Document:

Exhibit 10.1

 

APPLE INC.

MASTER DEVELOPMENT AND SUPPLY AGREEMENT

 

This Master Development and Supply Agreement #C56-13-02947 (the “Agreement”) is entered into by and among Apple Inc., a California corporation having its principal place of business at 1 Infinite Loop, Cupertino, California 95014, United States (“Apple”) and GTAT Corporation, having its principal place of business at 243 Daniel Webster Highway, Merrimack, NH 03054  (“GTAT”), effective as of October 31, 2013 (the “Effective Date”).

 

1.              Scope.  This Agreement relates to goods that GTAT will develop, manufacture, sell and deliver to Authorized Purchasers (as defined below) for use in connection with Apple’s products (collectively, the “Goods”).  The parties may enter into statements of work (each, a “Statement of Work” or “SOW”) in the future to address additional details related to specific Goods.

 

2.              Forecast.  Apple will periodically provide written forecasts indicating Apple’s projected demand for each Good (each such forecast, a “Forecast”).  GTAT will accept each such Forecast upon receipt provided it is consistent with the applicable Flexibility Schedule, if any, in an SOW.  GTAT will timely commence the manufacture of Goods in order to deliver the Goods by the dates indicated in each Forecast.  “Flexibility Schedule” means a schedule that sets forth the maximum percentage increase in units forecasted or ordered, based on when notice of such increase is given.

 

3.              Pricing.  Apple and GTAT will mutually agree on pricing for Goods [***].

 

4.              Purchase Orders.

 

4.1.         GTAT will accept and timely fulfill all Purchase Orders that Apple or any entity Apple authorizes to procure Goods under this Agreement (Apple and each of the foregoing entities, an “Authorized Purchaser”) issues by the delivery date requested in such Purchase Order so long as the number of Goods indicated does not exceed the quantity specified in the applicable Forecast with respect to the relevant delivery period.  “Purchase Order” means an Authorized Purchaser’s written or electronically transmitted instruction to GTAT to deliver particular Goods pursuant to applicable delivery or performance dates and locations.

 

4.2.         Authorized Purchasers may, [***] reschedule the shipment date of undelivered Goods and/or redirect shipments of Goods to alternate locations.

 

4.3.         Unless mutually agreed in writing otherwise, all Purchase Orders will be governed by the terms and conditions of this Agreement and any applicable SOW.  As between Apple, its Related Entities and GTAT, any different or additional terms in any proposal, acknowledgement form or any other document will be of no force or effect and will not become part of the agreement between the parties.  GTAT will not enter into any agreement with any Authorized Purchaser in connection with the Goods on terms less favorable to such Authorized Purchaser than those in this Agreement.  Further, if GTAT or an Authorized Purchaser seeks, but fails within 90 days, to enter into such an agreement, then GTAT will promptly notify Apple of the circumstances.

 

4.4.         GTAT may not invoice for Goods until after delivery.  Payment terms are 45 days from the date an Authorized Purchaser receives an undisputed invoice.  All amounts payable will be stated and paid in United States Dollars.

 

4.5.         Authorized Purchasers are not obligated to purchase any Goods except pursuant to a Purchase Order it issues.  Except for amounts due pursuant to a Purchase Order or SOW, Authorized Purchasers will not be responsible for any costs in connection with the supply or purchase of any Goods.

 

5.              Delivery.  TIME IS OF THE ESSENCE as to the supply and delivery of Goods under this Agreement.  If GTAT cannot meet the requirements of a Forecast or a Purchase Order, GTAT must promptly notify the Authorized Purchaser and propose a revised delivery date, and the Authorized Purchaser may, at its option,

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

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exercise any or all of the following options: (i) require GTAT to deliver the Goods using priority freight delivery (with all incremental freight charges at GTAT’s expense); (ii) purchase substitute goods and hold GTAT accountable for the difference between the price of the Goods and the price paid for substitute goods, as well as all amounts paid for shipping, insurance, handling, and any taxes or duties; and (iii) seek and collect all other remedies provided at law, in equity and under this Agreement for failure to timely deliver Goods.

 

6.              Supply Constraint. If GTAT’s ability to manufacture and deliver any Goods in accordance with the then current Forecast is constrained for any reason, GTAT will promptly notify Apple of the supply constraint and GTAT’s plan to resolve it, and will provide Apple daily updates regarding the steps taken to resolve the supply constraint.  If the supply constraint is due to constrained resources (e.g., personnel, material, equipment, or third party components), GTAT will allocate the constrained resources to supply Goods to Authorized Purchasers before using such resources to supply goods to any other customer.

 

7.              Acceptance. Goods delivered will be subject to Authorized Purchaser’s inspection, test and rejection. Acceptance testing and inspection of Goods will be performed at the Authorized Purchaser’s factory (or other applicable delivery destination specified in the Purchase Order) by GTAT’s and Authorized Purchaser’s personnel.  Any Goods delivered (individual units or entire lots) that do not comply with the requirements of the applicable Specifications, Purchase Order or this Agreement may be rejected; provided, however, that any Goods expressly accepted upon completion of acceptance testing and inspection, but later discovered to be Defective Goods, will instead be handled according to Sections 8 and 9.  Payment of invoices will not be deemed acceptance of Goods. “Specifications” means the most current version of all specifications and requirements that Apple provides in writing (which may include Apple notifying GTAT that such specifications and/or requirements are available for electronic download along with providing necessary access and download instructions), including any documents referenced in any bill of materials, SOW, and any relevant specifications, drawings, samples or other descriptions that GTAT provides and Apple approves in writing.

 

8.              Warranties.  GTAT represents and warrants that: (i) it has the right to enter into this Agreement and its performance of this Agreement will be free and clear of liens and encumbrances; (ii) entering into this Agreement will not cause GTAT to breach any other agreements to which it is a party; (iii) the Goods will be new and comprised of new materials when delivered; (iv) the Goods, or any portion thereof, do not infringe any patent, copyright, trademark, trade secret, or other proprietary right of a third party; and (v) for a period of 3 years (unless agreed otherwise in an SOW) the Goods will conform to all applicable Specifications, be free from any defects and be merchantable (as defined in CA Civil Code Section 1791.1).  For all Goods that an Authorized Purchaser other than Apple purchases, GTAT agrees that Apple may enforce against GTAT any and all applicable warranties in the same manner as if Apple was the actual purchaser of the Goods.  Further, Apple’s rights and remedies under this Agreement with respect to the Goods (including all warranties) remain in full force and effect even if Apple sells, consigns or otherwise transfers the Goods to any of Apple’s contract manufacturers, GTATs and other subcontractors.

 

9.              Remedies for Defective Goods.

 

9.1.         “Defective Goods” means Goods or individual [***]that are cut from a Good that (a) fail (or because of a known issue or defect Apple reasonably expects to fail) to conform with or operate according to the warranties set forth in Section 8, applicable Specifications, or a consumer’s reasonable expectations; (b) fail to comply with any applicable law or regulation; or (c) create a risk of bodily injury or property damage.  [***].

 

9.2.         If, after acceptance, Apple or an Authorized Purchaser gives notice to GTAT that any Goods or individual [***]that are cut from a Good are Defective Goods, [***]Apple, the Authorized Purchaser, and GTAT [***]. GTAT will provide a sufficient number[***].

 

9.3.         The consequence of [***]in each instance will be as follows:

 

9.3.1.    In case of a [***], then Apple may in its sole discretion select one or more of the following remedies: [***].

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

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9.3.2.    In case of a [***], then GTAT will have no liability to Apple or the Authorized Purchaser on account of such Defective Goods.

 

9.3.3.    In case of a [***], then Apple may specify, and GTAT will comply with, [***].

 

10.       Return of Goods.  At its expense, GTAT will accept the return of any Defective Goods that an Authorized Purchaser returns, other than Goods found by [***] to be Defective Goods due to [***], and will thereupon (i) ship replacement Goods on the same day the Authorized Purchaser returns the Goods or (ii) upon request, credit the Authorized Purchaser the original purchase price of the Goods (or, in the case of individual [***].  For example, [***].  For the avoidance of doubt, GTAT will, upon Apple’s request pursuant to Section 9.3.3, comply with the obligations in this Section 10 with respect to Goods found by [***] to be Defective Goods due to [***].

 

11.       Modifications.  GTAT may not modify any Equipment, Specifications, manufacturing process or materials without first obtaining Apple’s prior consent.  Whenever Apple modifies the Specification for a Good, and notwithstanding any disagreement over the cost to implement such Specification modification, GTAT will immediately implement all such modifications and manufacture and timely deliver all such Goods pursuant to the applicable Forecast.  The parties will make good faith efforts to promptly resolve any such disagreement. During any period of disagreement, GTAT will charge Authorized Purchasers, and Authorized Purchasers will pay:  (i) the applicable price for the Good set forth in an SOW; (ii) in the absence of an SOW, the last price Authorized Purchasers paid for the applicable Good; or (iii) if Authorized Purchasers have not yet purchased the applicable Good, the last mutually agreed price for the applicable Good. When the parties resolve any disagreement over the amount to be charged for such Goods, they will reconcile any amounts an Authorized Purchaser or GTAT owes.

