exhibit101gtatapplesettl







EXHIBIT 10.1      EXECUTION COPY   IN RE GT ADVANCED TECHNOLOGIES INC. ET AL.    (the “Company” or the “Debtors”)   TERMS OF RESOLUTION OF APPLE CLAIMS AND MESA LEASE ISSUES   November 2, 2015    INTRODUCTION   This agreement (the “Agreement”) among the Debtor signatories hereto and Apple Inc. and   certain of its affiliates (collectively, “Apple”) supersedes the Amended and Restated Adequate   Protection and Settlement Agreement (the “Settlement Agreement”), subject to the surviving   sections of the Settlement Agreement enumerated in Paragraph 14 of this Agreement, and   amends the Amended and Restated Facility Lease Agreement (the “Mesa Lease”) both dated as   of December 15, 2014, to the extend provided herein.  All capitalized terms used herein and not   otherwise defined will have the meanings ascribed to such terms in the Settlement Agreement   and the Mesa Lease, as applicable.   SETTLEMENT TERMS   1. The Agreement will become effective as of the date on which both (i) the Agreement is   approved by the Bankruptcy Court (the “Effective Date”) pursuant to an order   satisfactory to the parties hereto, and (ii) a waiver and amendment of the DIP Facility (as   defined below) is consummated in accordance with paragraph 17 below.   2. The Debtors will conduct an auction of the ASF Furnaces currently located in the Mesa   Facility pursuant to procedures approved by the Debtors, Apple and the DIP Lenders and   approved by the Bankruptcy Court pursuant to Bankruptcy Code section 363 (the “Sale   Auction”).  The Sale Auction shall take place on or prior to November 23, 2015 at the   Mesa Facility.  The Debtors shall have no obligation to sell any ASF Furnaces at the Sale   Auction.   3. The Debtors shall receive 50% of the Net Proceeds of all ASF Furnaces sold in such Sale   Auction (the “Sold Furnaces”), with the remaining 50% of Net Proceeds being distributed   to Apple.  For purposes of this Agreement, “Net Proceeds” means the proceeds from the   sale, lease or other transfer or disposition of ASF Furnaces or parts thereof to be received   by the Debtors or the DIP Lenders (or any other party if such sale would benefit the   Debtors or the DIP Lenders), net of all (a) reasonable costs associated with conducting   the Sale Auction, including any applicable commission payments, (b) reasonable storage   costs, (c) customary installation, logistics, or shipping charges, and (d) costs of any   replacement parts required to be purchased as part of fulfilling the sale, in each case with   respect to the ASF Furnaces sold.  For the avoidance of doubt, Net Proceeds shall   exclude any customary fees for support services, warranties, and post-sale services (all   such fees being consistent with past practices and in amounts not to exceed those listed   on Exhibit 1 hereto) provided by the Debtors to the buyer of ASF Furnaces and any items   that may accompany the sale of ASF Furnaces (such as mezzanines and start-up kits).    The Sold Furnaces shall be removed from the Mesa Facility by December 31, 2015.     





 







