Document:

ex103gtatprioritynote

EXECUTION VERSION   PRIORITY NOTE   $22,500,000.00 July 20, 2015   For value received, GT Advanced Technologies Limited (“GT Hong Kong” or “Maker”),   a Hong Kong limited liability company, hereby promises to pay to GTAT Corporation, a   Delaware corporation (“GTAT Corp.” and, together with any transferee permitted under the   terms hereof, “Holder”), no event later than the Maturity Date (as defined herein), the principal   amount of $22,500,000.00, together with interest thereon calculated in accordance with the   provisions of this promissory note (as amended, restated, supplemented, or otherwise modified   from time to time, the “Note”).   1. Definitions.   1.1 “2010 Services Agreement” means that certain Management and Administrative   Services Agreement, effective as of July 5, 2010, between GTAT Corp. and GT Hong Kong, as   amended by that certain First Amendment to Management and Administrative Services   Agreement (Effective as of July 5, 2010), dated as of July 20, 2015.   1.2 “2011 Services Agreement” means that certain Management and Administrative   Services Agreement, effective as of April 3, 2011, between GTAT Corp. and GT Hong Kong, as   amended by that certain First Amendment to Management and Administrative Services   Agreement (Effective as of April 3, 2011), dated as of July 20, 2015.   1.3 “ASF Furnaces” means advanced sapphire furnaces.   1.4 “ASF License Agreement” means that certain License Agreement, by and   between GTAT Corp. and GT Hong Kong, effective as of April 1, 2011, as modified by that   certain Sapphire Transfer Pricing Analysis and Report for the Fiscal Year Ended March 31,   2012, issued January 21, 2013, and as amended by that certain First Amendment to ASF License   Agreement, dated as of July 20, 2015.   1.5 “Bankruptcy Code” means title 11 of the United States Code, as in effect from   time to time.   1.6 “Business Day” means any day that is not a Saturday, Sunday, or other day on   which banks are authorized or required to close in the state of New York.   1.7 “Chapter 11 Cases” means the voluntary chapter 11 bankruptcy cases initiated by   GT Advanced Technologies Inc. and its affiliated debtors in the Court, which are jointly   administered under Case No. 14-11916-HJB.   1.8 “Contingent Note” means that certain Contingent Note made by GT Hong Kong   in favor of GTAT Corp. of even date herewith (as amended, restated, supplemented, or otherwise   modified from time to time).     

 

2   1.9 “Cost Sharing Agreement” means that certain Agreement  for Sharing   Development Costs, by and between GTAT Corp. and GT Hong Kong, effective as of April 1,   2011, as amended by that certain First Amendment to Cost Sharing Agreement, dated as of July   20, 2015.    1.10 “Court” means the United States Bankruptcy Court for the District of New   Hampshire.   1.11 “Debenture” means that certain Debenture between GT Hong Kong, GTAT   Corp., and GT SPE, dated as of July 20, 2015.   1.12 “Debtors” means GT Advanced Technologies Inc. and its affiliated debtors in the   Chapter 11 Cases.   1.13 “DIP Financing” means the debtor in possession financing to be provided by   certain holders of the 3.00% Senior Convertible Notes due 2017 and 3.00% Senior Convertible   Notes issued by GT Advanced Technologies Inc.   1.14 “Dollars” or “$” means United States dollars.   1.15 “Event of Default” has the meaning set forth in Section 7.1 hereof.   1.16 “GT SPE” means GT Advanced Equipment Holding LLC.   1.17 “Intercompany Settlement Agreement” means that certain Intercompany   Settlement Agreement, dated July 20, 2015, by and among GTAT Corp., GT Hong Kong, and   GT SPE.   1.18 “Intercompany Sales Agreement” means that certain Intercompany Sales   Agreement, dated July 20, 2015, by and among GTAT Corp., GT Hong Kong, and GT SPE.   1.19 “Maturity Date” means the earlier of the (i) date on which an Event of Default   occurs and (ii) date that is two years from the date hereof.    1.20 “Obligations” means all principal, interest, fees (if any), charges, expenses,   attorneys’ fees, and any other sum chargeable to Maker under this Note.   1.21 “Poly/DSS License Agreement” means that certain License Agreement, by and   between GTAT Corp. and GT Hong Kong, effective as of July 5, 2010, as amended by that   certain Amendment No. 1 to License Agreement, effective as of April 3, 2011, as further   modified by that certain Polysilicon Transfer Pricing Analysis and Report for the Calendar Year   Ended December 31, 2013), and as further amended by that certain First Amendment to   Poly/DSS License Agreement, dated as of July 20, 2015.   1.22 “Priority Note Collateral” means all of GT Hong Kong’s assets, whether   consisting of real, personal, tangible, or intangible property (including 100% of the outstanding   share of capital stock of any subsidiaries of GT Hong Kong and any and all intercompany claims     