 

12.       Service and Support.  GTAT will provide the service and support services set forth on Attachment 3.

 

13.       Hubs.  As agreed in any SOW, GTAT will store Goods in Hubs before their Forecast delivery date to support just-in-time delivery of the Goods.  GTAT will: (i) bear all costs associated with warehousing Goods in Hubs; (ii) maintain a sufficient inventory of Goods in the Hubs to satisfy the requirements of the then current Forecast; (iii) ensure that the Authorized Purchaser or its carrier(s) may withdraw Goods from the Hubs as needed; (iv) fully insure, or require the Hub operator to fully insure, all Goods in transit to or stored at a Hub against all risk of loss or damage until such time as the Authorized Purchaser takes title to them; and (v) require that the Hub operator take all steps necessary to protect all Goods in a Hub consistent with good commercial warehousing practice.  “Hub” means an Apple-approved facility located at or near Apple-specified manufacturing or distribution facilities, or other Apple-specified location.

 

14.       Logistics. When an Authorized Purchaser is the “Importer of Record,” GTAT will, at no charge, promptly forward to the Authorized Purchaser any documents the Authorized Purchaser may reasonably require to allow the Authorized Purchaser to clear the Goods through customs and/or obtain possession of the Goods at the port of entry.  GTAT will use the freight carriers that Apple selects or approves.  Apple is solely responsible for specifying any labeling of the Goods.  GTAT may not print any of its own trade names, trademarks, or logos on the Goods without Apple’s prior written consent.  GTAT will package all Goods in accordance with applicable Specifications using the best commercial practices.

 

15.      Terms of Sale.  GTAT will deliver Goods DDU (INCOTERMS 2010) delivery location designated in the applicable SOW, or if not so designated, in the applicable Purchase Order) with title and risk of loss transferring from GTAT to the Authorized Purchaser at the designated delivery location.  If Goods are delivered via Hubs, GTAT will deliver them DDP (delivery location designated in the applicable SOW or applicable Purchase Order) with title and risk of loss remaining with GTAT until the Authorized Purchaser or its designated carrier withdraws the Goods from the Hub.

 

16.       Manufacturing Commitment.  Regardless of initial manufacturing yields or any other circumstance, GTAT will always timely start the manufacture of the Goods in order to fully and timely meet Apple’s Forecasts.  For example, if GTAT is experiencing undesirable manufacturing yields during the initial ramp of a Good, GTAT will nevertheless continue to manufacture the Goods to meet Apple’s Forecast.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

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17.       Right to Manufacture.

 

17.1.  If GTAT materially breaches its supply obligations under this Agreement or any SOW and fails to cure such breach within 10 Business Days of Apple’s written notice of such breach as set forth below, then GTAT, on behalf of itself and its Related Entities, hereby grants and conveys to Apple a fully paid-up, royalty-free, worldwide, nonexclusive, irrevocable, perpetual license under any Intellectual Property Rights owned, controlled or licensable by GTAT or its Related Entities to make, have made, use, have used, purchase, have purchased, sell, have sold, offer for sale, license, lease, import, have imported, export, or otherwise distribute or dispose of Sapphire Technology in Consumer Electronic Products (including components thereof), and to practice and have practiced any method in connection with the same by or for Apple or Apple’s Related Entities; provided, however, that Apple may exercise such license rights only: (i) for a period of up to 10 Business Days beginning upon Apple’s written notice to GTAT of any breach of GTAT’s supply obligations under this Agreement or any SOW, so long as such breach remains uncured, solely to prepare for but not to engage in commercial production of Goods; and (ii) indefinitely, and without the foregoing limitation on engaging in commercial production, if such breach remains uncured at the end of such 10 Business Day period.

 

17.2.  As reasonably necessary to assist Apple in exercising its rights under this license, GTAT will promptly and fully provide any technical information, training, and other assistance Apple requests.

 

17.3.  “Sapphire Technology” is defined in Section 10.3.4 of SOW #1.

 

18.       Development.  GTAT may be asked to develop new products and technology, including Goods.  GTAT agrees that all such development activities and any resulting technology or Intellectual Property Rights (as defined in Attachment 2), will be governed by the terms set forth in Attachment 2.

 

19.       Indemnification. GTAT shall indemnify and hold harmless, and at Apple’s request, defend or pay for the defense of Apple, Authorized Purchasers, or Apple Personnel (or any combination of Apple, Authorized Purchasers and Apple Personnel) against any claims or allegations that: [***]; (ii) the Goods caused injury or damage; or (iii) arise or are alleged to have arisen as a result of negligent and/or intentional acts or omissions of GTAT or GTAT Personnel or breach by GTAT of any term of the Agreement.  GTAT’s indemnification obligation includes the obligation to hold Apple, Authorized Purchasers and Apple Personnel harmless from and against any costs, damages and fees (including attorney and other professional fees) attributable to any such claims or allegations.  Apple agrees that it will notify GTAT in writing of any claims or allegations that are covered by this Section 19.  If Apple requests that GTAT defend such claim or allegation and GTAT irrevocably confirms full indemnification for the claim in writing and without exception, thereafter (1) Apple will permit GTAT to control the defense of the claim or allegation using counsel of GTAT’s choice who is approved by Apple, provided that such approval is not unreasonably withheld or delayed; and (2) Apple will not settle any such claim or allegation without GTAT’s permission if it requires any payment by GTAT, provided that such permission is not unreasonably withheld or delayed.  Notwithstanding the foregoing, Apple may control the defense and settlement of a claim, at its own expense, if there is a reasonable risk that GTAT will not be able to cover its full obligation for the claim or if there is a significant risk of harm to Apple from a request for an injunction.  GTAT agrees to provide information and assistance reasonably necessary to enable Apple to defend the claim (at GTAT’s expense), and if GTAT defends at Apple’s request, then Apple will do the same (at GTAT’s expense). GTAT may not enter into any settlement that imposes any obligation on Apple without Apple’s prior written consent.  GTAT will not publicize or permit any third party to publicize any settlement of such claim or allegation without Apple’s written permission. If GTAT does not agree that the claim or allegation is fully covered by this indemnity provision, then the parties agree the indemnity claim shall be tolled while the Parties negotiate in good faith an equitable arrangement regarding the defense of the claim or suit and any settlement thereof consistent with GTAT’s obligations hereunder.  “Personnel” means officers, directors, agents, consultants, contractors, and employees.

 

20.       Duty to Correct.  If a third party claims that any Goods infringe an Intellectual Property Right, GTAT will, in addition to its obligations under Section 19, promptly notify Apple in writing and, at its own expense, keep Apple informed of GTAT’s defenses and exercise the first of the following remedies that is practicable: (i) obtain from such third party the right for Authorized Purchasers to use, import and sell such Goods in Apple

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

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products; (ii) modify the Goods so they are non-infringing and in compliance with this Agreement; (iii) replace the Goods with non-infringing versions that comply with the requirements of any Specifications and this Agreement; or (iv) at Authorized Purchaser’s request, accept the return of infringing Goods and refund any amounts Authorized Purchasers paid.  In any event, GTAT must exercise one of the foregoing remedies at a time and in a manner that will protect Apple from harm that could result from an injunction.

 

21.       Resource Requirements; Access to Apple Supply Chain.

 

21.1.  Unless agreed otherwise in an SOW, GTAT will, at its expense, purchase, install, test, maintain and operate all Equipment necessary to manufacture and deliver the development deliverables and the Goods.  GTAT will also secure all materials in accordance with applicable Specifications necessary to timely manufacture and supply the development deliverables (pursuant to Attachment 2) and the Goods.  Upon Apple’s request, GTAT will purchase materials directly from Apple, and, at Apple’s request, will provide Apple with (i) weekly reports by part number specifying demand for such materials for the immediately following 12-week period; and (ii) weekly receipt logs of any such materials.  Before placing orders for or purchasing any materials for use in Goods that are comprised of multiple components, GTAT will provide Apple, for Apple’s review and approval, a complete engineering bill of materials for such Goods, listing the GTAT part number(s), lead-time(s), and cost(s) of each material therein.  Except for amounts due pursuant to a Letter of Authorization, the applicable SOW or Purchase Order, Apple will not be responsible for any costs associated with the materials.  “Equipment” means fixtures, tooling, test equipment and any other equipment used in connection with the development, manufacturing, testing, packaging, delivery or servicing of the development deliverables or Goods.  “BOM” means the engineering bill of materials that Apple creates and approves for the development deliverables or Goods.

