<PAGE> SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for use of the
Commission only (as per-
[X] Definitive proxy statement mitted by Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
________________________Photronics, Inc._________________________
(Name of Registrant as specified in Its Charter)
_________________________________________________________________
(Name of Person[s] Filing Proxy Statement,
if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
(1) Title of each class of securities to which transaction
applies:
______________________________________________________________
(2) Aggregate number of securities to which transaction
applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined.)
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
(5) Total fee paid:
______________________________________________________________
[ ] Fee paid previously with preliminary materials.
______________________________________________________________
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
______________________________________________________________
(2) Form, schedule or registration statement number:
______________________________________________________________
(3) Filing party:
______________________________________________________________
(4) Date filed:
______________________________________________________________
FORMS\14A.EDG/p
<PAGE> PHOTRONICS, INC.
1061 East Indiantown Road
Jupiter, Florida 33477
(407) 747-4163
- ----------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 20, 1996
-------------
TO THE SHAREHOLDERS OF PHOTRONICS, INC.
Notice is hereby given that the Annual Meeting of Shareholders of
Photronics, Inc. will be held at The Crown Sterling Suites, 901 Calaveras
Boulevard, Milpitas, California 95035, on March 20, 1996, at 2:00 p.m.
local time, for the following purposes:
1) To elect five (5) members of the Board of Directors, each to serve
until the next Annual Meeting;
2) To approve the 1996 Stock Option Plan of the Company;
3) To ratify the appointment of Deloitte & Touche LLP as the
independent certified public accountants of the Company for the
fiscal year ending October 31, 1996; and
4) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed February 7, 1996 as the record date
for determining the holders of Common Stock entitled to notice of and to
vote at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
By Order of the Board of Directors
Jeffrey P. Moonan
Secretary
February 9, 1996
<PAGE> PHOTRONICS, INC.
1061 East Indiantown Road
Jupiter, Florida 33477
(407) 747-4163
- -------------------------------------------------------------------------
PROXY STATEMENT
For the Annual Meeting of Shareholders
to be held on March 20, 1996
The enclosed proxy is solicited by the Board of Directors (the
"Board" or "Board of Directors") of Photronics, Inc. (the "Company"),
1061 East Indiantown Road, Jupiter, Florida 33477, to be voted at the
Annual Meeting of Shareholders to be held on March 20, 1996, at 2:00 p.m.
local time at The Crown Sterling Suites, 901 Calaveras Boulevard,
Milpitas, California 95035, or any adjournments thereof (the "Annual
Meeting"). At the Annual Meeting, the presence in person or by proxy of
the holders of a majority of the total number of shares of outstanding
stock will be necessary to constitute a quorum.
The persons named as proxies on the accompanying proxy card have
informed the Company of their intention, if no contrary instructions are
given, to vote the shares represented by such proxies in favor of the
election as directors of the Company of those persons named as
management's nominees; in favor of the approval of the 1996 Stock Option
Plan; in favor of the selection of Deloitte & Touche LLP as independent
certified public accountants of the Company for the 1996 fiscal year; and
in accordance with their best judgment on any other matters which may
come before the meeting. The Board of Directors does not know of any
business to be brought before the Annual Meeting other than as indicated
in the notice.
Any shareholder who executes and delivers a proxy may revoke it at
any time prior to its use upon (a) receipt by the Secretary of the
Company of written notice of such revocation; (b) receipt by the
Secretary of the Company of a duly executed proxy bearing a later date;
or (c) appearance by the shareholder at the meeting and his request for
the return of his proxy. Any such notice or proxy should be sent to
Photronics, Inc., 1061 East Indiantown Road, Jupiter, Florida 33477,
Attention: Jeffrey P. Moonan. Appearance at the meeting without a
request for return of a proxy will not revoke a previously executed and
delivered proxy.
Only shareholders of record at the close of business on February 7,
1996 are entitled to notice of and to vote at the Annual Meeting. As of
February 7, 1996, there were 11,631,604 shares of Common Stock issued and
outstanding, each of which is entitled to one vote. Unless otherwise
noted in this proxy statement, all matters to come before the meeting
that are listed in the Notice of Meeting require, to be adopted, the
affirmative vote of a majority of those shares, present in person or by
proxy and voting at the Annual Meeting, assuming that a quorum is
present. Abstentions will be considered as present but will not be
considered as votes in favor of any matter; broker non-votes will not be
considered as present for the matter as to which the shares are not
voted. This proxy statement and the attached form of proxy are first
being sent or given to shareholders on or about February 9, 1996.
<PAGE> OWNERSHIP OF COMMON
STOCK BY DIRECTORS, NOMINEES,
OFFICERS AND CERTAIN BENEFICIAL OWNERS
To the best knowledge of the Company based on information filed with
the Securities and Exchange Commission and the Company's stock records,
the following table sets forth the beneficial ownership of the Company's
Common Stock as of December 29, 1995, by (i) beneficial owners of more
than five percent of the Company's Common Stock, (ii) each director,
(iii) each nominee for director, (iv) each executive officer named in the
summary compensation table set forth below, and (v) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percentage
of Beneficial Owner Beneficial Ownership(1) of Class
<S> <C> <C>
Robert J. Bollo 3,750 *
1061 East Indiantown Road
Jupiter, FL 33477
Walter M. Fiederowicz 22,125(2)(3) *
Colonial Data Technologies Corp.
80 Pickett District Road
New Milford, CT 06776
Joseph A. Fiorita, Jr. 10,925(2)(4) *
146 Deer Hill Avenue
Danbury, CT 06810
Masahiro Fujii 1,590,000(5) 13.7%
Toppan Printing Co., Ltd.
1, Kanda Izumi-cho
Chiyoda-ku
Tokyo, Japan 101
Constantine S. Macricostas 1,574,709(2)(6) 13.3%
1061 East Indiantown Road
Jupiter, FL 33477
Jeffrey P. Moonan 64,437(2) *
1061 East Indiantown Road
Jupiter, FL 33477
Toppan Printing Co., Ltd. 1,590,000 13.7%
1, Kanda Izumi-cho
Chiyoda-ku
Tokyo, Japan 101
Michael J. Yomazzo 179,694(2)(7) 1.5%
1061 East Indiantown Road
Jupiter, FL 33477
Directors and Executive 3,445,640(8) 28.8%
Officers as a group
(7 persons)
</TABLE>
- -------------
* Less than 1%
- -------------
<PAGE>
(1) Except as otherwise indicated, the named person has the sole voting
and investment power with respect to the shares of the Company's
Common Stock set forth opposite such person's name.
(2) Includes shares of Common Stock subject to stock options
exercisable as of February 27, 1996 as follows: Mr. Bollo (3,750);
Mr. Fiederowicz (10,725); Mr. Fiorita (10,725); Mr. Macricostas
(218,250); Mr. Yomazzo (40,575); and Mr. Moonan (53,187). Also
includes shares subject to forfeiture, as of February 27, 1996,
under restricted stock award grants as follows: Mr. Macricostas
(11,250); Mr. Yomazzo (11,250); and Mr. Moonan (3,750).
(3) Includes 5,000 shares held by the wife of Mr. Fiederowicz and 1,375
shares owned by children of Mr. Fiederowicz as to which shares he
disclaims beneficial ownership.
(4) Includes 100 shares held by the wife of Mr. Fiorita as to which
shares he disclaims beneficial ownership.
(5) Includes 1,590,000 shares owned by Toppan Printing Co., Ltd. of
which Mr. Fujii is a director, as to which shares Mr. Fujii
disclaims ownership.
(6) Includes 18,000 shares held by the wife of Mr. Macricostas as to
which shares he disclaims beneficial ownership.
(7) Also includes 31,000 shares held by the wife of Mr. Yomazzo and
3,510 shares owned by children of Mr. Yomazzo as to which shares he
disclaims beneficial ownership.