 

3   and receivables, whether arising prior to the date hereof or thereafter) and, in each case, the   proceeds of any of the foregoing.   2. Interest.  The Note shall bear interest on the outstanding principal amount thereof at a   rate per annum equal to 12.5%, to be paid in kind on a monthly basis; provided that any such   interest paid in kind shall accrue and be capitalized and be added to the aggregate principal   balance of this Note in arrears on a monthly basis.   3. Payment of Principal and Interest on Note.   3.1 Payment on Maturity Date.  On the Maturity Date, Maker shall pay, in cash, the   outstanding principal and accrued interest on this Note.     3.2 No Amortization.  This Note shall not amortize prior to the Maturity Date.   3.3 No Prepayment.  This Note may not be voluntarily prepaid prior to the Maturity   Date.   4. Treatment of Note; Set-Off; Taxes.     4.1 The Obligations incurred under this Note shall be treated as allowed   administrative expense claims under sections 503(b) and 507(a)(2) of the Bankruptcy Code   against Maker in the Chapter 11 Cases, which allowed claim shall not be subject to setoff or   recoupment.   4.2 All payments to be made to Holder under this Note shall be made free and clear of   and (save as required by law) without any deduction for or on account of any tax, withholding,   charges, set-off or counterclaim (except for any income or profit tax).  If Maker is required by   law to make a deduction or withholding (except for any income or profit tax) from any payment   made under this Note, then the sum payable by Maker in respect of which such deduction or   withholding is required to be made shall be increased to the extent necessary to ensure that, after   the making of such deduction or withholding (including any deduction or withholding applicable   to additional sums payable under this Section 4.2), Holder receives and retains (free from any   liability in respect of any such deduction or withholding) a net sum equal to the sum which it   would have received and so retained had no such deduction or withholding been made or been   required to be made.  If Maker makes any payment under this Note in respect of which it is   required by law to make any deduction or withholding (except for any income or profit tax), then   it shall pay the full amount to be deducted or withheld to the relevant taxation or other authority   within the time allowed for such payment under applicable law and shall deliver to Holder,   within thirty (30) calendar days after it has made such payment to the applicable authority, an   original receipt or other appropriate evidence issued by such authority evidencing the payment to   such authority of all amounts so required to be deducted or withheld from such payment.   4.3 For the avoidance of doubt, Holder shall have full recourse to Maker for the   outstanding amount of the Obligations.     

 

4   5. Covenants   5.1 Total cash disbursements made by GT Hong Kong, excluding, without   duplication, (i) cash expenditures with respect to fully executed purchase orders that will be   accounted for as costs of goods sold when revenue is recognized, provided, that for cash   expenditures beginning on July 1, 2015, such expenditures related to each fully executed   purchase order shall not exceed the total revenue to be recognized over the life of the applicable   fully executed purchase order (irrespective of any required revenue deferrals), (ii) payments to   GTAT Corp. and any cash withholding taxes related to such payments that are royalty payments,   (iii) costs related directly to the shipping and installation of sold ASF Furnaces and sold furnace   components (including cash taxes related directly to such shipping and installation), (iv) costs   related directly to seed purchases pursuant to the Seed Agreement (as defined in the Debtors’   motion, dated March 30, 2015 [Docket No. 1544]), and (v) payments of certain amounts to Kerry   Logistics in accordance with the Stipulation and Agreed Order entered by the Bankruptcy Court   [Docket No. 1668], shall not exceed (a) $4.5 million in Q3 fiscal year 2015 (commencing July 5,   2015 and ending September 26, 2015), (b) $3.75 million in Q4 fiscal year 2015 (commencing   September 27, 2015 and ending December 31, 2015), and (c) $2.50 million per every fiscal   quarter thereafter (Q1 fiscal year 2016 commencing January 1, 2016 and ending April 2, 2016   and Q2 fiscal year 2016 commencing April 3, 2016 and ending July 2, 2016).   5.2 GT Hong Kong shall provide monthly cash reports to GTAT Corp. with copies to   the legal and financial advisors of GTAT Corp., GT SPE, the lenders under the DIP Financing,   and the official committee of unsecured creditors appointed in the Chapter 11 Cases.   6. Security Interest   6.1 Maker hereby grants to Holder a first priority security interest in the Priority Note   Collateral to secure all of Maker’s Obligations.  Maker hereby authorizes Holder to file financing   statements describing the Priority Note Collateral and to take any and all other steps necessary or   advisable to perfect or protect such security interest.   6.2 To secure all of Maker’ Obligations, Maker also grants to Holder a floating   charge in the Priority Note Collateral, pursuant to the Debenture; provided, however, that   nothing in the Debenture shall be deemed or interpreted to modify the rights set forth in this   Note.   6.3 The security interest securing this Note shall be (i) senior to the security interest   securing the Contingent Note and (ii) senior to the security interest securing the Intercompany   Sales Agreement.    6.4 Maker agrees to execute any further documents, and to take any further actions,   reasonably requested by Holder to evidence or perfect the security interests granted under this   Article 6, to maintain the perfection and priority of these security interests, or to effectuate the   rights granted to Holder in this Article 6.     