      2            4. The Debtors shall have the option, with the consent of the lenders (the “DIP Lenders”)   under that certain Senior Secured Superpriority Debtor-in-Possession Credit Agreement,   dated as of July 27, 2015, to retain any number of the ASF Furnaces currently located at   the Mesa Facility (the “Retained Furnaces”); provided, however, that the Debtors may   only retain in excess of 364 Retained Furnaces (such excess, the “Surplus Retained   Furnaces”) to the extent the Debtors believe, in good faith, that they will be able to sell   such Surplus Retained Furnaces, and have such furnaces removed from the Mesa Facility,   by December 31, 2015; provided further, however, that the Debtors agree to scrap by   December 31, 2015 any Surplus Retained Furnaces that are not, in fact, sold. The   proceeds, if any, from the scrapping of Retained Furnaces, net of the costs of such   scrapping, shall be distributed 50% to the Debtors and 50% to Apple. For all purposes   herein Surplus Retained Furnaces shall be deemed Retained Furnaces.  The Debtors shall   choose which ASF Furnaces are Retained Furnaces by close of business on November   25, 2015 and shall promptly begin removing such Retained Furnaces from the Mesa   Facility.  If the Debtors or the DIP Lenders (or any other party if such sale would benefit   the Debtors or the DIP Lenders) sell or otherwise dispose of, on or before December 15,   2018, any Retained Furnaces or any ASF Furnaces currently in inventory at the Debtors’   other facilities, the Debtors shall retain 50% of the Net Proceeds of such sale or   disposition, with the remaining 50% of Net Proceeds being distributed to Apple;   provided, however, that if GT Advanced Technologies Limited (“GT HK”) sells any of   its ASF Furnaces, GTAT Corporation (“GTAT Corp.”) shall pay Apple 50% of the Net   Proceeds of such sale instead of GT HK.  For the avoidance of doubt, (i) ASF Furnaces   not currently in existence shall not be subject to the sharing of Net Proceeds in this   Paragraph and (ii) GTAT’s obligation under this Paragraph to make distributions to   Apple on account of the sale or disposition of Retained Furnaces or any ASF Furnaces   currently in inventory at the Debtors’ other facilities terminates on December 15, 2018.    The Debtors agree not to sell any ASF Furnaces not currently in existence until after all   ASF Furnaces currently in the Debtors’ inventory have been sold or scrapped.  The   Debtors are not having any current discussions, negotiations, and have not reached any   understandings or agreements with any existing or prospective customers to sell ASF   Furnaces not currently in existence.  The Debtors shall provide to Apple and the   Collateral Agent a quarterly report regarding the sales of any ASF Furnaces, including   the number sold and sale prices, and Apple shall have the right to conduct an audit of   such sales and prices.   5. On November 25, 2015, title to any ASF Furnaces located at the Mesa Facility other than   the Sold Furnaces and the Retained Furnaces (such other ASF Furnaces, the “Excess   Furnaces”) shall immediately and automatically for no consideration and without need   for further order of the court transfer to Apple, free and clear of all liens, claims,   encumbrances and interests, including, without limitation, liens granted to secure the DIP   Facility and any Priming Financing.  In the event the Sale Auction does not take place on   or prior to November 23, 2015, all ASF Furnaces located at the Mesa Facility other than     





 







      3            the Retained Furnaces shall be deemed Excess Furnaces and title to such ASF Furnaces   shall immediately and automatically for no consideration and without the need for further   order of the court transfer to Apple, free and clear of any and all liens, claims,   encumbrances and interests, including, without limitation, liens granted to secure the DIP   Facility and any Priming Financing.    6. Apple agrees that it will scrap all of the Excess Furnaces and any other ASF Furnaces to   which it obtains title pursuant to this Agreement at its own cost and expense.  For the   avoidance of doubt, Apple shall only be permitted to scrap the Excess Furnaces and any   other furnace to which it obtains title pursuant to this Agreement and shall not be   permitted to use the Excess Furnaces or sell or transfer the Excess Furnaces except as   part of the scrapping process. The proceeds, if any, from the scrapping of Excess   Furnaces, net of the costs of such scrapping, shall be distributed 50% to the Debtors and   50% to Apple.         7. As of November 23, 2015, the Mesa Lease will be deemed amended without the need for   any further agreement to provide that (a) the Debtors’ obligation to pay Additional Rent   (as defined in the Mesa Lease) and for the cost of security at the Mesa Facility shall   terminate, (b) the Debtors shall have no further obligations to make any other payments   in connection with the Mesa Lease, including without limitation, any obligations to clean,   repair or refurbish the Mesa Facility or make utility payments with respect to the Mesa   Facility, and (c) Apple shall have no obligation to repair any portion of the Mesa Facility   that may have been damaged in the May 26, 2015 fire (the “Mesa Fire”).  For the   avoidance of doubt, the Debtors shall be entitled to any and all insurance proceeds from   insurance the Debtors maintain and for which the Debtors are the beneficiaries.  The   Debtors shall be required to maintain Minimum Insurance Requirements as set forth in   the Mesa Lease until such time as the Debtors have vacated the Mesa Facility.   8. On or prior to December 31, 2015 (the “Lease Expiration Date”), the Debtors shall   remove all Retained Furnaces from the Mesa Facility and surrender the entire Mesa   Facility to Apple.  Except as otherwise provided in this Agreement, all other terms and   conditions of the Mesa Lease will remain unchanged, including the Lease Expiration   Date.  Additionally, as of the Effective Date, the Warehouse Lease, dated as of December   15, 2014 (“Warehouse Lease”), will be deemed terminated and the rights and obligations   of each party thereunder shall be null and void.     9. In the event any Sold Furnaces or Retained Furnaces remain in the Mesa Facility after the   Lease Expiration Date, such ASF Furnaces shall be deemed Excess Furnaces and title to   such ASF Furnaces shall immediately and automatically for no consideration and without   the need for further order of the court transfer to Apple, free and clear of any and all lien,   claims, encumbrances and interests, including, without limitation, liens granted to secure   the DIP Facility and any Priming Financing, unless such Sold Furnaces or Retained     





