The Borrower agrees that the such actions shall no longer require the consent of the Borrower. The Borrower agrees that the suchactions shall no longer require the consent of the Borrower. Other ICBC branch agencies that undertake the rights and obligations of the Lender are entitledto exercise all rights under the Contract and are entitled to file lawsuits, submit for arbitration, or apply for enforcement in the name of the given agency. 　 Article 13 Entry into Force, Changes, and Release of Contract　　13.1 The Contract enters into force on the signing date and shall be terminated on the date on which the Borrower fully performs all obligations underthe Contract.　　13.2 Any changes to the Contract shall be agreed to the parties and made in writing. Changed clauses or agreements constitute a part of the Contract andshall have the same legal effect of the Contract. Apart from the changed sections, other parts of the Contract shall remain in effect, and the original terms shallremain in effect until the change is effective.　　13.3 Changes to and release of the Contract shall not affect the rights of the contracting parties to claim damages. The release of the Contract does notaffect the validity of the dispute resolution clause.14　　Article 14 Applicable Law and Dispute Resolution　　The conclusion, validity, interpretation, performance of the Contract and settlement of disputes under the Contract shall be governed by the laws of thePeople’s Republic of China. Any disputes or issues arising from or related to the Contract shall be settled through negotiations by the borrower and thelender; where negotiations fail, disputes shall be resolved through methods as stipulated under the Contract.　　Article 15 Address Confirmation for Serving Litigation/Arbitration Instruments　　15.1 The Borrower confirms that the address listed on the first page of the Contract is the address for serving litigation/arbitration instruments fordisputes under the Contract. Litigation/arbitration instruments include but are not limited to subpoenas, notices of hearings, judgments, rulings, mediations,and time-limit notices.　　15.2 The Borrower agrees that arbitration institutions or the courts may use the fax or email address listed on the first page of the Contract toserve arbitration/litigation instruments, except for judgments, rulings, and mediations.　　15.3 The abovementioned stipulations on service are applicable to first hearings, second hearings, retrials, and enforcement under arbitration andlitigation proceedings. As for service to the above address, arbitration institutions or the courts may serve instruments directly by mail.　　15.4 The Borrower shall ensure the truthfulness and validity of the address, contact, fax, email address, and other information listed in theContract, and if related information changes, the Borrower shall promptly notify the Lender in writing; otherwise, service to the original mailingaddress shall still be valid, and the Borrower shall bear all resulting legal consequences.　　　　Article 16 Complete Contract　　Section 1: Basic Stipulations and Section 2: Specific Stipulations of the Contract together constitute a single complete fixed assets loan contract, andthe same terms in the two sections shall have the same meanings. The Borrower’s borrowing is subject to the above two sections. The Borrower’s borrowing issubject to the above two sections.　　　　Article 17 Notifications　　17.1 All notices from the parties to the Contract shall be sent in writing. Unless stipulated otherwise, the parties designate the domiciles listed in theContract as their mailing address and contact address. Unless stipulated otherwise, the parties designate the domiciles listed in the Contract as their mailingaddress and contact address. Should either party’s mailing address or other contact information change, the other party shall be promptly notified in writing.　　17.2 Should either party to the Contract refuse to accept mail or should otherwise be unable to be served, the notifying party may serve mail bynotarization or an announcement.　　Article 18 Special Value-Added Tax Stipulations　　18.1 Interest and expenses under the Contract paid by the Borrower to the Lender shall all include taxes.15　　18.2 Should the Borrower request that the Lender issue a value-added tax receipt, relevant information shall first be registered with the Lender.Information for registration includes the Borrower’s full name, the taxpayer’s identification number or social credit code, address, telephone, bank of account,and account number. The Borrower shall ensure that relevant information provided to the Lender is true, accurate, and complete and shall provide relevantproof as required by the Lender; for specific requirements, the Lender may send online notices or make online announcements.　　18.3 Should the Borrower collect its own value-added tax invoices, it shall provide the Lender with a stamped power of attorney, designating thecollector and specifying such information as the collector’s identification number; thereafter, the collector shall present the original of his or heridentification card to collect value-added tax invoices. If the designated collector changes, the Borrower shall need to issue to the Lender a new stampedpower of attorney. If the designated collector changes, the Borrower shall need to issue to the Lender a new stamped power of attorney. Should the Borrowerchoose to receive value-added tax invoices by mail, the Borrower shall still provide accurate, error-free, and servable mailing information; if the mailinginformation changes, the Lender shall be promptly notified in writing.　　18.4 Should the Lender be unable to promptly issue value-added tax invoices due to natural disasters, government actions, social anomalies, and othercircumstances of force majeure or because of tax authorities, the Lender is entitled to delay invoicing and shall not assume any responsibility.　　18.5 Should a value-added tax invoice be lost, damaged, or overdue after it is collected by the Borrower or delivery by the Lender to a third party,or for other reasons unrelated to the Lender, such that the Borrower cannot receive the value-added tax invoice or cannot deduct the tax on time, theLender shall not be liable for compensating the Borrower for related economic losses.　　18.6 Should the Borrower need to have a special red-text value-added tax invoice issued because of sales returns, the suspension of taxable services, orinvoicing errors, deductions, or the inability to certify invoices and the Borrower is required, under relevant laws, regulations, and policy documents, tosubmit a Special Red-Text Value-Added Tax Invoice Issuance Information Form, the Borrower shall submit a Special Red-Text Value-Added Tax InvoiceIssuance Information Form to tax authorities; once approved by tax authorities and once notified, the Lender shall issue a special red-text value-added taxinvoice.　　18.7 During the performance of the Contract, should national tax rates be adjusted, the Lender is entitled to adjust pricing under the Contract based onchanges and adjustments to national tax rates.　　 Article 19 Miscellaneous　　19.1 Lender’s failure to exercise or partially exercise or delay the exercise of any right under the Contract does not constitute a waiver or change of thatright or other rights, nor does it affect its further exercise of that right or other rights.　　19.2 Should any term of the Contract be invalid or unenforceable, it shall not affect the validity and enforceability of other terms and shall not affectthe validity of the entire contract.　　19.3 The Lender is entitled to, pursuant to relevant legal and regulatory provisions and the requirements of financial regulators, to provide informationrelated to the Contract or the Borrower’s other information to the People’s Bank of China Credit System and other lawfully established credit informationdatabases to be queried and used by qualified institutions or individuals. The Lender is also entitled, for the purposes of entering into and performing theContract, to query the Borrower’s related information on the People’s Bank of China Credit System and other lawfully established credit informationdatabases.16　　19.4　 The terms “related party”, “related party relationships”, “related party transactions”, “main investors”, “key management personnel”, and othersuch terms shall have the same meanings as the same terms in the Accounting Standards for Business Enterprises No. 36 - Related Party Disclosures (C.H.[2006] 3) issued by the Ministry of Finance, as well as subsequent amendments to the Standards.　　19.5　The environmental and social risks mentioned in the Contract refer to the environmental and social hazards and risks associated with theBorrower and its important related parties in construction, production, and operation activities, including environmental and social issues related to energyconsumption, pollution, land, health, safety, resettlement, ecological protection, and climate change.　　19.6 The documents and vouchers for loans under the Contract prepared and retained by the Lender according to its business rules constitute validevidence for the credit relationship between the Borrower and the Lender and are binding on the Borrower.　　19.7 In the Contract, (1) all mention of the Contract shall include revisions to or supplementation of the Contract; (2) article titles are for reference onlyand do not constitute any interpretation of the Contract, nor do they impose any restrictions on the content of the titles or their scope; and (3) shouldwithdrawal dates or repayment dates fall on non-banking days, they shall be postponed to the next banking day.The parties acknowledge that: both the Borrower and the Lender have fully negotiated on all of the terms of the Contract. Lender has drawn theBorrower’s attention to all terms related to the parties’ rights and obligations, so that the Borrower full and accurately understands them, and at therequest of the Borrower, the Lender has provided explanations for relevant provisions. The Borrower has carefully read and fully understands allterms of the Contract (including Section 1: General Stipulations and Section 2: Specific Stipulations), and both the Borrower and the Lender havereached full consensus on the understanding of the terms of the Contract with no objections to the contractual contents.　　　　Lender (Seal):　　Principal/Attorney: 　　Borrower (Seal):　　Legal Representative/Attorney: 　 Contract Signing Date: 17Attachment 1:Withdrawal NoticeIndustrial and Commercial Bank of China 　　　　　　　　　　　　:　　Pursuant to the Contract, number , signed by our company and your bank on (hereinafter referred to as the “Lending Contract”), we have fullyimplemented the preconditions for withdrawal as stipulated in the Lending Contract, and we hereby issue the following withdrawal notice to your bank: I. We intend to withdrawal lending from your bank for the amount of (currency) on . II. The lending term is , ending on .　　III. Please transfer this loan to our designated account below: Account Name:　　　　　　　　　　　　 Account Number:　　　　　　　　　　　　 Bank of Account:　　　　　　　　　　　　 IV. Pursuant to the stipulations of the Lending Contract and the entrusted payment agreement, for this loan, the entrusted payment is _____; the companyitself shall pay _____. Under the Lender’s entrusted payment method, we authorize and entrust your bank to transfer the loan to our account and make payment to the accountsof the following payment objects for the purposes agreed upon under the Lending Contract: Account Name:　　　　　　　　　　　　 Account Number:　　　　　　　　　　　　 Bank of Account:　　　　　　　　　　　　 [This loan must be paid to multiple payment objects at the same time. See the attachment for the list of payment objects and accounts.]　　V. We provide confirmation to your bank that:　　1. This loan shall be used for the purposes as stipulated in the Lending Contract;　　2. All statements, warranties, and commitments that we make are true, accurate, complete, and valid at the date of issuance of this notice and thewithdrawal date.　　3. As of the date of issuance of this notice, there have been no significantly adverse changes to our production operations or our financial creditstanding.　　4. As of the date of issuance of this notice, there are no defaults or expected defaults under the Lending Contract or in relation to the Lending Contract.We further confirm that no default events shall occur or be present on the withdrawal date.　　5. This notification is irrevocable once issued. Borrower (Seal):　　　　　　　　　 Legal Representative/Attorney:　　　　　 Date:18List of Objects of Payment and AccountsPayment Object 1:　　　Account Name:　　　　　 　　　　　　　　　　Account Number:　　　 　　　　　　　　　　　　Bank of Account:　　 　　　　　　　　　　　　　Payment Amount:　　　 　　　　　　　　　Payment Object 2:　　　Account Name:　　　　　 　　　　　　　　　　Account Number:　　　 　　　　　　　　　　　　Bank of Account:　　 　　　　　　　　　　　　　Payment Amount:　　　 　　　　　　　　　Payment Object 3:　　　Account Name:　　　　　 　　　　　　　　　　Account Number:　　　 　　　　　　　　　　　　Bank of Account:　　 　　　　　　　　　　　　　Payment Amount:　　　 　　　　　　　　　Payment Object 4:　　　Account Name:　　　　　 　　　　　　　　　　Account Number:　　　 　　　　　　　　　　　　Bank of Account:　　 　　　　　　　　　　　　　Payment Amount: Borrower: (Seal)19Exhibit 10.27No.:0410000286-2018 (Xiang’an) No. 00287___________________________________________________________________[seal:]Working Capital Loan Contract(2016 Edition)[seal:]Special Note: The Contract is negotiated by the lender and the borrower on an equal and voluntary basis. All contract terms are truerepresentations of the parties’ intentions. To protect the legitimate rights and interests of the Borrower, the Lender specifically invites the Borrower totake full notice of the full terms and conditions of the parties, in particular, the contents in bold.Contract Main Body Page 1 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]Lender: Industrial and Commercial Bank of China Limited Xiamen Xiang’an BranchPrincipal: Domicile (Address): Postal Code: Borrower: Legal Representative: Contact: Mobile No.: Domicile (Address): Postal Code: Telephone: Fax: Email: [Please ensure that the Borrower fills in the above information accurately and completely to ensure the timely delivery of relevant notices and legaldocuments.]Through equal negotiations, a consensus has been reached and the Contract has been entered into on the matters of the Lender’s issuance of lending tothe Borrower.Section 1 General StipulationsArticle 1 Loan PurposeLoans under the Contract shall be used for the following purpose; without the written consent of the Lender, the Borrower shall not misuse any loans.The Lender is entitled to supervision of the use of funds.Loan Purpose: VAT PaymentArticle 2 Lending Amount and Term2.1 The currency of the contract is the RMB , and the amount is 1600000.00 (in words: One million and six hundred thousand yuan) (where the figureand the amount in words is not the same, the amount in words shall prevail).2.2 The lending term under the Contract is 36 months , from the actual withdrawal date (for multiple withdrawals, from the first withdrawal date); theactual withdrawal date shall be based on the loan receipt.Article 3 Interest Rates, Interest, and Fees3.1 [Method for determining the RMB lending rate]Contract Main Body Page 2 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]The RMB lending rate is determined according to the following method (3) (1/2/3/4) below:(1) Fixed interest rate, at an annual interest rate of / %, with the interest rate remaining unchanged for the duration of the Contract.