 

5   7. Events of Default.   7.1 Definition.  For purposes of this Note, an “Event of Default” shall be deemed to   have occurred if:   (a) Maker fails to pay at the Maturity Date the full amount of principal   payment and interest then accrued on this Note;    (b) An Event of Default has occurred under the Contingent Note;   (c) GT Hong Kong is in material breach of any of its obligations under this   Note (other than the failure to pay at the Maturity Date the full amount of principal and interest   then accrued on this Note), the Intercompany Settlement Agreement, the ASF License   Agreement, the Cost Sharing Agreement, the Poly/DSS License Agreement, the 2010 Services   Agreement, or the 2011 Services Agreement, and such breach is not cured within 10 days after   GTAT Corp. provided notice of such breach to GT Hong Kong;    (d) GTAT Corp. and its direct and indirect subsidiaries organized in the   United States have less than $22,500,000 in unrestricted cash;   (e) The Bankruptcy Court enters an order authorizing the sale of all or   substantially all assets of GTAT Corp. at a time when the DIP Financing will not have been   repaid in full on or before consummation of such a sale; or   (f) The Chapter 11 Case of either GTAT Corp. or GT Hong Kong is   converted to a case under chapter 7 of the Bankruptcy Code.   7.2 Consequences of Events of Default.   (a) If an Event of Default has occurred, the aggregate principal amount of this   Note (together with all accrued interest thereon and all other amounts due and payable with   respect thereto) shall become immediately due and payable without any action on the part of   Holder, and Maker shall immediately pay to Holder all amounts due and payable with respect to   this Note.   (b) If an Event of Default has occurred, Holder may pursue any and all   remedies available at law (including, but not limited to, those available under the provisions of   the New York Uniform Commercial Code and those set forth in the Debenture) or in equity to   enforce the security interests granted hereunder by Maker to Holder, including, without   limitation:   (i) file suit and obtain judgment and, in conjunction with any action,   seek any ancillary remedies provided by law, including levy of   attachment and garnishment,   (ii) demand that Maker make the Priority Note Collateral available to   Holder as it may direct (and Maker hereby agrees to comply with   such demand), and       

 

6   (iii) with or without taking possession, sell, lease, or otherwise dispose   of the Priority Note Collateral at public or private sale in   accordance with the New York Uniform Commercial Code,   which remedies may be pursued separately, successively, or simultaneously.   (c) Holder shall also have any other rights that Holder may have been   afforded under any contract or agreement at any time and any other rights that Holder may have   pursuant to applicable law.   (d) Maker hereby waives diligence, presentment, protest and demand, and   notice of protest and demand, dishonor, and nonpayment of this Note, and expressly agrees that   this Note, or any payment hereunder, may be extended from time to time and that Holder hereof   may accept security for this Note or release security for this Note, all without in any way   affecting the liability of Maker hereunder.   (e) The rights and remedies of Holder under this Note are cumulative.  Holder   shall have all other rights and remedies not inconsistent herewith as provided under the New   York Uniform Commercial Code, by law, or in equity.  No exercise by Holder of one right or   remedy shall be deemed an election, and no waiver by Holder of any Event of Default shall be   deemed a continuing waiver.  No delay by Holder shall constitute a waiver, election, or   acquiescence by it.   8. Attorney’s Fees.  Maker agrees to pay or reimburse upon demand Holder for all of its   reasonable out-of-pocket costs and expenses (including reasonable attorney’s fees) incurred in   connection with the enforcement of Maker’s Obligations or the exercise of any rights or   remedies hereunder or under applicable law, including, without limitation, the exercise of rights   and remedies with respect to the Priority Note Collateral.   9. Amendment and Waiver.  Except as otherwise expressly provided herein, the   provisions of this Note may be amended and Maker may take any action herein prohibited, or   omit to perform any act herein required to be performed by it, if Maker has obtained the written   consent of Holder of this Note.   10. Assignment and Transfer.  Holder may assign at any time (or grant a participation   interest at any time in) this Note to any of its affiliates, any financial institutions, or any other   person (including upon enforcement of rights by any secured creditor of the Holder), in which   event, the assignee shall have, to the extent of such assignment, the same rights and benefits as it   would if it were Holder, except as otherwise provided by the terms of such assignment or   participation.   11. Cancellation.  After all principal and accrued interest at any time owed on this Note has   been paid in full, this Note shall be surrendered to Maker for cancellation and shall not be   reissued.   12. Payments.  All payments to be made to Holder shall be made in the lawful money of the   United States of America in immediately available funds.     

