Document:

ex105intercompanysalesa

Exhibit 10.5   THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.              INTERCOMPANY SALES AGREEMENT   This Intercompany Sales Agreement (the “Intercompany Sales Agreement”), dated as of   July 20, 2015, is entered into by and among GT Advanced Technologies Limited (“GT Hong   Kong”), a Hong Kong limited liability company, GTAT Corporation (“GTAT Corp.”), a   Delaware corporation, and GT Advanced Equipment Holding LLC (“GT SPE”), a Delaware   limited liability company.  GT Hong Kong, GTAT Corp., and GT SPE are referred to herein   each as a “Party” and, collectively, as the “Parties.”   RECITALS   WHEREAS, on October 6, 2014 (the “Petition Date”), GTAT Corp., GT Hong Kong, GT   SPE, GT Advanced Technologies, Inc. (“GT Parent”), GT Equipment Holdings, Inc., Lindbergh   Acquisition Corp., GT Sapphire Systems Holding LLC, GT Advanced Cz LLC and GT Sapphire   Systems Group LLC (collectively, “GTAT” or the “Debtors”) filed chapter 11 cases (the   “Chapter 11 Cases”) in the United States Bankruptcy Court for the District of New Hampshire   (the “Bankruptcy Court”);   WHEREAS, GTAT Corp. and GT SPE collectively own more than 2,100 ASF Furnaces   (as defined below), and GT Hong Kong owns approximately 240 ASF Furnaces;   WHEREAS, GT Hong Kong and GTAT Corp. are parties to: (a) that certain License   Agreement, effective as of April 1, 2011, as modified by that certain Sapphire Transfer Pricing   Analysis and Report for Fiscal Year Ended March 31, 2012, issued January 21, 2013 (the “ASF   License Agreement”); (b) that certain Agreement for Sharing Development Costs, effective as of   April 11, 2011 (the “Cost Sharing Agreement”); (c) that certain License Agreement, effective as   of July 5, 2010, as modified by that certain Amendment No. 1 to License Agreement, effective as   of April 3, 2011, and as further modified by that certain Polysilicon Transfer Pricing Analysis   and Report for the Calendar Year Ended December 31, 2013 (the “Poly/DSS License   Agreement”); (d) that certain Management and Administrative Services Agreement, effective as   of July 5, 2010 (the “2010 Services Agreement”); and (e) that certain Management and   Administrative Services Agreement, effective as of April 3, 2011 (the “2011 Services   Agreement” and, together with the ASF License Agreement, the Cost Sharing Agreement, the   Poly/DSS License Agreement, and the 2010 Services Agreement, the “Prepetition Intercompany   Agreements”);   WHEREAS, under the ASF License Agreement, GTAT Corp. granted GT Hong Kong,   among other things, the exclusive right and license (without reservation of right to GTAT Corp.)   to make, have made, assemble, have assembled, use, sell, and/or import ASF Furnaces in all   countries outside of the United States;     

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        2   WHEREAS, under the Cost Sharing Agreement, (a) GTAT Corp. and GT Hong Kong   agreed, among other things, to share the costs of the development of improvements to the   original technology platform licensed under the ASF License Agreement (such improvements,   the “Improvements”) and (b) GTAT Corp. and GT Hong Kong each received the exclusive right   and licenses (without reservation of right of the other party) to make, use, sell and/or import,   copy, display, create derivative works, or otherwise exploit the Improvements within each   party’s respective territory;   WHEREAS, GTAT Corp. asserts that (a) it did not provide the most recent version   of 165 kg ASF Furnace technology to GT Hong Kong prior to the Petition Date and (b) even if it   has a legal obligation to provide such technology to GT Hong Kong, GT Hong Kong must first   pay its share of the development costs for such technology under the Cost Sharing Agreement;   WHEREAS, under the current structure of the ASF License Agreement and the Cost   Sharing Agreement, GTAT Corp., GT SPE, and GT Hong Kong require each other’s cooperation   in order to sell any of their ASF Furnaces outside the United States;   WHEREAS, following extensive good faith, arm’s-length negotiations among GTAT   Corp., GT SPE, GT Hong Kong, certain unaffiliated holders of notes issued by GT Parent, and   other parties in interest, GTAT Corp., GT SPE, and GT Hong Kong have agreed to enter into   that certain Intercompany Settlement Agreement, dated as of July 20, 2015 (the “Intercompany   Settlement Agreement”), which resolves numerous intercompany issues between and among the   Parties, including, without limitation, with respect to the sale of their ASF Furnaces in the   marketplace and the sharing of proceeds from such sales among them;   WHEREAS, under the Intercompany Settlement Agreement, among other things, GT   Hong Kong has agreed to issue to GTAT Corp. (a) that certain Priority Note, dated July 20, 2015   (the “Priority Note”) (a copy of which is annexed to the Intercompany Settlement Agreement), to   satisfy certain post-petition administrative expense claims by GTAT Corp. against GT Hong   Kong, and (b) that certain Contingent Note, dated July 20, 2015 (the “Contingent Note”) (a copy   of which is annexed to the Intercompany Settlement Agreement), to satisfy, among other things,   the cure costs under the Prepetition Intercompany Agreements; and   WHEREAS, the Parties desire, subject to the terms of the Intercompany Settlement   Agreement and in accordance with the terms of this Intercompany Sales Agreement, to allocate   among the Parties certain rights, responsibilities, and obligations arising from purchase orders,   purchase agreements, invoices, and/or other purchase documentation (each, a “Purchase Order”)   to be entered into, performed under, accepted, or issued by GT Hong Kong and certain third   parties located outside of the United States (each such third party, a “Customer”) and pursuant to   which GT Hong Kong will be obligated to sell ASF Furnaces to such Customers.   NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, the   Parties agree as follows:     

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        3   1. DEFINITIONS   For purposes of this Agreement, the following definitions shall apply to the terms set   forth below wherever they appear:   1.1 “Accounts” has the meaning set forth in Article 9 of the New York Uniform Commercial   Code.   1.2 “Approval Order” has the meaning set forth in Section 6.2 hereof.   1.3 “Approval Date” means the date on which the Approval Order is entered by the   Bankruptcy Court.   1.4 “ASF Furnaces” means (a) advanced sapphire furnaces and (b) all components, parts,   processes, and accessories associated therewith.   1.5 “Combined Sale” has the meaning set forth in Section 3.4 hereof.   1.6 “Debenture” means that certain Debenture between GT Hong Kong, GTAT Corp., and   GT SPE, dated as of July 20.   1.7 “GT Hong Kong ASF Furnaces” means ASF Furnaces owned by GT Hong Kong as of   the date of this Intercompany Sales Agreement.   1.8 “GT SPE ASF Furnaces” means ASF Furnaces owned by GT SPE as of the date of this   Intercompany Sales Agreement.   1.9 “GT SPE Collateral” means (a) all of GT Hong Kong’s now owned or hereafter acquired   Accounts that in any way relate to ASF Furnaces that are or were the subject of   Intercompany Sales made by GT SPE to GT Hong Kong, (b) all of GT Hong Kong’s now   owned or hereafter acquired Letter-of-Credit Rights that in any way relate to ASF   Furnaces that are or were the subject of Intercompany Sales made by GT SPE to GT   Hong Kong, (c) all of GT Hong Kong’s now owned or hereafter acquired rights in and to   Supporting Obligations (including guarantees and Letter-of-Credit Rights) that in any   way relate to ASF Furnaces that are or were the subject of Intercompany Sales made by   GT SPE to GT Hong Kong, (d) all of GT Hong Kong’s now owned or hereafter acquired   (i) rights of reclamation, replevin, or recovery, (ii) mechanic’s liens or other liens,   (iii) rights of setoff, and (iv) other rights or remedies, in each case, that in any way relate   to ASF Furnaces that are or were the subject of Intercompany Sales made by GT SPE to   GT Hong Kong, (e) all of GT Hong Kong’s now owned or hereafter acquired rights in   respect of returned goods arising in relation to ASF Furnaces that were the subject of   Intercompany Sales made by GT SPE to GT Hong Kong, (f) all of GT Hong Kong’s now   owned or hereafter acquired rights in any deposits in relation to ASF Furnaces that were     

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        4   the subject of Intercompany Sales made by GT SPE to GT Hong Kong, and (g) any and   all proceeds of any of the foregoing.   1.10 “GTAT Corp. ASF Furnaces” means ASF Furnaces owed by GTAT Corp. as of the date   of this Intercompany Sales Agreement.    1.11 “GTAT Corp. Collateral” means (a) all of GT Hong Kong’s now owned or hereafter   acquired Accounts that in any way relate to ASF Furnaces that are or were the subject of   Intercompany Sales made by GTAT Corp. to GT Hong Kong, (b) all of GT Hong Kong’s   now owned or hereafter acquired Letter-of-Credit Rights that in any way relate to ASF   Furnaces that are or were the subject of Intercompany Sales made by GTAT Corp. to GT   Hong Kong, (c) all of GT Hong Kong’s now owned or hereafter acquired rights in and to   Supporting Obligations (including guarantees and Letter-of-Credit Rights) that in any   way relate to ASF Furnaces that are or were the subject of Intercompany Sales made by   GTAT Corp. to GT Hong Kong, (d) all of GT Hong Kong’s now owned or hereafter   acquired (i) rights of reclamation, replevin, or recovery, (ii) mechanic’s liens or other   liens, (iii) rights of setoff, and (iv) other rights or remedies, in each case, that in any way   relate to ASF Furnaces that are or were the subject of Intercompany Sales made by   GTAT Corp. to GT Hong Kong, (e) all of GT Hong Kong’s now owned or hereafter   acquired rights in respect of returned goods arising in relation to ASF Furnaces that were   the subject of Intercompany Sales made by GTAT Corp. to GT Hong Kong, (f) all of GT   Hong Kong’s now owned or hereafter acquired rights in any deposits in relation to ASF   Furnaces that were the subject of Intercompany Sales made by GTAT Corp. to GT Hong   Kong, and (g) any and all proceeds of any of the foregoing.   1.12 “Intercompany Sale” has the meaning set forth in Section 2.1 hereof.   1.13 “Letter-of-Credit Rights” has the meaning set forth in Article 9 of the New York   Uniform Commercial Code.   1.14 “Mesa ASF Price” has the meaning set forth in Section 2.4 hereof.   1.15 “Mesa ASF Furnaces” means, collectively, the GTAT Corp. ASF Furnaces and the GT   SPE ASF Furnaces.   1.16 “Supporting Obligations” has the meaning set forth in Article 9 of the New York   Uniform Commercial Code.   2. INTERCOMPANY SALE OF MESA ASF FURNACES   2.1 Intercompany Sales.  In furtherance of Purchase Orders,     