(2) The lending rate is determined by the benchmark interest rate plus a floating range, wherein the benchmark interest rate is the benchmark lending rateof the People’s Bank of China on / (withdrawal date/ effective date of the Contract) that corresponds to the lending term stipulated in Article 2.2, and thefloating range is /(upward/downward/zero) / %. After the Borrower makes a withdrawal, the lending rate will remain the same for a period of / (1/3/6/12)month(s), to be adjusted once a period, with interest accounted for in segments. The date for determining the interest rate for the second period shall be thedate that corresponds to the withdrawal date at the end of the first period; should the given month not have the given date that corresponds to the withdrawaldate, the corresponding date shall be the last day of the given month, and the same shall hold true for other periods. Should the Borrower make withdrawals ininstallments, the lending rate shall be adjusted according to method / (A/B) listed below:A. Regardless of the number of withdrawals during a single period, the current lending rate determined on the date on which the interest rate for thecurrent period shall be used, to be adjusted at the next period.B. The lending rate shall be determined and adjusted for each withdrawal.(3)The lending rate for each withdrawal shall be determined based on the benchmark interest rate plus the floating range, wherein the benchmark interestrate shall be the annual (annual/monthly) loan promotion rate (LPR) by the National Interbank Funding Center published on the business day prior to thewithdrawal date (withdrawal date/effective date of the contract) for the current withdrawal, and the floating range shall be / (upward/downward/zero) / % orplus (plus/less/zero) 67.75 base points (with one base point being 0.01%). The lending rate after each withdrawal shall be adjusted according to method__(A/B) listed below:A. For a period of 1 (1/3/6/12) month(s), to be adjusted once a period, with interest accounted for in segments. The benchmark interest rate adjustmentdate for the second period shall be the date that corresponds to the withdrawal date at the end of the first period; should the given month not have the givendate that corresponds to the withdrawal date, the corresponding date shall be the last day of the given month. Should the National Interbank Funding Centernot have published a loan benchmark interest rate for the corresponding term on the previous business day, the loan benchmark interest for the correspondingterm published on the last business day shall prevail, and so on and so forth.B. The lending rate shall not be adjusted for the entire lending term.(4) Other: /3.2 [Method for determining the foreign exchange lending rate]The foreign exchange lending rate shall be determined according to method / listed below:(1) Fixed interest rate, at an annual interest rate of / %, with the interest rate remaining unchanged for the duration of the Contract.(2) Floating interest rate, with the lending rate a floating interest rate composted of the spread of the / -month / (LIBOR/HIBOR) as the benchmarkinterest rate plus / base points (one base point is 0.01%). The spread will remain unchanged during the Contract term. Should withdrawals be made ininstallments, the interest rate shall be calculated for each withdrawal. After the Borrower makes a withdrawal, the benchmark interest rate shall be adjustedaccording to method / listed below, with interest accounted for in segments:A. For a period of / (1/3/6/12) month(s), to be adjusted once a period. The benchmark interest rate adjustment date for the second period shall be the datethat corresponds to the withdrawal date at the end of the first period; should the given month not have the given date that corresponds to the withdrawal date,the corresponding date shall be the last day of the given month, and the same shall hold true for other periods.Contract Main Body Page 3 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]B. The benchmark interest rate shall be adjusted on the first day of each interest-bearing period.(3)Other: /3.3 Interest shall be calculated on lending under the Contract on a daily basis from the withdrawal date and settled every month (month/quarter/sixmonths). Interest shall be settled with principal when loans are due, and the daily interest rate = annual interest rate/360.3.4 The penalty interest rate for overdue payments under the Contract shall be determined at 30 % of the original lending rate, and the penalty interestrate for misuse of loans shall be determined at 50 % of the original lending rate.3.5 In addition to interest, the Borrower shall also pay a commitment fee to the Lender. The commitment fee shall be the difference between the amountof lending stipulated in Article 2 and the Borrower’s withdrawals (the daily average balance during the billing period) and an annual rate of / %, to be paidaccording to method / below:(1) A single payment shall be made to the Lender on the last day of the billing period.(2) After the Contract enters into force, payments shall be made in installments to the Lender on the 20th day of every / (month/quarter/six months) upuntil the last day of the billing period.Should loans under the Contract be on a revolving basis, the billing period refers to the time limit on the use of credit for revolving loans; should loansunder the Contract not be on a revolving basis, the billing period refers to the period between the signing date of the Contract and the withdrawal date of thelast loan as stipulated in Article 4.The commitment fee is paid in installments; should the Borrower fail to pay the commitment fee on time, the Lender is entitled to the suspension ofthe issuance of loans or to cancel all amounts that the Borrower has not withdrawn.Article 4 Withdrawals(Revolving Loans are Not Applicable)4.1 The Borrower shall make withdrawals according to method (1) (1/2/3)listed below according to actual funding needs:(1) One-time loan request prior to 12/14/2018;(2) One or more loan requests after the Contract’s effective date and before / /;(3) Withdrawals in installments on the dates below; the Borrower may, with the Lender’s consent, make changes to withdrawal dates or amountsbased on funding needs, though the Borrower must make loan requests no later than //.Withdrawal DateWithdrawal Amount//////4.2 Should the Borrower fail to make withdrawals as agreed, the Lender is entitled to cancel, in part or in full, lending that the Borrower has not yetwithdrawn.Contract Main Body Page 4 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]Article 5 Repayments5.15.1 The Borrower shall repay loans under the Contract according to method (2) (1/2) listed below:(1) One-time loan repayment upon expiration.(2) According to the following repayment plan (when there is additional content, additional pages can be attached): Planned Repayment Date Planned Repayment Amount 05-20-2019 16000.00 yuan 11-20-2019 64000.00 yuan 05-20-2020 80000.00 yuan 11-20-2020 160000.00 yuan 05-20-2021 160000.00 yuan 11-05-2021 1120000.00 yuan5.2 For lending under the Contract under the following circumstances, the Borrower shall not be required to pay the early repayment penalty incase the loan is returned immediately after the corresponding funds are in place, thus resulting in early repayment: / /5.3 Apart from the circumstances stipulated in Article 5.2, should loans be repaid early, the Borrower shall pay an early repayment penalty to theLender, with the early repayment penalty calculated according to the following criteria: early repayment amount × remaining lending term (months) ×/ %; if the remaining lending term is less than one month, the period shall be calculated as one month.Article 6 Special Agreements on Revolving Loans (Optional clause; this Article □ is applicable ■ is not applicable)6.1 Loans under the Contract may be used on a revolving basis, and the lending amount and lending periods in Article 2 above shall be the revolvingloan credit line and revolving loan credit term, wherein the revolving loan credit term is calculated from the effective date of the Contract.6.2 RMB revolving loans are determined using the benchmark lending rate published by the People’s Bank of China plus the floating range, and thebenchmark lending rate is determined based on the benchmark lending rate of the People’s Bank of China that corresponds to the grade of each lending term. Article 7 GuaranteesThe loan guarantee under the Contract is the maximum guarantee, and the corresponding maximum guarantee contract is as follows ____/____(1/2/3,select as many as applicable ):(1) Maximum Guarantee Contract Name: / (No.: / )Contract Main Body Page 5 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]Guarantor: /(2) Maximum Mortgage Contract Name: / (No.: / )Mortgager: /(3) Maximum Pledge Contract Name: / (No.: / )Pledger: /Article 8 Financial Agreement (Optional clause; this Article □ is applicable ■ is not applicable)For the duration of the Contract, the Borrower shall be subject to the following financial metrics: / /Article 9 Dispute ResolutionThe dispute resolution method under the Contract is (1) (1/2) :(1) The dispute shall be submitted to the Xiamen Arbitration Commission, subject to the arbitration rules effective at the time in which theapplication for arbitration is submitted for arbitration in Xiamen (arbitral place). The arbitral award is final and binding upon the parties.(2) The dispute shall be resolved through litigation in the court of the Lender’s location.Article 10 Miscellaneous10.1 The Contract is in 2 duplicates, with the Borrower, Lender, and , / , each holding one original, each of equal legal effect.10.2 The following attachments and other attachments mutually agreed upon by the parties shall constitute an integral part of the Contract and have thesame legal effect as the Contract:Attachment 1: Withdrawal Notice (Format)Attachment 2: Entrusted Payment AgreementAttachment 3: /Article 11 Other Matters of Agreement11.1 The arbitral ruling is final and binding on both parties. The parties agree that the arbitration shall be conducted after the arbitration has been filed;the relevant legal documents (including the arbitration documents) shall be deemed to have been served on the day following mailing to the mailingaddresses of the parties as recorded in the Contract.11.2 The Borrower shall disclose related party relationships and related party transactions to the Lender in a timely, comprehensive, and accuratemanner; the total amount of financing that the Borrower applies to the Lender for shall not exceed the actual funding needs of Party B. Should the Borrowerviolate any of the stipulations in the two foregoing paragraphs, the Lender is entitled to take the breach of contract remedy measures as stipulated in thisagreement.Contract Main Body Page 6 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]11.3 Without the consent of the Lender, the Borrower shall not provide any guarantees or warranties to others or be deemed as in breach of contract,wherein the Lender is entitled to withdraw financing in advance.11.4 Without the written consent of the Lender, the Borrower shall not set up mortgages (pledges) on or provide guarantees or warranties for assets that iteffectively operates.11.5 The Borrower shall regularly submit reports to the Lender on external guarantees and promise that such information on external guarantee amountsis complete, true, and accurate.11.6 When the Borrower’s financial metrics during the existence of lending are inferior to those previously agreed to by the Lender (if any), the Lender isentitled to declare that the loan expire in advance, to suspend the issuance of unissued funds, to require that the Borrower repay some or all of the loansalready issued, or to require that the Borrower provide a legal and valid guarantee as recognized by the Lender.Section 2 Specific Stipulations Article 1 Interest Rate and Interest1.1 For foreign currency borrowing, LIBOR is the interbank interest rate for the lending currency under the Contract displayed on the Reuters financialtelecommunications terminal “LIBO=“ page two banking days (11: 00 am London time) prior to the withdrawal date or benchmark interest rate adjustmentdate; HIBOR is the interbank interest rate for the lending currency under the Contract displayed on the Reuters financial telecommunications terminal“HIBO=“ page two banking days (11: 15 am Hong Kong time) prior to the withdrawal date or benchmark interest rate adjustment date.1.2 Should a floating interest rate be used for loans under the Contract, the original interest rate shall still be used for interest on overdue loans.1.3 Should loan interest be settled on a monthly basis, the settlement date shall be the 20th of each month; should interest be settled quarterly, thesettlement date shall be the 20th day of the last month of each quarter; should interest be settled semi-annually, the settlement date shall be June 20 orDecember 20 of each year.1.4 The first interest-bearing period shall be from the actual date of withdrawal to the first settlement date; the last interest-bearing period shall be fromthe day after the end of the previous interest-bearing period to the final payment date; all other interest-bearing periods shall be from the date after the end ofthe previous interest-bearing period to the next settlement date.1.5 Loan Interest = Loan Principal × Daily Interest Rate × Actual Days of Use. Should the equal principal and interest repayment method beadopted, the formula for calculating the principal and interest shall be as follows:Total Principal and Interest Per Period = Loan Principle x Period Profit x (1 + Period Profit) Number of Repayment Installments (1 + Period Profit) Number of Repayment Installments - 1 1.6 Should the People’s Bank of China adjust its measures for determining loan interest rates applicable to lending under the Contract, the relevantrules of the People’s Bank of China shall be adopted, and the Lender shall not provide separate notice thereof to the Borrower.1.7 The lending rate determined at the signing of the Contract may float downward to a certain degree from the relevant loan benchmark interestrate published by the People’s Bank of China or the loan prime rate (LPR) published by the National Interbank Funding Center. The Lender is entitledto re-evaluate the Borrower’s interest rate concessions each year and determine whether to cancel, in part or in full, the interest rate concessionsgranted to the Borrower, based on national policies, the Borrower’s credit standing, lending guarantee changes, and other such circumstances, andpromptly notify the Borrower of such a cancellation.Contract Main Body Page 7 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]Article 2 Loan Issuances and Payments2.1 The Borrower must meet the following withdrawal preconditions in order to withdraw loans, otherwise the Lender is not obligated to issue any fundsto the Borrower, unless the Lender has agreed to such an issuance in advance:(1) Apart from credit loans, the Borrower has provided corresponding guarantees as required by the Lender and has completed relevant guaranteeprocedures;(2) There has been no breach of contract under the Contract or other contracts with the Lender;(3) The proof of loan usage provided is consistent with the intended use.