(8) Includes the shares listed in notes (2), (3), (4), (5), (6) and
(7), above.
ELECTION OF DIRECTORS
A board of five (5) directors is to be elected at the Annual
Meeting. The names of, and certain information with respect to, the
nominees for election as directors, to serve until the 1997 Annual
Meeting of Shareholders and until their successors are elected and
qualified, are set forth below and were furnished to the Company by the
nominees.
If, for any reason, any of the nominees shall become unavailable for
election, the individuals named in the enclosed proxy may exercise their
discretion to vote for any substitutes chosen by the Board of Directors,
unless the Board of Directors should decide to reduce the number of
directors to be elected at the Annual Meeting. The Company has no reason
to believe that any nominee will be unable to serve as a director. There
are no family relationships between any directors or executive officers
of the Company.
<PAGE>
Nominees to be Elected by the Shareholders
<TABLE>
<CAPTION> Director
Name and Age Since Position with the Company
<S> <C> <C>
Walter M. Fiederowicz(1)......... 1984 Director
(49 years)
Joseph A. Fiorita, Jr.(1)........ 1987 Director
(51 years)
Masahiro Fujii................... 1995 Director
(64 years)
Constantine S. Macricostas....... 1974 Chairman of the Board
(60 years) Chief Executive Officer
Michael J. Yomazzo............... 1977 President
(53 years) Chief Operating Officer
Director
</TABLE>
- --------------
(1) Member of the Audit Committee and the Compensation Committee.
- --------------
For the past five years, the principal occupation of each nominee
has been substantially as set forth in the above table, except as
follows:
Mr. Fiederowicz has served as chairman of Colonial Data Technologies
Corp., (a distributor of telecommunications equipment) since August 1994.
From January 1991 until July 1994, he held various positions, including
executive vice president and chairman and served as director of Conning
and Company (the parent company of an investment firm). Mr. Fiederowicz
also serves as a director of Barry Blau and Partners, Inc. (a direct
response advertising agency). Mr. Fiederowicz was chairman and director
of Covenant Mutual Insurance Company, (a property and casualty insurance
company) from 1989 until March 1993, and was president and chief
executive officer of Covenant from 1989 until December 1992. Covenant
was placed in rehabilitation by the Insurance Commissioner of the State
of Connecticut in 1993 and subsequently liquidated as a result of losses
in connection with insurance claims relating to Hurricane Andrew.
Mr. Fiorita is a partner in Fiorita, Kornhaas and Van Houten, P.C.,
the independent certified public accountants for the Company from May
1973 through October 1984.
Mr. Macricostas, in addition to his current positions, served as
President from 1974 until November 1990 and as Treasurer. Mr.
Macricostas also serves as a director of Nutmeg Federal Savings and Loan
Association, of Colonial Data Technologies Corp. (a distributor of
telecommunications equipment) and of Orbit Semiconductor, Inc. (a
semiconductor manufacturer and foundry).
Mr. Fujii has served as a Senior Managing Director of Toppan since
June 1995 and served as a Managing Director of Toppan from June 1993
until June 1995. For five years prior to June 1993, he served as a
director of such company. Toppan is a diversified manufacturing company
with operations in the printing and electronics industries (including
<PAGE>
photomask manufacture) and had revenues in excess of $12 billion during
its last fiscal year.
Mr. Yomazzo has served as President since January 1994. From
November 1990 until January 1994, he served as Executive Vice President,
from July 1989 until November 1990, he served as Senior Vice President -
Finance and Planning and since 1977, he has served as a Vice President of
the Company with responsibilities which included finance, sales and
marketing.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met four times during the fiscal year ended
October 31, 1995. During fiscal 1995, each director attended at least
75% of the total number of meetings of the Board of Directors and of all
committees of the Board on which such director served.
The Company has an Audit Committee and a Compensation Committee.
The Audit Committee's functions include recommending to the Board of
Directors the engagement of the Company's independent certified public
accountants, reviewing with such accountants the plan for and results of
their auditing engagement and the independence of such accountants. The
Audit Committee held four meetings during the fiscal year ended October
31, 1995. The Compensation Committee's functions include establishing
compensation for the executive officers of the Company and administration
of the Company's stock plans. The Compensation Committee held four
meetings during the fiscal year ended October 31, 1995. The Company does
not have a nominating committee.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Mr. Walter Fiederowicz serves as a member of the Compensation
Committee of the Board of Directors. He has served as a Director of the
Company since 1984 and as a member of the Compensation Committee since
1992. Both Messrs Fiederowicz and Macricostas serve as directors of
Colonial Data Technologies Corp. ("Colonial Data") and have held such
office with Colonial Data (or its predecessor) since 1985 and 1987,
respectively. Mr. Macricostas does not serve on the Compensation
Committee of Colonial Data. In August 1994, Mr. Fiederowicz became the
Chairman of Colonial Data.
EXECUTIVE COMPENSATION
The following tables set forth certain compensation paid by the
Company for services rendered during each of the three fiscal years
during the period ended October 31, 1995 for each of the individuals who
served as an executive officer of the Company during fiscal 1995.
<PAGE>
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Long-Term
Compensation Compensation All
-------------- Other
Awards Comp-
------------------ ensa-
Restricted Stock tion
Name/Principal Position Year Salary Bonus Stock Options ($)
($) ($) ($) (#) (1)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Constantine S. Macricostas 1995 306,859 370,635 0 0 59,620
Chief Executive Officer 1994 295,100 421,000 452,813(2) 0 2,715
and Director 1993 239,838 119,300 0 0 2,570
--------------------------------------------------------------------------
Michael J. Yomazzo 1995 239,845 303,635 0 0 44,620
President and Chief 1994 230,620 357,000 452,813(2) 0 2,757
Operating Officer and 1993 158,135 86,000 0 12,500 3,082
Director
--------------------------------------------------------------------------
Jeffrey P. Moonan 1995 153,835 178,242 0 0 27,588
Senior Vice President, 1994 147,940 195,250 150,938(2) 0 2,919
General Counsel and 1993 134,414 58,000 0 7,500 2,706
Secretary
--------------------------------------------------------------------------
Robert J. Bollo 1995 119,961 50,000 0 0 1,292
Vice President/Finance 1994 - - - - -
and Chief Financial 1993 - - - - -
Officer (3)
--------------------------------------------------------------------------
</TABLE>
-------
(1) Represents premiums paid on life insurance policies owned by the individual
for their designee as to which the Company shall be entitled to be repaid
unless the respective individual satisfies certain length of service
requirements. The amount of such premiums is as follows: Mr. Macricostas
($55,000); Mr. Yomazzo ($40,000); and Mr. Moonan ($22,500). Also
represents matching contributions by the Company pursuant to the Company's
Savings and Profit Sharing (401-k) Plan as follows: Mr. Macricostas
($4,620); Mr. Yomazzo ($4,620); Mr. Moonan ($5,088); and Mr. Bollo
($1,292).
(2) Represents restricted stock awards granted during fiscal 1994 which vest
equally over three (3) years based on achievement of certain performance
goals. Messrs. Macricostas, Yomazzo and Moonan received 33,750, 33,750
and 11,250 restricted stock awards, respectively. The value of the awards
at the date of grant are indicated in the above table. At fiscal 1995 year
end, Messrs Macricostas, Yomazzo and Moonan still held 22,500, 22,500 and
7,500 restricted stock awards which had a value at that time of $663,750,
$663,750 and $221,250, respectively. Dividends earned on shares subject
to the awards would be subject to the terms of the awards and would not be
paid if the award is not earned.
(3) Mr. Bollo became Vice President/Finance and Chief Financial Officer in
November 1994 and amounts paid to Mr. Bollo prior to fiscal 1994 are not
reported in the above table.