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        5   (a) GTAT Corp. agrees to sell GTAT Corp. ASF Furnaces to GT Hong Kong, and   GT Hong Kong agrees to purchase such GTAT Corp. ASF Furnaces from GTAT   Corp., and   (b) GT SPE agrees to sell GT SPE ASF Furnaces to GT Hong Kong, and GT Hong   Kong agrees to purchase such GT SPE ASF Furnaces from GT SPE (all such   sales described in clauses (a) and (b), the “Intercompany Sales”),    which ASF Furnaces GT Hong Kong shall, immediately thereafter, resell to Customers   pursuant to such Purchase Orders; provided, however, that no Intercompany Sales shall   occur unless and until GT Hong Kong has sold all GT Hong Kong ASF Furnaces, except   in the case where a Customer requests the purchase a Mesa ASF Furnace.  GTAT Corp.   and GT SPE shall not be obligated to sell any ASF Furnaces to GT Hong Kong, and GT   Hong Kong shall not be obligated to purchase any ASF Furnaces from GTAT Corp. or   GT SPE, unless and until such ASF Furnaces are necessary for GT Hong Kong to satisfy   an executed Purchase Order with a Customer.  Neither GTAT Corp. nor GT SPE shall be   obligated to acquire goods in order to sell them to GT Hong Kong as Mesa ASF Furnaces   and their obligations to sell to GT Hong Kong shall only extend to Mesa ASF Furnaces   owned by them as of the date hereof.   Nothing herein shall preclude GTAT Corp. or GT SPE, on the one hand, and GT Hong   Kong, on the other hand, from separately agreeing to purchase and sell components for   ASF Furnaces from each other on customary business terms.   2.2 Closing.  The closing of any Intercompany Sale of Mesa ASF Furnaces to GT Hong   Kong shall occur immediately prior to the corresponding resale of such ASF Furnaces by   GT Hong Kong to the applicable Customer.     2.3 Delivery.  The Mesa ASF Furnaces sold pursuant to Intercompany Sales shall be   delivered to GT Hong Kong as directed by GTAT Corp.   2.4 Mesa ASF Price.  The purchase price of each Mesa ASF Furnace to be purchased by GT   Hong Kong pursuant to an Intercompany Sale (such price, the “Mesa ASF Price”) shall   be equal to [* * *].   2.5 Payment of Mesa ASF Price.  With respect to each Intercompany Sale of Mesa ASF   Furnaces, GT Hong Kong agrees to pay GTAT Corp. or GT SPE, as applicable, the Mesa   ASF Price for such Mesa ASF Furnaces in immediately available funds and in   U.S. dollars no later than the date that is 30 days after the date of delivery of such Mesa   ASF Furnaces; provided, however, that if GT Hong Kong does not receive the full sale   price for the sale of an ASF Furnace to a Customer in a single installment, GT Hong   Kong shall pay the Mesa ASF Price to GTAT Corp. ratably as and when GT Hong Kong   receives each installment of the sale price.     

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        6   2.6 Exclusivity.  GT Hong Kong shall purchase all of its requirements of ASF Furnaces from   GTAT Corp. and/or GT SPE; provided, that GT Hong Kong shall have no obligation to   buy, and GTAT Corp. or GT SPE, as the case may be, shall have no obligation to sell a   Mesa ASF Furnace if, after taking into account all payments contemplated under the   Intercompany Settlement, either GT Hong Kong would incur a cash loss on the ultimate   sale to the Customer, or GTAT Corp. and/or GT SPE, as the case may be, would incur a   cash loss on the sale of a Mesa ASF Furnace to GT Hong Kong.     2.7 NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY.  GTAT CORP.   AND GT SPE MAKE NO REPRESENTATION OR WARRANTY, EXPRESSED OR   IMPLIED, UNDER CONTRACT, AT LAW, OR IN EQUITY, WITH RESPECT TO   ANY OF THE MESA ASF FURNACES, INCLUDING REPRESENTATIONS OR   WARRANTIES WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY   PARTICULAR PURPOSE, SUITABILITY, USAGE, WORKMANSHIP, QUALITY,   PHYSICAL CONDITION, OR VALUE, AND ANY AND ALL SUCH   REPRESENTATIONS AND WARRANTIES ARE HEREBY EXPRESSLY   DISCLAIMED.     3. SECURITY INTERESTS   3.1 Grant of Security Interest in GTAT Corp. Collateral.     (a) GT Hong Kong hereby grants to GTAT Corp. a security interest in the GTAT   Corp. Collateral to secure all of GT Hong Kong’s present and future obligations   to pay GTAT Corp. for GTAT Corp. ASF Furnaces.     (b) To secure all of GT Hong Kong’s present and future obligations to pay GTAT   Corp. for GTAT Corp. ASF Furnaces, GT Hong Kong also grants a floating   charge in the GTAT Corp. 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 Intercompany Sales Agreement.   (c) GT Hong Kong hereby authorizes GTAT Corp. to file financing statements   describing the GTAT Corp. Collateral and to take any and all other steps   necessary or advisable to perfect or protect the security interests under this   Section 3.1.   3.2 Grant of Security Interest in GT SPE Collateral.     (a) GT Hong Kong hereby grants to GT SPE a security interest in the GT SPE   Collateral to secure all of GT Hong Kong’s present and future obligations to pay   GT SPE for GTAT SPE ASF Furnaces.       

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        7   (b) To secure all of GT Hong Kong’s present and future obligations to pay GT SPE   for GT SPE ASF Furnaces, GT Hong Kong also grants a floating charge in the   GTAT Corp. Collateral under Hong Kong law, pursuant to the Debenture;   provided, however, that nothing in the Debenture shall be deemed or interpreted   to modify the rights set forth in this Intercompany Sales Agreement.   (c) GT Hong Kong hereby authorizes GT SPE to file financing statements describing   the GT SPE Collateral and to take any and all other steps necessary or advisable   to perfect or protect the security interests under this Section 3.2.   3.3 GT Hong Kong agrees to execute any further documents, and to take any further actions,   reasonably requested by GTAT Corp. or GT SPE, as applicable, to evidence or perfect   the security interests granted in this Article 3, to maintain the first priority of these   security interests, or to effectuate the rights granted to GTAT Corp. and GT SPE in this   Article 3.   3.4 If a sale of ASF Furnaces by GT Hong Kong to a Customer involves both GTAT Corp.   ASF Furnaces and GT SPE ASF Furnaces (any such sale, a “Combined Sale”), the   security interests granted in respect of the GTAT Corp. Collateral and the GT SPE   Collateral shall be equal in priority and the proceeds of such collateral resulting from   such sale shall be shared by GTAT Corp. and GT SPE ratably based on the Mesa ASF   Prices for the GTAT Corp. ASF Furnaces and GT SPE ASF Furnaces composing such   Combined Sale.   3.5 The security interest securing GT Hong Kong’s obligations under this Intercompany   Sales Agreement shall be junior to the security interests securing the Priority Note and   the Contingent Note.    4. INDEMNIFICATION   4.1 GTAT Corp. ASF Furnaces.  With respect to Mesa ASF Furnaces sold by GT Hong   Kong to Customers which Mesa ASF Furnaces were originally GTAT Corp. ASF   Furnaces, GTAT Corp. shall indemnify, defend, and hold GT Hong Kong harmless from   and against any and all claims, damages, liabilities, and losses (including reasonable   attorney’s fees) incurred or suffered by GT Hong Kong related to any claim asserted by a   Customer against GT Hong Kong for personal injury or property damage solely to the   extent caused by the gross negligence or willful misconduct of GTAT Corp. with respect   to such GTAT Corp. ASF Furnaces.  Notwithstanding Section 2.7 hereof, the foregoing   indemnity shall not cover any claims, damages, liabilities, and losses incurred or suffered   by GT Hong Kong related to any claim asserted by a Customer against GT Hong Kong   for breach of warranty with respect to such GTAT Corp. ASF Furnaces, except (i) in the   case of gross negligence or willful misconduct by GTAT Corp. and (ii) [* * *].     