 







      4            Furnaces were prevented from removal because of affirmative action by Apple that   materially and demonstrably prevented such removal.     10. Apple agrees, as of the Effective Date, that the Sold Furnaces, the Retained Furnaces and   any ASF Furnace not located at the Mesa Facility may be sold for less than the Apple   Repayment Amount, including for scrapping.      11. The Debtors shall have 30 days from the Effective Date to sell or remove Tenant’s   Property (other than ASF Furnaces) from the Mesa Facility.  In the event any Tenant’s   Property (other than ASF Furnaces) remains in the Mesa Facility after such 30-day   period, title to such remaining Tenant’s Property shall immediately and automatically and   without the need for further order of the court transfer to Apple, free and clear of any   liens, claims, encumbrances and interests, including, without limitation, liens granted to   secure the DIP Facility and any Priming Facility in such furnaces and other personal   property.  For the avoidance of doubt, Tenant’s Property shall include, without limitation,   all mezzanines, connections and ancillary equipment supporting the ASF Furnaces   located in the Mesa Facility, meltstock, and the Mesa Equipment, including all Meyer   Burger cutting and other fabrication and inspection equipment.   12. Other than as provided in Paragraphs 3 and 4 hereof, and any provision hereof to which   title to the ASF Furnaces or other property is transferred to Apple, Apple shall not receive   any further distributions from the Debtors’ bankruptcy estates or their successors,   whether under a chapter 11 plan or otherwise, and shall not assert any claims against   GTAT or its successors other than claims arising after the date hereof or based on a   breach of the Agreement.      13. Apple will, as of November 23, 2015, release and discharge any and all liens and security   interests in property of the Debtors’ estates.  For the avoidance of doubt, any rights in   favor of Apple under the Order Pursuant to Bankruptcy Code Sections 105, 361, 362,   363(b), 363(c), 363(e), 364, 503(b), and 507 and Bankruptcy Rules 2002, 4001, 6004(h),   and 9014: (I) Authorizing Debtors to Obtain Postpetition Financing; (II) Granting Liens   and Super-Priority Claims; (III) Authorizing Debtors to Pay Put Option Premium and   Expense Reimbursement; (IV) Approving Information Sharing Obligations and Indemnity   Thereunder; and (V) Granting Related Relief [Docket No. 2122] (the “DIP Order”), or   the “DIP Documents” (as defined in the DIP Order) shall be terminated.     14. Except as otherwise provided herein and with respect to enforcement of this Agreement,   each party shall, as of the Effective Date, release and forever discharge the other for any   and all claims, losses, liabilities, damages and causes of action, whether known or   unknown, relating to the Settlement Agreement, the Mesa Lease, including, without   limitation, the Mesa Fire, the Warehouse Lease, the Apple Contracts and any other aspect   of their business relationship; provided, however, that nothing herein releases any party   hereto from any liability to the other for claims arising after the date hereof; provided     





 







      5            further, however, that sections 1(a), 1(b), 1(c), 4(a), 4(b), 4(d), 4(e), 4(f), 5, 6 and 9 of the   Settlement Agreement shall not be affected by the foregoing release, and all other   provisions of the Settlement Agreement will be deemed terminated and shall be of no   force and effect commencing on the Effective Date.     15. After title to the Excess Furnaces passes to Apple, the Debtors may cancel any property   insurance policies related to the Excess Furnaces, after title to any Tenant’s Property   (other than ASF Furnaces) passes to Apple, the Debtors may cancel any property   insurance policies related to any Tenant’s Property (other than ASF Furnaces) that   remains on the Mesa Facility after 30 days after the Effective Date.   16. For the avoidance of doubt, the transfer of title of Excess Furnaces and any other assets to   Apple under this Agreement is to facilitate disposal of such assets and not in repayment   of debt.   17. Apple’s non-recourse claim in the amount of $439 million pursuant to the Settlement   Agreement shall be deemed satisfied and expunged as of the Effective Date in exchange   for the right of Apple, under this Agreement, to receive 50% of the Net Proceeds from   Sold Furnaces and future sales or dispositions of the Retained Furnaces or any ASF   Furnaces currently in inventory at the Debtors’ other facilities.   18. The Agreement shall be binding on any chapter 7 trustee appointed for the Debtors.   19. The effectiveness of the Agreement shall be subject to the consummation of a waiver and   amendment with respect to the DIP Facility (as defined in the DIP Order), which waiver   and amendment shall be in form and substance acceptable to the Required Lenders.    20. 34 of the Retained Furnaces shall be held by the Debtors subject to the contingent interest   granted to Tera Xtal Technology Corp. (“TXT”) in paragraph 13 of the Order Pursuant   to Bankruptcy Code Sections 105, 361, 363(b), 364, and 365 and Bankruptcy Rule 9019   Approving the Terms of and Authorizing Debtors to Enter Into Adequate Protection and   Settlement Agreement with Apple [Docket No. 819].  Therefore, until and unless the   Bankruptcy Court holds that TXT has no interest in such ASF Furnaces, the sale of such   34 ASF Furnaces shall not trigger the application of the sharing formula in Paragraphs 3   and 4 hereof; provided that the Debtors will endeavor to sell such 34 ASF Furnaces after   any ASF Furnace on which TXT does not have a contingent interest.   21. The Debtors will amend the Intercompany Settlement Agreement, dated as of July 20,   2015, by and among GT HK, GTAT Corp., and GT Advanced Equipment Holding LLC,   and the ancillary documents and exhibits related thereto (collectively, the “Intercompany   Settlement Agreement”) to reflect this Agreement prior to the Effective Date of this   Agreement, which amendment shall be in form and substance acceptable to the Required   Lenders as provided under the DIP Documents.      