The Company has agreed that if the employment of Messrs. Macricostas,
Yomazzo or Moonan is terminated under certain conditions, such officer will be
<PAGE>
entitled to continued salary and benefits for one year.
The Company maintains stock option plans which allow for the grant of stock
options and restricted stock awards to directors and executive officers of the
Company as well as other employees of the Company. The Company's stock option
plans do not provide for the issuance of stock appreciation rights ("SAR's").
There were no option grants to the executive officers named in the summary
compensation table during fiscal 1995. The following table sets forth
information with respect to option exercises and the value of options granted
to such executive officers of the Company.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<CAPTION>
Number of
Securities Value of
Shares Underlying Unexercised
Acquired Unexercised in-the-money
on Value Options at Options at
Name Exercise Realized Fiscal Year Fiscal Year
(#) ($) End End ($)
------------ -------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
Constantine -0- -0- 218,250/21,751 5,658,330/
Macricostas 507,520
- ------------------------------------------------------------------
Michael J. 75,000 1,612,264 36,075/23,925 839,342/
Yomazzo 546,259
- ------------------------------------------------------------------
Jeffrey P. 25,000 508,436 50,375/14,625 1,212,906/
Moonan 333,747
- ------------------------------------------------------------------
Robert J. -0- -0- 3,750/11,250 55,001/
Bollo 165,004
- ------------------------------------------------------------------
</TABLE>
DIRECTORS' COMPENSATION
A fee of $1,500 for each directors' meeting attended is payable to
directors who are not also employees of the Company. The Chairman and
other members of the Compensation and Audit Committees also receive a fee
of $5,000 and $2,500, respectively, per year, for service on each such
committee.
During fiscal 1995, the Company retained Joseph Fiorita as a
consultant to perform certain accounting and tax services. Fees paid to
Mr. Fiorita in this capacity aggregated $36,000.
<PAGE>
CERTAIN TRANSACTIONS
The Company continues to lease a building at one of its
manufacturing facilities and a contiguous parcel of land from entities
controlled by Constantine S. Macricostas. The rent paid to these
entities for the fiscal year ended October 31, 1995 was $116,363.
Financing for construction of such leased building and certain
equipment was provided through the sale of industrial development bonds
issued by the Connecticut Development Authority (the "CDA"). As lessee,
the Company was obligated to serve as guarantor of certain of the bonds
issued by the CDA. As of October 31, 1995 there were outstanding a total
of approximately $677,000 of industrial development bonds for which the
Company serves as guarantor.
The Company believes that the terms of the transactions described
above with affiliated persons were no less favorable to the Company than
the Company could have obtained from non-affiliated parties.
The Company and Toppan have engaged in numerous ongoing commercial
transactions for the purchase and sale of raw materials and finished
goods at prices based upon competitive market prices. The total amount
of sales by the Company to or from Toppan aggregated approximately
$5,000,000 during fiscal 1995. The Company believes these transactions
are negotiated as arm's-length transactions and were no less favorable to
the Company than the Company could have obtained from non-affiliated
parties. The Company and Toppan also entered into an agreement whereby
the companies share certain technology.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was established
during fiscal 1992 and is responsible for the establishment of executive
compensation and administration of the Company's stock plans.
The Committee's philosophy is that executive compensation must be
competitive with other comparable employers to insure that qualified
employees can be attracted and retained and that the Company's
compensation practices should provide incentives and rewards for
achieving or exceeding company goals and for creating a return to the
Company's shareholders. The Committee uses three components to achieve
these goals: base salary, bonuses and stock based awards.
The Committee evaluates and establishes base salary levels in light
of economic conditions and comparisons to other similarly situated
companies. Bonuses, if any, are dependent upon a subjective evaluation
of the Company's performance and achievement of its financial and other
goals during the relevant period. Stock options and restricted stock
awards, which the Compensation Committee believes provide a strong link
between executive compensation and shareholder return, are used to
provide long-term incentives which are based on shareholder return.
While Section 162(m) of the Internal Revenue Code limits the
deductibility of certain compensation (in excess of $1,000,000 per year)
paid by the Company to named executive officers unless certain formal
requirements are satisfied, the Committee believes that its ability to
subjectively evaluate executive officer performance is an important part
<PAGE>
of its function and its ability to provide incentives. Additionally,
compensation to the named executive officers has historically not
exceeded deductibility limits under this Section. Accordingly, the
Committee has not pursued adoption of compensation programs which comply
with such Section although the Committee continues to consider the
advisability of such adoption.
In establishing compensation levels for the executive officers of
the Company, the Committee in 1992 considered compensation at companies
in the electronics industries with similar levels of sales and capital.
The companies considered were not necessarily the same as those included
in the performance chart below due to the difference in the size of the
companies considered. The Committee adjusted executive compensation in
connection with this review. Generally, the Committee believes that its
expectation of performance from the Company and its executive officers
should allow executive compensation to fall within the median to 75th
percentile of compensation at this comparison group. Since that time,
salary adjustments for the executive officers have been in accordance
with the salary adjustment budgets for the Company's other employees.
The Committee believes that its three-part approach provides reasonable
compensation to the executive which is aligned with the Company's needs
and results and balances both short and long-term goals.
Mr. Macricostas' compensation for 1995 was determined based on this
analysis. Mr. Macricostas' base salary was adjusted in 1995 in
accordance with the salary budget for other employees of the Company.
The Committee also approved the payment of a bonus to Mr. Macricostas
based on its subjective evaluation of his efforts during fiscal 1995 and
of the Company's performance during the year. Prominent factors in this
determination were the Company's ability to recognize record levels of
sales, earnings and other performance criteria during the year and to
successfully acquire and integrate its Sunnyvale and Colorado Springs
operations which had been acquired in fiscal 1995.
In addition, the Committee granted Mr. Macricostas a special bonus
related to the equity investment held by the Company in Orbit
Semiconductor, Inc. The Company had realized a significant appreciation
and return in this investment and the Committee felt that Mr. Macricostas
had made a significant contribution in connection with this investment.
This bonus was paid in shares of Orbit Semiconductor stock, valued at
$63,635, although it is reflected as monetary compensation in the
compensation table.
In fiscal 1994, the Company had granted restricted stock awards to
Mr. Macricostas which were intended to cover more than one (1) year and
accordingly, the Committee did not grant any additional stock based
compensation to Mr. Macricostas during fiscal 1995.
The compensation for the other executive officers was determined
based on the same factors used to determine Mr. Macricostas'
compensation.
Respectfully submitted,
Joseph A. Fiorita, Jr.
Walter M. Fiederowicz
<PAGE> PERFORMANCE GRAPH
The following graph compares the yearly percentage change at October
31 of the indicated year in the Company's cumulative total shareholder
return on its common stock with the cumulative total shareholder return
on (i) securities traded on the NASDAQ market, and (ii) publicly traded
securities of companies which have indicated that their business falls
within Standard Industrial Classification (SIC) Code 367 (Electronic
Components and Accessories). Although the Company believes this graph
reflects favorably on the Company, it does not believe that the
comparison is necessarily useful in determining the quality of the
Company's performance or in establishing executive compensation.