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        8   4.2 GT SPE ASF Furnaces.  With respect to Mesa ASF Furnaces sold by GT Hong Kong to   Customers which Mesa ASF Furnaces were originally GT SPE ASF Furnaces, GT SPE   shall indemnify, defend, and hold GT Hong Kong harmless from and against any and all   claims, damages, liabilities, and losses (including reasonable attorney’s fees) incurred or   suffered by GT Hong Kong related to any claim asserted by a Customer against GT Hong   Kong for personal injury or property damage allegedly solely to the extent caused by the   gross negligence or willful misconduct of GT SPE with respect to such GT SPE ASF   Furnaces.  Notwithstanding Section 2.7 hereof, the foregoing indemnity shall not cover   any claims, damages, liabilities, and losses incurred or suffered by GT Hong Kong   related to any claim asserted by a Customer against GT Hong Kong for breach of   warranty with respect to such GT SPE ASF Furnaces, except (i) in the case of gross   negligence or willful misconduct by GT SPE and (ii) [* * *]   5. EVENTS OF DEFAULT AND REMEDIES   5.1 Events of Default.  The occurrence of any of the following shall, at the option of GTAT   Corp. or GT SPE, as applicable, be an Event of Default:     (a) GT Hong Kong’s failure to comply with any of the provisions of this   Intercompany Sales Agreement;   (b) Other than the remittance of payments to GTAT Corp. or GT SPE as   contemplated by this Intercompany Sales Agreement, the transfer or disposition   by GT Hong Kong of any of the GTAT Corp. Collateral or GT SPE Collateral   without the consent of GTAT Corp. or GT SPE, as applicable;   (c) The attachment, execution, garnishment, or levy by a third party on any of the   GTAT Corp. Collateral or GT SPE Collateral;   (d) An Event of Default has occurred under the Priority Note or the Contingent Note,   or GT Hong Kong is in material breach of any of its obligations under (a) the   Intercompany Settlement Agreement, (b) the ASF License Agreement (as   amended by that certain First Amendment to ASF License Agreement, dated as of   July 20, 2015), (c) the Cost Sharing Agreement (as amended by that certain First   Amendment to Cost Sharing Agreement, dated as of July 20, 2015), (d) the   Poly/DSS License Agreement (as amended by that certain Second Amendment to   Poly/DSS License Agreement, dated as of July 20, 2015), (e) the 2010 Services   Agreement (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), or (f) the 2011 Services Agreement (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), and such breach is not cured   within 10 days after GTAT Corp. provided notice of such breach to GT Hong   Kong;     

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        9   (e) The Chapter 11 Case of either GTAT Corp. or GT Hong Kong is converted to a   case under chapter 7 of the Bankruptcy Code.    5.2 Remedies Upon Default.  Upon the occurrence and during the continuation of any Event   of Default, GTAT Corp. or GT SPE, as applicable, acting individually or jointly, may:   (a) Declare all or any portion of the obligations owed to GTAT Corp. or GT SPE, as   applicable, hereunder immediately due and payable;   (b) Pursue any and all remedies available at law or in equity to collect, enforce, or   otherwise satisfy any obligations then owing by GT Hong Kong to GTAT Corp.   or GT SPE, as applicable;   (c) Pursue any and all remedies available at law (including those available under the   provisions of the New York Uniform Commercial Code) or in equity to enforce   the security interests granted hereunder by GT Hong Kong to GTAT Corp. or GT   SPE, as applicable;   (d) Pursue any and all of the following remedies separately, successively, or   simultaneously:   (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 GT Hong Kong make the GTAT Corp. Collateral or GT SPE   Collateral, as applicable, available to GTAT Corp. or GT SPE, as   applicable, as each may direct (and GT Hong Kong hereby agrees to   comply with such demand), and     (iii) With or without taking possession, sell, lease, or otherwise dispose of the   GTAT Corp. Collateral or GT SPE Collateral, as applicable, at public or   private sale in accordance with the New York Uniform Commercial Code.   5.3 Remedies Cumulative.  The rights and remedies of GTAT Corp. and GT SPE under this   Intercompany Sales Agreement are cumulative.  GTAT Corp. and GT SPE 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 GTAT Corp. or GT   SPE of one right or remedy shall be deemed an election, and no waiver by GTAT Corp.   or GT SPE of any Event of Default shall be deemed a continuing waiver.  No delay by   GTAT Corp. or GT SPE shall constitute a waiver, election, or acquiescence by it.   6. MISCELLANEOUS      

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        10   6.1 Currency Conversion.  In any case where this Agreement requires GT Hong Kong to   remit to GTAT Corp. or GT SPE an amount equal to the amount that GT Hong Kong has   received from a Customer and where the payment made by such Customer was made in a   currency other than U.S. dollars, this Agreement shall be understood to require GT Hong   Kong to immediately convert the amount of the payment received from its Customer into   U.S. dollars at the then prevailing exchange rates as quoted by reputable currency   exchange brokers in GT Hong Kong’s local market and to remit the amount received by   such conversion (i.e., net of fees or commissions paid to effectuate such conversion), in   immediately available U.S. dollars, to GTAT Corp. or GT SPE, as applicable, and only   the amount so remitted will be credited against the obligations owed by GT Hong Kong   to GTAT Corp. or GT SPE, as applicable.   6.2 Approval Order.  The effectiveness of this Intercompany Settlement Agreement and the   obligations of the Parties are conditioned upon entry of (a) an order, substantially in the   form attached to the Debtors’ motion, dated July 6, 2015 [Docket No. 1998] (the   “Approval Order”), approving, among other things, the Parties’ entry into the   Intercompany Settlement Agreement.     6.3 Attorney’s Fees.  GT Hong Kong agrees to pay or reimburse upon demand GTAT Corp.   and GT SPE for all of its reasonable out-of-pocket costs and expenses (including   reasonable attorney’s fees) incurred in connection with the enforcement of GT Hong   Kong’s obligations under this Intercompany Sales Agreement 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 GTAT Corp. Collateral and the GT   SPE Collateral.   6.4 No Third-Party Beneficiaries.  This Intercompany Sales Agreement is for the sole benefit   of the Parties and their respective successors and assigns and nothing herein, express or   implied, is intended to or shall confer upon any other person any legal or equitable right,   benefit, or remedy of any nature whatsoever.   6.5 Severability.  If any term or provision of this Intercompany Sales Agreement is invalid,   illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability   shall not affect any other term or provision of this Intercompany Sales Agreement or   invalidate or render unenforceable such term or provision in any other jurisdiction.  Upon   such determination that any term or other provision is invalid, illegal, or unenforceable,   the Parties shall negotiate in good faith to modify this Intercompany Sales Agreement so   as to effect the original intent of the parties as closely as possible in a mutually acceptable   manner in order that the transactions contemplated hereby be consummated as originally   contemplated to the greatest extent possible.   6.6 Modifications.  No term or provision of this Intercompany Sales Agreement may be   amended or waived except in writing signed by the Parties that are to be affected by such   amendment or waiver.     

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A   CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED   WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.        11   6.7 Entire Agreement.  This Intercompany Sales Agreement, together with the Intercompany   Settlement Agreement and the exhibits thereto, constitutes the entire agreement of the   Parties with respect to the subject matter contained herein, and supersedes all prior and   contemporaneous understandings and agreements, both written and oral, with respect to   such subject matter.   6.8 Governing Law; Submission to Jurisdiction.  This Intercompany Sales Agreement, and   all of the rights of the Parties arising out of or related to the transactions that are the   subject hereof, shall be governed by and construed in accordance with the laws of the   State of New York, USA.  All actions and proceedings arising out of or relating to this   Intercompany Sales 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 Parties irrevocably submit to the exclusive   jurisdiction of such courts in respect of any such actions or proceedings.       <Signature Pages to Follow>     

 

      IN WITNESS WHEREOF, each of the Parties has duly executed this Agreement as of   the date first written above.   GT Advanced Technologies Limited, a Hong   Kong limited liability company   By: __________________________________   Printed Name: __________________________   Title: _________________________________   Date:  _________________________________         GTAT Corporation, a Delaware corporation   By: __________________________________   Printed Name: __________________________   Title: _________________________________   Date:  _________________________________         GT Advanced Equipment Holding LLC, a   Delaware limited liability company   By: __________________________________   Printed Name: __________________________   Title: _________________________________   Date:  _________________________________ex106gtatdebenture

EXECUTION VERSION            DATED JULY 20, 2015   GT ADVANCED TECHNOLOGIES LIMITED   AS COMPANY   GTAT CORPORATION   AS PRIORITY CHARGEE   GTAT CORPORATION   AS CONTINGENT CHARGEE   AND   GTAT CORPORATION AND GTAT ADVANCED EQUIPMENT HOLDING LLC   AS INTERCOMPANY SALES CHARGEES             DEBENTURE            

 

                  CONTENTS   Clause Page   1.  Definitions and Interpretation ........................................................................................ 1    2.  Covenant to Pay ............................................................................................................. 5    3.  Priority Note Floating Charge ........................................................................................ 6    4.  Contingent Note Floating Charge .................................................................................. 6    5.  Intercompany Sales Floating Charges ........................................................................... 6    6.  Crystallisation of Floating Charge ................................................................................. 6    7.  Perfection of Security .................................................................................................... 7    8.  Further Assurance .......................................................................................................... 8    9.  Negative Pledge and Disposals ...................................................................................... 8    10.  General Undertakings .................................................................................................... 8    11.  Enforcement of Security ................................................................................................ 9    12.  Powers of Sale................................................................................................................ 9    13.  Appointment of Receiver or Administrator ................................................................. 10    14.  Powers of Receiver ...................................................................................................... 11    15.  Priority and Application of Monies ............................................................................. 14    16.  Receipt and Protection of Purchasers .......................................................................... 15    17.  Power of Attorney ........................................................................................................ 16    18.  Representations ............................................................................................................ 16    19.  Effectiveness of Security ............................................................................................. 17    20.  Release of Security ...................................................................................................... 19    21.  Subsequent and Prior Security Interests ...................................................................... 22    22.  Currency Conversion ................................................................................................... 22    23.  Stamp taxes .................................................................................................................. 22    24.  Discretion and Delegation ............................................................................................ 22    25.  Set-off .......................................................................................................................... 23    26.  Changes to Parties ........................................................................................................ 23    27.  Amendments and Waivers ........................................................................................... 24    28.  Third Party Rights ........................................................................................................ 24    29.  Counterparts ................................................................................................................. 24    30.  Governing Law ............................................................................................................ 24    31.  Jurisdiction ................................................................................................................... 24         

 