(4) Other materials are submitted as required by the Lender.2.2 Written documents provided to the Lender by the Borrower at the time of withdrawal must be originals; if originals cannot be provided, with theLender’s consent, photocopies affixed with the Borrower’s corporate seal may be provided.2.3 The Borrower must provide the Lender with a withdrawal notice at least five banking days in advance of a withdrawal. Once the withdrawal noticehas been submitted, it cannot be revoked without the written consent of the Lender.2.4 Once the Borrower has met the withdrawal preconditions or the Lender has agreed to issuance in advance, the Lender shall transfer the loan to theBorrower’s designated account, meaning that the Lender has issued the loan to the Borrower as stipulated under the Contract.2.5 Pursuant to relevant regulatory requirements and the Lender’s administrative requirements, lending exceeding a certain amount or meeting certainconditions shall be made with a Lender’s entrusted payment, whereby the Lender pays the loan amount to payment objects that comply with the usagestipulated under the Contract based on the Borrower’s withdrawal application and payment entrustment. To this end, the Borrower shall enter into a separateentrusted payment agreement with the Lender as an attachment to the Contract and open or designate an account at the Lender for entrusted payments.Article 3 Repayments3.1 The Borrower shall repay the principal, interest and other payables in full and on time as stipulated under the Contract. One banking day prior to therepayment date and each settlement date, the Borrower shall deposit enough in its repayment account opened at the Lender for the current interest, principal,and other payables, and the Lender is entitled to actively collect payment there from on the repayment date or settlement date, or ask that the Borrowercomply with relevant transfer procedures. Should the amount in the repayment account be insufficient to pay all payables due, the Lender has the right todetermine the order of payment.3.2 Should the Borrower apply to repay loans early, in part or in full, the Borrower shall submit a written application to the Lender 10 banking days inadvance and pay the early repayment penalty to the Lender according to the standards stipulated under the Contract.3.3 Should the Lender agree to an early repayment, on the early repayment date, the Borrower shall also settle loan principal, interest, and otherpayments due as of the early repayment date, as stipulated under the Contract.3.4 The Lender is entitled to withdraw lending in advance based on the Borrower’s capital returns.Contract Main Body Page 8 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]3.5 Should the actual loan period be shortened because of the Borrower’s early repayment or because the Lender withdraws the loan in advance asstipulated under the Contract, the corresponding interest rate grade shall not be adjusted, and the original lending rate shall still be used.Article 4 Revolving Loans4.1 Should loans under the Contract be used on a revolving basis, during the revolving credit term, the sum of the Borrower’s loan balance at any timeshould not exceed the revolving line of credit; the lending term for each of the Borrower’s withdrawals shall be from the actual withdrawal date to thestipulated repayment date, as recorded on the lending receipt. The repayment date of any single withdrawal shall not exceed the revolving credit term.4.2 Should loans under the Contract be used on a revolving basis, from the signing date of the Contract, should the Borrower make no withdrawals forthree consecutive months, the Lender has the right to cancel the revolving line of credit.Article 5 Guarantees5.1 Apart from credit loans, the Borrower shall provide legal and valid guarantees recognized by the Lender for its performance of obligations under theContract. A guarantee contract shall be separately signed.5.2 Should the collateral under the Contract be damaged, devalued, subject to an ownership dispute, seized or withheld, or should the mortgager disposeof the collateral without authorization, or should the financial situation of the guarantor adversely change or change in a way that is not conducive to theLender’s claims, the Borrower shall promptly notify the Lender and provide additional guarantees as recognized by the Lender.5.3 The Lender is entitled to periodically or irregularly reassess the value of the collateral and the guarantor’s ability to guarantee. Should theassessment hold that the value of the collateral has declined or that the guarantor’s ability to guarantee has declined, the Borrower shall provideadditional guarantees equal to the reduced value or the reduced ability to guarantee and may provide other guarantees as recognized by the Lender.5.4 Should pledge guarantees for receivables be provided for loans under the Contract, for the duration of the Contract, in any one of the followingcircumstances, the Lender has the right to declare the early expiration of lending, require that the Borrower immediately repay loan principal and interest, inpart or in full, or add additional legal, valid, and sufficient guarantees recognized by the Lender:(1) The accounts receivable pledger’s bad debt rate on the payer’s accounts receivable has increased for two consecutive months;(2) The accounts receivable pledger’s accounts receivable for the payer that are overdue and have yet to be received account for over 5% of the payer’sbalance of accounts receivable;(3) The accounts receivable pledger has entered into a trade dispute (including but not limited to quality, technology, or service disputes) or claimsdispute with the payer or another third party, such that the accounts receivable may not be payable on time.Article 6 Account Management6.1 The Borrower shall use a special designated capital returns account with the Lender to collect corresponding sales income or planned repaymentfunds. Should corresponding sales income be settled in a non-cash manner, the Borrower shall ensure that the funds are returned to the account promptly afterpayment is received.6.2 The Lender is entitled to the supervision of the capital returns account, including but not limited to inquiries and supervision of the account’s capitaldebits and credits, and the Borrower shall cooperate. If required by the Lender, the Borrower shall sign a special account supervision agreement with theLender.Contract Main Body Page 9 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]Article 7 Representations and WarrantiesThe Borrower makes the following representations and warranties to the Lender, which shall be valid for the duration of the Contract:7.1 The Borrower has the qualifications for borrowing and the qualifications and ability to sign and perform the Contract.7.2 All necessary authorizations or approvals have been obtained for signing the contract, and the signing and performance of the contract do not violatethe provisions of the company’s articles of incorporation or relevant laws and regulations and do not conflict with obligations under other contracts.7.3 Other debts payable have been paid on time, with no malicious defaults on bank loans or interest.7.4 There are sound organizations and financial management systems in place. In the past one year, there have been no major disciplinary violations orunlawful conduct, and current senior management have no significantly negative records.7.5 All documents and materials provided to the Lender are true, accurate, complete, and valid, and they are free of false records, material omissions, ormisleading statements.7.6 Financial accounting reports provided to the Lender have been prepared in accordance with PRC accounting standards, reflecting the Borrower’soperating conditions and liabilities in a true, fair, and complete manner. Since the latest financial accounting report, the Borrower’s financial position has notexperienced any significantly adverse changes.7.7 No litigation, arbitration, or claims have been concealed from the Lender.Article 8 Borrower Commitments8.1 To withdraw and use loans according to the terms and purposes stipulated under the Contract and to not use the borrowings for fixed assets,equity, and other investments and to ensure that borrowings, in any form, do not flow into the securities market, futures market, or other uses prohibitedor restricted by relevant laws and regulations.8.2 To settle loan principal, interest, and other payables as stipulated under the Contract.To accept and actively cooperate with the Lender’s accounts analysis inspection and supervision of the use of loan funds, including by means ofaccount analysis, document inspection, and on-site investigations, and to regularly report the use of loan funds as required by the Lender.8.4 To accept the Lender’s credit checks, to provide financial accounting materials, such as balance sheets and income and loss statements, and othermaterials reflecting the Borrower’s solvency, as required by the Lender, and to assist and cooperate with the Lender’s investigations, inquiries, andsupervision of its productions, operations, and financial standing.8.5 To not distribute dividends or bonuses, in any form, when there are outstanding loan principal, interest, or other payables (including amountsthat are announced as due immediately) under the Contract.8.6 To first obtain the Lender’s written consent or to make arrangements that satisfy the Lender prior to Mergers, divisions, capital reductions,equity changes, equity pledges, transfers of major assets and claims, major foreign investments, substantial increases in debt financing, and otheractions that may adversely affect the Lender’s equity.8.7 In any one of the following events, to promptly notify the Lender:Contract Main Body Page 10 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code](1) changes to the company’s articles of incorporation, business scope, registered capital, or legal representative;(2) closure, dissolution, liquidation, suspension of business, business license suspended or revoked for rectification, or the company applies (is subjectto) bankruptcy;(3) involvement or possible involvement in major economic disputes, litigation, or arbitration, or property is seized, detained or under supervision bylaw;(4) shareholder(s), director(s), and current senior management are suspect of major cases or economic disputes.8.8 To promptly, comprehensively, and accurately disclose of related party relationships and related party transactions to the Lender.8.9 To mail or otherwise send to the Lender and promptly receive various notices.8.10 To not dispose of its own assets in a manner that reduces solvency; to not use assets formed under the Contract, without obtaining the Lender’sconsent, to provide guarantees to third parties.8.11 If borrowing under the Contract is issued as credit, to completely, truthfully, and accurately report routinely to the Lender on external guaranteesand, as required by the Lender, sign an account supervision agreement; when external guarantees may affect performance of obligations under the contract,the Lender’s written consent must be obtained.8.12 To bear expenses generated by the Lender to realize claims under the Contract, including but not limited to attorneys’ fees and auction fees.8.13 To give priority to the Borrower’s debts to its shareholders in terms of the priority for settling debts under the Contract and to at least give suchdebts an equal footing as other similar debts of the Borrower’s other creditors.8.14 To strengthen environmental and social risk management and accept the Lender’s supervision and inspections in this regard. If required bythe Lender, to submit environmental and social risk reports to the Lender.Article 9 Lender Commitments9.1 To issue loans to the Borrower as stipulated under the Contract.9.2 To keep confidential non-public materials and information provided by the Borrower, unless laws and regulations require otherwise or the Contractstipulates otherwise.Article 10 Breach of Contract10.1 Any one of the following events shall constitute breach of contract by the Borrower:(1) the Borrower fails to repay loan principal, interest, or other payables under the Contract according to stipulations under the Contract or acts contraryto representations, warranties, or commitments under the Contract;(2) changes occur to guarantees under the Contract that are not conducive to the Lender’s claims, and the Borrower fails to provide other guaranteesrecognized by the Lender;(3) the Borrower is unable to settle any other debts due (including debts declared due early) or fails to perform or violates obligations under otheragreements, such that it has affected or may affect its performance of obligations under the Contract;(4) the Borrower’s financial metrics, such as profitability, solvency, operating capacity, and cash flow, fail to meet agreed standards, or the deteriorationthereof has affected or may affect the performance of its obligations under the Contract;(5) the Borrower’s equity structure, production, operations, and foreign investments have undergone significantly adverse changes that have affected ormay affect the performance of its obligations under the Contract;Contract Main Body Page 11 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code](6) the Borrower is involved in or may be involved in major economic disputes, litigation, arbitration, or assets have been seized, detained or enforced, oris being investigated or dealt with by judicial or administrative organs in accordance with the law or subject to penalties in accordance with the law, or isexposed by the media for violating relevant state regulations or policies, such that it has affected or may affect the performance of its obligations under theContract;(7) the Borrower’s main investors and key management personnel make abnormal changes, go missing, or are investigated or restricted by