 

21.2.  Apple may from time to time direct GTAT (or, at GTAT’s request, grant written authorization to GTAT) to procure certain materials or supplies from certain third-party vendors with whom Apple has established supply agreements (each, a “Specified Vendor”). In each such instance: (i) GTAT will negotiate and execute its own purchasing agreement with the Specified Vendor; (ii) for the quantities that are to be used to produce Goods under this Agreement, Apple will request the Specified Vendor to offer those materials or supplies to GTAT on terms no less favorable than the terms on which the Specified Vendor sells, or has agreed to sell, the same materials or supplies to Apple; (iii) for all other quantities of such materials or supplies (that is, quantities that are not used to produce Goods under this Agreement), Apple will request, but need not require, that the Specified Vendor offer such materials or supplies to GTAT on the same terms; and (iv) Apple will not require the Specified Vendor to impose less favorable terms on GTAT for quantities of the materials or supplies that are not used to produce Goods under this Agreement.

 

22.       Term and Termination. The term of this Agreement is defined in Section 13.1 of SOW #1 (the “Term”). Except as agreed in an SOW, GTAT may terminate this Agreement if Apple materially breaches this Agreement and fails to cure the breach within 30 days after receipt of written notice from GTAT of the breach.  The provisions of Sections 9 through and including 23, and Attachments 1-6 will survive the termination of this Agreement.

 

23.       Miscellaneous.  The terms and conditions in Attachments 1-6, to this Agreement are incorporated herein by this reference.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the effective date shown above.  Each of the persons signing this Agreement affirms that he or she is duly authorized to do so and thereby to bind the indicated entity.  This Agreement may be executed simultaneously in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

	
Apple   Inc.
    	
 
    	
GTAT   CORPORATION
    
	
 
    	
 
    	
 
    
	
By
    	
 
    	
 
    	
By
    	
 
    
	
 
    	
 
    	
 
    
	
Name:   Duco Pasmooij
    	
 
    	
Name
    	
 
    
					

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

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Title:   Vice President, Operations
    	
 
    	
Title
    	
 
    
	
 
    	
 
    	
 
    
	
Date
    	
 
    	
 
    	
Date
    	
 
    
					

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

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ATTACHMENT 1

 

General Terms and Conditions

 

1.              Confidentiality. All disclosures of Confidential Information arising out of or related to this Agreement will be governed by the terms of the parties’ existing Confidentiality Agreement, dated August 24, 2012.

 

2.              Press Releases and Publicity.  Neither Apple nor GTAT will issue press releases or other publicity regarding the Agreement or its subject matter without the prior written approval of the other.

 

3.              Compliance with Laws.  GTAT agrees that it will fully comply with all applicable laws and regulations in performing its obligations under the Agreement.  GTAT agrees that it will not export, re-export, sell, resell or transfer any customer data or any export-controlled commodity, technical data or software (i) in violation of any law, regulation, order, policy or other limitation imposed by the United States (including the United States Export Administration regulations) or any other government authority with jurisdiction; or (ii) to any country for which an export license or other governmental approval is required at the time of export, without first obtaining all necessary licenses or equivalent.

 

4.              Anti-Corruption.  GTAT has reviewed and understands Apple’s policies with respect to ethical business conduct and agrees to fully comply with all such policies.  GTAT will comply with all applicable laws and regulations enacted to combat bribery and corruption, including the United States Foreign Corrupt Practices Act, the UK Bribery Act, the principles of the OECD Convention on Combating Bribery of Foreign Public Officials and any corresponding laws of all countries where business or services will be conducted or performed pursuant to the Agreement (collectively, the “Anti-Corruption Laws”).  GTAT and, to the best of GTAT’s knowledge, its subsidiaries and affiliates, have conducted their businesses in compliance with the Anti-Corruption Laws.  GTAT will not Knowingly, directly or indirectly pay, offer, promise, or give anything of value (including any amounts paid or credited by Apple to GTAT) to any person or party, to influence any act or decision by such person or party for the purpose of obtaining, retaining, or directing business to Apple.  “Knowingly” means (i) the actual knowledge of GTAT’s executive officers or employees, or (ii) the knowledge that GTAT’s executive officers and employees should reasonably be expected to have or (iii) the existence of a reasonable belief of GTAT’s executive officers or employees.  Any amounts paid by Apple to GTAT under the Agreement will be for services actually rendered, or Goods sold, by GTAT (as applicable).  Additionally, to the extent permitted by law, GTAT will notify Apple if an owner, partner, officer, director or employee of GTAT who is assigned to a current or prospective Apple account as an account representative or account manager (or any similar such position) has been, or will become, an official or employee of a governmental entity or political party or a candidate for political office.  GTAT represents and warrants that all information provided to Apple in connection with Apple’s selection and approval of GTAT as an Apple vendor, or at any other time during the term of the Agreement, is complete and true.

 

5.              Right to Offset.  Apple may, from time to time, set-off or recoup any amounts due from GTAT or any GTAT Related Entity to Apple or any Apple Related Entity, against any amounts due from Apple or any Apple Related Entity to GTAT or any GTAT Related Entity. If required by applicable law, Apple will give GTAT notice that Apple has effected a set-off or recoupment, within a reasonable time thereafter via email or any other reasonable means that Apple selects, and GTAT agrees that any such notice will be effective when given, even if a receiver, custodian, trustee, examiner, liquidator or similar official has been appointed for GTAT, the applicable GTAT Related Entity, or any substantial portion of the assets thereof.  The rights described in this paragraph are in addition to any other rights and remedies available under this Agreement or applicable law, including, for example, the right to deduct damages from any amount payable to GTAT or any GTAT Related Entity.  “Related Entity,” as applied to both Apple and GTAT, includes any subsidiary or affiliate and further includes any corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other business entity that controls, is controlled by, or is under common control with an entity, where “control” means that the entity possesses, directly or indirectly, the power to direct or cause the direction of the management policies of the other entity, whether through ownership of voting securities, an interest in registered capital, by contract, or otherwise.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

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6.              Insurance and Loss Prevention.  GTAT will comply with the requirements specified in Attachment 4 hereto.

 

7.              GTAT Code of Conduct.  GTAT will comply with the requirements specified in Attachment 5 hereto

 

8.              Relationship of Parties. Nothing in the Agreement creates a joint venture, partnership, franchise, employment or agency relationship or fiduciary duty of any kind. Neither party will have the power, and will not hold itself out as having the power, to act for or in the name of or to bind the other party.  Except as expressly provided, the Agreement is not for the benefit of any third parties.

 

9.              Assignment.  This Agreement is personal to GTAT, and GTAT may not assign, delegate or otherwise transfer this Agreement, any SOW, any Purchase Order, and/or any right or obligation thereunder without the prior written consent of Apple.  Unless otherwise defined in a SOW, a Change of Control, as defined below, will be considered an assignment of this Agreement.  Any purported or attempted assignment, delegation, subcontracting or other transfer, in whole or in part, without such consent will be null and void and will constitute a breach of this Agreement.  Subject to the foregoing, this Agreement will be binding upon, and inure to the benefit of, the successors, assigns, representatives, and administrators of the parties.  “Change of Control” means (i) any sale or exchange of the capital stock by the shareholders of GTAT, or any GTAT Related Entity that makes, uses or sells, or offers services in connection with, sapphire production or processing equipment or sapphire goods or material, in one transaction or a series of related transactions where more than 50% of the outstanding voting power of GTAT, or of GTAT’s interest in any such GTAT Related Entity, is acquired by a person or entity or group of related persons or entities; (ii) any reorganization, consolidation or merger of GTAT or any GTAT Related Entity where the outstanding voting securities of GTAT or such GTAT Related Entity immediately before the transaction represent or are converted into less than fifty percent 50% of the outstanding voting power of the surviving entity (or its parent corporation) immediately after the transaction; or (iii) the consummation of any transaction or series of related transactions that results in the sale of all or substantially all of the assets of GTAT or any GTAT Related Entity, other than where the entity acquiring shares or assets, or the surviving entity with respect to clause (ii) above, is GTAT or a wholly owned subsidiary of GTAT.

 

10.       No Waiver.  No delay or failure to act in the event of a breach of the Agreement will be deemed a waiver of that or any subsequent breach of any provision of the Agreement.  Any remedies at law or equity not specifically disclaimed or modified by the Agreement remain available to both parties.

 

11.       Audits/Inspections.  During the Term and for two (2) years thereafter, Apple or its representatives may inspect GTAT facilities and audit GTAT’s records to verify that GTAT has complied with its obligations under this Agreement.  GTAT will provide Apple or its representatives any information and documentation that is reasonably requested in connection with such audit or inspection. GTAT will maintain all records related to the Goods during the Term and for two (2) years thereafter. GTAT will reimburse Apple within 45 days after the audit is completed for any overpayments made by Authorized Purchasers plus the maximum interest rate allowed by law.  GTAT will bear the cost of the audit and inspection if the audit or inspection reveals any breach of GTAT’s obligations under the Agreement.  GTAT must track the date Goods are produced and make such information available to Apple upon Apple’s request during the term of this Agreement and for two (2) years after the Goods are delivered.

 

12.       Governing Law. The Agreement and the rights and obligations of the parties will be governed by and construed and enforced in accordance with the laws of the State of California as applied to agreements entered into and to be performed entirely within California between California residents, without regard to conflicts of law principles.  The parties expressly agree that the provisions of the United Nations Convention on Contracts for the International Sale of Goods will not apply to the Agreement or to their relationship.