 







      6            22. The Debtors shall pay to Apple its share of the Net Proceeds from the sale of each ASF   Furnace in accordance with this Agreement within three (3) business days of the receipt   of the proceeds of such sale.  Payments of 50% of the proceeds from the scrapping of   ASF Furnaces (net of the costs of such scrapping), as specified in this Agreement, shall   be made to the party entitled thereto promptly after receipt of such net proceeds by the   party arranging for such scrapping.   23. This Agreement and the rights and obligations of the parties will be governed and   construed and enforced in accordance with the laws of the State of New York, without   regard to conflicts of law principles.   24. This Agreement may not be amended except as agreed to in writing by all parties.   25. The terms of this Agreement shall be incorporated into a motion and proposed order to be   submitted as soon as possible to the Bankruptcy Court.  Such motion and proposed order   shall be in form and substance satisfactory to the parties to this Agreement.      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as   of the date first written above.       APPLE INC.    By:  /s/James Fowler    Name: James Fowler   Title: Assistant Secretary        PLATYPUS DEVELOPMENT LLC    By:  /s/ Gene Daniel Levoff    Name: Gene Daniel Levoff   Title: Authorized Person                     





 







      7             GTAT CORPORATION       By:  /s/Hoil Kim     Name: Hoil Kim   Title: Vice President, Chief                Administrative Officer,               General Counsel and               Secretary       GT ADVANCED TECHNOLOGIES   INC.       By:  /s/Hoil Kim    Name: Hoil Kim    Title: Vice President, Chief                Administrative Officer,               General Counsel and               Secretary       GT ADVANCED EQUIPMENT   HOLDING LLC       By:  /s/Hoil Kim    Name: Hoil Kim    Title: Manager              





 







      8             GT EQUIPMENT HOLDINGS, INC.       By:  /s/Hoil Kim    Name: Hoil Kim    Title: Vice President and Secretary        LINDBERGH ACQUISITION   CORP.       By:  /s/Hoil Kim    Name: Hoil Kim    Title: Vice President, General                Counsel and Secretary       GT SAPPHIRE SYSTEMS   HOLDING LLC       By:  /s/Hoil Kim    Name: Hoil Kim    Title: Vice President, General                Counsel and Secretary       GT ADVANCED CZ LLC       By:  /s/Hoil Kim    Name: Hoil Kim    Title: Vice President, General                Counsel and Secretary        





 







      9             GT SAPPHIRE SYSTEMS GROUP   LLC       By:  /s/Hoil Kim    Name: Hoil Kim    Title: Vice President, General                Counsel and Secretary           





 







   Exhibit 1 – Exclusions from Net Proceeds   1)       Installation charges of up to $25,000 per ASF Furnace.   2)       Warranty service charges of up to (a) $20,000 per ASF Furnace currently located in   Mesa, Arizona, and (b) $10,000 per ASF Furnace currently located in the Debtors’ other   facilities.     3)       Shipping charges of up to (a) $10,000 per ASF Furnace currently located in the United   States, and (b) up to $5,000 per ASF Furnace currently located in the Debtors’ other   facilities.   4) Reasonable commissions, if any, to be paid to third parties to facilitate the sale of ASF   Furnaces.