       - 1 -       THIS DEBENTURE is made on July 20, 2015   BY:   (1) GT ADVANCED TECHNOLOGIES LIMITED, a private company limited by   shares incorporated in Hong Kong with company registration number 1371858 whose   registered office is at 13/F, Tower 2, The Gateway, Harbour City, 25 Canton Road,   Twimshatsui, Kowloon, Hong Kong (the "Company");   (2) GTAT CORPORATION, a Delaware corporation, in its capacity as chargee under   the Priority Note (as defined below) (the "Priority Chargee", which expression shall   include its successors, assigns and transferees);   (3) GTAT CORPORATION, a Delaware corporation, in its capacity as chargee under   the Contingent Note (as defined below) (the "Contingent Chargee", which expression   shall include its successors, assigns and transferees);   (4) GTAT CORPORATION, a Delaware corporation, in its capacity as chargee under   the Intercompany Sales Agreement (as defined below) ("GTAT" or an "Intercompany   Sales Chargee", which expression shall include its successors, assigns and   transferees); and   (5) GTAT ADVANCED EQUIPMENT HOLDING LLC as chargee under the   Intercompany Sales Agreement (as defined below) ("GTE" or an "Intercompany   Sales Chargee", which expression shall include its successors, assigns and transferees   and together with GTAT Corporation in its capacity as Intercompany Sales Chargee,   the "Intercompany Sales Chargees" and together with the Priority Chargee and the   Contingent Chargee, the "Chargees”).   NOW THIS DEBENTURE WITNESSES as follows:   1. DEFINITIONS AND INTERPRETATION   1.1 Definitions   Unless otherwise defined in this Debenture or unless the context otherwise requires,   terms and expressions defined in or construed for the purposes of the Intercompany   Sales Agreement shall bear the same meanings when used herein.  In addition:   "Accounts” has the meaning given to that term in the Intercompany Sales Agreement.   "ASF Furnaces” has the meaning given to that term in the Intercompany Sales   Agreement.   "ASF Furnace Sales" has the meaning given to that term in the Contingent Note.   "Charged ASF Proceeds" means:   (i) 100 per cent. of the amount of proceeds from ASF Furnace Sales received by   the Company and owed to GTAT Corporation pursuant to the terms of the   Intercompany Settlement Agreement;      

 

       - 2 -       (ii) 100 per cent. of the amount of proceeds from ASF Furnace Sales received by   the Company and owed to GTE pursuant to the terms of the Intercompany   Settlement Agreement; and   (iii) 50 per cent. of the amount of proceeds from ASF Furnace Sales retained by   the Company,   provided that an aggregate amount in respect of (i), (ii) and (iii) above equal to   US$10,000,000 shall not constitute Charged ASF Proceeds and shall not be subject to   the Security constituted by this Debenture.    "Charged Property" means all the assets and undertaking of the Company (including   without limitation the Charged ASF Proceeds, the GTAT Collateral, and the GTE   Collateral) which from time to time are the subject of the Security created or expressed   to be created in favour of the Chargees by or pursuant to this Debenture.   "Collateral Rights" means all rights, powers and remedies of the Chargees provided   by or pursuant to this Debenture or by law.   "Company Chapter 11 Case" means the Chapter 11 case of the Company pending in   the United States Bankruptcy Court for the District of New Hampshire (Case No. 14-   11920-HJB).   "Contingent Note" means the US$130,000,000 note dated on or about the date of this   Debenture and issued by the Company in favour of the Contingent Chargee.   "Contingent Note Floating Charge" has the meaning given to that term in Clause 4.1   (Subject to the Existing Account Charge, the Company hereby charges as   beneficial owner in favour of the Contingent Chargee as security for the payment   and discharge of the Secured Obligations, by way of floating charge, the Charged   ASF Proceeds and all Related Rights in relation thereto (the "Contingent Note   Floating Charge").).   "Event of Default" has, in respect of each Secured Document, the meaning given to it   in that Secured Document.   "Existing Account Charge" means the charge over account dated 6 November 2013   and made between the Company as chargor and the Existing Chargee.   "Existing Chargee" means Bank of America, National Association.   "GTAT Collateral" means:   (a) all present and future Accounts of the Company in any way related to   Intercompany Sales of ASF Furnaces by GTAT to the Company, or to which   the proceeds of any such Intercompany Sales are at any time credited;   (b) all present and future Letter-of-Credit Rights of the Company in any way   related to ASF Furnaces that are or were the subject of Intercompany Sales by   GTAT to the Company;     

 

       - 3 -       (c) all present and future rights of the Company in and to Supporting Obligations   (including guarantees and Letter-of-Credit Rights) in any way related to ASF   Furnaces that are or were the subject of Intercompany Sales made by GTAT to   the Company;   (d) all present and future rights and remedies (including without limitation any   rights of reclamation, replevin or recovery, any mechanic’s liens or other liens,   any rights of set-off and all other rights or remedies) of the Company, in each   case, in any way related to ASF Furnaces that are or were the subject of   Intercompany Sales made by GTAT to the Company;    (e) all present and future rights of the Company in any deposits in relation to ASF   Furnaces that were the subject of Intercompany Sales made by GTAT to the   Company; and   (f) all present and future rights of the Company in respect of returned goods   arising in relation to ASF Furnaces that are or were the subject of   Intercompany Sales made by GTAT to the Company.   "GTE Collateral" means:   (a) all present and future Accounts of the Company in any way related to   Intercompany Sales of ASF Furnaces by GTE to the Company, or to which the   proceeds of any such Intercompany Sales are at any time credited;   (b) all present and future Letter-of-Credit Rights of the Company in any way   related to ASF Furnaces that are or were the subject of Intercompany Sales by   GTE to the Company;   (c) all present and future rights of the Company in and to Supporting Obligations   (including guarantees and Letter-of-Credit Rights) in any way related to ASF   Furnaces that are or were the subject of Intercompany Sales made by GTE to   the Company;   (d) all present and future rights and remedies (including without limitation any   rights of reclamation, replevin or recovery, any mechanic’s liens or other liens,   any rights of set-off and all other rights or remedies) of the Company, in each   case, in any way related to ASF Furnaces that are or were the subject of   Intercompany Sales made by GTE to the Company;    (e) all present and future rights of the Company in any deposits in relation to ASF   Furnaces that were the subject of Intercompany Sales made by GTE to the   Company;   (f) all present and future rights of the Company in respect of returned goods   arising in relation to ASF Furnaces that are or were the subject of   Intercompany Sales made by GTE to the Company.   "Hong Kong" means the Hong Kong Special Administrative Region of the People's   Republic of China.     

 

       - 4 -       "Intercompany Sales" has the meaning given to that term in the Intercompany Sales   Agreement.   "Intercompany Sales Agreement" means the intercompany sales agreement dated on   or about the date of this Debenture and made between the Company and the   Intercompany Sales Chargees.   "Intercompany Sales Floating Charges" has the meaning given to that term in Clause   5.1 (5.1).   "Letter-of-Credit Rights" has the meaning given to that term in the Intercompany   Sales Agreement.   "Priority Note" means the US$22,500,000 note dated on or about the date of this   Debenture and issued by the Company in favour of the Priority Chargee.   "Priority Note Floating Charge" has the meaning given to that term in Clause 3   (Priority Note Floating Charge).   "Receiver" means a receiver or receiver and manager or an administrative receiver of   the whole or any part of the Charged Property and that term will include any appointee   made under a joint and/or several appointment.   "Related Rights" means, in relation to any asset:   (a) the proceeds of sale of any part of that asset;   (b) all rights under any licence, agreement for sale, lease or other disposal in   respect of that asset;   (c) all rights, powers, benefits, claims, contracts, warranties, remedies, security,   guarantees, indemnities or covenants for title in respect of that asset;   (d) any moneys and proceeds paid or payable in respect of that asset; and   (e) (in the case where such asset comprises any share, equity interest or other   security) all dividends, distributions, interest and monies payable in respect   thereof and any rights, assets, shares and/or securities deriving therefrom or   accruing thereto whether by way of redemption, bonus, preference, option,   substitution, conversion, compensation or otherwise.   "Secured Documents" means each of the Priority Note, the Contingent Note and the   Intercompany Sales Agreement.   "Secured Obligations" means all present and future obligations and liabilities   (whether actual or contingent and owed in any capacity whatsoever) of the Company   to each Chargee under each Secured Document.   "Security" means a mortgage, charge, pledge, lien or other security interest securing   any obligation of any person or any other agreement or arrangement having a similar   effect.     

 

       - 5 -       "Supporting Obligations" has the meaning given to that term in the Intercompany   Sales Agreement.   "US$" means U.S. Dollars, the lawful currency of the United States of America.   1.2 Construction   In this Debenture:   1.2.1 any reference to:   (a) the "Company", the "Priority Chargee", the "Contingent Chargee",   any "Intercompany Sales Chargee", any "Chargee" or any other   person shall be construed so as to include its successors in title,   permitted assigns and permitted transferees to, or of, its rights and/or   obligations under the Secured Documents or this Debenture;   (b) a "Secured Document" or any other agreement or instrument is a   reference to that Secured Document or other agreement or instrument   as amended, novated, supplemented, extended or restated;   (c) a "person" includes any individual, firm, company, corporation,   government, state or agency of a state or any association, trust, joint   venture, consortium, partnership or other entity (whether or not having   separate legal personality);   (d) a "regulation" includes any regulation, rule, official directive, request   or guideline (whether or not having the force of law) of any   governmental, intergovernmental or supranational body, agency,   department or of any regulatory, self-regulatory or other authority or   organisation;   (e) a provision of law is a reference to that provision as amended or re-   enacted; and   (f) a time of day is a reference to Hong Kong time; and   1.2.2 save where the context otherwise requires, references in this Debenture to any   Clause or Schedule shall be to a clause or schedule contained in this   Debenture.   2. COVENANT TO PAY   The Company hereby covenants with each Chargee that it shall on demand of any   Chargee discharge all Secured Obligations on their due date in accordance with their   terms provided that neither such covenant nor the Security constituted by this   Debenture shall extend to or include any liability or sum that would, but for this   proviso, cause such covenant or security to be unlawful or prohibited by any   applicable law.     