 

13.       GTAT Affiliates. GTAT’s affiliates may provide Goods or related services under this Agreement, provided that such affiliate is preapproved by Apple in writing and has executed a Contract of Adherence, joining such GTAT affiliate as a party to this Agreement, in the form attached hereto as Attachment 6.  GTAT is not relieved of any of its obligations under this Agreement by virtue of joining an affiliate to this Agreement.  Any breach of the Agreement by an affiliate is deemed to be a breach of this Agreement by GTAT.  If GTAT knows or becomes

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

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aware that a GTAT affiliate is providing Goods or related services under this Agreement, then GTAT must immediately (i) notify Apple in writing of the affiliate’s identity and clearly explain its legal and corporate relationship with GTAT; (ii) obtain Apple’s written consent to allow such affiliate to engage in such activities; and (iii) promptly cause such affiliate to sign the Contract of Adherence (unless Apple requests otherwise).

 

14.       Remedies.  If GTAT breaches any term of this Agreement in connection with the provision of Goods to an Authorized Purchaser, then GTAT agrees it owes to Apple any and all remedies under this Agreement for such breach as if Apple had been the direct purchaser of the Goods from GTAT.  For example, if GTAT fails to timely deliver Goods to an Authorized Purchaser other than Apple, then GTAT will owe Apple (and Apple can seek from GTAT under this Agreement) any available remedies for failing to timely deliver such Goods.  If Apple seeks remedies in such event, then the affected Authorized Purchaser cannot seek remedies for the same breach.

 

15.       Binding Arbitration.  Disputes arising under, or in connection with, this Agreement will be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one arbitrator appointed in accordance with the Rules.  The language of the arbitration will be English. The place of the arbitration will be San Francisco, CA.  Judgment upon any award(s) rendered by the arbitrator may be entered in any court having jurisdiction thereof.

 

16.       Equitable Relief.  Notwithstanding the requirements of Section 15, above, either party may seek equitable relief in order to protect its rights, and to cause the other party to perform its obligations, hereunder at any time and in any court having jurisdiction over the parties hereto and/or the subject matter hereof.  The parties hereby waive any bond requirements for obtaining equitable relief. Without limitation of the foregoing, the confidentiality provisions of the Agreement will be enforceable under the provisions of the California Uniform Trade Secrets Act, California Civil Code Section 3426, as amended.

 

17.       Apple Requirements Documents.  GTAT will comply with all Apple Requirements Documents (as may be updated by Apple from time to time), including the following: #069-0135: Specification, Regulated Substances;  #069-1111: Apple RoHS Compliance Specification; #069-1857-D: Apple Specification on the Restriction of Chlorine and Bromine; #080-2503: Apple Supplier Code of Conduct (as further described in Section 7 of this Attachment 1); and #n/a: Loss Control and Loss Prevention Standards.

 

18.       Reports.  GTAT will, at GTAT’s expense, provide reports requested by Apple, including reports regarding the development deliverables, Goods, Purchase Orders, Hubs, and Defective Goods.

 

19.       Notices.  Any notice required or permitted hereunder will be in writing, and will be given to the appropriate party at the address first set forth above, or at such other address as the party may hereafter specify in writing.  Any notices to Apple will be sent to the attention of Apple’s Corporate Procurement Department.  Such notice will be deemed given: upon personal delivery to the appropriate address; or three (3) business days after the date of mailing if sent by certified or registered mail; or one (1) business day after the date of deposit with a commercial courier service offering next business day service with confirmation of delivery. “Business day” shall mean any day on which banks are open for business in San Francisco, California.

 

20.       Force Majeure.  Neither party will be liable for any failure to perform caused by circumstances beyond its reasonable control including, but not limited to, acts of God, earthquakes, hurricanes, floods, tornados, fires, acts of war, hostilities, invasions, terrorism, civil disorder, riots, labor actions (other than actions by GTAT’s personnel and contractors), major upheavals, government action, government restrictions, blockade, embargo, utility disruptions, including power and water, or accident, provided: (a) it promptly notifies the other party and uses reasonable efforts to correct its failure to perform; and (b) it has taken such commercially reasonable efforts to protect against and mitigate the impact of the force majeure event if such event was reasonably foreseeable or was of a kind for which such precautionary measures are customarily taken in the applicable industry.  For the avoidance of doubt, any circumstance caused primarily by one or more furnaces or any other Equipment provided by GTAT, will not constitute a Force Majeure event, and the provisions of this Section 20 will not apply.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

9

 

21.      Construction.  The section headings in the Agreement are for convenience only and are not to be considered in construing or interpreting the Agreement.  References to sections, schedules, SOWs, and Purchase Orders are references to sections of, and SOWs, schedules and Purchase Orders to, the Agreement, and the word “herein” and words of similar meaning refer to the Agreement in its entirety and not to any particular section or provision.  The word “party” means a party to the Agreement and the phrase “third party” means any person, partnership, corporation or other entity not a party to the Agreement.  The words “will” and “shall” are used in a mandatory, not a permissive, sense, and the word “including” is intended to be exemplary, not exhaustive, and will be deemed followed by “without limitation.”  Any requirement to obtain a party’s consent is a requirement to obtain such consent in each instance.

 

22.       Severability. If a court of competent jurisdiction finds any provision of the Agreement unlawful or unenforceable, that provision will be enforced to the maximum extent permissible so as to effect the intent of the parties, and the remainder of the Agreement will continue in full force and effect.

 

23.       Related Documents; Precedence.  The terms and conditions of any SOW, Purchase Order, and the terms and conditions of any schedules, exhibits, attachments and other documents referenced herein or therein are incorporated into the terms and conditions of this Agreement.  In the event of any conflict in the documents which constitute this Agreement, the order of precedence will be (i) the applicable SOW; (ii) this Agreement; (iii) any other schedules, exhibits, attachments and other documents referenced and incorporated herein and therein; and (iv) any Purchase Order.

 

24.       Complete Agreement. The parties agree that the Agreement constitutes the complete and exclusive agreement between them superseding all contemporaneous and prior agreements (written and oral) and all other communications between them relating to its subject matter, excluding the confidentiality agreement referenced herein.  Except as expressly provided herein, the Agreement may not be amended or modified except by a written amendment specifically referencing the Agreement, signed by authorized signatories of both parties. The parties expressly acknowledge that they have received and are in possession of a copy of any referenced item not physically attached to the Agreement and any such item will be treated as if attached.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

10

 

ATTACHMENT 2

 

Development Terms

 

1.              Scope and Standards of Work.

 

1.1.         During the Term of the Agreement, any services GTAT conducts in connection with the development of new products or other technology, including Goods, will be “Development Services” for the purpose of this Attachment 2.  The parties may describe the Development Services in a Statement of Work.  Apple has no obligation to purchase or pay for any Development Services or related deliverables except as set forth in an SOW.

 

1.2.         GTAT warrants that its employees, agents, consultants and subcontractors, if any, involved in performance of the Development Services will have the experience and expertise necessary to perform such Development Services and will at all times be bound by appropriate agreements to vest in GTAT all of their right, title and interest in any Project Work Product (as defined below), and all Intellectual Property Rights therein or thereto, that are to be property of Apple or otherwise protected pursuant to Sections 2, 3 or 4 of this Attachment 2.

 

1.3.         GTAT agrees to notify Apple promptly if GTAT knows or has reason to believe that the Statement of Work or any instructions from Apple would, if followed by GTAT, violate any applicable law or infringe or misappropriate any Intellectual Property Rights of any third party or be inconsistent with the Applicable Standards.

 

1.4.         GTAT agrees that while performing the Development Services for Apple, and for 3 years following the date that GTAT ceases to perform the Development Services for Apple, it will not to the best of its knowledge, after conducting reasonable due diligence, perform the same or similar Development Services in the Consumer Electronic Products Field for any other person or party, nor will GTAT assist, enable or in any way facilitate any other person or party in its provision of the same or similar Development Services for any other person or party. “Consumer Electronic Products” [***].

 

1.5.         The provision of deliverables and Services in their tangible form have no intrinsic value.  As such, no value added, sales, or use taxes have been assessed or are anticipated to be required as a result of the Services provided under this Agreement.

 

2.              Apple Project Materials.  Apple may provide items and materials, as specified in an SOW (the “Project Materials”).  GTAT agrees that all such Project Materials will be and remain the sole and exclusive property of Apple.  If Apple provides Project Materials, GTAT will only use them for the purpose described in the Statement of Work and will not be transferred to any third party without first obtaining written authorization from Apple in each instance. Upon completion of the Development Services, any unused Project Materials will be returned to Apple or destroyed at the sole discretion of Apple.