 

7   13. Place of Payment.  Payments of principal and interest shall be delivered to Holder at   such address as is specified by prior written notice by Holder.   14. Governing Law.  All questions concerning the construction, validity, and interpretation   of this Note will be governed by and construed in accordance with the domestic laws of the State   of New York, without giving effect to any choice of law or conflict of law provision or rule   (whether of the State of New York or any other jurisdiction) that would cause the application of   the laws of any jurisdiction other than the State of New York.   15. Loss, Theft, Destruction, or Mutilation of Note.  Upon receipt by Maker of evidence   reasonably satisfactory to Maker of the loss, theft, destruction or mutilation of this Note, and, in   case of loss, theft or destruction, upon receipt of indemnity or security reasonably satisfactory to   Maker or, in case of mutilation, upon surrendering this Note for cancellation, and upon   reimbursement to Maker of all reasonable expenses incidental thereto, Maker will make and   deliver a new note of like tenor in lieu of this Note.  Any note made and delivered in accordance   with the provisions of this paragraph shall be dated as of the date hereof.   16. Waiver of Presentment, Demand, and Dishonor.  Maker hereby waives presentment   for payment, protest, demand, notice of protest, notice of nonpayment, and diligence with respect   to this Note, and waives and renounces all rights to the benefits of any statute of limitations or   any moratorium, appraisement, exemption, or homestead now provided or that hereafter may be   provided by any federal or applicable state statute, including, but not limited to, exemptions   provided by or allowed under the Bankruptcy Code, both as to itself and as to all of its property,   whether real or personal, against the enforcement and collection of the obligations evidenced by   this Note and any and all extensions, renewals, and modifications hereof.   17. Usury Laws.  It is the intention of the Maker and Holder to conform strictly to all   applicable usury laws now or hereafter in force, and any interest payable under this Note shall be   subject to reduction to the amount not in excess of the maximum legal amount allowed under the   applicable usury laws as now or hereafter constructed by the courts having jurisdiction over such   matters.  If the maturity of this Note is accelerated by reason of an Event of Default or otherwise,   then earned interest may never include more than the maximum amount permitted by law,   computed from the date hereof until payment, and any interest in excess of the maximum amount   permitted by law shall be canceled automatically and, if theretofore paid, shall, at the option of   Holder, either be rebated to Maker or credited on the principal amount of this Note, or if this   Note has been paid, then the excess shall be rebated to Maker.  The aggregate amount of all   interest (whether designated as interest, service charges, points, or otherwise) contracted for,   chargeable, or receivable under this Note shall under no circumstances exceed the maximum   legal rate upon the unpaid principal balance of this Note remaining unpaid from time to time.  If   such interest does exceed the maximum legal rate, it shall be deemed a mistake and such excess   shall be canceled automatically and, if theretofore paid, rebated to Maker or credited on the   principal amount of this Note, or if this Note has been repaid, then such excess shall be rebated   to Maker.   18. Waiver of Jury Trial; Consent to Jurisdiction.  Maker (and, by virtue of its acceptance   hereof, Holder) hereby irrevocably waive all right to trial by jury in any litigation, action,   proceeding, cross-claim, or counterclaim in any court (whether based on contract, tort, or     

 

8   otherwise) arising out of, relating to, or in connection with (a) this Note or the validity,   performance, interpretation, collection, or enforcement hereof or (b) the actions of such party in   the negotiation, authorization, execution, delivery, administration, performance, or enforcement   hereof.  Maker (and, by virtue of its acceptance hereof, Holder) further hereby waive any right of   offset or right to interpose any counterclaim in any such action, except for compulsory   counterclaims.  All actions and proceedings arising out of or relating to this Agreement shall be   heard and determined in the Bankruptcy Court, or if the Bankruptcy Court no longer has   jurisdiction or abstains, then in the state courts of New York sitting in New York City in the   Borough of Manhattan or, to the extent subject matter jurisdiction exists therefor, the United   States District Court for the Southern District of New York, and the Maker and Holder   irrevocably submit to the exclusive jurisdiction of such courts in respect of any such actions or   proceedings.         [Remainder of Page Intentionally Left Blank]ex104gtatcontingentnote

