SECOND AMENDMENT AGREEMENT, dated as of April 9, 2003, among PHOTRONICS, INC., a Connecticut
corporation (the "Company"), the BORROWING SUBSIDIARIES party hereto, the GUARANTORS party hereto, the LENDERS party hereto, and
JPMORGAN CHASE BANK, as Administrative Agent.
WHEREAS, the Company, the Borrowing Subsidiaries, the Lenders and the Administrative Agent have
entered into that certain Credit Agreement dated as of July 12, 2002 (as amended by that certain First Amendment Agreement dated as
of February 3, 2003 and as in effect prior to the effectiveness of this Agreement, the "Existing Credit Agreement," and, as amended
by this Agreement, the "Amended Credit Agreement"), pursuant to which the Lenders have agreed, subject to the terms and conditions
therein set forth, to make or participate in Loans to, and to issue or participate in Letters of Credit for the account of, the
WHEREAS, the Guarantors have entered into a Guarantee Agreement, pursuant to which the Guarantors
have agreed to guaranty the obligations of the Loan Parties under the Existing Credit Agreement and the other Loan Documents;
WHEREAS, the Company, the Borrowing Subsidiaries, the Guarantors, the Lenders and the
Administrative Agent have agreed to enter into this Agreement to provide for, among other things, the modification of certain
covenants and definitions; and
WHEREAS, the Loan Documents (including, without limitation, this Agreement and the Amended Credit
Agreement), as amended and supplemented by this Agreement and as each may be amended or supplemented from time to time, are
referred to herein as the "Amended Loan Documents";
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Amendments to Existing Credit Agreement.
Each of the Borrowers and, subject to the satisfaction of the conditions set forth in Article III,
the Lenders hereby consents and agrees to the amendments to the Existing Credit Agreement set forth below:
(a) Section 1.01 of the Existing Credit Agreement is
hereby amended to add the following new definition in appropriate alphabetical order:
"Consolidated Capital Expenditures" means, for any period,
the dollar amount of gross expenditures (including Capital Lease Obligations) made by the Company and its consolidated Subsidiaries
for the acquisition of any fixed assets, real property, plant and equipment, and all renewals, improvements and replacements
thereto (but not repairs thereof) incurred during such period in each case which are required to be capitalized for financial
reporting purposes in accordance with GAAP.
(b) The definition of "Consolidated EBITDA" contained in
Section 1.01 of the Existing Credit Agreement is hereby amended to insert ", plus (f) the aggregate amount of noncash restructuring
charges taken during the fiscal quarter ending on May 4, 2003 in connection with the closure of a manufacturing facility
located in Phoenix, Arizona and related North American manufacturing network consolidation and reduction-in-workforce up to
$40,000,000" immediately subsequent to "$10,500,000".
(c) The definition of "Leverage Ratio" contained in
Section 1.01 of the Existing Credit Agreement is hereby amended to insert "minus Permitted Investments as of such date"
immediately subsequent to "Consolidated Indebtedness as of such date".
(d) Section 4.02(b) of the Existing Credit Agreement is
hereby amended to insert ", the Company will be in pro forma compliance with the covenants contained in Sections 6.13, 6.14, 6.15,
6.16, 6.17 and 6.18 recomputed as if such Borrowing or Letter of Credit had occurred on the first day of the period for testing
such compliance" immediately subsequent to "no Default shall have occurred and be continuing".
(e) Section 5.01(c) of the Existing Credit Agreement is
hereby amended to substitute ", 6.18 and 6.20" in place of "and 6.18".
(f) The Existing Credit Agreement is hereby amended to
add new Section 5.10 to read as follows:
SECTION 5.10. Retirement of 6% Subordinated
Notes. Until no 6% Subordinated Note is outstanding, the Company will use the proceeds received from any incurrence of
Consolidated Subordinated Indebtedness on or prior to May 15, 2003 to prepay, purchase, redeem, retire or otherwise acquire the 6%
Subordinated Notes within 90 days of such incurrence.