 

3.              Communication, Visits, Results, and Reports.

 

3.1.         All results, reports, findings, conclusions, work papers, notebooks, electronic records, samples, prototypes, deliverables, and any other information or materials in any form or format arising out of performance of the Development Services by or for GTAT (the “Project Work Product”) except GTAT Background Technology (defined below) will be the sole property of Apple and will become part of the Confidential Information to be protected under the Agreement.  “GTAT Background Technology” means GTAT’s inventions, data, improvements, discoveries, ideas, processes, methodologies, formulas, techniques, works of authorship, trade secrets and know-how, whether patentable or not, conceived, reduced to practice,

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

11

 

authored, or otherwise created or developed by or for GTAT either (i) prior to the date of the Agreement or (ii) subsequent to the date of the Agreement if conceived, reduced to practice, authored, or otherwise created or developed by GTAT separately and independently of its provision of any Development Services and any Apple Confidential Information or Project Materials, and all Intellectual Property Rights therein or thereto.  GTAT Background Technology is and will be owned by GTAT and is not being transferred or assigned to Apple under the Agreement.  For the avoidance of doubt, any Sapphire Technology that is conceived, reduced to practice, authored, or otherwise created or developed by or for GTAT using (i) any of Apple’s Confidential Information or (ii) any GTAT personnel or contractors who had access to Apple’s Confidential Information will be deemed Project Work Product.

 

3.2.         Upon receipt of any deliverable hereunder, Apple will either accept the deliverable, or if in Apple’s sole discretion, the deliverable does not comply with the Specifications, including the project schedule, reject the deliverable.  If Apple requests, GTAT will assist Apple with testing all deliverables without charge.  Upon rejection of a deliverable, GTAT will promptly correct any failure to comply with the Specifications and re-deliver the deliverable to Apple as soon as is practicable, or such other time period agreed upon by Apple in writing.

 

3.3.         GTAT will not destroy or dispose of any Project Work Product without Apple’s prior written authorization in each instance.  GTAT will, upon Apple’s request from time to time, promptly deliver any and all Project Work Product and any work-in-process to Apple.

 

3.4.         GTAT will provide Apple with a written monthly report summarizing the progress of the Development Services and any new Project Work Product developed since the last written report.  In addition, GTAT will prepare and provide one or more draft and final report(s) at the intervals, and upon completion of the Development Services, as more fully described in the Statement of Work.  All reports will be formatted and delivered to Apple in accordance with Apple’s instructions.

 

3.5.         Apple will be solely responsible, at its discretion in accordance with applicable law, for any reporting to appropriate government agencies any Project Work Product generated during performance of the Development Services.

 

3.6.         GTAT will permit Apple’s representatives to access all relevant GTAT facilities with reasonable frequency to perform quality assurance audits, observe progress of the Development Services, discuss the Development Services with relevant GTAT personnel, and inspect records and data relevant to the Development Services.

 

4.              Intellectual Property.

 

4.1.         Except as otherwise provided herein, no right or license to Apple’s Intellectual Property Rights is granted or implied as a result of the Agreement or the Development Services, except that Apple hereby grants to GTAT a limited, non-exclusive, worldwide, royalty-free license to use Apple’s Intellectual Property Rights (including Project Work Product) solely to the extent necessary to perform Development Services and other obligations under the Agreement.  The transfer or license of Project Materials or GTAT Background Technology provided herein does not constitute a public disclosure. “Intellectual Property Rights” means the rights in and to all (i) U.S. and foreign patents and patent applications claiming any inventions or discoveries made, developed, conceived, or reduced to practice, including all divisions, substitutions, continuations, continuation-in-part applications, and reissues, re-examinations and extensions thereof; (ii) copyrights; (iii) unpatented information, trade secrets, data, or materials; (iv) mask work rights; and (v) any other intellectual or other proprietary rights of any kind now known or hereafter recognized in any jurisdiction.

 

4.2.         All right, title and interest in all Project Work Product, and all Intellectual Property Rights therein or thereto, is solely owned by Apple, and GTAT hereby transfers and assigns all of GTAT’s right, title and interest in all Project Work Product and all Intellectual Property Rights therein or thereto, to Apple. GTAT will communicate to Apple any of the same promptly and fully upon its creation or development. GTAT

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

12

 

will execute all papers and take all actions that Apple reasonably deems necessary or advisable for the filing and prosecution of patent applications or copyright or other registrations and, if appropriate, maintenance of patents or other rights or properties that may issue therefrom, including without limitation execution of any assignments or other agreements further evidencing, perfecting, or recording Apple’s ownership of Project Work Product and all Intellectual Property Rights therein or thereto.  Inventorship will be determined under principles of U.S. patent law and practice.

 

4.3.         Except as set forth in an SOW, or as otherwise documented in writing and provided to Apple prior to performing any Development Services, GTAT represents and warrants that all Intellectual Property Rights not owned by GTAT and that are necessary for Apple’s use or exploitation of the Project Work Product are the subject of valid license or other agreements that grant to GTAT all necessary rights to sublicense or otherwise permit Apple’s use or exploitation of the Project Work Product, including in Apple products and services.  If any Intellectual Property Rights that are owned, controlled or licensable by GTAT or its Related Entities apply to any of Apple’s use or exploitation of the Goods and/or the Project Work Product, GTAT hereby grants to Apple a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license under such Intellectual Property Rights to make, have made, use, have used, sell, have sold, offer for sale, import, have imported or otherwise dispose of Apple products and services, and to practice any methods in connection therewith.

 

4.4.         GTAT will not engage in, nor will it authorize others to engage in, reverse engineering, disassembly or decompilation of any Apple technology provided by Apple to GTAT under this Agreement (including Project Materials) except as required to perform its obligations under the Agreement.  Neither Apple nor GTAT will use the other party’s Confidential Information provided or developed under this Agreement for the purpose of: (i) identifying or providing evidence to support any potential patent infringement claim against the other Party or its Related Entities, or any of the other Party’s direct or indirect suppliers or direct or indirect customers, (ii) filing patent applications except as otherwise provided under this Agreement; (iii) modifying its pending patent applications or the claims of patents in any post-grant proceedings; or (iv) mapping or reviewing software, hardware, and/or confidential information against patents, patent applications, claim charts or other like material.

 

4.5.         GTAT will not use any Apple trademarks for any purpose except to comply with its obligations under this Agreement.  The goodwill derived from GTAT’s use of any Apple trademarks inures exclusively to the benefit of and belongs to Apple.  GTAT acknowledges Apple’s ownership of the Apple trademarks and agrees not do anything inconsistent with Apple’s ownership of the Apple trademarks, such as filing any trademark application for an identical or similar mark anywhere in the world.  Apple will not use any GTAT’s trademarks for any purpose except to comply with its obligations under this Agreement.  The goodwill derived from Apple’s use of any GTAT trademarks inures exclusively to the benefit of and belongs to GTAT.  Apple acknowledges GTAT’s ownership of the GTAT trademarks and agrees not do anything inconsistent with GTAT’s ownership of the GTAT trademarks, such as filing any trademark application for an identical or similar mark anywhere in the world.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

13

 

ATTACHMENT 3

 

Service and Support

 

1.              GTAT will accept and fulfill Purchase Orders for replacement Goods (“Service Units”) for seven years after the date Apple designates as end-of-life for the Apple product featuring (or manufactured using) such Good (“End-of-Life Designation Date”).  To ensure that it is able to do so, GTAT agrees to (i) maintain an adequate stock of Service Units and/or (ii) maintain the equipment and materials (or the ongoing ability to timely acquire as needed) needed to produce and timely deliver Service Units throughout this seven-year period.  Under no circumstances will the price of a Service Unit (including the cost of single or multi-pack packaging and handling fees) exceed the price of the corresponding Good as of the day immediately preceding the End-of-Life Designation Date.  In no event will there be minimum order quantities for Service Units.

 

2.              Furthermore, GTAT will, at GTAT’s expense, provide an inventory of Service Units to Apple in accordance with the Service Unit inventory requirements set forth in document(s), if any, referenced in the applicable Apple Requirements Document(s) or applicable SOW.  In absence of such requirements and upon Apple’s request, GTAT will deliver an Initial Service Unit Inventory to entities designated by Apple, at no cost, at least one week before Apple first ships the applicable Apple product which incorporates the relevant Good.

 

“Initial Service Unit Inventory” means the number of Service Units calculated using the following formula:

Initial Service Unit Inventory = A x B, where:

 

A = the projected rate of return (as determined by Apple) of the Goods.