EXECUTION VERSION      CONTINGENT NOTE   $130,000,000.00 July 20, 2015   For value received, GT Advanced Technologies Limited (“GT Hong Kong” or “Maker”),   a Hong limited liability company, hereby promises to pay to GTAT Corporation, a Delaware   corporation (“GTAT Corp.” and, together with any transferee permitted under the terms hereof,   “Holder”), the principal amount of $130,00,000.00, together with interest thereon calculated in   accordance with the provisions of this promissory note (as amended, restated, supplemented, or   otherwise modified from time to time, the “Note”).   1. Definitions.   1.1 “2010 Services Agreement” means that certain Management and Administrative   Services Agreement, effective as of July 5, 2010, between GTAT Corp. and GT Hong Kong, as   amended by that certain First Amendment to Management and Administrative Services   Agreement (Effective as of July 5, 2015), dated as of July 20, 2015.   1.2 “2011 Services Agreement” means that certain Management and Administrative   Services Agreement, effective as of April 3, 2011, between GTAT Corp. and GT Hong Kong, as   amended by that certain First Amendment to Management and Administrative Services   Agreement (Effective as of April 3, 2011), dated as of July 20, 2015.   1.3 “ASF Furnaces” means advanced sapphire furnaces.   1.4 “ASF Furnace Sale” means the sale of any ASF Furnace by GT Hong Kong,   regardless of whether such ASF Furnace is or was owned by GTAT Corp., GT Hong Kong, or   GT SPE.   1.5 “ASF License Agreement” means that certain License Agreement, by and   between GTAT Corp. and GT Hong Kong, effective as of April 1, 2011, as modified by that   certain Sapphire Transfer Pricing Analysis and Report for the Fiscal Year Ended March 31,   2012, issued January 21, 2013, and as amended by that certain First Amendment to ASF License   Agreement, dated as of July 20, 2015.   1.6 “Bankruptcy Code” means title 11 of the United States Code, as in effect from   time to time.   1.7 “Business Day” means any day that is not a Saturday, Sunday, or other day on   which banks are authorized or required to close in the state of New York.   1.8 “Chapter 11 Cases” means the voluntary chapter 11 bankruptcy cases initiated by   GT Advanced Technologies Inc. and its affiliated debtors in the Court, which are jointly   administered under Case No. 14-11916-HJB.     

 

2   1.9 “Contingent Note Collateral” means (i) 100% of the amount of proceeds from   ASF Furnace Sales received by GT Hong Kong that is owed to GTAT Corp. under the terms of   the Intercompany Settlement Agreement, (ii) 100% of the amount of proceeds from ASF Furnace   Sales received by GT Hong Kong that is owed to GT SPE under the terms of the Intercompany   Settlement Agreement and (iii) 50% of the amount of proceeds from ASF Furnace Sales retained   by GT Hong Kong, and any proceeds of the foregoing; all subject to a carve-out for the benefit   of GT Hong Kong of up to $10 million.   1.10 “Contingent Payment” has the meaning set forth in the Intercompany Settlement   Agreement.   1.11 “Cost Sharing Agreement” means that certain Agreement  for Sharing   Development Costs, by and between GTAT Corp. and GT Hong Kong, effective as of April 1,   2011, as amended by that certain First Amendment to Cost Sharing Agreement, dated as of July   20, 2015.    1.12 “Court” means the United States Bankruptcy Court for the District of New   Hampshire.   1.13 “Debenture” means that certain Debenture between GT Hong Kong, GTAT   Corp., and GT SPE, dated as of July 20, 2015.   1.14 “Debtors” means GT Advanced Technologies Inc. and its affiliated debtors in the   Chapter 11 Cases.   1.15 “DIP Financing” means the debtor in possession financing to be provided by   certain holders of the 3.00% Senior Convertible Notes due 2017 and 3.00% Senior Convertible   Notes issued by GT Advanced Technologies Inc.   1.16 “Dollars” or “$” means United States dollars.   1.17 “Event of Default” has the meaning set forth in Section 7.1 hereof.   1.18 “GT SPE” means GT Advanced Equipment Holding LLC.   1.19 “Intercompany Sales Agreement” means that certain Intercompany Sales   Agreement, dated July 20, 2015, by and among GTAT Corp., GT Hong Kong, and GT SPE.   1.20 “Intercompany Settlement Agreement” means that certain Intercompany   Settlement Agreement, dated July 20, 2015, by and among GTAT Corp., GT Hong Kong, and   GT SPE.   1.21 “Priority Note” means that certain Priority Note made by GT Hong Kong in favor   of GTAT Corp. of even date herewith (as amended, restated, supplemented, or otherwise   modified from time to time).   1.22 “Obligations” means all principal, interest, fees (if any), charges, expenses,   attorneys’ fees, and any other sum chargeable to Maker under this Note.     