Comparison of Five-Year Cumulative Total Return Among
Photronics, Inc., NASDAQ Over-the-Counter Securities
and Publicly Traded Companies with SIC Code 367
======================================================================
1
700 ------------------------------------------------------------------
600 ------------------------------------------------------------------
2
500 ------------------------------------------------------------------
1
400 ------------------------------------------------------------------
300 ------------------------------------------------------------------
2
1 2
1
200 -------------------------------------------------------------3----
1 3
3 2 3
2 3
100 ------------------------------------------------------------------
0 ------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
1 Photronics, Inc. 100.00 268.08 165.96 234.04 459.57 753.94
2 NASDAQ Stock Market 100.00 126.80 154.70 240.34 288.35 537.93
(US) Index
3 NASDAQ Electronic 100.00 127.20 123.22 161.70 171.90 203.93
Component Stock Index
</TABLE>
<PAGE> ADOPTION OF THE 1996 STOCK OPTION PLAN
The Board of Directors of the Company believes that the Company's
existing Stock Option Plans have been worthwhile in attracting and
retaining qualified personnel. As of October 31, 1995, there were 75,762
shares available for grants under the Plans. In view of such fact, on
January 29, 1996, the Board of Directors adopted, subject to shareholder
approval, the 1996 Stock Option Plan (the "1996 Plan"), covering a
maximum of 600,000 shares of Common Stock. In the judgment of the Board,
the ability to issue incentive stock options, non-qualified stock options
and restricted stock awards under the 1996 Plan will permit achieving the
maximum incentive effect for employees, considering tax and other laws,
individual circumstances of employees and incentives currently offered by
other corporations with which the Company must compete in attracting and
retaining qualified employees. Shareholder approval is requested for the
1996 Plan, the text of which is set forth in Appendix "A" of this Proxy
Statement.
Options may be granted to any employee or director of the Company
and options under the 1996 Plan may be incentive stock options or non-
qualified stock options provided that incentive stock options may only be
granted to employees and no more that fifteen percent (15%) of the shares
subject to the Plan may be issued to any one person during any one
calendar year. The 1996 Plan also allows options to be characterized as
"performance stock options" and allows for the grant of restricted stock
awards, provided that no more than ten percent (10%) of the shares
subject to the Plan can be issued pursuant to restricted stock awards.
The exercise price per share of Common Stock under each option may not be
less than the fair market value of such share on the date of grant or the
par value of one share of the Company's Common Stock, whichever is
greater and may be paid, at the election of the holder, in cash or by
delivery of previously acquired Common Stock. Restricted stock awards
will not require the payment of any cash consideration by the recipient
to the Company. For any participant who owns stock or currently
exercisable options which in the aggregate account for more than 10% of
the voting power of the Company, the exercise price of any incentive
stock option granted under the 1996 Plan must be at least equal to 110%
of fair market value on the date of grant and the term of any such option
may not exceed five (5) years. Furthermore, the aggregate fair market
value of the Common Stock (determined at the date of option grant) which
becomes exercisable under incentive stock options for the first time may
not exceed $100,000 for any one employee in any calendar year. The
closing price of a share of Common Stock as reported on the NASDAQ System
for January 29, 1996 was $24.50. The 1996 Plan will terminate on January
29, 2006, or earlier if the shares reserved thereunder have been issued
upon exercise of options or vesting of restricted stock awards. The 1996
Plan is to be administered by the Board of Directors or a compensation
committee composed of at least two (2) members of the Board.
Upon the grant of a restricted stock award under the 1996 Plan, a
certificate representing the shares of Common Stock covered by the award
will be issued in the name of the recipient of the award, after execution
by the recipient of an award agreement and any other documents which the
Board may require, but such certificate will be held in the custody of
the Company. The shares covered by the award will be subject to the
possibility of forfeiture in the event restrictions and conditions
established by the Board at the time the award is granted are not
satisfied, and such shares shall not be transferable by the recipient
unless and until they are no longer subject to forfeiture. Such
restrictions and conditions may include, among other things, specified
<PAGE>
measures of the Company's financial performance or the individual
recipient's performance or continuation of the recipient's employment, or
combinations thereof. During the period the shares covered by a
restricted stock award are subject to forfeiture, the recipient of the
award will have the rights and privileges of a stockholder as to such
shares, including the right to vote the shares, but not the right to
transfer or otherwise dispose of the shares or to receive dividends or
distributions with respect to the shares. All dividends and
distributions with respect to shares subject to forfeiture shall also be
subject to the terms of the restricted stock award. If and when the
restrictions and conditions established by the Board have been satisfied,
the recipient will have unrestricted ownership of the shares and any
dividends and distributions with respect thereto. Upon the grant of a
restricted stock award, a compensation expense will be incurred for
financial reporting purposes with respect to the shares covered by the
award equal to the fair market value of the shares at the date of grant.
This expense is reported over the period during which the shares are
subject to forfeiture.
The Board of Directors has the authority to determine, subject to
the provisions of the 1996 Plan, to which employees or directors options
or restricted stock awards are to be granted, the time at which options
and awards are to be granted, the number of shares subject to options and
awards granted to each individual from time to time, the option exercise
price per share, the period over which the options and awards vest,
whether the options are to be non-qualified or incentive stock options,
the period during which each option may be exercised and the conditions
that are applicable to any restricted stock award or performance stock
option. The Plan provides that options and restricted stock awards
cannot vest more rapidly than ratable over three (3) years, unless
accelerated in connection with a consolidation, merger, dissolution,
liquidation or a similar transaction involving the Company. The Board
may make all other determinations necessary for options and awards under
the 1996 Plan. The Board may also accelerate the vesting date of any
options and awards and, with the consent of the holder, cancel, modify or
amend any option or award; provided that the Plan prohibits a reduction
of option exercise prices except in connection with adjustments related
to stock splits and other changes in capitalization of the Company. Any
shares subject to options or awards which, for any reason, expire or are
terminated or forfeited, become available again for options and awards
under the 1996 Plan.
Holders of options or awards are protected against dilution in the
event of a stock dividend, share distribution, recapitalization, merger,
consolidation, split-up, spin-off, combination or exchange of shares or
similar action. The Board of Directors may from time to time adopt
amendments to the 1996 Plan, provided that no amendments which would
increase the number of shares for which options or awards may be granted
or amend the eligibility requirements of the Plan may be effected without
the consent of the holders of a majority of the outstanding shares of
Common Stock present and voting at a duly held meeting of shareholders of
the Company. The 1996 Plan may be suspended or terminated at any time by
the Board of Directors, but such action cannot affect options or awards
previously granted.
Options to the extent exercisable on the date of termination of
employment, are exercisable until thirty (30) days after termination
except in the case of retirement with the consent of the Company or
death. In the event the holder's employment is terminated for such
<PAGE>
retirement or death, an option may only be exercised, to the extent
exercisable on the date of termination, during the six (6) months after
the date of termination. In no event, however, may any option ever be
exercised after its term has expired. All options expire immediately if
termination of employment was for cause or without the consent of the
Company.
Upon the termination of employment of a recipient of a restricted
stock award, unless otherwise determined by the Board if such termination
is due to death, disability, normal retirement or with the consent of the
Company, all of the shares which then remain subject to forfeiture shall
automatically be forfeited and transferred to the Company at no cost to
the Company. The Board may, if such termination is due to death,
disability, normal retirement or with the consent of the Company, deem
that the restrictions or conditions on all or any of the shares subject
to forfeiture have been met, subject to such further terms and
conditions, if any, as the Board may deem appropriate.
The 1996 Plan provides that if a recipient of an option or award
engages in activities which are in competition with those engaged in by
the Company or other behavior contrary to the interests of the Company
within one (1) year of leaving the employ of the Company, the Company may
effect a forfeiture of any outstanding options and require such recipient
to pay to the Company an amount equal to the difference between the
market value of the shares acquired under options or awards exercised or
vested within one (1) year prior to leaving the employ of the Company
after deduction for, in the case of an option, the exercise price of the
options.
Under the Internal Revenue Code (the "Code"), no income is
recognized by the recipient of a non-qualified stock option at the time
the option is granted. Upon exercise of a non-qualified stock option,
the option holder will recognize ordinary income at the time of exercise
in an amount equal to the excess of the fair market value of the shares
purchased over their option exercise price; provided, that if the holder
pays the exercise price with previously acquired Common Stock, the holder
will recognize ordinary income equal to the fair market value of that
number of shares received which are in excess of the number of shares
which were tendered as payment of the option. The Company will be
entitled to an income tax deduction equal to the ordinary income
recognized by the holder.