 

B = the cumulative number of Goods in the then current Forecast for the first three months of production

 

3.              Authorized Purchasers will return all Goods Ex Works (place to be named by the Authorized Purchaser) and title will transfer to GTAT when placed in the carrier’s possession at the named place; provided, however, that whenever Apple Sales International or Apple Operations Europe returns Goods from the Asia-Pacific region, Goods will be returned DAF (named place, freight unpaid) and title will transfer to GTAT at the named place at the frontier, but before the customs border of the destination country.  GTAT will deliver all Service Units DDP (place to be named by the Authorized Purchaser) and title will transfer upon actual receipt of the Service Units at the named place of destination; provided, however, that whenever Service Units are delivered to Apple Sales International or Apple Operations Europe in the Asia-Pacific region, Goods will be delivered DAF (named place, freight paid to final destination) and title will transfer at the named place at the frontier, but before the customs border of the country of destination.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

14

 

ATTACHMENT 4

 

Insurance and Loss Prevention

 

1.              GTAT will, at no cost to Apple or any other Authorized Purchaser, maintain the following minimum insurance in full force and effect throughout the term of the Agreement: (i) public liability or commercial general liability insurance, including coverage for products liability and products/completed operations hazard, claims by one insured against another insured, and GTAT’s defense and indemnity obligations under the Agreement, with coverage of not less than $5,000,000 USD combined single limit per occurrence and $5,000,000 USD annual aggregate; (ii) automobile liability insurance in compliance with all statutory requirements and providing coverage for third party bodily injury and property damage, with limits of not less than $500,000 USD each accident, for all owned, non-owned and hired motor vehicles used in the performance of GTAT’s obligations under the Agreement; (iii) workers’ compensation insurance in compliance with all statutory regulations in any country, state, territory or province where any of the development deliverables or Goods are provided, manufactured or delivered; and (iv) property insurance on an all-risk of physical loss basis, subject to standard exclusions, with sufficient limits to cover GTAT’s liability for risk of loss or damage to Apple property while in GTAT’s care, custody or control.

 

2.              The insurance coverage that GTAT is obligated to carry pursuant to this Attachment 4 will include either (i) an indemnity to principals clause and either a blanket interest provision, or separately note the interests of Apple, its subsidiaries and affiliates, and any other party which Apple may reasonably designate as principals for liabilities and damages for which GTAT is obligated to provide indemnity to such parties pursuant to the Agreement, or (ii) Apple, its subsidiaries and affiliates, and any other party which Apple may reasonably designate as additional insureds for liabilities arising out of the acts or omissions of the GTAT, its employees, and agents in the performance of the Agreement.  The property insurance that GTAT is obligated to carry will include Apple, its subsidiaries and affiliates as loss payees, as their interests may appear.  The insurance that GTAT maintains will be primary to and without a right of contribution from any insurance maintained by or otherwise afforded to Apple, its subsidiaries and affiliates.

 

3.              GTAT will deliver to Apple’s Procurement Department (1 Infinite Loop, M/S 81-2BIZ, Cupertino, California 95014) one or more certificates of insurance showing evidence of the maintenance of the coverage required above.  In the event of cancellation of any required coverage, GTAT will promptly replace such coverage so that no lapse in insurance occurs.  GTAT agrees to comply with the insurance and loss prevention requirements set forth in the document(s), if any, referenced in the Apple Requirements Document.  Apple reserves the right to perform risk evaluations of GTAT’s facilities and GTAT agrees to work with Apple to upgrade any facility that does not comply with such requirements.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

15

 

ATTACHMENT 5

 

Supplier Code of Conduct

 

1.              GTAT will comply with the Apple Supplier Code of Conduct (“Code of Conduct”) available on Apple’s public website, and will implement its requirements as amended by Apple from time-to-time.

 

2.              Notwithstanding anything to the contrary in any prior agreement between Apple and GTAT, GTAT will:  (i) allow Apple and a third party auditor designated by Apple (collectively, the “Auditors”) to audit and assess GTAT’s practices, policies, records, and facilities without notice and to interview GTAT’s personnel without monitoring solely to verify GTAT’s compliance with the Code of Conduct (collectively, an “Assessment”); (ii) provide the Auditors with access to GTAT’s facilities, relevant records, and knowledgeable personnel without disruption as part of any Assessment; (iii) allow the Auditors to audit and assess working hours and conditions, remuneration, personnel practices, dormitory and dining facilities, and health, safety, and environmental practices, as applicable, as part of the Assessment; (iv) not request or encourage, directly or indirectly, any GTAT personnel to furnish false or incomplete information in connection with any Assessment; (v) not take retaliatory action against any GTAT personnel interviewed during an Assessment; and (vi) promptly implement corrective action to remedy any material non-conformance with the Code of Conduct identified by an Assessment.

 

3.              Prior to engaging any subcontractor to perform any material portion of its obligations under the Agreement, GTAT will provide Apple with the name and address of such subcontractor, and upon Apple’s written request, GTAT will (a) require such subcontractor’s compliance with the Code of Conduct; (b) require such subcontractor to provide the Auditors with access to its facilities, records, and personnel sufficient to enable the Auditors to assess such subcontractor’s compliance with the Code of Conduct; and (c) require such subcontractor to promptly implement corrective action to remedy any material non-conformance with the Code of Conduct.

 

4.             Notwithstanding any provision in the Agreement or any other agreement between Apple and GTAT, GTAT agrees to hold the results of any Assessment in the strictest confidence and all such information is deemed to be Apple Confidential Information and GTAT relinquishes any and all rights in and to such results and findings.  GTAT will obtain all permits, consents, and authorizations necessary to enable the Auditors to audit and assess the policies, practices, records, and facilities of each subcontractor or GTAT Related Entity performing under the terms of the Agreement.

 

5.              For purposes of Attachment 5, the term “GTAT” will include any GTAT Related Entity performing any material portion of GTAT’s obligations under the Agreement, and GTAT’s obligations hereunder will apply to any such GTAT Related Entity.

 

6.              GTAT’s failure to perform its obligations described in this section or to remedy any material non-conformance with the Code of Conduct after a reasonable amount of time will constitute a breach of the Agreement.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

16

 

ATTACHMENT 6

 

Contract of Adherence

 

This Contract of Adherence (“CoA”) is between the following parties and is effective as of [DATE]:

 

Apple Inc., a California corporation located at 1 Infinite Loop, Cupertino, California 95014, United States (“Apple”);

 

[GTAT Name and Address] (collectively, “Company”); and

 

[GTAT AFFILIATE TO BE ADDED], a [*], located at [*] (the “Covered Party”).

 

Purpose.  Reference is made to that certain Apple Inc. Supply Agreement by and between Apple and Company, effective as of [date] (together with its attachments, and any documents referenced therein, and all SOWs issued thereunder, the “Agreement”). All capitalized terms not defined herein are defined as set forth in the Agreement.  Pursuant to Section [    ] of the Agreement, additional GTAT Affiliates may become a party to the Agreement by the execution of this CoA.  Company and Apple would like to add Covered Party as a GTAT Affiliate.

 

GTAT Affiliate Obligations.  Covered Party acknowledges that it has read and understands the Agreement.  Covered Party hereby agrees to be a GTAT Affiliate under the Agreement and to fully comply with all terms and conditions applicable to GTAT Affiliates.

 

Agreement Amendments.  Covered Party acknowledges and agrees that Apple and Company may amend the Agreement in accordance with its terms, without the consent of Covered Party, and that any such amendment shall apply to Covered Party unless otherwise stated in such amendment.

 

Representations.  Covered Party represents that: (a) it has the full right and authority to enter into and carry out its obligations under this CoA and the Agreement; (b) it has obtained all private and governmental consents required to perform its obligations under this CoA; and (c) the execution and performance of this CoA does not and will not conflict with or violate any other obligation Covered Party may have, contractual or otherwise.

 

Entire Agreement.  This CoA and the Agreement constitute the entire understanding and agreement of Covered Party, Apple and Company, whether written or oral, with respect to the subject matter of this CoA, and supersede any prior or contemporaneous agreements or understandings between Covered Party, Apple and Company with respect to its subject matter.

 

Joint and Several Liability.  Company shall not be relieved of any of its obligations under the Agreement by virtue of this CoA and Company guarantees the performance of the terms and conditions of the Agreement by GTAT Affiliates.  Any breach of this CoA is deemed to be a breach of this Agreement by Company.

 

Company and Covered Party agree that they will be jointly and severally liable for any claims by Apple or damages incurred by Apple under the Agreement or this CoA.  Company and Covered Party’s joint and several liability under this CoA includes obligations arising under successive transactions continuing, compromising, extending, increasing, modifying, releasing, or renewing obligations under the Agreement, any SOW, changing payment terms, or other terms and conditions thereof, or creating new or additional obligations after prior obligations under the Agreement have been satisfied in whole or in part under the Agreement, to the maximum extent permitted by law, Company and Covered Party hereby irrevocably waive any right to revoke their joint and several liability under this Agreement as to future obligations.