 

3   1.23 “Poly/DSS License Agreement” means that certain License Agreement, by and   between GTAT Corp. and GT Hong Kong, effective as of July 5, 2010, as amended by that   certain Amendment No. 1 to License Agreement, effective as of April 3, 2011, as further   modified by that certain Polysilicon Transfer Pricing Analysis and Report for the Calendar Year   Ended December 31, 2013), and as further amended by that certain First Amendment to   Poly/DSS License Agreement, dated as of July 20, 2015.   1.24 “Recourse Sub-Obligation” shall mean $45,000,000.00 of the principal amount of   this Note.   2. Interest.  The Note shall bear interest on the outstanding principal amount thereof at a   rate per annum equal to 12.5%, to be paid in kind on a monthly basis, provided that any such   interest paid in kind shall accrue and be capitalized and be added to the aggregate principal   balance of this Note in arrears on a monthly basis.   3. Payment of Principal and Interest on Note.   3.1 Scheduled Payments.  This Note shall amortize solely by application of the   Contingent Payment in accordance with the Intercompany Settlement Agreement.   3.2 Application of Payments.  Payments under this Note shall be applied (a) first, to   the payment of accrued interest hereunder until all such interest is paid, and (b) second, to the   repayment of the principal outstanding hereunder.    4. Treatment of Note; Set-Off; Taxes   4.1 The obligations of GT Hong Kong to pay the Contingent Payments under the   Contingent Note when due and payable, shall be treated as allowed administrative expense   claims under sections 503(b) and 507(a)(2) of the Bankruptcy Code against GT Hong Kong in   the Chapter 11 Cases.  The Obligations under the Contingent Note shall not be subject to setoff   or recoupment.   4.2 All payments to be made to Holder under this Note shall be made free and clear of   and (save as required by law) without any deduction for or on account of any tax, withholding,   charges, set-off or counterclaim (except for any income or profit tax).  If Maker is required by   law to make a deduction or withholding (except for any income or profit tax) from any payment   made under this Note, then the sum payable by Maker in respect of which such deduction or   withholding is required to be made shall be increased to the extent necessary to ensure that, after   the making of such deduction or withholding (including any deduction or withholding applicable   to additional sums payable under this Section 4.3), Holder receives and retains (free from any   liability in respect of any such deduction or withholding) a net sum equal to the sum which it   would have received and so retained had no such deduction or withholding been made or been   required to be made.  If Maker makes any payment under this Note in respect of which it is   required by law to make any deduction or withholding (except for any income or profit tax), then   it shall pay the full amount to be deducted or withheld to the relevant taxation or other authority   within the time allowed for such payment under applicable law and shall deliver to Holder,   within thirty (30) calendar days after it has made such payment to the applicable authority, an     

 

4   original receipt or other appropriate evidence issued by such authority evidencing the payment to   such authority of all amounts so required to be deducted or withheld from such payment.   5. Covenants   5.1 Total cash disbursements made by GT Hong Kong, excluding, without   duplication, (i) cash expenditures with respect to fully executed purchase orders that will be   accounted for as costs of goods sold when revenue is recognized, provided, that for cash   expenditures beginning on July 1, 2015, such expenditures related to each fully executed   purchase order shall not exceed the total revenue to be recognized over the life of the applicable   fully executed purchase order (irrespective of any required revenue deferrals), (ii) payments to   GTAT Corp. and any cash withholding taxes related to such payments that are royalty payments,   (iii) costs related directly to the shipping and installation of sold ASF Furnaces and sold furnace   components (including cash taxes related directly to such shipping and installation), (iv) costs   related directly to seed purchases pursuant to the Seed Agreement (as defined in the Debtors’   motion, dated March 30, 2015 [Docket # 1544]), and (v) payments of certain amounts to Kerry   Logistics in accordance with the Stipulation and Agreed Order entered by the Bankruptcy Court   [Docket # 1668], shall not exceed (a) $4.5 million in Q3 fiscal year 2015 (commencing July 5,   2015 and ending September 26, 2015), (b) $3.75 million in Q4 fiscal year 2015 (commencing   September 27, 2015 and ending December 31, 2015), and (c) $2.50 million per every fiscal   quarter thereafter (Q1 fiscal year 2016 commencing January 1, 2016 and ending April 2, 2016   and Q2 fiscal year 2016 commencing April 3, 2016 and ending July 2, 2016).   5.2 GT Hong Kong shall provide monthly cash reports to GTAT Corp. with copies to   the legal and financial advisors of GTAT Corp., GT SPE, the lenders under the DIP Financing,   and the official committee of unsecured creditors appointed in the Chapter 11 Cases.   6. Security Interest   6.1 Maker hereby grants to Holder a security interest in the Contingent Note   Collateral to secure all of Maker’s Obligations.  Maker hereby authorizes Holder to file financing   statements describing the Contingent Note Collateral and to take any and all other steps   necessary or advisable to perfect or protect such security interest.     6.2 To secure all of Maker’ Obligations, Maker also grants to Holder a floating   charge in the Contingent Note Collateral, pursuant to the Debenture; provided, however, that   nothing in the Debenture shall be deemed or interpreted to modify the rights set forth in this   Note.   6.3 The security interest securing this Note shall be (i) junior to the security interest   securing the Priority Note and (ii) senior to the security interest securing the Intercompany Sales   Agreement.    6.4 Under a plan of reorganization for GT Hong Kong in its Chapter 11 Case, the   Recourse Sub-Obligation shall be subject to treatment as a recourse general unsecured claim of   GTAT Corp. against GT Hong Kong (which will be reduced dollar-for-dollar by any payments   upon this Note).     