When an optionee or a recipient disposes of shares acquired by the
exercise of a non-qualified stock option, any amount received in excess
of the fair market value of the shares used to determine previously
recognized ordinary income and the optionee's basis in any shares
tendered in payment of exercise of the option will be treated as a long-
term or short-term capital gain, depending upon the holding period of the
shares. If the amount received is less than such values, the loss will
be treated as a long-term or short-term capital loss, depending upon the
holding period of the shares.
As in the case of a non-qualified stock option, upon the grant of an
incentive stock option, the optionee will not recognize income. However,
unlike the holder of a non-qualified stock option, the holder of an
incentive stock option will not recognize income on the exercise of the
incentive stock option, but will recognize income only when he
subsequently disposes of the shares. However, the amount of the income
not recognized is generally a tax preference item for the purposes of the
<PAGE>
alternate minimum tax. Alternative minimum tax ("AMT") is imposed in
addition to, but only to the extent it exceeds, an optionee's regular tax
for the taxable year. Generally, AMT is computed on the excess of a
taxpayer's alternative minimum taxable income ("AMTI") over any
applicable exemption amount. A taxpayer's AMTI is essentially the
taxpayer's taxable income adjusted pursuant to the AMT provisions and
increased by items of tax preference. Subsequently, the basis of the
stock acquired (for AMT purposes) will equal the exercise price increased
by the prior upward adjustment of the taxpayer's AMTI due to the exercise
of the option. Upon the disposition of the stock, the increased basis
will result in a smaller capital gains for AMTI than for ordinary income
tax purposes.
If an optionee disposes of shares acquired upon the exercise of an
incentive stock option not earlier that the later of one year from the
date of exercise or two years from the date of grant of the option, the
difference between the option price and the sale price will be recognized
by the optionee as income and taxed at capital gains rates. If the
disposition occurs prior to the later of one year from the date of
exercise or two years from the date of grant, the employee will recognize
ordinary income equal to the excess, if any, between (a) the lesser of
the fair market value of the shares on the date of exercise of the
option, or the amount realized on the disposition of the shares acquired
on exercise and (b) the purchase price paid for the shares, and will
recognize a long-term or short-term capital gain (depending on the
holding period) on any further gain measured by the excess if any,
between the amount received upon disposition of the shares and the fair
market value of the shares on the date of exercise of the option. The
Company is not entitled to an income tax deduction upon the exercise of
an incentive stock option but, if the employee makes an early disposition
of the shares, the Company will be entitled to an income tax deduction
equal to the amount recognized by the employee as ordinary income. The
transfer of stock acquired pursuant to the exercise of an incentive stock
option as payment of the exercise price in connection with the exercise
of a second incentive stock option will be treated as an early
disposition of such stock if made prior to the later of two (2) years
from the date of grant or one (1) year from date of exercise, with the
tax consequences described above.
Unless a recipient of a restricted stock award elects to be taxed at
the time of grant with respect to the shares subject to the award, the
recipient will not recognize income until the possibility of forfeiture
shall lapse. When and as the possibility of forfeiture shall lapse, the
recipient will recognize ordinary income in an amount equal to the fair
market value of the shares at that time. A recipient of a restricted
stock award may elect, within thirty (30) days following the date of
grant, to recognize ordinary income at the date of the grant with respect
to the shares subject to the award in an amount equal to the fair market
value of the shares at the date of grant, determined without regard to
the possibility of forfeiture. The Company will be entitled to a
deduction at the time ordinary income is recognized by a recipient of a
restricted stock award equal to the amount so recognized. If a recipient
of a restricted stock award elects to be taxed at the date of grant and
the shares are subsequently forfeited, the recipient is not entitled to
a deduction as a consequence of such forfeiture and the Company must
include as ordinary income the amount it previously deducted with respect
to such award. Any dividends with respect to shares subject to
forfeiture pursuant to a restricted stock award granted to a recipient
who has not elected to be taxed at the date of grant of the award are
<PAGE>
treated as additional compensation taxable as ordinary income to the
recipient and deductible by the Company when received by the recipient.
If an election has been made to be taxed at the date of grant, the
dividends represent ordinary dividend income to the recipient and are not
deductible by the Company.
To the extent that the exercisability of any options are accelerated
on account of a proposed dissolution or liquidation of the Company, or a
sale of substantially all of the assets of the Company, or the merger or
consolidation of the Company with or into another corporation, the value
of the options at the time of vesting could be treated as a "parachute
payment" subject to an excise tax imposed on the holder. Such
consequences would only follow, however, if the total "parachute
payments" (including the value of the option) were of sufficient
magnitude to give rise to "excess parachute payments" as defined in the
Code.
Section 162(m) of the Internal Revenue Code may limit the
deductibility by the Company of compensation recognized by executive
officers under options or awards to the extent it exceeds certain
threshold levels unless such options or awards are issued as "performance
stock options" as defined by Section 162(m). The 1996 Plan allows for
the issuance of performance stock options.
The foregoing, while summarizing the Federal income tax implications
with respect to options and awards which may be granted under the 1996
Plan, does not purport to be a detailed account of such tax treatment.
Adoption of the 1996 Plan is subject to the approval by the
favorable vote of the holders of a majority of the outstanding shares of
Common Stock present and voting at a duly held meeting of shareholders of
the Company.
The Board of Directors recommends a vote FOR this proposal.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Subject to ratification by the shareholders at the Annual Meeting,
the Board of Directors has appointed Deloitte & Touche LLP to serve as
the independent certified public accountants for the Company for its
fiscal year ending October 31, 1996. Deloitte & Touche LLP has served as
the Company's independent certified public accountants since July 1991.
Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting, will have the opportunity to make a statement, if
they desire to do so, and will be available to respond to appropriate
questions.
The affirmative vote of the majority of the votes cast by the
holders of the Company's Common Stock on this proposal shall constitute
ratification of the appointment of Deloitte & Touche LLP.
If the shareholders by the affirmative vote of a majority of the
Common Stock represented at the Annual Meeting do not ratify the
appointment of Deloitte & Touche LLP, the selection of independent
certified public accountants will be reconsidered by the Board of
Directors.
<PAGE>
The Board of Directors recommends a vote FOR this proposal.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows
of no matters which will be presented for consideration at the Annual
Meeting other than the proposals set forth in this Proxy Statement. If
any other matters properly come before the Annual Meeting, it is intended
that the persons named in the proxy will act in respect thereof in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company no later than
October 13, 1996 and must meet certain eligibility requirements of the
Securities and Exchange Commission. Proposals may be mailed to
Photronics, Inc. to the attention of Jeffrey P. Moonan, 1061 East
Indiantown Road, Jupiter, Florida 33477.
SOLICITATION OF PROXIES AND COST THEREOF
This proxy solicitation is being made by the Board of Directors of
the Company and the cost of such solicitation of proxies will be borne by
the Company. In addition to solicitation of the proxies by use of the
mails, employees of the Company, without extra remuneration, may solicit
proxies personally or by telephone or cable. The Company will reimburse
brokerage firms, nominees, custodians and fiduciaries for their out-of-
pocket expenses for forwarding proxy materials to beneficial owners and
seeking instruction with respect thereto.
By order of the Board of Directors
Jeffrey P. Moonan
Secretary
February 9, 1996
<PAGE> Appendix "A"
PHOTRONICS, INC.
1996 STOCK OPTION PLAN
1) PURPOSES OF THE PLAN
The purposes of this 1996 Stock Option Plan are:
(a) to attract and retain the best available personnel for positions of
substantial responsibility (both as Employees and as Outside
Directors) in respect of the business of PHOTRONICS, INC., and any
current subsidiary or any subsidiary which PHOTRONICS, INC. may
hereafter organize or acquire;
(b) to provide additional incentive to such personnel; and
(c) to promote the success of the business.