 

Company assumes full responsibility for keeping informed of Covered Party’s financial condition and all other circumstances bearing upon the risk of nonpayment or nonperformance of the Agreement and any SOW and Apple will have no duty to report any such information known to Apple. A separate action may be brought against any of Company, Covered Party or any other guarantor.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

17

 

Company and Covered Party acknowledge and agree with Apple that they are jointly and severally liable for their obligations under the Agreement and this CoA. Neither Company’s nor Covered Party ‘s obligations to Apple will be affected by (a) the amendment, modification, renewal, increase in the amount, waiver, surrender, compromise, settlement, release or termination of, or the acceptance of partial payment on, any or all of the obligations, covenants or agreements of the other under the Agreement or this Amendment; (b) the failure by Apple to give notice to either of the occurrence of a default by the other under the Agreement; (c) the extension of the time for performance of or the giving of any other indulgence in relation to any obligation under the Agreement; (d) proceeding against Company or Covered Party or any other person or entity in any particular order; (e) the taking of any of the actions referred to in the Agreement, including any acceleration of sums owing thereunder;(f) any failure, omission, delay or lack on the part of Apple to enforce, assert or exercise any right, power or remedy conferred on it in the Agreement or otherwise available to it in law or equity to proceed against or exhaust any such security held from Company or Covered Party or any other person;(g) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings affecting Company or Covered Party or any of the respective assets of either of them; (h) any defense based upon any legal disability of Company or Covered Party or, any release, discharge, reduction or limitation of or with respect to any sums owing by Company or Covered Party or any other liability of Company or Covered Party to Apple; (i) the release or discharge by operation of law of Company or Covered Party from the performance or observance of any obligation, covenant or agreement contained in the Agreement or this CoA; (j) the taking and, holding, substitution, release, impairing the value, applying and directing the order or manner of sale of, or the addition to, in whole or in part, at any time or times, collateral or, guarantees or other security or support for payment under the Agreement and any change of such guaranties or collateral, guarantees or other security or support; or (k) application of payments received by Apple from Company or Covered Party to any amount owed by either to Apple, in such order as Apple shall determine in its sole discretion, whether or not such amounts are owed under this Agreement.  Without limiting the generality of the foregoing, Company and Covered Party irrevocably waive (i) all notices all notices of acceptance of joint and several liability, the occurrence of any breach, default, nonperformance, protest, notice of protest or notice of dishonor or of any presentment, demand for any payment, action at any time taken or omitted, and to which each might otherwise be entitled to which it might otherwise be entitled; (ii) any claims and other rights that it now has or may hereafter acquire against Covered Party that arise from the payment or enforcement of Covered Party’s obligations under CoA, including any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of Apple against Covered Party; (iii)  any lack of authority of any officer, director, partner, agent or any other person acting or purporting to act on behalf of Company or Covered Party which is a corporation, partnership or other type of entity, or any defect in the formation of it; and (iv) any rights and benefits that might otherwise be available to Company under any rights and benefits that might otherwise be available to Covered Party under California Civil Code Section 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2847, 2848, 2849, 2850, 2855, 2899 or 3433 or California Code of Civil Procedure Sections 337.

 

This Contract of Adherence shall be governed by, and construed in accordance with, the laws of the State of California, without reference to principles of conflicts of law.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

18

 

Acknowledged and agreed by their duly authorized representatives.

 

	
Apple   Inc.
    	
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[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

19Exhibit 10.2

 

APPLE INC.

STATEMENT OF WORK #1

to

MASTER DEVELOPMENT AND SUPPLY AGREEMENT

# C56-13-02947

 

Apple Inc. (“Apple”) and GTAT Corporation (“GTAT”) entered into Master Development and Supply Agreement #C56-13-02947 effective as of October 31, 2013 (the “Agreement” or “MDSA”).  Apple may purchase the Goods described in this Statement of Work #1 (“SOW”), and GTAT and any GTAT affiliates authorized to provide such Goods agree to manufacture and deliver such Goods, all in accordance with the terms set forth in this SOW and the MDSA.  This SOW is effective as of October 31, 2013 (“Effective Date of the SOW”).

PURPOSE

 

Apple and GTAT are entering into this SOW and the rest of the Collateral Agreements (as defined below) pursuant to which: (i) Apple will design and build the Mesa Facility that it will lease to GTAT; (ii) GTAT will grow and process sapphire boules into Goods which it will sell to Apple; (iii) Apple will make a prepayment to GTAT to fund the purchase of Furnaces (as defined in Section 1.6 below) and Equipment used to make the Goods and (iv) GTAT will grant Apple a security interest and provide Apple with other protective rights in recognition of Apple’s investment in the Mesa Facility and Apple’s prepayment to GTAT.  In connection with the foregoing, Apple and GTAT, or Apple’s or GTAT’s Related Entities, as applicable, are entering or will enter into the following agreements (collectively, the “Collateral Agreements”):

 

(a)         this SOW;

 

(b)         MDSA;

 

(c)          Intellectual Property Agreement among Apple, GTAT, GT Advanced Technologies Limited, GT Sapphire Systems Holding LLC and GT Sapphire Systems Group LLC;

 

(d)         Prepayment Agreement between Apple and GTAT, dated as of the Effective Date of the SOW (the “Prepayment Agreement”) and all exhibits and attachments thereto;

 

(e)          Membership Interest Pledge Agreement between Apple and GTAT, dated as of the Effective Date of the SOW (the “Pledge Agreement”) and all exhibits and attachments thereto; and

 

(f)           Mesa Facility Lease Agreement between [***]and GTAT, dated as of the Effective Date of the SOW (the “Mesa Facility Lease Agreement”) and all exhibits and attachments thereto.

 

AGREEMENT

 

Any capitalized terms used in this SOW will have the meanings assigned them in this SOW, or, if not defined in this SOW, those assigned them in the MDSA.  In the event of any conflicting terms, the order of precedence will be terms of (i) the Prepayment Agreement, (ii) the Pledge Agreement, (iii) the Intellectual Property Agreement, (iv) this SOW, (v) the MDSA and (vi) the Mesa Facility Lease Agreement.

 

For purposes of this SOW, “Goods” mean [***]. “New Goods” will mean [***].

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

1.                   Manufacturing Facility.

 

1.1                     Apple or its designee is purchasing and developing a new manufacturing facility to be located in Mesa, AZ (the “Mesa Facility”).  GTAT will execute Mesa Facility Lease Agreement, pursuant to which it will lease the Mesa Facility to manufacture the Goods for sale to Apple pursuant to this SOW and the MDSA.

 

1.2                     In connection with the acquisition, design and development of the Mesa Facility, and as may be more fully specified in the Mesa Facility Lease Agreement, Apple or its designee will use commercially reasonable efforts to:

 

1.2.1            Procure the land and initial entitlements necessary to retrofit the Mesa Facility for production of the Goods;

 

1.2.2            Contract for, fund and oversee the Landlord Work (as defined in Section 1.2.2 of the Mesa Facility Lease Agreement) (the “Facility Requirements”); and

 

1.2.3            Timely provide GTAT with all information it reasonably requests concerning the design and development of the Mesa Facility.

 

1.3                     To facilitate Apple’s, or its designee’s acquisition, design and development of the Mesa Facility, GTAT will use commercially reasonable efforts to:

 

1.3.1            Timely and continually provide input on the Facility Requirements;

 

1.3.2            Insure that the Facility Requirements are and remain commercially reasonable and consistent with industry practice such that the Facility Requirements do not impose or add unnecessary expenses to the development of the Mesa Facility; and

 

1.3.3            Timely and fully respond to all of Apple’s, or its designee’s, questions and requests for help or participation (including at Apple’s request, participation on-site at the Mesa Facility by a designated representative of GTAT) during all phases of the acquisition, design and development of the Mesa Facility.

 

1.4                     In the event that, despite using commercially reasonable efforts, (a) the parties disagree on any aspects of the Mesa Facility design or manner in which the Facility Requirements will be met, (b) Apple or its designee is unable to accomplish 1.2.1-1.2.2 in accordance with the timelines set forth in 1.7(a), or (c) GTAT is unable to accomplish 1.3.1-1.3.3 in accordance with the timelines set forth in 1.7, the parties will promptly escalate the situation to the following executives for immediate resolution: for Apple, Vice President, World-Wide Operations; for GTAT, Chief Executive Officer.

 

1.5                     GTAT will purchase, install, qualify and operate all Equipment at the Mesa Facility necessary to timely manufacture and deliver the Goods pursuant to Apple’s Forecast. GTAT is responsible for all Equipment-related costs associated with GTAT’s performance under this SOW and the MDSA.

 

1.6                     GTAT will timely purchase, install, qualify and operate [***] (the “Furnaces”) by the applicable dates specified in Attachment 1 hereto.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

1.7                     The parties intend that: (a) GTAT will begin occupying the Mesa Facility by [***] (b) GTAT will begin installing Furnaces and other Equipment in the Mesa Facility by [***] and (c) that GTAT will grow the [***] sapphire boule at the Mesa Facility by [***]. Apple will otherwise provide GTAT access to the Mesa Facility as soon as practicable.

 

1.8                     GTAT will not be responsible for failing to timely deliver Goods to Apple if such delay is solely attributable to any non-compliance with the Facility Requirements that: (a) is identified prior to GTAT’s occupancy of the Mesa Facility or (b) results from Construction Defects (as defined in the Mesa Facility Lease Agreement) in the Mesa Facility.  GTAT will be responsible for managing and resolving any non-compliance with the Facility Requirements that is identified after GTAT’s occupancy of the Mesa Facility has begun and is not the result of Construction Defects in the Mesa Facility.