judicialauthorities in accordance with the law, such that it has affected or may affect the performance of its obligations under the Contract;(8) the Borrower utilizes false contracts with related parties, utilizes transactions without actual trading to obtain funding or credit from the Lender, orintentionally evades the Lender’s claims through related transactions;(9) the Borrower has or may be closed, dissolved, liquidated, have its business suspended, have its business license rectified or revoked, or apply for (orbe subject to) bankruptcy;(10) the Borrower has a liability incident or a major environmental or social risk incident for food safety, safety production, or environmental protectionviolations or violation other environmental or social risk management laws, regulations, or industry standards, such that it has affected or may affect theperformance of its obligations under the Contract;(11) if borrowing under the Contract is issued as credit, the Borrower’s credit rating, profitability, asset-liability ratio, cash flow from operating activities,or other metrics do not meet the Lender’s conditions for credit lending; or the Borrow sets up pledge/mortgage guarantees for others or provides guaranteesusing its validly operated assets without the written consent of the Lender, such that it has affected or may affect the performance of its obligations under theContract;(12) Other circumstances that may adversely affect the Lender’s realization of claims under the Contract.10.2 Should the Borrower breach the Contract, the Lender is entitled to take one or more of the following remedies:(1) to require that the Borrower rectify the breach of contract within a period of time;(2) to suspend the issuance of loans or other financing to the Borrower based on the Contract or other contracts between the Lender and theBorrower and cancel, in part or in full, loans or other financing that the Borrower has yet to withdraw;(3) to announce immediate expiration of lending or other financing under the Contract and other contracts between the Lender and the Borrowerand to immediately recover unpaid amounts;(4) to require that the Borrower compensate for losses suffered by the Lender from the breach of contract;(5) other remedies provided by laws or regulations, as stipulated under the Contract, or as deemed necessary by the Lender.10.3 For loans due yet unpaid by the Borrower as agreed (including debts that are announced as due immediately), the Lender is entitled to chargepenalty interest from the date at the overdue penalty interest rate stipulated under the Contract from the date on which the amount was overdue. For interestthat the Borrower fails to pay on time (including penalty interest), compound interest shall be charged based on the overdue penalty interest rate. Penaltyinterest / compound interest shall be settled according to the interest settlement rules stipulated under the Contract.Contract Main Body Page 12 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]10.4 Should the Borrower fail to use loans according to the usage stipulated under the Contract, the Lender is entitled to charge penalty interest formisuse of funds according to the penalty interest rate stipulated in the Contract from the date in which funds are misused, and compound interest shall becharged according to the penalty interest rate for misuse of funds for interest (including penalty interest) not paid on time during the misuse of funds. Penaltyinterest / compound interest shall be settled according to the interest settlement rules stipulated under the Contract. Penalty interest / compound interest shallbe settled according to the interest settlement rules stipulated under the Contract.10.5 Should the Borrower simultaneously encounter the circumstances of Article 10.3 and Article 10.4, the greater penalty interest rate shall be chargedand cannot be combined.10.6 Should the Borrower fail to repay loan principal, interest (including penalty interest and compound interest), or other payables on time, theLender is entitled to make an announcement through the media.10.7 Should the Borrower’s related parties’ controlling relationship with the Borrower change or should the Borrower’s related party encounter thecircumstances in Article 10.1 above, other than items (1) or (2), such that it has affected or may affect the Borrower’s performance of its obligations under theContract, the Lender is entitled to take various measures as stipulated under the Contract.Article 11 Auto-termination of Lender Commitment11.1 Should the credit status of the Borrower worsen, the Lender may cancel all loan commitments not yet withdrawn by the Borrower withoutprior notice.11.2 In the event as described in 10.1 and 10.7, it constitutes the worsening of Borrower credit status.Article 12 Withholding12.1 Should the Borrower fail to repay debts due under the Contract as agreed (including debts announced as due immediately), the Borroweragrees that the Lender may withhold corresponding amounts from all foreign exchange and RMB accounts that the Borrower has opened at ICBC tosettle debts owed, until the Borrower’s debts under the Contract have been settled in full.12.2 Should the withheld amount be in a currency other than that of the Contract, the currency shall be exchanged at the Lender’s applicableexchange rate on the withholding date. The Borrower shall bear interest and other expenses incurred from the withholding date to the settlement date(the date on which the Lender converts the withheld amount into the currency of the Contract according to national foreign exchange managementpolicies and actually pays of the debts under the Contract), as well as differences from exchange rate volatility during this period.12.3 Should the amount withheld by the Lender be insufficient to settle all debts owed by the Borrower, the Lender has the right to decide on theorder of settlement.Article 13 Transfer of Rights and Obligations13.1 The Lender is entitled to transfer its rights under the Contract, in part or in full, to a third party, and the Lender’s transfer thereof does not require theBorrower’s consent. Without the written consent of the Lender, the Borrower shall not transfer any of its rights or obligations under the Contract.13.2 The Lender or Industrial and Commercial Bank of China Limited (“ICBC”) may, based on its business management needs, authorize or entrust otherICBC branch agencies to perform rights and obligations under the Contract, or place loan claims under the Contract under the management of other ICBCbranch agencies. The Borrower agrees that such actions shall no longer require the consent of the Borrower. Other ICBC branch agencies that undertake therights and obligations of the Lender are entitled to exercise all rights under the Contract and are entitled to file lawsuits, submit for arbitration, or apply forenforcement in the name of the given agency.Contract Main Body Page 13 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]Article 14 Entry into Force, Changes, and Release of Contract14.1 The Contract enters into force on the signing date and shall be terminated on the date on which the Borrower fully performs all obligations underthe Contract.14.2 Any changes to the Contract shall be agreed to the parties and made in writing. Changed clauses or agreements constitute a part of the Contract andshall have the same legal effect of the Contract. Apart from the changed sections, other parts of the Contract shall remain in effect, and the original terms shallremain in effect until the change is effective.14.3 Changes to and release of the Contract shall not affect the rights of the contracting parties to claim damages. The release of the Contract does notaffect the validity of the dispute resolution clause.Article 15 Applicable Law and Dispute ResolutionThe conclusion, validity, interpretation, performance of the Contract and settlement of disputes under the Contract shall be governed by the laws of thePeople’s Republic of China. Any disputes or issues arising from or related to the Contract shall be settled through negotiations by the borrower and thelender; where negotiations fail, disputes shall be resolved through methods as stipulated under the Contract.Article 16 Address Confirmation for Serving Litigation/Arbitration Instruments16.1 The Borrower confirms that the address listed on the first page of the Contract is the address for serving litigation/arbitration instruments fordisputes under the Contract. Litigation/arbitration instruments include but are not limited to subpoenas, notices of hearings, judgments, rulings, mediations,and time-limit notices.16.2 The Borrower agrees that arbitration institutions or the courts may use the fax or email address listed on the first page of the Contract to servearbitration/litigation instruments, except for judgments, rulings, and mediations.16.3 The abovementioned stipulations on service are applicable to first hearings, second hearings, retrials, and enforcement under arbitration andlitigation proceedings. As for service to the above address, arbitration institutions or the courts may serve instruments directly by mail.16.4 The Borrower shall ensure the truthfulness and validity of the address, contact, fax, email address, and other information listed in theContract, and if related information changes, the Borrower shall promptly notify the Lender in writing; otherwise, service to the original mailingaddress shall still be valid, and the Borrower shall bear all resulting legal consequences.Article 17 Complete ContractSection 1: Basic Stipulations and Section 2: Specific Stipulations of the Contract together constitute a single complete working capital loan contract,and the same terms in the two sections shall have the same meanings. The Borrower’s borrowing is subject to the above two sections.Contract Main Body Page 14 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]Article 18 Notifications18.1 All notices from the parties to the Contract shall be sent in writing. Unless stipulated otherwise, the parties designate the domiciles listed in theContract as their mailing address and contact address. Should either party’s mailing address or other contact information change, the other party shall bepromptly notified in writing.18.2 Should either party to the Contract refuse to accept mail or should otherwise be unable to served, the notifying party may serve mail by notarizationor an announcement.Article 19 Special Value-Added Tax Stipulations19.1 Interest and expenses under the Contract paid by the Borrower to the Lender shall all include taxes.19.2 Should the Borrower request that the Lender issue a value-added tax receipt, relevant information shall first be registered with the Lender.Information for registration includes the Borrower’s full name, the taxpayer’s identification number or social credit code, address, telephone, bank of account,and account number. The Borrower shall ensure that relevant information provided to the Lender is true, accurate, and complete and shall provide relevantproof as required by the Lender; for specific requirements, the Lender may send online notices or make online announcements.19.3 Should the Borrower collect its own value-added tax invoices, it shall provide the Lender with a stamped power of attorney, designating thecollector and specifying such information as the collector’s identification number; thereafter, the collector shall present the original of his or heridentification card to collect value-added tax invoices. If the designated collector changes, the Borrower shall need to issue to the Lender a new stampedpower of attorney. Should the Borrower choose to receive value-added tax invoices by mail, the Borrower shall still provide accurate, error-free, and servablemailing information; if the mailing information changes, the Lender shall be promptly notified in writing.19.4 Should the Lender be unable to promptly issue value-added tax invoices due to natural disasters, government actions, social anomalies, and othercircumstances of force majeure or because of tax authorities, the Lender is entitled to delay invoicing and shall not assume any responsibility.19.5 Should a value-added tax invoice be lost, damaged, or overdue after it is collected by the Borrower or delivery by the Lender to a third party,or for other reasons unrelated to the Lender, such that the Borrower cannot receive the value-added tax invoice or cannot deduct the tax on time, theLender shall not be liable for compensating the Borrower for related economic losses.19.6 Should the Borrower need to have a special red-text value-added tax invoice issued because of sales returns, the suspension of taxable services, orinvoicing errors, deductions, or the inability to certify invoices and the Borrower is required, under relevant laws, regulations, and policy documents, tosubmit a Special Red-Text Value-Added Tax Invoice Issuance Information Form, the Borrower shall submit a Special Red-Text Value-Added Tax InvoiceIssuance Information Form to tax authorities; once approved by tax authorities and once notified, the Lender shall issue a special red-text value-added taxinvoice.19.7 During the performance of the Contract, should national tax rates be adjusted, the Lender is entitled to adjust pricing under the Contract based onchanges and adjustments to national tax rates.Contract Main Body Page 15 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]Article 20 Miscellaneous20.1 Lender’s failure to exercise or partially exercise or delay the exercise of any right under the Contract does not constitute a waiver or change of thatright or other rights, nor does it affect its further exercise of that right or other rights.20.2 Should any term of the Contract be invalid or unenforceable, it shall not affect the validity and enforceability of other terms and shall not affect thevalidity of the entire contract.20.3 The Lender is entitled to, pursuant to relevant legal and regulatory provisions and the requirements of financial regulators, to provide informationrelated to the Contract or the Borrower’s other information to the People’s Bank of China Credit System and other lawfully established credit informationdatabases to be queried and used by qualified institutions or individuals. The Lender is also entitled, for the purposes of entering into and performing theContract, to query the Borrower’s related information on the People’s Bank of China Credit System and other lawfully established credit informationdatabases.20.4 The terms “related party,” “related party relationships,” “related party transactions,” “main investors,” “key management personnel,” and other suchterms shall have the same meanings as the same terms in the Accounting Standards for Business Enterprises No. 36 - Related Party Disclosures (C.H. [2006] 3)issued by the Ministry of Finance, as well as subsequent amendments to the Standards.20.5 The environmental and social risks