 

       - 6 -       3. PRIORITY NOTE FLOATING CHARGE   Subject to the Existing Account Charge, the Company hereby charges as beneficial   owner in favour of the Priority Chargee as security for the payment and discharge of   the Secured Obligations, by way of first floating charge, all present and future assets   (including without limitation any real, personal, tangible or intangible property and   any and all intercompany claims and receivables) and undertaking of the Company   and all Related Rights in relation thereto (the "Priority Note Floating Charge").   4. CONTINGENT NOTE FLOATING CHARGE   4.1 Subject to the Existing Account Charge, the Company hereby charges as beneficial   owner in favour of the Contingent Chargee as security for the payment and discharge   of the Secured Obligations, by way of floating charge, the Charged ASF Proceeds and   all Related Rights in relation thereto (the "Contingent Note Floating Charge").   4.2 The Contingent Note Floating Charge shall be deferred in point of priority to the   Priority Note Floating Charge.   5. INTERCOMPANY SALES FLOATING CHARGES   5.1 Subject to the Existing Account Charge, the Company hereby charges as beneficial   owner in favour of:   5.1.1 GTAT, as security for the payment and discharge of the Secured Obligations,   by way of floating charge, the GTAT Collateral; and   5.1.2 GTE, as security for the payment and discharge of the Secured Obligations, by   way of floating charge, the GTE Collateral,   and (in each case) all Related Rights in relation thereto (the "Intercompany Sales   Floating Charges").   5.2 The Intercompany Sales Floating Charges shall be deferred in point of priority to (i)   the Priority Note Floating Charge and (ii) the Contingent Note Floating Charge.   6. CRYSTALLISATION OF FLOATING CHARGE   6.1 Crystallisation:  By Notice   Each Chargee may at any time by notice in writing to the Company convert any   floating charge created under this Debenture with immediate effect into a fixed charge   as regards any property or assets specified in the notice if:   6.1.1 an Event of Default has occurred and is continuing under the applicable   Secured Document; or   6.1.2 such Chargee reasonably considers that any of the Charged Property may be in   jeopardy or in danger of being seized or sold pursuant to any form of legal   process; or     

 

       - 7 -       6.1.3 such Chargee reasonably considers that it is desirable in order to protect the   priority of the Security constituted by this Debenture.   6.2 Crystallisation:  Automatic   Notwithstanding Clause  6.1 (Crystallisation:  By Notice) and without prejudice to any   law which may have a similar effect, any floating charge created by this Debenture   will automatically be converted (without notice) with immediate effect into a fixed   charge as regards all the assets subject to the floating charge if:   6.2.1 the Company creates or attempts to create any Security (other than Security   that is permitted under this Debenture or any Secured Document) over any of   the Charged Property; or   6.2.2 any person levies or attempts to levy any distress, execution or other process   against any of the Charged Property; or   6.2.3 a petition is presented for the compulsory winding-up of the Company; or   6.2.4 a meeting is convened for the passing of a resolution for the voluntary   winding-up of the Company; or   6.2.5 an application is presented or made for a warrant of execution, writ of fieri   facias, garnishee order or charging order in respect of any of the assets of the   Company; or   6.2.6 a resolution is passed or an order is made for the winding-up, dissolution,   administration or re-organisation of the Company or any provisional liquidator   or liquidator is appointed to or in respect of the Company; or   6.2.7 any event occurs under the laws of any jurisdiction having a similar or   analogous effect to any of those events referred to in sub-clauses  6.2.3 to  6.2.6;   or   6.2.8 the Existing Chargee enforces or takes any steps with a view towards   enforcing, the Security created under or pursuant to the Existing Account   Charge,   provided that no crystallisation shall occur under this Clause 6.2 in connection with a   plan of reorganization in the Company Chapter 11 Case.   7. PERFECTION OF SECURITY   The Company shall, as soon as practicable but in any event within ten days of the date   of this Debenture, submit the specified particulars of the Security created under this   Debenture for registration with the Hong Kong Companies Registry in accordance   with the relevant laws and regulations of Hong Kong, and promptly upon such   registration having been completed, deliver evidence thereof to each Chargee.     

 

       - 8 -       8. FURTHER ASSURANCE   8.1 Further Assurance: General   8.1.1 The Company shall promptly at its own cost do all such acts and/or execute all   such documents (including without limitation assignments, transfers,   mortgages, charges, notices and instructions) as each Chargee may reasonably   specify (and in such form as such Chargee may reasonably require in favour of   such Chargee or its nominee(s)):   (a) to perfect the Security created or intended to be created in respect of the   Charged Property (which may include, without limitation, the execution   by the Company of a mortgage, charge or assignment over all or any of   the assets constituting, or intended to constitute, any part of Charged   Property) or for the exercise of the Collateral Rights;   (b) to confer on each Chargee security over any property and assets of the   Company located in any jurisdiction outside Hong Kong equivalent or   similar to the Security intended to be conferred by or pursuant to this   Debenture; and/or   (c) to facilitate the realisation of the Charged Property.   8.2 Necessary Action   The Company shall from time to time take all such action (whether or not requested to   do so by any Chargee) as is or shall be available to it (including without limitation   obtaining and/or effecting all authorisations) as may be necessary for the purpose of   the creation, perfection, protection or maintenance of any security conferred or   intended to be conferred on the Chargees by or pursuant to this Debenture.   8.3 Implied Covenants for Title   The obligations of the Company under this Debenture shall be in addition to any   covenants for title deemed to be included in this Debenture under the Conveyancing    and Property Ordinance (Cap. 219) and/or general law.   9. NEGATIVE PLEDGE AND DISPOSALS   9.1 Negative Pledge   The Company undertakes that it shall not, at any time during the subsistence of this   Debenture, create or permit to subsist any Security over all or any part of the Charged   Property, except for the Security constituted by this Debenture and the Existing   Account Charge.   10. GENERAL UNDERTAKINGS   10.1 Information and Access   The Company shall from time to time on request of each Chargee, furnish such   Chargee with such information as the Company may reasonably require about the     

 

       - 9 -       Company's business and affairs, the Charged Property, the Existing Account Charge   and/or the Company's compliance with the terms of this Debenture and the Company   shall permit each Chargee, its representatives, professional advisers and contractors,   free access at all reasonable times and on reasonable notice to (a) inspect and take   copies and extracts from the books, accounts and records of the Company and (b) to   view the Charged Property or any part thereof (without becoming liable as mortgagee   in possession).   11. ENFORCEMENT OF SECURITY   11.1 Enforcement   Upon and after the occurrence of an Event of Default or if the Company requests any   Chargee to exercise any of its powers under this Debenture or if any event described   in any of Clauses  6.2.1 to 6.2.8 occurs, the Security created by or pursuant to this   Debenture is immediately enforceable and each Chargee may, without notice to the   Company or prior authorisation from any court, in its absolute discretion:   11.1.1 enforce all or any part of such security (at the times, in the manner and on the   terms it thinks fit) and take possession of and hold or dispose of all or any part   of the Charged Property; and   11.1.2 whether or not it has appointed a Receiver, exercise all or any of the powers,   authorities and discretions conferred by the Conveyancing and Property   Ordinance (Cap. 219) (as varied or extended by this Debenture) on mortgagees   and by this Debenture on any Receiver or otherwise conferred by law on   mortgagees and/or Receivers.   11.2 No Liability as Mortgagee in Possession   Neither any Chargee nor any Receiver shall be liable to account as a mortgagee in   possession in respect of all or any part of the Charged Property or be liable for any   loss upon realisation or for any neglect, default or omission in connection with the   Charged Property to which a mortgagee or a mortgagee in possession might otherwise   be liable.   12. POWERS OF SALE   12.1 Extension of Powers   The power of sale or other disposal conferred on each Chargee and on any Receiver by   this Debenture shall operate as a variation and extension of the statutory power of sale   under Sections 51 and 53 of the Conveyancing and Property Ordinance (Cap. 219) and   such power shall arise (and the Secured Obligations shall be deemed due and payable   for that purpose) on execution of this Debenture.   12.2 Restrictions   The restrictions contained in paragraph 11 of the Fourth Schedule to the Conveyancing   and Property Ordinance (Cap. 219) shall not apply to this Debenture or to the exercise   by any Chargee of its right to consolidate all or any of the Security created by or   pursuant to this Debenture with any other security in existence at any time or to its     

 

       - 10 -       power of sale, which powers may be exercised by any Chargee without notice to the   Company on or at any time after the occurrence of an Event of Default or any of the   events described in any of Clauses  6.2.1 to 6.2.8.  Any restrictions on the consolidation   of security shall be excluded to the fullest extent permitted by law.   13. APPOINTMENT OF RECEIVER OR ADMINISTRATOR   13.1 Appointment and Removal   Upon and after the occurrence of an Event of Default or if requested to do so by the   Company or if any of the events described in any of Clauses  6.2.1 to 6.2.86.2.7 occur,   each Chargee may by deed or otherwise (acting through an authorised officer of such   Chargee), without prior notice to the Company:   13.1.1 appoint one or more persons to be a Receiver of the whole or any part of the   Charged Property;   13.1.2 appoint two or more Receivers of separate parts of the Charged Property;   13.1.3 remove (so far as it is lawfully able) any Receiver so appointed; and/or   13.1.4 appoint another person(s) as an additional or replacement Receiver(s).   13.2 Capacity of Receivers   Each person appointed to be a Receiver pursuant to Clause  13.1 (Appointment and   Removal) shall be:   13.2.1 entitled to act individually or together with any other person appointed or   substituted as Receiver;   13.2.2 for all purposes deemed to be the agent of the Company which shall be solely   responsible for his acts, defaults and liabilities and for the payment of his   remuneration and no Receiver shall at any time act as agent for any Chargee;   and   13.2.3 entitled to remuneration for his services at a rate to be fixed by any Chargee   from time to time.   13.3 Statutory Powers of Appointment   The powers of appointment of a Receiver herein contained shall be in addition to all   statutory and other powers of appointment of the Chargees under the Conveyancing   and Property Ordinance (Cap. 219) (as varied and extended by this Debenture) or   otherwise and such powers shall remain exercisable from time to time by the Chargees   in respect of all or any part of the Charged Property.     