(g) Section 6.15 of the Existing Credit Agreement is
amended and restated to read as follows:
SECTION 6.15. Leverage Ratio. The Company will not permit the
Leverage Ratio as determined as of the end of each fiscal quarter of the Company to be greater than the applicable ratio set forth
in the following table:
If such fiscal quarter ends on:
May 4, 2003 or August 3, 2003
3.25 to 1.00
November 2, 2003
3.00 to 1.00
February 1, 2004 or May 2, 2004
2.50 to 1.00
August 1, 2004 or thereafter
2.25 to 1.00
(h) Section 6.16 of the Existing Credit Agreement is
hereby amended and restated to read as follows: "SECTION 6.16. Intentionally Omitted."
(i) Section 6.17 of the Existing Credit Agreement is
hereby amended to substitute "1.00" in place of ".75".
(j) The Existing Credit Agreement is hereby amended to
add new Section 6.20 to read as follows:
SECTION 6.20. Capital Expenditures. The Company
will not permit Consolidated Capital Expenditures for any fiscal year of the Company to exceed (a) for the fiscal year ending on
November 2, 2003, $60,000,000 and (b) for each fiscal year ending thereafter, $75,000,000.
Representations and Warranties
Each Borrower (as to itself and its subsidiaries) hereby represents
and warrants that as of the Effective Date (as defined in Article III of this Agreement):
Section 2.01. Existing Representations and
Warranties. Each of the representations and warranties contained in Article III of the Existing Credit Agreement and
in each of the other Loan Documents is true and correct, except that any representation or warranty limited by its terms to a
specific date shall be true and correct as of such specific date.
Section 2.02. No Defaults. No event has
occurred and no condition exists which would constitute a Default or an Event of Default as defined in the Existing Credit
Agreement, and no event has occurred and no condition exists which would constitute a Default or an Event of Default as defined in
the Amended Credit Agreement.
Section 2.03. Power and Authority; No Conflicts.
The execution, delivery and performance by each of the Loan Parties of the Amended Loan Documents to which it is a party are within
such Loan Party's corporate, partnership or limited liability company powers and have been duly authorized by all necessary
corporate, partnership or limited liability company and, if required, stockholder, partner or member action. Each Amended
Loan Document to which any Loan Party is a party has been duly executed and delivered by such Loan Party and constitutes a legal,
valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
Section 2.04. Governmental Approvals; No
Conflicts. The execution, delivery and performance by each of the Loan Parties of the Amended Loan Documents to which it
is a party (a) do not require the Company or any Subsidiary to obtain or make any consent or approval of, registration or filing
with, or other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect or
that could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (b) will not
violate any law or regulation applicable to the Company or any Subsidiary, or the charter, by-laws or other organizational
documents of the Company or any Subsidiary, or any order of any Governmental Authority applicable to the Company or any Subsidiary,
except as to any law, regulation or order the violation of which could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect, (c) will not violate or result in a default under any indenture, agreement or
other instrument binding upon the Company or any Subsidiary or their respective assets, or give rise to a right thereunder to
require any payment to be made by the Company or any of its Subsidiaries, except for any such violations, defaults or rights to
require payment that could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect,
and (d) will not result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries.
Section 2.05. Financial Condition; No Material Adverse
Change. (a) The Company has heretofore furnished to the Lenders the consolidated balance sheets of the Company and
its consolidated Subsidiaries and the related statements of income, stockholders equity and cash flows (i) as of and for the fiscal
years ended November 3, 2002, October 31, 2001, October 31, 2000 and October 31, 1999, such consolidated financial statements
being reported on by Deloitte & Touche LLP, independent public accountants, and (ii) as of and for the fiscal quarter and the
portion of the fiscal year ended February 2, 2003, certified by its chief financial officer. Such financial statements present
fairly, in all material respects, the financial condition and 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 February 2, 2003, there has been no material
adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Company and the
Subsidiaries, taken as a whole.