mentioned in the Contract refer to the environmental and social hazards and risks associated with the Borrowerand its important related parties in construction, production, and operation activities, including environmental and social issues related to energyconsumption, pollution, land, health, safety, resettlement, ecological protection, and climate change.20.6 The documents and vouchers for loans under the Contract prepared and retained by the Lender according to its business rules constitute validevidence for the credit relationship between the Borrower and the Lender and are binding on the Borrower.20.7 In the Contract, (1) all mention of the Contract shall include revisions to or supplementation of the Contract; (2) article titles are for reference onlyand do not constitute any interpretation of the Contract, nor do they impose any restrictions on the content of the titles or their scope; and (3) shouldwithdrawal dates or repayment dates fall on non-banking days, they shall be postponed to the next banking day.The parties acknowledge that: both the Borrower and the Lender have fully negotiated on all of the terms of the Contract. Lender has drawn theBorrower’s attention to all terms related to the parties’ rights and obligations, so that the Borrower full and accurately understands them, and at therequest of the Borrower, the Lender has provided explanations for relevant provisions. The Borrower has carefully read and fully understands allterms of the Contract (including Section 1: General Stipulations and Section 2: Specific Stipulations), and both the Borrower and the Lender havereached full consensus on the understanding of the terms of the Contract with no objections to the contractual contents.Borrower (Seal): Photronics DNP Mask Corporation Xiamen [seal]Date:____________ As the legal representative/authorized representative of the Borrower, I certify that the Borrower borrows from the Lender as per the contract terms,the fact that the seals used in this contract are authentic and valid, as well as that the Borrower has completed each required procedure for the loan.Contract Main Body Page 16 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]Borrower Legal Representative / Authorized Representative (Signature):____[seal:] Peter Scott Kirlin_____________Contract Main Body Page 17 of 17 Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]This page is the Lender signature page of the Working Capital Loan Contract (Contract #: 0410000286-2018 (Xiang’an) No. 00287) entered into byPhotronics DNP Mask Corporation Xiamen and ICBC Xiang’an Branch.We agree to proceed with the working capital loan with the business information below:1. Borrower: Photronics DNP Mask Corporation Xiamen2. Loans under the Contract shall be used for the following purpose; without the written consent of the Lender, the Borrower shall not misuse any loans. TheLender is entitled to supervision of the use of funds. Purpose: VAT Payment3. In accordance to Article 2.1 in the main body of this Contract, the currency of the loan in this Contract is RMB, and the amount is 1600000.00 (InWORDS: One million and six hundred thousand) yuan (In case of inconsistency amounts in numbers and words, the amount in words shall prevail)4. In accordance to Article 2.2 in the main body of this Contract, the term of the loan in this contract is 36 months with the starting date from the date ofwithdrawal (for multiple withdrawals, starting date is the day of the first withdrawal), and the loan document determines the actual withdrawal date.5. The interest rate of RMB loan is determined by the method (3) of Article 3.1 in the main body of this Contract.6. The interest rate of foreign currency loan is determined by the method / of Article 3.2 in the main body of this Contract.7. Interest shall be calculated on lending under the Contract on a daily basis from the withdrawal date and settled every month (month/quarter/six months).Interest shall be settled with principal when loans are due, and the daily interest rate = annual interest rate/360.8. The penalty interest rate for overdue payments under the Contract shall be determined at 30 % of the original lending rate, and the penalty interest rate formisuse of loans shall be determined at 50 % of the original lending rate.9. In accordance to Article 5.1 of the main body of this Contract, the Borrower shall repay the loan under this Contract according to method (2) (1/2).(1) One-time loan repayment upon expiration.(2) According to the following repayment plan:Lender: ICBC Xiang’an Branch [seal](seal)Date: November 22, 2018Signature Page Contract Serial #201811220410001245216760Document 1 of 2 ICBC Mobile Bank “Scan It” to verifycontract contents [QR Code]No.:0410000286-2018 (Xiang'an) No. 00275_________________Working Capital Loan Contract(2016 Edition)Special Note: The Contract is negotiated by the lender and the borrower on an equal and voluntary basis. All contract terms are truerepresentations of the parties’ intentions. To protect the legitimate rights and interests of the Borrower, the Lender specifically invites the Borrower totake full notice of the full terms and conditions of the parties, in particular, the contents in bold.Contract Main Body Page 1 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]Lender: Industrial and Commercial Bank of China Limited Xiamen Xiang'an BranchPrincipal: Domicile (Address): Postal Code: Borrower: Legal Representative: Contact: Mobile No.: 17859729311Domicile (Address): Postal Code: Telephone: Fax: Email: [Please ensure that the Borrower fills in the above information accurately and completely to ensure the timely delivery of relevant notices and legaldocuments.]Through equal negotiations, a consensus has been reached and the Contract has been entered into on the matters of the Lender’s issuance of lending tothe Borrower.Section 1 General StipulationsArticle 1 Loan PurposeLoans under the Contract shall be used for the following purpose; without the written consent of the Lender, the Borrower shall not misuse any loans.The Lender is entitled to supervision of the use of funds.Loan Purpose: VAT PaymentArticle 2 Lending Amount and Term2.1 The currency of the contract is the RMB , and the amount is 13,500,000.00 (in words: Thirteen million and five hundred thousand yuan) (where thefigure and the amount in words is not the same, the amount in words shall prevail).2.2 The lending term under the Contract is 36 months , from the actual withdrawal date (for multiple withdrawals, from the first withdrawal date); theactual withdrawal date shall be based on the loan receipt.Article 3 Interest Rates, Interest, and Fees3.1 [Method for determining the RMB lending rate]The RMB lending rate is determined according to the following method (3) below:(1) Fixed interest rate, at an annual interest rate of / %, with the interest rate remaining unchanged for the duration of the Contract.Contract Main Body Page 2 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code](2) The lending rate is determined by the benchmark interest rate plus a floating range, wherein the benchmark interest rate is the benchmark lending rateof the People’s Bank of China on / (withdrawal date/ effective date of the Contract) that corresponds to the lending term stipulated in Article 2.2, and thefloating range is /(upward/downward/zero) / %. After the Borrower makes a withdrawal, the lending rate will remain the same for a period of / (1/3/6/12)month(s), to be adjusted once a period, with interest accounted for in segments. The date for determining the interest rate for the second period shall be thedate that corresponds to the withdrawal date at the end of the first period; should the given month not have the given date that corresponds to the withdrawaldate, the corresponding date shall be the last day of the given month, and the same shall hold true for other periods. Should the Borrower make withdrawals ininstallments, the lending rate shall be adjusted according to method / (A/B) listed below:A. Regardless of the number of withdrawals during a single period, the current lending rate determined on the date on which the interest rate for thecurrent period shall be used, to be adjusted at the next period.B. The lending rate shall be determined and adjusted for each withdrawal.(3) The lending rate for each withdrawal shall be determined based on the benchmark interest rate plus the floating range, wherein the benchmark interestrate shall be the annual (annual/monthly) loan promotion rate (LPR) by the National Interbank Funding Center published on the business day prior to thewithdrawal date (withdrawal date/effective date of the contract) for the current withdrawal, and the floating range shall be / (upward/downward/zero) / % orplus (plus/less/zero) 67.75 base points (with one base point being 0.01%). The lending rate after each withdrawal shall be adjusted according to method__(A/B) listed below:A. For a period of 1 (1/3/6/12) month(s), to be adjusted once a period, with interest accounted for in segments. The benchmark interest rate adjustmentdate for the second period shall be the date that corresponds to the withdrawal date at the end of the first period; should the given month not have the givendate that corresponds to the withdrawal date, the corresponding date shall be the last day of the given month. Should the National Interbank Funding Centernot have published a loan benchmark interest rate for the corresponding term on the previous business day, the loan benchmark interest for the correspondingterm published on the last business day shall prevail, and so on and so forth. B. The lending rate shall not be adjusted for the entire lending term.(4) Other: /3.2 [Method for determining the foreign exchange lending rate]The foreign exchange lending rate shall be determined according to method / listed below:(1) Fixed interest rate, at an annual interest rate of / %, with the interest rate remaining unchanged for the duration of the Contract.(2) Floating interest rate, with the lending rate a floating interest rate composted of the spread of the / -month / (LIBOR/HIBOR) as the benchmarkinterest rate plus / base points (one base point is 0.01%). The spread will remain unchanged during the Contract term. Should withdrawals be made ininstallments, the interest rate shall be calculated for each withdrawal. After the Borrower makes a withdrawal, the benchmark interest rate shall be adjustedaccording to method / listed below, with interest accounted for in segments:A. For a period of / (1/3/6/12) month(s), to be adjusted once a period. The benchmark interest rate adjustment date for the second period shall be the datethat corresponds to the withdrawal date at the end of the first period; should the given month not have the given date that corresponds to the withdrawal date,the corresponding date shall be the last day of the given month, and the same shall hold true for other periods.B. The benchmark interest rate shall be adjusted on the first day of each interest-bearing period.(3) Other:_________________________/______________________________ Contract Main Body Page 3 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]3.3 Interest shall be calculated on lending under the Contract on a daily basis from the withdrawal date and settled every month (month/quarter/sixmonths). Interest shall be settled with principal when loans are due, and the daily interest rate = annual interest rate/360.3.4 The penalty interest rate for overdue payments under the Contract shall be determined at 30 % of the original lending rate, and the penalty interestrate for misuse of loans shall be determined at 50 % of the original lending rate.3.5 In addition to interest, the Borrower shall also pay a commitment fee to the Lender. The commitment fee shall be the difference between the amountof lending stipulated in Article 2 and the Borrower’s withdrawals (the daily average balance during the billing period) and an annual rate of / %, to be paidaccording to method / below:(1) A single payment shall be made to the Lender on the last day of the billing period.(2) After the Contract enters into force, payments shall be made in installments to the Lender on the 20th day of every / (month/quarter/six months) upuntil the last day of the billing period.Should loans under the Contract be on a revolving basis, the billing period refers to the time limit on the use of credit for revolving loans; should loansunder the Contract not be on a revolving basis, the billing period refers to the period between the signing date of the Contract and the withdrawal date of thelast loan as stipulated in Article 4.The commitment fee is paid in installments; should the Borrower fail to pay the commitment fee on time, the Lender is entitled to the suspension ofthe issuance of loans or to cancel all amounts that the Borrower has not withdrawn.Article 4 Withdrawals(Revolving Loans are Not Applicable)4.1 The Borrower shall make withdrawals according to method (1) (1/2/3)listed below according to actual funding needs:(1) One-time loan request prior to 11/30/2018/;(2) One or more loan requests after the Contract’s effective date and before / //;(3) Withdrawals in installments on the dates below; the Borrower may, with the Lender’s consent, make changes to withdrawal dates or amountsbased on funding needs, though the Borrower must make loan requests no later than ///.Withdrawal DateWithdrawal Amount 4.2 Should the Borrower fail to make withdrawals as agreed, the Lender is entitled to cancel, in part or in full, lending that the Borrower has not yetwithdrawn.Article 5 Repayments5.15.1 The Borrower shall repay loans under the Contract according to method (2) (1/2) listed below:(1) One-time loan repayment upon expiration.