2) DEFINITIONS
As used herein, the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of PHOTRONICS, INC.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Compensation Committee" shall mean a committee of the Board
composed of at least two (2) members of the Board who may be
"disinterested persons" as defined in Rule 16b-3(c)(2) promulgated
under the Securities Exchange Act of 1934, as amended (the "Act"),
or any successor provision thereto.
(d) "Common Stock" shall mean the Common Stock of the Company.
(e) "Company" shall mean PHOTRONICS, INC.
(f) "Outside Director" shall mean a member of the Company's Board of
Directors who is not also an Employee.
(g) "Disability" shall have the meaning set forth in Section 22(e)(3)
of the Code or in any successor provision thereto.
(h) "Employee" shall mean a regular, salaried common law employee of
the Company or any of its subsidiaries.
(i) "Option" shall mean a stock option granted pursuant to the Plan.
(j) "Option Agreement" shall mean the Stock Option Agreement entered
into between the Company and an Employee or Outside Director upon
the grant of an Option.
(k) "Option Price" shall mean the exercise price determined pursuant to
<PAGE>
Section 4 hereof for the Shares to be issued pursuant to any Option
granted under the Plan.
(l) "Optioned Stock" shall mean the stock subject to an Option or
Restricted Stock Award granted pursuant to the Plan.
(m) "Optionee" shall mean an Employee or Outside Director who receives
an Option or Restricted Stock Award.
(n) "Performance Stock Option" means an Option which is subject to
conditions which render it a Performance Stock Option under
applicable law.
(o) "Plan" shall mean this 1996 Stock Option Plan.
(p) "Restricted Stock Award" means a restricted stock award granted
pursuant to the Plan.
(q) "Restricted Stock Award Agreement" means the Restricted Stock Award
Agreement entered into between the Company and an Employee or
Outside Director upon the grant of a Restricted Stock Award.
(r) "Share" shall mean a share of the Common Stock of the Company as
adjusted in accordance with Section 14 of the Plan.
(s) "10% Shareholder" shall mean an individual who at the time an
Option is granted hereunder owns, within the meaning of Section
422(b)(6) of the Code, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of
its parent or subsidiary corporations.
3) STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 14 of the Plan, the maximum
aggregate number of Shares which may be optioned and sold or which may be
issued and not subsequently forfeited pursuant to Restricted Stock Awards
under the Plan, is six hundred thousand (600,000) Shares of the Common
Stock of the Company provided, that no more than ten percent (10%) of the
Shares authorized for issuance under this Plan may be issued pursuant to
Restricted Stock Awards and no more than fifteen percent (15%) of the
Shares authorized for issuance under this Plan may be issued to any one
person during any one calendar year. Such Shares may be authorized but
unissued or may be treasury shares.
If an Option should expire or become unexerciseable for any reason
without having been exercised in full or any shares issued pursuant to a
Restricted Stock Award are forfeited, the unpurchased or forfeited Shares
which were subject thereto shall, unless the Plan shall have been
terminated, become available for other Option(s) or Restricted Stock
Awards under the Plan.
4) ADMINISTRATION OF THE PLAN
(a) Procedure
The Plan shall be administered by the Board or the Compensation
Committee. Members of the Board who are either eligible for
grants under this Plan or have been given grants under this
Plan may vote on any matters affecting the administration of
<PAGE>
the Plan or the grant of any Options or Restricted Stock Awards
pursuant to the Plan, except that no such member shall act upon
the granting of an Option or Restricted Stock Award to himself,
but any such member may be counted in determining the existence
of a quorum at any meeting of the Board during which action is
taken with respect to the granting of Options or Restricted
Stock Awards to him.
(b) Powers of the Board and the Committee
Subject to the provisions of the Plan, the Board or the
Compensation Committee shall have the authority:
i) to grant to any eligible Employee or Outside Director an
Option or Restricted Stock Award, which shall be
conditioned on the execution by such Employee or Outside
Director of an Option Agreement or Restricted Stock Award
Agreement in the form approved by the Board or the
Committee;
ii) to determine the Option Price for any Shares to be issued
pursuant to an Option granted under the Plan, whether an
Option is to be a Performance Stock Option and the
conditions applicable to such Options, the conditions
applicable to any Restricted Stock Award, the Employees or
Outside Directors to whom and the time or times at which
Options or Restricted Stock Awards shall be granted, to
determine the exercise or vesting date of Options and
Restricted Stock Awards (provided that in no event shall
more than one-third (1/3) of the Options or Restricted
Stock Awards included in any one grant be exercisable or
vest prior to the first anniversary of the date of grant
and an additional one-third (1/3) of such Options or
Restricted Stock Awards be exercisable or vest on each of
the second and third anniversaries of the date of grant
except pursuant to the provisions of Section 16, whether
the Option shall be a non-qualified or an incentive stock
option (as defined in Section 422 of the Code or any
successor provision thereto) and the number of Shares to be
represented by each Option or Restricted Stock Award, and
the term of each Option which in no event shall be more
than ten (10) years from the date of the grant of the
Option (five [5] years in the case of an incentive stock
option granted to a 10% owner);
iii) to interpret the Plan;
iv) to prescribe, amend and rescind rules and regulations
relating to the Plan;
v) to determine the terms and provisions of each Option
granted under the Plan (which need not be identical) and,
with the consent of the holder thereof, to modify or amend
each Option or Restricted Stock Award; provided, however,
that in no event may the exercise price of an Option be
reduced (except pursuant to Section 14) after it is issued;
vi) subject to the provisions of sub-section (ii), above, to
accelerate any exercise date of any Option or Restricted
Stock Award except that the exercise date of any Option or
<PAGE>
Restricted Stock Award granted to any director or executive
officer cannot be accelerated without such holder's consent
if such acceleration would result in liability under
Section 16 of the Act, or any successor provision thereto;
vii) to authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an
Option or Restricted Stock Award previously granted by the
Board or the Compensation Committee; and
viii) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(c) Effect of Board's or Compensation Committee's Decision
All decisions, determinations and interpretations of the Board
or the Compensation Committee shall be final and binding on all
Optionees and any other holders of any Options granted under
the Plan.
5) ELIGIBILITY
Options and Restricted Stock Awards under the Plan may be granted
only to such Employees or to such Outside Directors as the Board or the
Compensation Committee shall select. An Employee or Outside Director who
has been granted an Option or Restricted Stock Award may, if he is
otherwise eligible, be granted additional Options or Restricted Stock
Awards. Incentive stock options may be granted only to an "employee" of
the Company, as that term is used Section 422 of the Code or any
successor provision thereto. No incentive stock option may be granted to
a 10% Shareholder unless the Option Price is at least 110% of the fair
market value of such stock on date of grant and the term of such option
does not exceed five (5) years.
6) TERM OF PLAN
Subject to the provisions of Section 22 hereof, the Plan shall
become effective on adoption by the Board. The Plan shall continue in
effect for a term of ten (10) years unless sooner terminated under
Section 18 hereof.
7) TERM OF OPTION OR RESTRICTED STOCK AWARD
Except as provided under Code Section 422(c)(5) with respect to a
10% Shareholder's incentive stock option and unless of shorter duration
as provided in the terms of an Option or Restricted Stock Award
Agreement, the term of each Option or forfeiture period for a Restricted
Stock Award granted under the Plan shall be determined by the Board or
the Compensation Committee but, in no event, shall it be for a period in
excess of ten (10) years from the date of grant thereof.