 

5   6.5 Maker agrees to execute any further documents, and to take any further actions,   reasonably requested by Holder to evidence or perfect the security interests granted under this   Article 6, to maintain the perfection and priority of these security interests, or to effectuate the   rights granted to Holder in this Article 6.    7. Events of Default.   7.1 Definition.  For purposes of this Note, an “Event of Default” shall be deemed to   have occurred if:   (a) Maker fails to pay when due and payable the full amount of interest then   accrued on this Note or the full amount of any principal payment on this Note;    (b) An Event of Default has occurred under the Priority Note;   (c) GT Hong Kong is in material breach of any of its obligations under this   Note (other than the failure to pay when due and payable the full amount of interest then accrued   on this note or the full amount of any principal payment on this Note), the Intercompany   Settlement Agreement, the ASF License Agreement, the Cost Sharing Agreement, the Poly/DSS   License Agreement, the 2010 Services Agreement, or the 2011 Services Agreement, and such   breach is not cured within 10 days after GTAT Corp. provided notice of such breach to GT Hong   Kong;    (d) GTAT Corp. and its direct and indirect subsidiaries organized in the   United States have less than $22,500,000 in unrestricted cash;   (e) The Bankruptcy Court enters an order authorizing the sale of all or   substantially all assets of GTAT Corp. at a time when the DIP Financing will not have been   repaid in full on or before consummation of such a sale; or   (f) The Chapter 11 Case of either GTAT Corp. or GT Hong Kong is   converted to a case under chapter 7 of the Bankruptcy Code.   7.2 Consequences of Events of Default.   (a) If an Event of Default has occurred, the aggregate principal amount of this   Note (together with all accrued interest thereon and all other amounts due and payable with   respect thereto) shall become immediately due and payable without any action on the part of   Holder, and Maker shall immediately pay to Holder all amounts due and payable with respect to   this Note.   (b) If an Event of Default has occurred, Holder may pursue any and all   remedies available at law (including, but not limited to, those available under the provisions of   the New York Uniform Commercial Code and those set forth in the Debenture) or in equity to   enforce the security interests granted hereunder by Maker to Holder (subject to the carve-out   provisions of the Contingent Note Collateral), including, without limitation:     

 

6   (i) file suit and obtain judgment and, in conjunction with any action,   seek any ancillary remedies provided by law, including levy of   attachment and garnishment,   (ii) demand that Maker make the Contingent Note Collateral available   to Holder as it may direct (and Maker hereby agrees to comply   with such demand), and     (iii) with or without taking possession, sell, lease, or otherwise dispose   of the Contingent Note Collateral at public or private sale in   accordance with the New York Uniform Commercial Code,   which remedies may be pursued separately, successively, or simultaneously.   (c) Holder shall also have any other rights that Holder may have been   afforded under any contract or agreement at any time and any other rights that Holder may have   pursuant to applicable law.   (d) Maker hereby waives diligence, presentment, protest and demand, and   notice of protest and demand, dishonor, and nonpayment of this Note, and expressly agrees that   this Note, or any payment hereunder, may be extended from time to time and that Holder hereof   may accept security for this Note or release security for this Note, all without in any way   affecting the liability of Maker hereunder.   (e) The rights and remedies of Holder under this Note are cumulative.  Holder   shall have all other rights and remedies not inconsistent herewith as provided under the New   York Uniform Commercial Code, by law, or in equity.  No exercise by Holder of one right or   remedy shall be deemed an election, and no waiver by Holder of any Event of Default shall be   deemed a continuing waiver.  No delay by Holder shall constitute a waiver, election, or   acquiescence by it.   8. Attorney’s Fees.  Maker agrees to pay or reimburse upon demand Holder for all of its   reasonable out-of-pocket costs and expenses (including reasonable attorney’s fees) incurred in   connection with the enforcement of Maker’s Obligations or the exercise of any rights or   remedies hereunder or under applicable law, including, without limitation, the exercise of rights   and remedies with respect to the Contingent Note Collateral.   9. Amendment and Waiver.  Except as otherwise expressly provided herein, the   provisions of this Note may be amended and Maker may take any action herein prohibited, or   omit to perform any act herein required to be performed by it, if Maker has obtained the written   consent of Holder of this Note.   10. Assignment and Transfer.  Holder may assign at any time (or grant a participation   interest at any time in) this Note to any of its affiliates, any financial institutions, or any other   person (including upon enforcement of rights by any secured creditor of the Holder), in which   event, the assignee shall have, to the extent of such assignment, the same rights and benefits as it   would if it were Holder, except as otherwise provided by the terms of such assignment or   participation.     