(2) According to the following repayment plan (when there is additional content, additional pages can be attached):Contract Main Body Page 4 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code] Planned Repayment Date Planned Repayment Amount 05-20-2019 135000.00 yuan 11-20-2019 540000.00 yuan 05-20-2020 675000.00 yuan 11-20-2020 1350000.00 yuan 05-20-2021 1350000.00 yuan 11-05-2021 9450000.00 yuan5.2 For lending under the Contract under the following circumstances, the Borrower shall not be required to pay the early repayment penalty incase the loan is returned immediately after the corresponding funds are in place, thus resulting in early repayment:_________________________/_______________________________________________________/______________________________5.3 Apart from the circumstances stipulated in Article 5.2, should loans be repaid early, the Borrower shall pay an early repayment penalty to theLender, with the early repayment penalty calculated according to the following criteria: early repayment amount × remaining lending term (months) × / %; if the remaining lending term is less than one month, the period shall be calculated as one month.Article 6 Special Agreements on Revolving Loans (Optional clause; this Article □ is applicable ■ is not applicable)6.1 Loans under the Contract may be used on a revolving basis, and the lending amount and lending periods in Article 2 above shall be the revolvingloan credit line and revolving loan credit term, wherein the revolving loan credit term is calculated from the effective date of the Contract.6.2 RMB revolving loans are determined using the benchmark lending rate published by the People's Bank of China plus the floating range, and thebenchmark lending rate is determined based on the benchmark lending rate of the People's Bank of China that corresponds to the grade of each lending term.Article 7 GuaranteesThe loan guarantee under the Contract is the maximum guarantee, and the corresponding maximum guarantee contract is as follows ____/____(1/2/3,select as many as applicable ):(1) Maximum Guarantee Contract Name: / (No.: / )Guarantor: /(2) Maximum Mortgage Contract Name: / (No.: / )Mortgager: /(3) Maximum Pledge Contract Name: / (No.: / )Pledger: /Contract Main Body Page 5 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]Article 8 Financial Agreement (Optional clause; this Article □ is applicable ■ is not applicable)For the duration of the Contract, the Borrower shall be subject to the following financial metrics:_________________________/_______________________________________________________/______________________________Article 9 Dispute ResolutionThe dispute resolution method under the Contract is (1) (1/2) :(1) The dispute shall be submitted to the Xiamen Arbitration Commission, subject to the arbitration rules effective at the time in which theapplication for arbitration is submitted for arbitration in Xiamen (arbitral place). The arbitral award is final and binding upon the parties.(2) The dispute shall be resolved through litigation in the court of the Lender’s location.Article 10 Miscellaneous10.1 The Contract is in 　2 duplicates　, with the Borrower, Lender, and , / , each holding 　one　 original, each of equal legal effect.10.2 The following attachments and other attachments mutually agreed upon by the parties shall constitute an integral part of the Contract and have thesame legal effect as the Contract:Attachment 1: Withdrawal Notice (Format)Attachment 2: Entrusted Payment AgreementAttachment 3: /Article 11 Other Matters of Agreement11.1 The arbitral ruling is final and binding on both parties. The parties agree that the arbitration shall be conducted after the arbitration has been filed;the relevant legal documents (including the arbitration documents) shall be deemed to have been served on the day following mailing to the mailingaddresses of the parties as recorded in the Contract.11.2 The Borrower shall disclose related party relationships and related party transactions to the Lender in a timely, comprehensive, and accuratemanner; the total amount of financing that the Borrower applies to the Lender for shall not exceed the actual funding needs of Party B. Should the Borrowerviolate any of the stipulations in the two foregoing paragraphs, the Lender is entitled to take the breach of contract remedy measures as stipulated in thisagreement.11.3 Without the consent of the Lender, the Borrower shall not provide any guarantees or warranties to others or be deemed as in breach of contract,wherein the Lender is entitled to withdraw financing in advance.11.4 Without the written consent of the Lender, the Borrower shall not set up mortgages (pledges) on or provide guarantees or warranties for assets that iteffectively operates.11.5 The Borrower shall regularly submit reports to the Lender on external guarantees and promise that such information on external guarantee amountsis complete, true, and accurate.Contract Main Body Page 6 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]11.6 When the Borrower’s financial metrics during the existence of lending are inferior to those previously agreed to by the Lender (if any), the Lenderis entitled to declare that the loan expire in advance, to suspend the issuance of unissued funds, to require that the Borrower repay some or all of the loansalready issued, or to require that the Borrower provide a legal and valid guarantee as recognized by the Lender.Section 2 Specific StipulationsArticle 1 Interest Rate and Interest1.1 For foreign currency borrowing, LIBOR is the interbank interest rate for the lending currency under the Contract displayed on the Reuters financialtelecommunications terminal “LIBO=” page two banking days (11: 00 am London time) prior to the withdrawal date or benchmark interest rate adjustmentdate; HIBOR is the interbank interest rate for the lending currency under the Contract displayed on the Reuters financial telecommunications terminal“HIBO=” page two banking days (11: 15 am Hong Kong time) prior to the withdrawal date or benchmark interest rate adjustment date.1.2 Should a floating interest rate be used for loans under the Contract, the original interest rate shall still be used for interest on overdue loans.1.3 Should loan interest be settled on a monthly basis, the settlement date shall be the 20th of each month; should interest be settled quarterly, thesettlement date shall be the 20th day of the last month of each quarter; should interest be settled semi-annually, the settlement date shall be June 20 orDecember 20 of each year.1.4 The first interest-bearing period shall be from the actual date of withdrawal to the first settlement date; the last interest-bearing period shall be fromthe day after the end of the previous interest-bearing period to the final payment date; all other interest-bearing periods shall be from the date after the end ofthe previous interest-bearing period to the next settlement date.1.5 Loan Interest = Loan Principal × Daily Interest Rate × Actual Days of Use. Should the equal principal and interest repayment method beadopted, the formula for calculating the principal and interest shall be as follows:Total Principal and Interest Per Period =Loan Principle x Period Profit x (1 + Period Profit) Number of RepaymentInstallments(1 + Period Profit) Number of Repayment Installments - 1 1.6 Should the People’s Bank of China adjust its measures for determining loan interest rates applicable to lending under the Contract, the relevantrules of the People’s Bank of China shall be adopted, and the Lender shall not provide separate notice thereof to the Borrower.1.7 The lending rate determined at the signing of the Contract may float downward to a certain degree from the relevant loan benchmark interestrate published by the People’s Bank of China or the loan prime rate (LPR) published by the National Interbank Funding Center. The Lender is entitledto re-evaluate the Borrower’s interest rate concessions each year and determine whether to cancel, in part or in full, the interest rate concessionsgranted to the Borrower, based on national policies, the Borrower’s credit standing, lending guarantee changes, and other such circumstances, andpromptly notify the Borrower of such a cancellation.Article 2 Loan Issuances and Payments2.1 The Borrower must meet the following withdrawal preconditions in order to withdraw loans, otherwise the Lender is not obligated to issue any fundsto the Borrower, unless the Lender has agreed to such an issuance in advance:Contract Main Body Page 7 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code](1) Apart from credit loans, the Borrower has provided corresponding guarantees as required by the Lender and has completed relevant guaranteeprocedures;(2) There has been no breach of contract under the Contract or other contracts with the Lender;(3) The proof of loan usage provided is consistent with the intended use.(4) Other materials are submitted as required by the Lender.2.2 Written documents provided to the Lender by the Borrower at the time of withdrawal must be originals; if originals cannot be provided, with theLender's consent, photocopies affixed with the Borrower's corporate seal may be provided.2.3 The Borrower must provide the Lender with a withdrawal notice at least five banking days in advance of a withdrawal. Once the withdrawal noticehas been submitted, it cannot be revoked without the written consent of the Lender.2.4 Once the Borrower has met the withdrawal preconditions or the Lender has agreed to issuance in advance, the Lender shall transfer the loan to theBorrower's designated account, meaning that the Lender has issued the loan to the Borrower as stipulated under the Contract.2.5 Pursuant to relevant regulatory requirements and the Lender's administrative requirements, lending exceeding a certain amount or meeting certainconditions shall be made with a Lender's entrusted payment, whereby the Lender pays the loan amount to payment objects that comply with the usagestipulated under the Contract based on the Borrower's withdrawal application and payment entrustment. To this end, the Borrower shall enter into a separateentrusted payment agreement with the Lender as an attachment to the Contract and open or designate an account at the Lender for entrusted payments.Article 3 Repayments3.1 The Borrower shall repay the principal, interest and other payables in full and on time as stipulated under the Contract. One banking day prior to therepayment date and each settlement date, the Borrower shall deposit enough in its repayment account opened at the Lender for the current interest, principal,and other payables, and the Lender is entitled to actively collect payment there from on the repayment date or settlement date, or ask that the Borrowercomply with relevant transfer procedures. Should the amount in the repayment account be insufficient to pay all payables due, the Lender has the right todetermine the order of payment.3.2 Should the Borrower apply to repay loans early, in part or in full, the Borrower shall submit a written application to the Lender 10 banking days inadvance and pay the early repayment penalty to the Lender according to the standards stipulated under the Contract.3.3 Should the Lender agree to an early repayment, on the early repayment date, the Borrower shall also settle loan principal, interest, and otherpayments due as of the early repayment date, as stipulated under the Contract.3.4 The Lender is entitled to withdraw lending in advance based on the Borrower's capital returns.3.5 Should the actual loan period be shortened because of the Borrower’s early repayment or because the Lender withdraws the loan in advance asstipulated under the Contract, the corresponding interest rate grade shall not be adjusted, and the original lending rate shall still be used.Article 4 Revolving Loans4.1 Should loans under the Contract be used on a revolving basis, during the revolving credit term, the sum of the Borrower's loan balance at any timeshould not exceed the revolving line of credit; the lending term for each of the Borrower's withdrawals shall be from the actual withdrawal date to thestipulated repayment date, as recorded on the lending receipt. The repayment date of any single withdrawal shall not exceed the revolving credit term.Contract Main Body Page 8 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]4.2 Should loans under the Contract be used on a revolving basis, from the signing date of the Contract, should the Borrower make no withdrawals forthree consecutive months, the Lender has the right to cancel the revolving line of credit.Article 5 Guarantees5.1 Apart from credit loans, the Borrower shall provide legal and valid guarantees recognized by the Lender for its performance of obligations under theContract. A guarantee contract shall be separately signed.5.2 Should the collateral under the Contract be damaged, devalued, subject to an ownership dispute, seized or withheld, or should the mortgager disposeof the collateral without authorization, or should the financial situation of the guarantor adversely change or change in a way that is not conducive to theLender’s claims, the Borrower shall promptly notify the Lender and provide additional guarantees as recognized by the Lender.5.3 The Lender is entitled to periodically or irregularly reassess the value of the collateral and the guarantor’s ability to guarantee. Should theassessment hold that the value of the collateral has declined or that the guarantor’s ability to guarantee has declined, the Borrower shall provideadditional guarantees equal to the reduced value or the reduced ability to guarantee and may provide other guarantees as recognized by the Lender.5.4 Should pledge guarantees for receivables be provided for loans under the Contract, for the duration of the Contract, in any one of the followingcircumstances, the Lender has the right to declare the early expiration of lending, require that the Borrower immediately repay loan principal and interest, inpart or in full, or add additional legal, valid, and sufficient guarantees recognized by the Lender:(1) The accounts receivable pledger’s bad debt rate on the payer’s accounts receivable has increased for two consecutive months;(2) The accounts receivable pledger's accounts receivable for the payer that are overdue and have yet to be received account for over 5% of the payer'sbalance of accounts receivable; (3) The accounts receivable pledger has entered into a trade dispute (including but not limited to quality, technology, or service disputes) or claimsdispute with the payer or another third party, such that the accounts receivable may not be payable on time.Article 6 Account Management6.1 The Borrower shall use a special designated capital returns account with the Lender to collect corresponding sales income or planned repaymentfunds. Should corresponding sales income be settled in a non-cash manner, the Borrower shall ensure that the funds are returned to the account promptly afterpayment is received.6.2 The Lender is entitled to the supervision of the capital returns account, including but not limited to inquiries and supervision of the account's capitaldebits and credits, and the Borrower shall cooperate. If required by the Lender, the Borrower shall sign a special account supervision agreement with theLender. Article 7 Representations and WarrantiesThe Borrower makes the following representations and warranties to the Lender, which shall be valid for the duration of the Contract:7.1 The Borrower has the qualifications for borrowing and the qualifications and ability to sign and perform the Contract.7.2 All necessary authorizations or approvals have been obtained for signing the contract, and the signing and performance of the contract do not violatethe provisions of the company's articles of incorporation or relevant laws and regulations and do not conflict with obligations under other contracts.Contract Main Body Page 9 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]7.3 Other debts payable have been paid on time, with no malicious defaults on bank loans or interest.7.4 There