8) MAXIMUM ALLOTMENT OF OPTIONS
The aggregate fair market value (determined as of the date the
Option is granted) of the Common Stock with respect to which incentive
stock options are exercisable for the first time by any individual during
any calendar year under the Plan and all other plans of the Company or
<PAGE>
any parent or subsidiary of the Company shall not exceed $100,000 or such
other amount as is permitted by the Code.
9) OPTION PRICE
The Option Price for the Shares to be issued pursuant to any Option
shall be as stated in the Option Agreement and shall be not less than the
greater of (a) the fair market value of such Shares on date of grant of
the Option as determined by the Board or the Compensation Committee
(except that with respect to an incentive stock option issued to a 10%
Shareholder, 110% of the fair market value), or (b) the par value of such
Shares. Except pursuant to Section 14, in no event shall the Option
Price for an Option be reduced after it is issued.
10) EXERCISE OF OPTIONS
(a) Procedure for Exercise
Any Option shall be exercisable on such terms and conditions
as are set forth in the Option Agreement. The purchase price
of the Shares as to which an Option shall be exercised shall
be paid in full at the time of exercise at the election of the
holder of an Option:
i) in cash or currency of the United States of America;
ii) by tendering to the Company shares of the Company's Common
Stock, then owned by him, having a fair market value equal
to the cash exercise price applicable to the purchase
price of the Shares as to which an Option is being
exercised; or
iii) partly in cash and partly in shares of the Company's
Common Stock valued at fair market value.
Such fair market value shall be determined as of the close of
the business day immediately preceding the day on which the
Option is exercised by the Board or the Compensation
Committee, whose determination shall be final and conclusive.
An Option shall be deemed to be exercised when:
i) written notice of such exercise has been given to the
Company in accordance with the terms of the Option
Agreement by the person entitled to exercise the Option;
ii) payment as described above for the Shares with respect to
which the Option is exercised has been received by the
Company; and
iii) such payment is accompanied by any representations or
agreements required by the terms of this Plan or the
Option Agreement.
A holder of an Option shall not have any rights to dividends
or any other rights as a stockholder of the Company with
respect to any shares covered by his Option until such shares
shall have been issued to him as reflected by the books and
records maintained by the Company's transfer agent relating to
stockholders of the Company.
<PAGE>
(b) Termination of Employment or Director Relationship/
Death or Disability of Optionee
i) If an Optionee shall cease to be an Employee or Outside
Director by reason of discharge or termination, as
applicable, his right to exercise any non-qualified stock
options shall cease thirty (30) days (except to the extent
otherwise provided in [ii] below) after the date of such
discharge or termination; provided, however, that if his
employment is terminated for cause or without the consent
of the Company, said Option shall terminate immediately.
The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting, nor
shall it interfere in any way with his right or the
Company's right to terminate such relationship at any time
subject to the provisions of any applicable contract. An
Option may be exercised under this paragraph only to the
extent of the accrued right to exercise at the time of
discharge or termination, as the case may be, and only to
the extent that the Option is otherwise exercisable
pursuant to the initial term provided for in the Option
Agreement covering such Option.
ii) In the event of the death or disability of an Optionee,
any non-qualified stock options which were exercisable by
the Optionee on the date of his death or disability shall
remain exercisable for a period of six (6) months by the
Optionee, the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance. An Option may be exercised under this
paragraph only to the extent of the accrued right to
exercise at the time of death or disability, as the case
may be, and only to the extent that the Option is
otherwise exercisable pursuant to its initial term.
11) NON-TRANSFERABILITY OF OPTIONS AND RESTRICTED STOCK AWARDS
The Option and, unless and until the shares subject to a Restricted
Stock Award are no longer subject to forfeiture, shares subject to a
Restricted Stock Award may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the
laws of descent or distribution and an Option may be exercised during the
lifetime of the Optionee only by the Optionee.
12) RESTRICTED STOCK AWARD
The Shares subject to a Restricted Stock Award shall be issued in
the name of the recipient as soon as reasonably practicable after the
date of grant of the Restricted Stock Award (and after the recipient has
executed a Restricted Stock Award Agreement and any other documents which
the Board or the Compensation Committee, in its absolute discretion, may
require) without the requirement for payment of any cash consideration by
such recipient, but shall be held by the Company until all risk of
forfeiture shall have lapsed. Any certificate representing such Shares
may bear such restrictive legend, if any, as the Board or the
Compensation Committee may determine. Shares issued pursuant to
Restricted Stock Awards shall be subject to such restrictions, terms and
<PAGE>
conditions as the Board or the Compensation Committee may establish,
which may include, without limitation, the achievement of specific goals,
and shall vest at such time or times as the Board or the Compensation
Committee shall determine. The Board or the Compensation Committee may,
in their sole discretion, make such adjustments to the goals applicable
to a Restricted Stock Award as they deem necessary or advisable due to
changes in criteria used for the specific goals or other factors which
they deem appropriate.
Upon issuance of the Shares subject to a Restricted Stock Award, the
recipient shall, subject to Section ll, have all the rights of a
stockholder with respect to such Shares, including the right to vote such
Shares, but all dividends and other distributions paid or made with
respect to such Shares shall be held by the Company subject to the
restrictions, terms and conditions of the Restricted Stock Award.
As promptly as practicable after the shares of Common Stock subject
to a Restricted Stock Award, cease to be subject to forfeiture, the
certificate representing such Shares, or a new certificate without any
inapplicable restrictive legend if the original certificate bore a
restrictive legend, shall be delivered to the recipient or, in the event
of the death of a recipient prior to delivery, to his personal
representative.
In the event of the termination of employment of a recipient of a
Restricted Stock Award with the consent of the Company or due to death,
disability or normal retirement, the Board or the Compensation Committee
may, in its sole discretion, deem that the restrictions, terms and
conditions of the Restricted Stock Award have been met for all or part of
the Shares subject thereto, subject to such further terms and conditions,
if any, as the Board or the Compensation Committee may determine.
13) FORFEITURE OF OPTIONS AND REPAYMENT
OF MARKET VALUE OF OPTIONS OR AWARDS
If, at any time within one (1) year after an Optionee ceases to be
an Employee or Outside Director, such Optionee engages in any activity in
competition with any activity of the Company, or inimical, contrary or
harmful to the interests of the Company, including, but not limited to:
(a) conduct related to such Optionee's employment for which either
criminal or civil penalties against the Optionee may be sought;
(b) violation of Company policies, including, without limitation, the
Company's insider trading policy;
(c) accepting employment with or serving as a consultant, advisor or in
any other capacity to an employer that is in competition with or
acting against the interests of the Company, including employing or
recruiting any present, former or future employee of the Company;
(d) disclosing or mis-using any confidential information or material
concerning the Company; or,
(e) participating in a hostile takeover attempt, then:
i) Options and Restricted Stock Awards shall terminate effective
the date on which such Optionee enters into such activity,
<PAGE>
unless terminated sooner by operation of another term or
condition of this Plan;
ii) the aggregate difference between the exercise price of Options
exercised within one (1) year of the date (the "Termination
Date") Optionee ceased to be an Employee or Outside Consultant
and the closing market value of the Shares covered by such
Options; and
iii) the aggregate of the closing market value for all Shares
subject to Restricted Stock Awards as to which forfeiture
provision expired within one (1) year prior to the Termination
Date shall be paid by the Optionee to the Company.
By accepting any Option or Restricted Stock Award, each Optionee
consents to a deduction from any amounts the Company owes such Optionee
from time to time (including amounts owed as wages or other compensation,
fringe benefits or vacation pay, as well as any other amounts owed by the
Company), to the extent of the amounts the Optionee owes the Company
under the foregoing paragraph. Whether or not the Company elects to make
any set-off in whole or in part, if the company does not recover by means
of set-off the full amount the Optionee owes it, calculated as set forth
above, each Optionee agrees to pay immediately the unpaid balance to the
Company. Optionees may be released from their obligations under this
Section above only by the Board of Directors or the Compensation
Committee.
14) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event there is any change in the Common Stock through the
declaration of stock dividends, or through a recapitalization resulting
in a stock split, or combination or exchange of Shares, or
reorganization, or otherwise, the Board or the Compensation Committee
shall appropriately adjust the number or class of Shares covered by any
Option or Restricted Stock Award, as well as the price to be paid
therefor; and, in the event of any such change in the outstanding Common
Stock, the aggregate number and class of Shares available under the Plan
shall be appropriately adjusted.
No fractional Shares of the Common Stock shall be issuable on
account of any action aforesaid, and the aggregate number of Shares then
covered by the Option or Restricted Stock Award when changed as a result
of such action shall be reduced to the largest number of whole Shares
resulting from such action unless the Board or the Compensation
Committee, in its discretion, shall determine to issue scrip certificates
in respect of any fractional Shares, which scrip certificates shall be in
a form and have such terms and conditions as the Board or the
Compensation Committee in its discretion shall prescribe.
15) MERGER, CONSOLIDATION, ETC.
In the event that any consolidation of the Company with, or merger
of the Company into, any other corporation (other than a consolidation or
merger in which the Company is the continuing corporation) or any sale or
transfer of all or substantially all of the assets of the Company is
contemplated, the Board may provide that any Optionee shall be given the
opportunity to exercise any and all Options which such Optionee then
holds prior to such consolidation, merger or sale of assets and,
<PAGE>
notwithstanding any provisions of this Plan or of an Option Agreement to
the contrary, the exercisability of such Option shall be accelerated as
appropriate to allow for such exercise and the Board may terminate each
outstanding Option as of a date to be fixed by the Board or Compensation
Committee, which shall not be earlier than five (5) days after the date
such Options become exercisable.
16) WITHHOLDING TAX
The Company may make such provisions (including accepting Shares as
payment or reducing the number of Shares to be issued) as it may deem
appropriate for the withholding of any taxes which the Company determines
it is required to withhold in connection with the grant or exercise of
any Option or Restricted Stock Award or the disposition of any Common
Stock acquired pursuant to the exercise of an Option or Restricted Stock
Award. If an Optionee who exercises all or part of an Option
subsequently disposes of Common Stock in a "disqualifying disposition"
described under Code Section 422(c)(2), such Optionee shall so notify the
Company, forward such information as is thereby requested by the Company
and, if so requested by the Company, pay to the Company such dollar
amounts as are necessary to satisfy the Company's tax withholding
obligations resulting from such disposition.
17) TIME OF GRANTING OPTIONS
The date of grant of an Option or Restricted Stock Award under the
Plan shall for all purposes be the date on which the Board or
Compensation Committee makes the determination granting such Option or
Restricted Stock Award. Notice of the determination shall be given to
the Optionee within a reasonable time after the date of such grant.
18) AMENDMENT AND TERMINATION OF THE PLAN
(a) Amendment
The Board, without approval of the shareholders, may amend the
Plan from time to time in such respects as the Board may deem
advisable except that the Board may not, except with approval
of the shareholders, amend the eligibility requirements of
this Plan or increase the number of shares subject to this
Plan except as permitted by Section 14.
(b) Termination
The Board, without approval of the shareholders, may at any
time terminate the Plan.
(c) Effect of Amendment or Termination
Any such amendment or termination of the Plan shall not affect
Options or Restricted Stock Awards already granted, and such
Options or Restricted Stock Awards shall remain in full force
and effect as if this Plan had not been amended or terminated
and shall be deemed to incorporate the terms of this Plan as
it existed on the dates the Options or Restricted Stock Awards
were granted.
<PAGE>
19) CONDITIONS UPON ISSUANCE OF SHARES
Shares shall not be issued with respect to an Option or Restricted
Stock Award granted under the Plan unless the exercise of such Option or
termination of the forfeiture period for such Restricted Stock Award and
the issuance and delivery of such Shares pursuant thereto shall comply
with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Act, the rules and regulations
promulgated thereunder, the requirements of any stock exchange upon which
the Shares may then be listed, and applicable state securities laws, and
shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment
and without any present intention to sell or distribute such Shares if,
in the opinion of counsel for the Company, such a representation is
necessary or desirable under any of the aforementioned relevant
provisions of law.
20) RESERVATION OF SHARES
During the terms of this Plan, the Company will at all times reserve
and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
Inability of the Company to obtain from any regulatory body having
jurisdiction such authority as is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder shall
relieve the Company of any liability in respect of the non-issuance or
sale of such Shares as to which such requisite authority shall not have
been obtained.
21) GOVERNING LAW
The Plan and the rights of all persons hereunder shall be governed
by the laws of the State of Connecticut, without regard to principles of
conflict of laws.
22) MISCELLANEOUS
Participation under the Plan shall not affect eligibility for any
profit-sharing, bonus, insurance, pension, or other extra compensation
plan which the Company or any subsidiary may at any time adopt for
employees, except to the extent that any law or regulation governing any
such plan so provides. By acceptance of a grant of an Option or
Restricted Stock Award under the Plan, each employee shall be deemed to
agree that any income realized upon the receipt or exercise thereof or
upon the disposition of the shares received pursuant thereto is special
incentive compensation and will not be taken into account as "wages",
"salary" or "compensation" in determining the amount of any payment under
any pension, retirement, incentive, profit-sharing, employee stock
purchase or deferred compensation plan of the Company or any subsidiary.
<PAGE>
23) SHAREHOLDER'S APPROVAL
The Plan shall be subject to approval by the affirmative vote of the
holders of a majority of the shares of Common Stock present and voting at
a duly held shareholders' meeting within twelve (12) months before or
after adoption of the Plan by the Board and any Option or Restricted
Stock Award, granted hereunder prior to such approval shall be
conditioned thereon.
STOCK\SOP-96.EDG/p
<PAGE> P R O X Y
___________
Photronics, Inc.
1996 Annual Meeting of Shareholders
March 20, 1996
___________________________________________________
The undersigned hereby appoints Constantine S. Macricostas, Michael J.
Yomazzo and Jeffrey P. Moonan, or any one or more of them acting in the
absence of the others, with full power of substitution, proxies for the
undersigned, to vote at the 1996 Annual Meeting of Shareholders of
Photronics, Inc. to be held at 2:00 p.m. on March 20, 1996 at The Crown
Sterling Suites, 901 Calaveras Boulevard, Milpitas, California 95035, and
at any adjournment or adjournments thereof according to the number of
votes the undersigned might cast and with all powers the undersigned
would possess if personally present.
1) To elect the following five (5) directors:
Walter M. Fiederowicz Masahiro Fujii Constantine S. Macricostas
Joseph A. Fiorita, Jr. Michael J. Yomazzo
/ / FOR all nominees listed above (except as marked to the
contrary below).
/ / Withhold authority to vote for all nominees listed above.
INSTRUCTION: To withhold authority to vote for any
individual nominee, print that nominee's name below:
___________________________________________________________
2) To approve the 1996 Stock Option Plan of the Company.
/ / FOR / / AGAINST / / ABSTAIN
3) To ratify the appointment of Deloitte & Touche LLP as the
independent certified public accountants of the Company
for the fiscal year ending October 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
4) To transact such other business as may properly come before the
meeting or any adjournments thereof.
(Please date and sign proxy card on other side)
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The shares represented by this proxy card will be voted (or not voted) on
Items 1, 2 and 3, as directed by the shareholder, but if no direction is
indicated, will be voted FOR each thereof. The management recommends a
vote FOR each of the proposals.
Please sign as name(s) appear hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such.
<PAGE>
____________________________________________________________________
Signature(s)
____________________________________________________________________
Signature(s)
Dated:____________________
Please mark, sign, date and return the proxy card using the enclosed
envelope.