 

       - 11 -       14. POWERS OF RECEIVER   14.1 Powers of Receiver   Every Receiver shall (subject to any restrictions in the instrument appointing him but   notwithstanding any winding-up or dissolution of the Company) have and be entitled   to exercise, in relation to the Charged Property (and any assets of the Company which,   when got in, would be Charged Property) or that part thereof in respect of which he   was appointed, and as varied and extended by the provisions of this Debenture (in the   name of or on behalf of the Company or in his own name and, in each case, at the cost   of the Company):   14.1.1 all the powers conferred by the Conveyancing and Property Ordinance (Cap.   219) on mortgagors and on mortgagees in possession and on receivers   appointed under that Ordinance;   14.1.2 all the powers and rights of an absolute owner and power to do or omit to do   anything which the Company itself could do or omit to do; and   14.1.3 the power to do all things (including without limitation bringing or defending   proceedings in the name or on behalf of the Company) which seem to the   Receiver to be incidental or conducive to (a) any of the functions, powers,   authorities or discretions conferred on or vested in him or (b) the exercise of   any Collateral Rights (including without limitation realisation of all or any part   of the Charged Property) or (c) bringing to his hands any assets of the   Company forming, or which when got in would be, part of the Charged   Property.   14.2 Additional Powers of Receiver   In addition to and without prejudice to the generality of the foregoing, every Receiver   shall (subject to any limitations or restrictions expressed in the instrument appointing   him but notwithstanding any winding-up or dissolution of the Company) have the   following powers in relation to the Charged Property (and any assets of the Company   which, when got in, would be part of the Charged Property) in respect of which he was   appointed (and every reference in this Clause 14.2 to the "Charged Property" shall be   read as a reference to that part of the Charged Property in respect of which such   Receiver was appointed):   14.2.1 Take Possession   power to enter upon, take immediate possession of, collect and get in the   Charged Property including without limitation rents and other income whether   accrued before or after the date of his appointment and for that purpose to   make, or to require the directors of the Company to make, calls conditionally   or unconditionally upon the holders of the Company's share capital in respect   of any such capital of the Company which remains uncalled and to enforce   payment of calls so made and any previous unpaid calls by taking proceedings   in the name of the Company or in his own name;     

 

       - 12 -       14.2.2 Proceedings and Claims   power to bring, prosecute, enforce, defend and abandon applications, claims,   disputes, actions, suits and proceedings in connection with the business of the   Company or all or any part of the Charged Property or the Debenture in the   name of the Company or in his own name and to submit to arbitration,   negotiate, compromise and settle any such applications, claims, disputes,   actions, suits or proceedings and in addition to take or defend proceedings for   the compulsory winding-up of the Company and proceedings for directions   under Section 255 of the Companies Ordinance (Cap. 32);   14.2.3 Carry on Business   power to carry on and manage, or concur in the carrying on and management   of or to appoint a manager of, the whole or any part of the Company's business   in such manner as he shall in his absolute discretion think fit including without   limitation the power to enter into any contract or arrangement and to perform,   repudiate, rescind or vary any contract to which the Company is a party and   power to supervise, control and finance any subsidiary of the Company or any   other body corporate (including without limitation any referred to in   Clause  14.2.6 below) and its business and the conduct thereof and to change   the situation of the registered office of the Company or any such subsidiary or   other body corporate;   14.2.4 Deal with Charged Property   without the need to observe the restrictions imposed by paragraph 11 of the   Fourth Schedule to the Conveyancing and Property Ordinance (Cap. 219),   power, in relation to the Charged Property and each and every part thereof, to   sell, transfer, convey, grant or accept surrenders of leases, vary, terminate or   surrender leases, grant, vary or terminate licences or rights of user (in each   case with or without consideration) or concur in any of the foregoing by the   Company or any other receiver or manager of the Company (including without   limitation to or in favour of the Chargees) in such manner and generally on   such terms as he thinks fit including without limitation, without the consent of   the Company, the severing and separate disposal from the premises to which   they were affixed of fixtures and plant and machinery;   14.2.5 Acquisitions   power to purchase, lease, hire or otherwise acquire any assets or rights of any   description which he shall in his absolute discretion consider necessary or   desirable for the carrying on, improvement or realisation of the whole or any   part of the Charged Property or the business of the Company or otherwise for   the benefit of the whole or any part of the Charged Property;   14.2.6 New Subsidiary   power to promote, procure the formation or otherwise acquire the share capital   of, any body corporate with a view to such body corporate becoming a   subsidiary of the Company or otherwise and purchasing, leasing or otherwise     

 

       - 13 -       acquiring an interest in the whole or any part of the Charged Property or   carrying on any business in succession to the Company or any subsidiary of   the Company;   14.2.7 Landlord and Tenant   power to make allowances to and re-arrangements with any lessees, tenants or   other persons from whom any rents and profits may be receivable (including   granting any licences and operating any rent reviews) and to exercise any   powers and discretions conferred on a landlord or a tenant by any statutory   provision or by general law from time to time in force in relation to all or any   part of the Charged Property;   14.2.8 Repairs, etc.   power to undertake, effect or complete any work of repair, refurbishment,   decoration, modification, building, improvement or development of all or any   part of the Charged Property as he may think expedient and to apply for and   obtain any planning permissions, building regulation approvals and any other   permissions, consents or licences in each case as he may in his absolute   discretion think fit and to acquire (or acquire an interest in) any such property   as he may think expedient;   14.2.9 Insurance   power to effect, maintain or renew indemnity and other insurances and to   obtain bonds and performance guarantees;   14.2.10 Employment   power to employ, engage, dismiss or vary the terms of employment or   engagement of such employees, workmen, servants, officers, managers, agents   and advisers on such terms as to remuneration and otherwise as he shall think   fit including without limitation power to engage his own firm in the conduct of   the receivership;   14.2.11 Borrowing   power to raise or borrow money from any Chargee or any other person to rank   either in priority to the security constituted by this Debenture or any part of it   or otherwise and with or without a mortgage or charge on the Charged   Property or any part of it on such terms as he shall in his absolute discretion   think fit (and no person lending such money shall be concerned to see or   enquire as to the propriety or purpose of the exercise of such power or the   application of money so raised or borrowed);   14.2.12 Redemption of Security   power to redeem, discharge or compromise any security whether or not having   priority to the security constituted by this Debenture or any part of it;     

 

       - 14 -       14.2.13 Covenants, Guarantees and Indemnities   power to enter into bonds, covenants, guarantees, commitments, indemnities   and other obligations or liabilities as he shall think fit, to make all payments   needed to effect, maintain or satisfy such obligations or liabilities and to use   the company seal of the Company; and   14.2.14 Exercise of Powers in Company's Name   power to exercise any or all of the above powers on behalf of and in the name   of the Company (notwithstanding any winding-up or dissolution of the   Company) or on his own behalf.   14.3 Terms of Disposition   In making any sale or other disposal of all or any part of the Charged Property or any   acquisition in the exercise of their respective powers (including without limitation a   disposal by a Receiver to any subsidiary of the Company or other body corporate as is   referred to in Clause  14.2.6), a Receiver or any Chargee may accept or dispose of as,   and by way of consideration for, such sale or other disposal or acquisition, cash,   shares, loan capital or other obligations, including without limitation consideration   fluctuating according to or dependent upon profit or turnover and consideration the   amount whereof is to be determined by a third party.  Any such consideration may, if   thought expedient by the Receiver or any Chargee, be nil or may be payable or   receivable in a lump sum or by instalments.  Any contract for any such sale, disposal   or acquisition by the Receiver or any Chargee may contain conditions excluding or   restricting the personal liability of the Receiver or such Chargee.   15. PRIORITY AND APPLICATION OF MONIES   15.1 Security   Each Chargee agrees that the Security constituted by this Debenture shall rank and   secure the following liabilities of the Company (but only to the extent that such   Security is expressed to secure those liabilities of the Company) in the following   order:   15.1.1 first, the liabilities of the Company under the Priority Note;   15.1.2 second, (a) with respect to the Charged ASF Proceeds, the liabilities of the   Company under the Contingent Note and (b) with respect to the GTAT   Collateral and the GTE Collateral other than the Charged ASF Property, the   liabilities of the Company under the Intercompany Sales Agreement; and   15.1.3 third, with respect to the GTAT Collateral and the GTE Collateral that is also   Charged ASF Property, the liabilities of the Company under the Intercompany   Sales Agreement.     

 

       - 15 -       15.2 Payments under Secured Documents   The Company may make payments of the Secured Obligations at any time in   accordance with the terms of the Secured Documents, and each Chargee may receive   any such payments made in accordance with the terms of the Secured Documents.   15.3 Application of Monies   Save as made under Clause 15.2 (Payments under Secured Documents) or as   otherwise expressly provided in this Debenture, all monies received or recovered by   any Chargee under this Debenture (whether as a result of the enforcement of the   Security constituted by this Debenture or otherwise) shall (by way of variation of the   Conveyancing and Property Ordinance (Cap. 219)) be applied:   15.3.1 first, in the payment of the costs, charges and expenses incurred and payments   made by any Receiver, the payment of his remuneration and the discharge of   any liabilities incurred by such Receiver in, or incidental to, the exercise of   any of his powers;   15.3.2 second, in the payment and satisfaction in full of the obligations of the   Company under the Priority Note;   15.3.3 third, to the extent such monies are received or recovered on account of the   Charged ASF Proceeds, in the payment and satisfaction in full of the   obligations of the Company under the Contingent Note; and   15.3.4 fourth, to the extent such monies are received or recovered on account of the   GTAT Collateral or the GTE Collateral, in the payment and satisfaction in full   of the obligations of the Company under the Intercompany Sales Agreement.     15.4 Turnover by Chargees   If at any time prior to the release of the Security constituted by this Debenture   pursuant to Section 20 (Release of Security), any Chargee receives or recovers any   payment from the Company which is not made pursuant to Clause 15.2 (Payments   under Secured Documents) or Clause 15.3 (Application of Monies), such Chargee   shall promptly notify each other Chargee of such receipt or recovery and apply the   full amount of such receipt or recovery in the order set out in Clause 15.3 (Application   of Monies).   15.5 Application by Company   Any application under this Clause 15 shall override any application by the Company.   16. RECEIPT AND PROTECTION OF PURCHASERS   16.1 Receipt and Consideration   The receipt of any Chargee or any Receiver shall be conclusive discharge to a   purchaser of any part of the Charged Property from such Chargee or such Receiver   and in making any sale or disposal of any part of the Charged Property or making any     