The effectiveness of this Agreement is subject to the condition
precedent that the Administrative Agent and the Lenders shall have received on or before April 9, 2003 (the "Effective Date") each
of the following, in form and substance satisfactory to the Administrative Agent and the Required Lenders:
(a) counterparts of this Agreement executed by each of
the Company, the Borrowing Subsidiaries, the Guarantors, the Administrative Agent and the Required Lenders;
(b) a favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated the Effective Date) of Brenner Saltzman and Wallman, counsel for the Loan Parties,
substantially in the form of Exhibit A; the Company hereby requests such counsel to deliver such opinion;
(c) such documents and certificates as the Administrative
Agent or its counsel may reasonably request relating to the authorization of the execution, delivery and performance by each Loan
Party of the Amended Loan Documents to which it is a party; and
(d) evidence that all fees and other amounts required to
be paid under Section 4.04 of this Agreement shall have been paid in full.
Section 4.01. Defined Terms. Capitalized
terms used herein and not defined herein shall have the meanings assigned to such terms in the Existing Credit Agreement.
Section 4.02. Nonwaiver. The terms of this
Agreement shall not operate as a waiver by the Administrative Agent, the Issuing Bank or any Lender of, or otherwise prejudice, the
rights, remedies or powers of the Administrative Agent, the Issuing Bank or any Lender under the Amended Credit Agreement, under
any other Amended Loan Document or under applicable law. Except as set forth in Article I: (i) no terms and provisions of the
Loan Documents are modified or changed by this Agreement; and (ii) the terms and provisions of the Loan Documents shall continue in
full force and effect.
Section 4.03. Waivers; Amendments. Any
provision of this Agreement may be amended or modified only by an agreement or agreements in writing signed by the Company and the
Required Lenders, or by the Company and the Administrative Agent acting with the consent of the Required Lenders.
Section 4.04. Fees and Expenses. The Company
agrees to pay on the Effective Date to the Administrative Agent, for the account of each Lender who executes this Agreement on or
prior to the Effective Date, an amendment fee equal to .25% of such Lender's Commitment. The Company shall pay all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent, in connection with the preparation and administration of this Agreement, the
other Amended Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated).
Section 4.05. Notices. All notices and other
communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy in accordance with the terms of the Amended Credit Agreement.
Section 4.06. Headings. Article and Section
headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction
of, or be taken into consideration in interpreting, this Agreement.
Section 4.07. Severability. Any provision of this
Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the
remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
Section 4.08. Counterparts; Integration;
Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single
contract. The Amended Loan Documents and the separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject matter thereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter thereof. Subject to the satisfaction of the
conditions set forth in Article III of this Agreement, this Agreement shall become effective when it shall have been executed by
the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear
the signatures of each of the Company, the Borrowing Subsidiaries, the Guarantors and the Required Lenders, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 4.09. Governing Law. This Agreement
shall be construed in accordance with and governed by the law of the State of New York.
Section 4.10. Reaffirmation. Each of the Loan
Parties hereby unconditionally and absolutely affirms its obligations under each Loan Document to which it is a party, as herein
modified, and agrees that such obligations are valid and binding upon it, and enforceable against it, without defense, offset or
counterclaim and hereby acknowledges and consents to, and waives all objections to, all of the transactions contemplated by or
consented to under or in connection with this Agreement.
Section 4.11. Consent. In accordance with
the definition of "Consolidated Subordinated Indebtedness", each of the Lenders hereby consents to (a) the terms and conditions of
Indebtedness in the principal amount of up to $150,000,000 issued on or prior to May 15, 2003 with subordination provisions and
fundamental change redemption provisions substantially in accordance with comparable provisions of that certain draft Indenture
dated as of April 2003 between the Company and JPMorgan Chase Bank, as Trustee, delivered to the Lenders on the date hereof and (b)
the use of proceeds of the Consolidated Subordinated Indebtedness in accordance with Section 5.10 of the Amended Credit