are sound organizations and financial management systems in place. In the past one year, there have been no major disciplinary violations orunlawful conduct, and current senior management have no significantly negative records.7.5 All documents and materials provided to the Lender are true, accurate, complete, and valid, and they are free of false records, material omissions, ormisleading statements.7.6 Financial accounting reports provided to the Lender have been prepared in accordance with PRC accounting standards, reflecting the Borrower'soperating conditions and liabilities in a true, fair, and complete manner. Since the latest financial accounting report, the Borrower's financial position has notexperienced any significantly adverse changes.7.7 No litigation, arbitration, or claims have been concealed from the Lender.Article 8 Borrower Commitments8.1 To withdraw and use loans according to the terms and purposes stipulated under the Contract and to not use the borrowings for fixed assets,equity, and other investments and to ensure that borrowings, in any form, do not flow into the securities market, futures market, or other uses prohibitedor restricted by relevant laws and regulations.8.2 To settle loan principal, interest, and other payables as stipulated under the Contract.To accept and actively cooperate with the Lender’s accounts analysis inspection and supervision of the use of loan funds, including by means ofaccount analysis, document inspection, and on-site investigations, and to regularly report the use of loan funds as required by the Lender.8.4 To accept the Lender's credit checks, to provide financial accounting materials, such as balance sheets and income and loss statements, and othermaterials reflecting the Borrower's solvency, as required by the Lender, and to assist and cooperate with the Lender's investigations, inquiries, andsupervision of its productions, operations, and financial standing.8.5 To not distribute dividends or bonuses, in any form, when there are outstanding loan principal, interest, or other payables (including amountsthat are announced as due immediately) under the Contract.8.6 To first obtain the Lender’s written consent or to make arrangements that satisfy the Lender prior to Mergers, divisions, capital reductions,equity changes, equity pledges, transfers of major assets and claims, major foreign investments, substantial increases in debt financing, and otheractions that may adversely affect the Lender’s equity.8.7 In any one of the following events, to promptly notify the Lender:(1) changes to the company’s articles of incorporation, business scope, registered capital, or legal representative;(2) closure, dissolution, liquidation, suspension of business, business license suspended or revoked for rectification, or the company applies (is subjectto) bankruptcy;(3) involvement or possible involvement in major economic disputes, litigation, or arbitration, or property is seized, detained or under supervision bylaw;(4) shareholder(s), director(s), and current senior management are suspect of major cases or economic disputes.8.8 To promptly, comprehensively, and accurately disclose of related party relationships and related party transactions to the Lender.8.9 To mail or otherwise send to the Lender and promptly receive various notices.Contract Main Body Page 10 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]8.10 To not dispose of its own assets in a manner that reduces solvency; to not use assets formed under the Contract, without obtaining the Lender'sconsent, to provide guarantees to third parties.8.11 If borrowing under the Contract is issued as credit, to completely, truthfully, and accurately report routinely to the Lender on external guaranteesand, as required by the Lender, sign an account supervision agreement; when external guarantees may affect performance of obligations under the contract,the Lender’s written consent must be obtained.8.12 To bear expenses generated by the Lender to realize claims under the Contract, including but not limited to attorneys’ fees and auction fees.8.13 To give priority to the Borrower’s debts to its shareholders in terms of the priority for settling debts under the Contract and to at least give suchdebts an equal footing as other similar debts of the Borrower’s other creditors.8.14 To strengthen environmental and social risk management and accept the Lender’s supervision and inspections in this regard. If required bythe Lender, to submit environmental and social risk reports to the Lender.Article 9 Lender Commitments9.1 To issue loans to the Borrower as stipulated under the Contract.9.2 To keep confidential non-public materials and information provided by the Borrower, unless laws and regulations require otherwise or the Contractstipulates otherwise.Article 10 Breach of Contract10.1 Any one of the following events shall constitute breach of contract by the Borrower:(1) the Borrower fails to repay loan principal, interest, or other payables under the Contract according to stipulations under the Contract or acts contraryto representations, warranties, or commitments under the Contract;(2) changes occur to guarantees under the Contract that are not conducive to the Lender’s claims, and the Borrower fails to provide other guaranteesrecognized by the Lender;(3) the Borrower is unable to settle any other debts due (including debts declared due early) or fails to perform or violates obligations under otheragreements, such that it has affected or may affect its performance of obligations under the Contract;(4) the Borrower's financial metrics, such as profitability, solvency, operating capacity, and cash flow, fail to meet agreed standards, or the deteriorationthereof has affected or may affect the performance of its obligations under the Contract;(5) the Borrower’s equity structure, production, operations, and foreign investments have undergone significantly adverse changes that have affected ormay affect the performance of its obligations under the Contract;(6) the Borrower is involved in or may be involved in major economic disputes, litigation, arbitration, or assets have been seized, detained or enforced, oris being investigated or dealt with by judicial or administrative organs in accordance with the law or subject to penalties in accordance with the law, or isexposed by the media for violating relevant state regulations or policies, such that it has affected or may affect the performance of its obligations under theContract;(7) the Borrower's main investors and key management personnel make abnormal changes, go missing, or are investigated or restricted by judicialauthorities in accordance with the law, such that it has affected or may affect the performance of its obligations under the Contract;Contract Main Body Page 11 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code](8) the Borrower utilizes false contracts with related parties, utilizes transactions without actual trading to obtain funding or credit from the Lender, orintentionally evades the Lender's claims through related transactions;(9) the Borrower has or may be closed, dissolved, liquidated, have its business suspended, have its business license rectified or revoked, or apply for (orbe subject to) bankruptcy;(10) the Borrower has a liability incident or a major environmental or social risk incident for food safety, safety production, or environmental protectionviolations or violation other environmental or social risk management laws, regulations, or industry standards, such that it has affected or may affect theperformance of its obligations under the Contract;(11) if borrowing under the Contract is issued as credit, the Borrower’s credit rating, profitability, asset-liability ratio, cash flow from operating activities,or other metrics do not meet the Lender's conditions for credit lending; or the Borrow sets up pledge/mortgage guarantees for others or provides guaranteesusing its validly operated assets without the written consent of the Lender, such that it has affected or may affect the performance of its obligations under theContract;(12) Other circumstances that may adversely affect the Lender’s realization of claims under the Contract.10.2 Should the Borrower breach the Contract, the Lender is entitled to take one or more of the following remedies:(1) to require that the Borrower rectify the breach of contract within a period of time;(2) to suspend the issuance of loans or other financing to the Borrower based on the Contract or other contracts between the Lender and theBorrower and cancel, in part or in full, loans or other financing that the Borrower has yet to withdraw;(3) to announce immediate expiration of lending or other financing under the Contract and other contracts between the Lender and the Borrowerand to immediately recover unpaid amounts;(4) to require that the Borrower compensate for losses suffered by the Lender from the breach of contract;(5) other remedies provided by laws or regulations, as stipulated under the Contract, or as deemed necessary by the Lender.10.3 For loans due yet unrepaid by the Borrower as agreed (including debts that are announced as due immediately), the Lender is entitled to chargepenalty interest from the date at the overdue penalty interest rate stipulated under the Contract from the date on which the amount was overdue. For interestthat the Borrower fails to pay on time (including penalty interest), compound interest shall be charged based on the overdue penalty interest rate. Penaltyinterest / compound interest shall be settled according to the interest settlement rules stipulated under the Contract.10.4 Should the Borrower fail to use loans according to the usage stipulated under the Contract, the Lender is entitled to charge penalty interest formisuse of funds according to the penalty interest rate stipulated in the Contract from the date in which funds are misused, and compound interest shall becharged according to the penalty interest rate for misuse of funds for interest (including penalty interest) not paid on time during the misuse of funds. Penaltyinterest / compound interest shall be settled according to the interest settlement rules stipulated under the Contract. Penalty interest / compound interest shallbe settled according to the interest settlement rules stipulated under the Contract.10.5 Should the Borrower simultaneously encounter the circumstances of Article 10.3 and Article 10.4, the greater penalty interest rate shall be chargedand cannot be combined.10.6 Should the Borrower fail to repay loan principal, interest (including penalty interest and compound interest), or other payables on time, theLender is entitled to make an announcement through the media.10.7 Should the Borrower’s related parties’ controlling relationship with the Borrower change or should the Borrower’s related party encounter thecircumstances in Article 10.1 above, other than items (1) or (2), such that it has affected or may affect the Borrower’s performance of its obligations under theContract, the Lender is entitled to take various measures as stipulated under the Contract.Contract Main Body Page 12 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]Article 11 Auto-termination of Lender Commitment11.1 Should the credit status of the Borrower worsen, the Lender may cancel all loan commitments not yet withdrawn by the Borrower withoutprior notice.11.2 In the event as described in 10.1 and 10.7, it constitutes the worsening of Borrower credit status.Article 12 Withholding12.1 Should the Borrower fail to repay debts due under the Contract as agreed (including debts announced as due immediately), the Borroweragrees that the Lender may withhold corresponding amounts from all foreign exchange and RMB accounts that the Borrower has opened at ICBC tosettle debts owed, until the Borrower’s debts under the Contract have been settled in full.12.2 Should the withheld amount be in a currency other than that of the Contract, the currency shall be exchanged at the Lender’s applicableexchange rate on the withholding date. The Borrower shall bear interest and other expenses incurred from the withholding date to the settlement date(the date on which the Lender converts the withheld amount into the currency of the Contract according to national foreign exchange managementpolicies and actually pays of the debts under the Contract), as well as differences from exchange rate volatility during this period.12.3 Should the amount withheld by the Lender be insufficient to settle all debts owed by the Borrower, the Lender has the right to decide on theorder of settlement.Article 13 Transfer of Rights and Obligations13.1 The Lender is entitled to transfer its rights under the Contract, in part or in full, to a third party, and the Lender’s transfer thereof does not require theBorrower’s consent. Without the written consent of the Lender, the Borrower shall not transfer any of its rights or obligations under the Contract.13.2 The Lender or Industrial and Commercial Bank of China Limited (“ICBC”) may, based on its business management needs, authorize or entrust otherICBC branch agencies to perform rights and obligations under the Contract, or place loan claims under the Contract under the management of other ICBCbranch agencies. The Borrower agrees that the such actions shall no longer require the consent of the Borrower. Other ICBC branch agencies that undertakethe rights and obligations of the Lender are entitled to exercise all rights under the Contract and are entitled to file lawsuits, submit for arbitration, or applyfor enforcement in the name of the given agency.Article 14 Entry into Force, Changes, and Release of Contract14.1 The Contract enters into force on the signing date and shall be terminated on the date on which the Borrower fully performs all obligations underthe Contract.14.2 Any changes to the Contract shall be agreed to the parties and made in writing. Changed clauses or agreements constitute a part of the Contract andshall have the same legal effect of the Contract. Apart from the changed sections, other parts of the Contract shall remain in effect, and the original terms shallremain in effect until the change is effective.Contract Main Body Page 13 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]14.3 Changes to and release of the Contract shall not affect the rights of the contracting parties to claim damages. The release of the Contract does notaffect the validity of the dispute resolution clause.Article 15 Applicable Law and Dispute ResolutionThe conclusion, validity, interpretation, performance of the Contract and settlement of disputes under the Contract shall be governed by the laws of thePeople's Republic of China. Any disputes or issues arising from or related to the Contract shall be settled through negotiations by the borrower and thelender; where negotiations fail, disputes shall be resolved through methods as stipulated under the