 

7   11. Cancellation.  After all principal and accrued interest at any time owed on this Note has   been paid in full, this Note shall be surrendered to Maker for cancellation and shall not be   reissued.   12. Payments.  All payments to be made to Holder shall be made in the lawful money of the   United States of America in immediately available funds.   13. Place of Payment.  Payments of principal and interest shall be delivered to Holder at   such address as is specified by prior written notice by Holder.   14. Governing Law.  All questions concerning the construction, validity, and interpretation   of this Note will be governed by and construed in accordance with the domestic laws of the State   of New York, without giving effect to any choice of law or conflict of law provision or rule   (whether of the State of New York or any other jurisdiction) that would cause the application of   the laws of any jurisdiction other than the State of New York.   15. Loss, Theft, Destruction, or Mutilation of Note.  Upon receipt by Maker of evidence   reasonably satisfactory to Maker of the loss, theft, destruction or mutilation of this Note, and, in   case of loss, theft or destruction, upon receipt of indemnity or security reasonably satisfactory to   Maker or, in case of mutilation, upon surrendering this Note for cancellation, and upon   reimbursement to Maker of all reasonable expenses incidental thereto, Maker will make and   deliver a new note of like tenor in lieu of this Note.  Any note made and delivered in accordance   with the provisions of this paragraph shall be dated as of the date hereof.   16. Waiver of Presentment, Demand, and Dishonor.  Maker hereby waives presentment   for payment, protest, demand, notice of protest, notice of nonpayment, and diligence with respect   to this Note, and waives and renounces all rights to the benefits of any statute of limitations or   any moratorium, appraisement, exemption, or homestead now provided or that hereafter may be   provided by any federal or applicable state statute, including, but not limited to, exemptions   provided by or allowed under the Bankruptcy Code, both as to itself and as to all of its property,   whether real or personal, against the enforcement and collection of the obligations evidenced by   this Note and any and all extensions, renewals, and modifications hereof.   17. Usury Laws.  It is the intention of the Maker and Holder to conform strictly to all   applicable usury laws now or hereafter in force, and any interest payable under this Note shall be   subject to reduction to the amount not in excess of the maximum legal amount allowed under the   applicable usury laws as now or hereafter constructed by the courts having jurisdiction over such   matters.  If the maturity of this Note is accelerated by reason of an Event of Default or otherwise,   then earned interest may never include more than the maximum amount permitted by law,   computed from the date hereof until payment, and any interest in excess of the maximum amount   permitted by law shall be canceled automatically and, if theretofore paid, shall, at the option of   Holder, either be rebated to Maker or credited on the principal amount of this Note, or if this   Note has been paid, then the excess shall be rebated to Maker.  The aggregate amount of all   interest (whether designated as interest, service charges, points, or otherwise) contracted for,   chargeable, or receivable under this Note shall under no circumstances exceed the maximum   legal rate upon the unpaid principal balance of this Note remaining unpaid from time to time.  If   such interest does exceed the maximum legal rate, it shall be deemed a mistake and such excess     

 

8   shall be canceled automatically and, if theretofore paid, rebated to Maker or credited on the   principal amount of this Note, or if this Note has been repaid, then such excess shall be rebated   to Maker.   18. Waiver of Jury Trial; Consent to Jurisdiction.  Maker (and, by virtue of its acceptance   hereof, Holder) hereby irrevocably waive all right to trial by jury in any litigation, action,   proceeding, cross-claim, or counterclaim in any court (whether based on contract, tort, or   otherwise) arising out of, relating to, or in connection with (a) this Note or the validity,   performance, interpretation, collection, or enforcement hereof or (b) the actions of such party in   the negotiation, authorization, execution, delivery, administration, performance, or enforcement   hereof.  Maker (and, by virtue of its acceptance hereof, Holder) further hereby waive any right of   offset or right to interpose any counterclaim in any such action, except for compulsory   counterclaims.  All actions and proceedings arising out of or relating to this Agreement shall be   heard and determined in the Bankruptcy Court, or if the Bankruptcy Court no longer has   jurisdiction or abstains, then in the state courts of New York sitting in New York City in the   Borough of Manhattan or, to the extent subject matter jurisdiction exists therefor, the United   States District Court for the District of New York, and the Maker and Holder irrevocably submit   to the exclusive jurisdiction of such courts in respect of any such actions or proceedings.      [Remainder of Page Intentionally Left Blank]

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