 

       - 16 -       acquisition, any Chargee or any Receiver may do so for such consideration, in such   manner and on such terms as it thinks fit.   16.2 Protection of Purchasers   No purchaser or other person dealing with any Chargee or any Receiver shall be   bound to inquire whether the right of such Chargee or such Receiver to exercise any   of its powers has arisen or become exercisable or be concerned with any propriety or   regularity on the part of such Chargee or such Receiver in such dealings.  The   protection given to purchasers from a mortgagee in Sections 52 and 55 of the   Conveyancing and Property Ordinance (Cap. 219) shall apply equally to purchaser(s)   and other person(s) dealing with any Chargee or any Receiver.   17. POWER OF ATTORNEY   17.1 Appointment and Powers   The Company by way of security irrevocably (within the meaning of Section 4 of the   Powers of Attorney Ordinance (Cap. 31)) appoints each Chargee and any Receiver   severally to be its attorney and in its name, on its behalf and as its act and deed to   execute, deliver and perfect all documents and do all things which such Chargee or   such Receiver may consider to be necessary for:   17.1.1 carrying out any obligation imposed on the Company by this Debenture or any   other agreement binding on the Company to which such Chargee is party   (including without limitation the execution and delivery of any deeds, charges,   assignments or other security and any transfers of the Charged Property or any   part thereof); and   17.1.2 enabling such Chargee and any Receiver to exercise, or delegate the exercise   of, any of the rights, powers and authorities conferred on them by or pursuant   to this Debenture or by law (including, without limitation, upon or after the   occurrence of an Event of Default, the exercise of any right of a legal or   beneficial owner of the Charged Property or any part thereof).   17.2 Ratification   The Company shall ratify and confirm all things done and all documents executed by   any attorney in the exercise or purported exercise of all or any of his powers.   18. REPRESENTATIONS   The Company makes the representations and warranties set out in this Clause 18 with   respect to itself and the Charged Property to each Chargee on the date of this   Debenture.   18.1 Nature of Security   This Debenture creates the Security it purports to create and is not liable to be   amended, avoided or otherwise set aside on its liquidation or otherwise.       

 

       - 17 -       18.2 Ranking of Security   The Security created by this Debenture has the ranking it is expressed to have in this   Debenture and (other than as provided in this Debenture, any Secured Document and   the Existing Account Charge) is not subject to any prior ranking or pari passu ranking   Security Interest.   19. EFFECTIVENESS OF SECURITY   19.1 Continuing Security   The Security created by or pursuant to this Debenture shall remain in full force and   effect as a continuing security for the Secured Obligations unless and until discharged   by the Chargees.  No part of the Security from time to time intended to be constituted   by this Debenture will be considered satisfied or discharged by any intermediate   payment, discharge or satisfaction of the whole or any part of the Secured   Obligations.   19.2 Cumulative Rights   The Security created by this Debenture and the Collateral Rights shall be cumulative,   in addition to and independent of every other Security which the Chargees may at any   time hold for any or all of the Secured Obligations or any rights, powers and remedies   provided by law.  No prior security held by the Chargees over the whole or any part of   the Charged Property shall merge into the Security constituted by this Debenture.   19.3 Company's Obligations   None of the obligations of the Company under this Debenture or the Collateral Rights   shall be affected by an act, omission, matter, thing or event which, but for this   Clause  19.3, would reduce, release or prejudice any of its obligations under this   Debenture including (without limitation and whether or not known to it or to any   Chargee):   19.3.1 the winding-up, dissolution, administration, reorganisation, death, insolvency,   incapacity or bankruptcy  of the Company or any other person or any change   in its status, function, control or ownership;   19.3.2 any of the obligations of the Company or any other person under any Secured   Document, or under any other security relating to any Secured Document   being or becoming illegal, invalid, unenforceable or ineffective in any respect;   19.3.3 any time, waiver or consent granted to, or composition with, the Company or   other person;   19.3.4 the release of the Company or any other person under the terms of any   composition or arrangement with any creditor;   19.3.5 the taking, variation, compromise, exchange, renewal or release of, or refusal   or neglect to perfect, take up or enforce, any rights against, or security over   assets of, the Company or other person or any non-presentation or non-    

 

       - 18 -       observance of any formality or other requirement in respect of any instrument   or any failure to realise the full value of any security;   19.3.6 any incapacity or lack of power, authority or legal personality of or dissolution   or change in the members or status of the Company or any other person;   19.3.7 any amendment, novation, supplement, extension (whether of maturity or   otherwise) or restatement (in each case however fundamental and of   whatsoever nature, and whether or not more onerous) or replacement of a   Secured Document or any other document or security or of the Secured   Obligations;   19.3.8 any unenforceability, illegality or invalidity of any obligation of any person   under any Secured Document or any other document or security;   19.3.9 any insolvency or similar proceedings;   19.3.10 any claims or set-off right that the Company may have; or   19.3.11 any law, regulation or decree or order of any jurisdiction affecting the   Company or any other person.   19.4 Remedies and Waivers   No failure on the part of any Chargee to exercise, or any delay on its part in   exercising, any Collateral Right shall operate as a waiver thereof or constitute an   election to affirm this Debenture.  No election by any Chargee to affirm this   Debenture shall be effective unless it is in writing.  No single or partial exercise of   any Collateral Right shall preclude any further or other exercise of that or any other   Collateral Right.   19.5 No Liability   None of any Chargee, its nominee(s) or any Receiver shall be liable by reason of (a)   taking any action permitted by this Debenture or (b) any neglect or default in   connection with all or any part of the Charged Property or (c) taking possession of or   realising all or any part of the Charged Property, except in the case of gross   negligence or wilful default upon its part (as finally judicially determined).   19.6 Partial Invalidity   If, at any time, any provision of this Debenture is or becomes illegal, invalid or   unenforceable in any respect under the law of any jurisdiction, neither the legality,   validity or enforceability of the remaining provisions of this Debenture under such   laws nor of such provision under the laws of any other jurisdiction shall in any way be   affected or impaired thereby and, if any part of the security intended to be created by   or pursuant to this Debenture is invalid, unenforceable or ineffective for any reason,   that shall not affect or impair any other part of that security.     

 

       - 19 -       19.7 Variation of Conveyancing and Property Ordinance (Cap. 219)   The covenants implied under section 35 of, and the powers implied under section   51(1) of, and (subject to the provisions of this Debenture) the provisions of the Fourth   Schedule to, the Conveyancing and Property Ordinance (Cap. 219) of the Laws of   Hong Kong are varied and extended by this Debenture so that such covenants, powers   and provisions shall take effect in relation to:   19.7.1 the creation (whether by assignment, charge or otherwise) of each and every   element of any security constituted under or pursuant to this Debenture; and   19.7.2 each and every item of the Charged Property (whether mortgaged land or other   assets of any kind).   19.8 No Prior Demand   No Chargee shall be obliged to make any demand of or enforce any rights or claim   against any person, to take any action or obtain judgment in any court against any   person or to make or file any proof or claim in a liquidation, bankruptcy or insolvency   of any person or to enforce or seek to enforce any other security in respect of any or   all of the Secured Obligations before exercising any Collateral Right.   19.9 Settlement conditional   Any settlement, discharge or release hereunder in relation to the Company or all or   any part of the Charged Property shall be conditional upon no security or payment by   the Company to, or recovery from the Company by, any Chargee being avoided or   reduced by virtue of any bankruptcy, insolvency, liquidation or similar laws of   general application or any similar event or for any other reason and shall in the event   of any such avoidance or reduction or similar event be void.   20. RELEASE OF SECURITY   20.1 Redemption of Security   20.1.1 At the time when the Priority Chargee confirms that (i) all Secured Obligations   under the Priority Note have been irrevocably discharged in full, (ii) all   amounts which may be or become payable by the Company under or in   connection with the Priority Note have been irrevocably paid in full and (iii)   the Company is not under any further obligation (whether actual or contingent)   to provide any further advance or financial accommodation to the Priority   Chargee under the Priority Note, the Priority Chargee shall, at the request   (with reasonable notice) and cost of the Company, release and cancel the   Priority Note Floating Charge and procure the reassignment to the Company of   the property and assets assigned to the Priority Chargee pursuant to the   Priority Note Floating Charge (to the extent not otherwise sold, assigned or   otherwise disposed of or applied in accordance with this Debenture), subject to   Clause  20.2 (Avoidance of Payments) and  19.9 (Settlement conditional) and   without recourse to, or any representation or warranty by, any Chargee or any   of its nominees, and provided that:     

 

       - 20 -       (a) such release, cancellation and reassignment shall not in any way be   deemed to constitute a release, cancellation or reassignment (or any   other discharge) of the Security constituted by this Debenture in favour   of the Contingent Chargee and the Intercompany Sales Chargees   (including the Contingent Note Floating Charge and the Intercompany   Sales Floating Charges); and   (b) the Company hereby irrevocably agrees that, at the time at which the   Priority Chargee grants any release, cancellation or reassignment under   this Clause 20.1.1, the Company shall enter into a deed of confirmation   (in a form acceptable to the Contingent Chargee and the Intercompany   Sales Chargees) which confirms that notwithstanding any such release,   cancellation or reassignment, the Security constituted by this   Debenture in favour of the Contingent Chargee and the Intercompany   Sales Chargees (including the Contingent Note Floating Charge and   the Intercompany Sales Floating Charges) shall continue in full force   and effect until such Security is released pursuant to Clause 20.1.2 or   20.1.3 (as applicable).   20.1.2 At the time when the Contingent Chargee confirms that (i) all Secured   Obligations under the Contingent Note have been irrevocably discharged in   full, (ii) all amounts which may be or become payable by the Company under   or in connection with the Contingent Note have been irrevocably paid in full   and (iii) the Company is not under any further obligation (whether actual or   contingent) to provide any further advance or financial accommodation to the   Contingent Chargee under the Contingent Note, the Contingent Chargee shall,   at the request (with reasonable notice) and cost of the Company, release and   cancel the Contingent Note Floating Charge and procure the reassignment to   the Company of the property and assets assigned to the Contingent Chargee   pursuant to the Contingent Note Floating Charge (to the extent not otherwise   sold, assigned or otherwise disposed of or applied in accordance with this   Debenture), subject to Clause  20.2 (Avoidance of Payments) and  19.9   (Settlement conditional) and without recourse to, or any representation or   warranty by, any Chargee or any of its nominees, and provided that:   (a) such release, cancellation and reassignment shall not in any way be   deemed to constitute a release, cancellation or reassignment (or any   other discharge) of the Security constituted by this Debenture in favour   of the Priority Chargee and the Intercompany Sales Chargees   (including the Priority Note Floating Charge and the Intercompany   Sales Floating Charges); and    (b) the Company hereby irrevocably agrees that, at the time at which the   Contingent Chargee grants any release, cancellation or reassignment   under this Clause 20.1.1, the Company shall enter into a deed of   confirmation (in a form acceptable to the Priority Chargee and the   Intercompany Sales Chargees) which confirms that notwithstanding   any such release, cancellation or reassignment, the Security constituted   by this Debenture in favour of the Priority Chargee and the   Intercompany Sales Chargees (including the Priority Note Floating   Charge and the Intercompany Sales Floating Charges) shall continue in     