Contract.Article 16 Address Confirmation for Serving Litigation/Arbitration Instruments16.1 The Borrower confirms that the address listed on the first page of the Contract is the address for serving litigation/arbitration instruments fordisputes under the Contract. Litigation/arbitration instruments include but are not limited to subpoenas, notices of hearings, judgments, rulings, mediations,and time-limit notices.16.2 The Borrower agrees that arbitration institutions or the courts may use the fax or email address listed on the first page of the Contract to servearbitration/litigation instruments, except for judgments, rulings, and mediations.16.3 The abovementioned stipulations on service are applicable to first hearings, second hearings, retrials, and enforcement under arbitration andlitigation proceedings. As for service to the above address, arbitration institutions or the courts may serve instruments directly by mail.16.4 The Borrower shall ensure the truthfulness and validity of the address, contact, fax, email address, and other information listed in theContract, and if related information changes, the Borrower shall promptly notify the Lender in writing; otherwise, service to the original mailingaddress shall still be valid, and the Borrower shall bear all resulting legal consequences.Article 17 Complete ContractSection 1: Basic Stipulations and Section 2: Specific Stipulations of the Contract together constitute a single complete working capital loan contract,and the same terms in the two sections shall have the same meanings. The Borrower’s borrowing is subject to the above two sections.Article 18 Notifications18.1 All notices from the parties to the Contract shall be sent in writing. Unless stipulated otherwise, the parties designate the domiciles listed in theContract as their mailing address and contact address. Should either party’s mailing address or other contact information change, the other party shall bepromptly notified in writing.18.2 Should either party to the Contract refuse to accept mail or should otherwise be unable to served, the notifying party may serve mail by notarizationor an announcement.Contract Main Body Page 14 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]Article 19 Special Value-Added Tax Stipulations19.1 Interest and expenses under the Contract paid by the Borrower to the Lender shall all include taxes.19.2 Should the Borrower request that the Lender issue a value-added tax receipt, relevant information shall first be registered with the Lender.Information for registration includes the Borrower’s full name, the taxpayer’s identification number or social credit code, address, telephone, bank of account,and account number. The Borrower shall ensure that relevant information provided to the Lender is true, accurate, and complete and shall provide relevantproof as required by the Lender; for specific requirements, the Lender may send online notices or make online announcements.19.3 Should the Borrower collect its own value-added tax invoices, it shall provide the Lender with a stamped power of attorney, designating thecollector and specifying such information as the collector’s identification number; thereafter, the collector shall present the original of his or heridentification card to collect value-added tax invoices. If the designated collector changes, the Borrower shall need to issue to the Lender a new stampedpower of attorney. Should the Borrower choose to receive value-added tax invoices by mail, the Borrower shall still provide accurate, error-free, and servablemailing information; if the mailing information changes, the Lender shall be promptly notified in writing.19.4 Should the Lender be unable to promptly issue value-added tax invoices due to natural disasters, government actions, social anomalies, and othercircumstances of force majeure or because of tax authorities, the Lender is entitled to delay invoicing and shall not assume any responsibility.19.5 Should a value-added tax invoice be lost, damaged, or overdue after it is collected by the Borrower or delivery by the Lender to a third party,or for other reasons unrelated to the Lender, such that the Borrower cannot receive the value-added tax invoice or cannot deduct the tax on time, theLender shall not be liable for compensating the Borrower for related economic losses.19.6 Should the Borrower need to have a special red-text value-added tax invoice issued because of sales returns, the suspension of taxable services, orinvoicing errors, deductions, or the inability to certify invoices and the Borrower is required, under relevant laws, regulations, and policy documents, tosubmit a Special Red-Text Value-Added Tax Invoice Issuance Information Form, the Borrower shall submit a Special Red-Text Value-Added Tax InvoiceIssuance Information Form to tax authorities; once approved by tax authorities and once notified, the Lender shall issue a special red-text value-added taxinvoice.19.7 During the performance of the Contract, should national tax rates be adjusted, the Lender is entitled to adjust pricing under the Contract based onchanges and adjustments to national tax rates.Article 20 Miscellaneous20.1 Lender's failure to exercise or partially exercise or delay the exercise of any right under the Contract does not constitute a waiver or change of thatright or other rights, nor does it affect its further exercise of that right or other rights.20.2 Should any term of the Contract be invalid or unenforceable, it shall not affect the validity and enforceability of other terms and shall not affect thevalidity of the entire contract.20.3 The Lender is entitled to, pursuant to relevant legal and regulatory provisions and the requirements of financial regulators, to provide informationrelated to the Contract or the Borrower's other information to the People’s Bank of China Credit System and other lawfully established credit informationdatabases to be queried and used by qualified institutions or individuals. The Lender is also entitled, for the purposes of entering into and performing theContract, to query the Borrower’s related information on the People’s Bank of China Credit System and other lawfully established credit informationdatabases.Contract Main Body Page 15 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]20.4 The terms "related party", "related party relationships", "related party transactions", "main investors", "key management personnel", and other suchterms shall have the same meanings as the same terms in the Accounting Standards for Business Enterprises No. 36 - Related Party Disclosures (C.H. [2006] 3)issued by the Ministry of Finance, as well as subsequent amendments to the Standards.20.5 The environmental and social risks mentioned in the Contract refer to the environmental and social hazards and risks associated with the Borrowerand its important related parties in construction, production, and operation activities, including environmental and social issues related to energyconsumption, pollution, land, health, safety, resettlement, ecological protection, and climate change.20.6 The documents and vouchers for loans under the Contract prepared and retained by the Lender according to its business rules constitute validevidence for the credit relationship between the Borrower and the Lender and are binding on the Borrower.20.7 In the Contract, (1) all mention of the Contract shall include revisions to or supplementation of the Contract; (2) article titles are for reference onlyand do not constitute any interpretation of the Contract, nor do they impose any restrictions on the content of the titles or their scope; and (3) shouldwithdrawal dates or repayment dates fall on non-banking days, they shall be postponed to the next banking day.The parties acknowledge that: both the Borrower and the Lender have fully negotiated on all of the terms of the Contract. Lender has drawn theBorrower’s attention to all terms related to the parties’ rights and obligations, so that the Borrower full and accurately understands them, and at therequest of the Borrower, the Lender has provided explanations for relevant provisions. The Borrower has carefully read and fully understands allterms of the Contract (including Section 1: General Stipulations and Section 2: Specific Stipulations), and both the Borrower and the Lender havereached full consensus on the understanding of the terms of the Contract with no objections to the contractual contents. Borrower (Seal):Photronics DNP Mask Corporation Xiamen [seal] Date:November 7, 2018 As the legal representative/authorized representative of the Borrower, I certify that the Borrower borrows from the Lender as per the contractterms, the fact that the seals used in this contract are authentic and valid, as well as that the Borrower has completed each required procedure for theloan.Borrower Legal Representative / Authorized Representative (Signature):____[seal: Peter Scott Kirlin]_____________Contract Main Body Page 16 of 16 Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]This page is the Lender signature page of the Working Capital Loan Contract (Contract #: 0410000286-2018 (Xiang'an) No. 00275) entered into byPhotronics DNP Mask Corporation Xiamen and ICBC Xiang'an Branch.We agree to proceed with the working capital loan with the business information below:1. Borrower: Photronics DNP Mask Corporation Xiamen2. Loans under the Contract shall be used for the following purpose; without the written consent of the Lender, the Borrower shall not misuse any loans. TheLender is entitled to supervision of the use of funds. Purpose: VAT Payment3. In accordance to Article 2.1 in the main body of this Contract, the currency of the loan in this Contract is RMB, and the amount is 13,500,000.00 (InWORDS: Thirteen million and five hundred thousand) yuan (In case of inconsistency amounts in numbers and words, the amount in words shall prevail)4. In accordance to Article 2.2 in the main body of this Contract, the term of the loan in this contract is 36 months with the starting date from the date ofwithdrawal (for multiple withdrawals, starting date is the day of the first withdrawal), and the loan document determines the actual withdrawal date.5. The interest rate of RMB loan is determined by the method (3) of Article 3.1 in the main body of this Contract.6. The interest rate of foreign currency loan is determined by the method / of Article 3.2 in the main body of this Contract.7. Interest shall be calculated on lending under the Contract on a daily basis from the withdrawal date and settled every month (month/quarter/six months).Interest shall be settled with principal when loans are due, and the daily interest rate = annual interest rate/360.8. The penalty interest rate for overdue payments under the Contract shall be determined at 30 % of the original lending rate, and the penalty interest rate formisuse of loans shall be determined at 50 % of the original lending rate.9. In accordance to Article 5.1 of the main body of this Contract, the Borrower shall repay the loan under this Contract according to method (2) (1/2).(1) One-time loan repayment upon expiration.(2) According to the following repayment plan:Lender: ICBC Xiang'an Branch [seal](seal)Date: November 7, 2018Signature Page Contract Serial #201811060410001245534942Document 2 of 2 ICBC Mobile Bank "Scan It" to verifycontract contents [QR Code]17Exhibit 21SUBSIDIARIES OF PHOTRONICS, INC. State or Jurisdiction ofIncorporation orOrganization Align-Rite International, Ltd.(United Kingdom)Photronics (Wales) Limited(United Kingdom)Photronics California, Inc.(California, USA)Photronics Idaho, Inc.(Idaho, USA)Photronics Texas Allen, Inc.(Texas, USA)Photronics MZD, GmbH(Germany)Photronics Advanced Mask Corporation(Taiwan, R.O.C.)Photronics DNP Mask Corporation (1)(Taiwan, R.O.C.)PDMC Shanghai, Ltd.(Shanghai, P.R.C.)Photronics Singapore Pte, Ltd.(Singapore)Xiamen American Japan Photronics Mask Co., Ltd.(Xiamen, P.R.C.)Photronics UK, Ltd.(United Kingdom)PMCH(Hefei, P.R.C.)PK, Ltd.(2)(Republic of Korea)PKLT Co., Ltd.(Taiwan, R.O.C.)Trianja Technologies, Inc.(Texas, USA)Note: Entities directly owned by subsidiaries of Photronics, Inc. are indented and listed below their immediate parent. Ownership is 100% unless otherwiseindicated.(1) 50.01% owned by Photronics, Inc. and 49.99% owned by DNPJ(2) 99.75% owned by Photronics, Inc., and 0.25% owned by minority shareholdersExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement Nos. 333-160235 and 333-161857 on Form S-3 and Registration Statement Nos. 333-169296, 333-169295, 333-151763, 333-197890 and 333-217676 on Form S-8 of our reports dated December 21, 2018, relating to the consolidated financialstatements and financial statement schedule of Photronics, Inc. and the effectiveness of Photronics, Inc. internal control over financial reporting, appearing inthis Annual Report on Form 10-K of Photronics, Inc. for the year ended October 31, 2018./s/ Deloitte & Touche LLPHartford, ConnecticutDecember 21, 2018EXHIBIT 31.1I, Peter S. Kirlin, certify that:1.I have reviewed this Annual Report on Form 10-K of Photronics, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisannual report based on such evaluation; andd)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that hasmaterially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting./s/ PETER S. KIRLIN Peter S. KirlinChief Executive OfficerDecember 21, 2018 EXHIBIT 31.2I, John P. Jordan, certify that:1.I have reviewed this Annual Report on Form 10-K of Photronics, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisannual report based on such evaluation; andd)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that hasmaterially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting./s/ JOHN P. JORDAN John P. JordanSenior Vice PresidentChief Financial Officer(Principal Accounting Officer/Principal Financial Officer)December 21, 2018 EXHIBIT 32.1I, Peter S. Kirlin, Chief Executive Officer of Photronics, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:1.the Annual Report on Form 10-K of the Company for the year ended October 31, 2018 (the “Report”) fully complies with therequirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.the information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company./s/ PETER S. KIRLIN Peter S. KirlinChief Executive OfficerDecember 21, 2018 EXHIBIT 32.2I, John P. Jordan, Chief Financial Officer of Photronics, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:1.the Annual Report on Form 10-K of the Company for the year ended October 31, 2018 (the “Report”) fully complies with therequirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.the information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company./s/ JOHN P. JORDAN John P. JordanSenior Vice PresidentChief Financial Officer(Principal Accounting Officer/Principal Financial Officer)December 21, 2018 

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