 

       - 21 -       full force and effect until such Security is released pursuant to Clause   20.1.2 or 20.1.3 (as applicable).   20.1.3 At the time when the Intercompany Sales Chargees confirm that (i) all Secured   Obligations under the Intercompany Sales Agreement have been irrevocably   discharged in full, (ii) all amounts which may be or become payable by the   Company under or in connection with the Intercompany Sales Agreement have   been irrevocably paid in full and (iii) the Company is not under any further   obligation (whether actual or contingent) to provide any further advance or   financial accommodation to the Intercompany Sales Chargees under the   Intercompany Sales Agreement, the Intercompany Sales Chargees shall, at the   request (with reasonable notice) and cost of the Company, release and cancel   the Intercompany Sales Floating Charges and procure the reassignment to the   Company of the property and assets assigned to the Intercompany Sales   Chargees pursuant to the Intercompany Sales Floating Charges (to the extent   not otherwise sold, assigned or otherwise disposed of or applied in accordance   with this Debenture), subject to Clause  20.2 (Avoidance of Payments) and  19.9   (Settlement conditional) and without recourse to, or any representation or   warranty by, any Chargee or any of its nominees, and provided that:   (a) such release, cancellation and reassignment shall not in any way be   deemed to constitute a release, cancellation or reassignment (or any   other discharge) of the Security constituted by this Debenture in favour   of the Priority Chargee and the Contingent Chargee (including the   Priority Note Floating Charge and the Contingent Note Floating   Charge); and   (b) the Company hereby irrevocably agrees that, at the time at which the   Contingent Chargee grants any release, cancellation or reassignment   under this Clause 20.1.1, the Company shall enter into a deed of   confirmation (in a form acceptable to the Priority Chargee and the   Contingent Chargee) which confirms that notwithstanding any such   release, cancellation or reassignment, the Security constituted by this   Debenture in favour of the Priority Chargee and the Contingent   Chargee (including the Priority Note Floating Charge and the   Contingent Note Floating Charge) shall continue in full force and   effect until such Security is released pursuant to Clause 20.1.2 or   20.1.3 (as applicable).   20.2 Avoidance of Payments   If any Chargee considers that any amount paid or credited to or recovered by such   Chargee by or from the Company is capable of being avoided or reduced by virtue of   any bankruptcy, insolvency, liquidation or similar laws, the liability of the Company   under this Debenture and the security constituted by this Debenture shall continue and   such amount shall not be considered to have been irrevocably paid.     

 

       - 22 -       21. SUBSEQUENT AND PRIOR SECURITY INTERESTS   21.1 Subsequent security interests   If any Chargee at any time receives or is deemed to have received notice of any   subsequent Security or other interest affecting all or any part of the Charged Property   or any assignment or transfer of the Charged Property which is prohibited by the   terms of this Debenture, each payment thereafter by or on behalf of the Company to   each Chargee shall be treated as having been credited to a new account of the Chargee   receiving such payment and not as having been applied in reduction of the Secured   Obligations as at the time when (or at any time after) such Chargee received such   notice of such subsequent Security or other interest or such assignment or transfer.   21.2 Prior security interests   In the event of any action, proceeding or step being taken to exercise any powers or   remedies conferred by any prior ranking Security or upon the exercise by any Chargee   or any Receiver of any power of sale under this Debenture or any Collateral Right,   any Chargee may redeem any prior ranking Security over or affecting any Charged   Property or procure the transfer of any such prior ranking Security to itself.  Any   Chargee may settle and agree the accounts of the beneficiary of any such prior   Security and any accounts so settled and agreed will be conclusive and binding on the   Company.  All principal, interest, costs, charges, expenses and/or other amounts   relating to and/or incidental to any such redemption or transfer shall be paid by the   Company to such Chargee upon demand.   22. CURRENCY CONVERSION    For the purpose of or pending the discharge of any of the Secured Obligations each   Chargee may convert any money received, recovered or realised or subject to   application by it under this Debenture from one currency to another, as such Chargee   may think fit, and any such conversion shall be effected at such rate of exchange as   may be available to such Chargee for the time being for obtaining such other currency   with such first-mentioned currency.   23. STAMP TAXES   The Company shall pay all stamp, registration and other taxes to which this   Debenture, the Security contemplated in this Debenture and/or any judgment given in   connection with this Debenture is, or at any time may be, subject and shall, from time   to time, indemnify each Chargee on demand against any liabilities, costs, claims   and/or expenses resulting from any failure to pay or delay in paying any such tax.   24. DISCRETION AND DELEGATION   24.1 Discretion   Any liberty or power which may be exercised or any determination which may be   made under this Debenture by any Chargee or any Receiver may (subject to the terms   of this Debenture) be exercised or made in its absolute and unfettered discretion   without any obligation to give reasons.     

 

       - 23 -       24.2 Delegation   Each of any Chargee and any Receiver shall have full power to delegate (either   generally or specifically) the powers, authorities and discretions conferred on it by   this Debenture (including without limitation the power of attorney under Clause  17   (Power of Attorney)) on such terms and conditions as it shall see fit which delegation   shall not preclude any subsequent exercise, any subsequent delegation or any   revocation of such power, authority or discretion by any Chargee or any Receiver.   25. SET-OFF   Each Chargee may set off any matured obligation due from the Company under any   or all of the Secured Documents (to the extent beneficially owned by such Chargee)   against any matured obligation owed by such Chargee to the Company, regardless of   the place of payment, booking branch or currency of either obligation.  If such   obligations are in different currencies, such Chargee may convert either obligation at   a market rate of exchange in its usual course of business for the purpose of such set-   off.   26. CHANGES TO PARTIES   26.1 Successors   This Debenture shall be binding upon and inure to the benefit of each party hereto and   its and/or any subsequent successors and permitted assigns and transferees.  Without   prejudice to the foregoing, this Debenture shall remain in effect despite any   amalgamation or merger (however effected) relating to any Chargee; and references   to any Chargee herein shall be deemed to include any person who, under the laws of   its jurisdiction of incorporation or domicile, has assumed the rights and obligations of   such Chargee under this Debenture or to which, under such laws, those rights and   obligations have been transferred.   26.2 Assignment and Transfer by Chargees   Each Chargee may:   26.2.1 assign all or any of its rights under this Debenture; and   26.2.2 transfer all or any of its obligations (if any) under this Debenture,   to any person in accordance with the provisions of the Secured Documents.  Upon   such assignment and transfer taking effect, the assignee or transferee (as applicable)   shall acquire an interest in this Debenture.   26.3 No assignment or transfer by Company    The Company may not assign or transfer any or all of its rights (if any) and/or   obligations under this Debenture.     

 

       - 24 -       27. AMENDMENTS AND WAIVERS   Any provision of this Debenture may be amended or waived only by agreement in   writing between the Company and each Chargee.   28. THIRD PARTY RIGHTS   A person who is not a party to this Debenture has no right under the Contracts (Rights   of Third Parties) Ordinance (Cap. 623) to enforce or enjoy the benefit of any term of   this Debenture.   29. COUNTERPARTS   This Debenture may be executed in any number of counterparts, all of which taken   together shall constitute one and the same instrument.   30. GOVERNING LAW   This Debenture is governed by the laws of Hong Kong.   31. JURISDICTION   31.1 Hong Kong Courts   The courts of Hong Kong have exclusive jurisdiction to settle any dispute (a   "Dispute") arising out of, or connected with this Debenture (including a dispute   regarding the existence, validity or termination of this Debenture or the consequences   of its nullity).   31.2 Convenient Forum   The parties hereto agree that the courts of Hong Kong are the most appropriate and   convenient courts to settle Disputes between them and, accordingly, that they will not   argue to the contrary.   31.3 Exclusive Jurisdiction   This Clause 31 (Jurisdiction) is for the benefit of the Chargees only.  As a result and   notwithstanding Clause  31.1 (Hong Kong Courts), nothing herein shall prevent any   Chargee from taking proceedings relating to a Dispute in any other courts with   jurisdiction.  To the extent allowed by law any Chargee may take concurrent   proceedings in any number of jurisdictions.   31.4 Waiver of immunity   The Company waives generally all immunity it or its assets or revenues may otherwise   have in any jurisdiction, including immunity in respect of:   (a) the giving of any relief by way of injunction or order for specific performance   or for the recovery of assets or revenues; and/or     

 

       - 25 -       (b) the issue of any process against its assets or revenues for the enforcement of a   judgment or, in an action in rem, for the arrest, detention or sale of any of its   assets and revenues.   IN WITNESS WHEREOF this Debenture has been executed as a deed by the Company and   each Chargee and is intended to be and is hereby delivered by each Chargee and the   Company as a deed on the date specified above.

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