 

1.9                     GTAT is not party to any arrangement, agreement or relationship with any third parties that would cause GTAT to receive any kind of income, credit or other economic benefit (including rebates or credits resulting from GTAT’s purchase of parts or materials for Furnaces, additional Furnaces, Similar Furnaces and Equipment used by GTAT to fulfill its obligations under this SOW) that will result from GTAT performing under this SOW and that has not been disclosed in writing to Apple.

 

2.                   Forecast and Supply Commitment.

 

2.1                     GTAT will develop and maintain the capacity to manufacture and timely deliver no less than the quantity of [***] per month as specified in Attachment 2 hereto (the “Supply Commitment”).  The maximum quantity of [***] that GTAT must timely deliver each month is also specified in Attachment 2 (the “Maximum Supply Obligation”); however, GTAT will use best efforts at all times to fulfill any Apple orders for Goods in excess of the Maximum Supply Obligation.  [***].  Whenever Apple specifies a New Good pursuant to Section 2.3, Apple and GTAT will promptly agree on the applicable Supply Commitment Conversion Ratio for such New Good, and the Supply Commitment and Maximum Supply Obligation will apply to such New Good.  [***].

 

2.2                     For purposes of determining GTAT’s compliance with the [***].

 

2.3                     GTAT must accept any Forecast for New Goods and must timely undertake Development Services in connection with such Goods and use best efforts to timely supply such Goods pursuant to such Forecast.

 

2.4                     The Flexibility Schedule for all Goods is as follows:

 

	
Days Notice Before
   Forecasted Delivery Date
    	
 
    	
% Upside
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    

 

The Forecast for a given week will be deemed consistent with the Flexibility Schedule if (i) the total number of units does not exceed the number of units in the last Forecast for that week by more than the percentage listed above, or (ii) if Apple has not previously

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

provided a Forecast for that week, the number of units does not exceed the number of units in the last week included in Apple’s then most recent Forecast by more than the percentage listed above.

 

2.5                     The Lead Time is [***] for Goods to be shipped by ocean and [***] for Goods to be shipped by air freight. “Lead Time” means the amount of time by which a Purchase Order for Goods must be placed in advance of the delivery date.

 

3.                   Price of Goods.

 

3.1                     Except as provided in Section 3.2 below [***]:

 

3.1.1            [***];

 

3.1.2            [***];

 

3.1.3            [***]; or

 

3.1.4            [***]

 

3.2                     For New Goods that can be manufactured [***], the price of such New Goods will be:  [***]:

 

[***]

 

3.3                     [***]

 

3.4                     [***]

 

3.5                     Whenever GTAT demonstrates to Apple’s satisfaction that it can successfully implement one or more of the sapphire growth or manufacturing process improvements specified in Attachment 4 hereto, [***].

 

3.6                     GTAT will provide [***].

 

3.7                     In the event of a disagreement over the price to be charged for Goods, GTAT will continue to manufacture and timely deliver all such Goods to Apple pursuant to the applicable Forecast to the extent of Supply Commitment.  After Apple and GTAT resolve any disagreement on the amount to be charged for such Goods, the parties will reconcile any amounts owed by Apple or to be credited by GTAT.

 

4.                   Modifications.

 

For purposes of this SOW, Section 11 of the MDSA (Modifications) is replaced in its entirety with the following:

 

4.1                     GTAT may not modify any Equipment, Specifications, manufacturing process or materials, without first obtaining Apple’s prior consent.  If Apple intends to modify the Specification for any Goods, or any Equipment, processes, or materials used in the manufacture of Goods, Apple will first solicit GTAT’s input regarding the proposed modification and will in good faith consider any such input that GTAT provides.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

4.2                     Subject to the preceding sentence, whenever Apple modifies the Specification for a Good, and notwithstanding any disagreement over the cost to implement such modified Specification, including inventory obsolescence throughout GTAT’s supply chain, GTAT will use best efforts to promptly implement all such modifications and manufacture and timely deliver all such Goods pursuant to the applicable Forecast.

 

4.3                     The parties will make good faith efforts to promptly resolve any such disagreement. During any period of disagreement, GTAT will temporarily charge Apple, and Apple will pay the lower of:  (i) the applicable price for the Good set forth in this SOW or (ii) the last price Apple paid for the applicable Good. When the parties resolve any disagreement over the amount to be charged for such Goods, they will reconcile any amounts Apple or GTAT owes.

 

4.4                     If Apple and GTAT cannot agree within 30 days on the change to the price of the Good(s) based solely on the changes to the Specification, then the price of the Goods will be determined by arbitration in San Francisco, CA.

 

4.4.1            Apple and GTAT agree that the arbitral proceedings, including the formation of the tribunal, will be expedited in order to permit the tribunal to render one or more final Awards fully resolving the disputes before it within 1 month from the date it receives the file from the ICC.  Accordingly, the ICC may only propose arbitrators whose schedule will permit them to resolve any disputes in conformity with this schedule and the other requirements of this dispute resolution provision.

 

4.4.2            The parties agree that the only two issues for determination in the arbitration are (i) by how much Apple’s modification of the Specification for Goods changes (positively or negatively) GTAT’s cost to make the Goods and (ii) as between Apple and GTAT, which party’s proposed price for the Goods most accurately reflects only the change in GTAT’s cost to make the Goods based on the modified Specification.

 

4.4.3            Five days prior to the arbitration hearing, each party will submit a proposed price for the Goods and a written brief to the tribunal and the other party setting forth the basis and rationale for its proposed price.

 

4.4.4            An arbitration hearing will be conducted at which time Apple and GTAT may present their respective proposals to the tribunal (and the rationale for such proposed amount) and answer any questions posed by the tribunal.  Apple and GTAT may also present rebuttal arguments at the conclusion of the hearing.  The tribunal will promptly notify the parties in writing which party’s proposed price for the Goods most accurately reflects only the change in GTAT’s cost to make the Goods based on the modified Specification and will be used as the price for applicable Goods (the “Award”).  The tribunal will, in the Award, order the non-prevailing party to pay the arbitrator’s fees.  Judgment on the Award may be entered in any court having jurisdiction.  Neither Apple nor GTAT may appeal the Award nor challenge the enforceability of such Judgment or Award for reasons of personal jurisdiction.

 

4.4.5            The tribunal will consist of one arbitrator appointed by the ICC.  The tribunal, and the parties, will conduct the proceedings as expeditiously as possible.  The tribunal will render one or more final Awards within 1 month from the date the file is transmitted to it by the ICC pursuant to Article 16 of the Rules.  The tribunal and the ICC are entitled to shorten any deadlines in the Rules to achieve this objective.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

4.4.6            The tribunal will not extend the period in which it is to render one or more final Awards unless it makes a written finding concluding that additional time is essential to enable it to perform its responsibilities under the Rules or to ensure the fairness of the proceedings.  In this event, the tribunal will extend the period in which it is required to render one or more final Awards only for a specifically defined period and then only for as much time as it concludes is absolutely required to achieve either or both of these objectives.

 

4.4.7            Neither Apple nor GTAT may appeal nor challenge the enforceability of a final judgment or Award for reasons of personal jurisdiction.

 

5.                   Apple-Owned Equipment.

 

5.1                     GTAT will purchase the Equipment listed in Attachment 7 hereto (collectively, “Apple Equipment”) and subject to the terms of this SOW, including Sections 5.2 and 5.4, Apple will purchase such Apple Equipment from GTAT and subsequently the Apple Equipment will be held by GTAT as a bailee for purposes of producing Goods for Apple.

 

5.2                     GTAT will place purchase orders for the Apple Equipment only upon prior written approval by Apple with respect to the quantity, specifications and price of each item of Apple Equipment.  Upon request, GTAT will provide Apple up to three competitive quotes for each item.  Apple reserves the right to contact each vendor directly to validate and/or negotiate the terms of any order (and GTAT agrees to waive any confidentiality restrictions to facilitate such discussions). GTAT will promptly provide documentation of each such order to Apple.  The value of any direct or indirect benefit received by GTAT from any vendor that sells Apple Equipment to GTAT in connection with this SOW must be applied exclusively to reducing the cost of the Apple Equipment listed in Attachment 7.

 

5.3                     GTAT will install and qualify the Apple Equipment at the Mesa Facility in accordance with the timelines set forth in Attachment 7.

 

5.4                     With respect to Apple Equipment purchased by GTAT, upon presentation of proof of delivery and proof that GTAT has paid for line items of Apple Equipment, and subject to the terms of this SOW, no more frequently than once every 2 weeks, GTAT may invoice Apple for such line items of Apple Equipment.  Apple will purchase the applicable Apple Equipment by payment to GTAT of the amount set forth in the actual Equipment vendor’s invoice and actually paid by GTAT to the Equipment vendor for the applicable Apple Equipment.  Upon such payment, Apple will become the owner of such Apple Equipment and GTAT hereby agrees to sell, assign, transfer and convey to Apple all of GTAT’s right, title and interest in and to such Apple Equipment.  GTAT hereby agrees that it will, at any time following Apple’s payment to GTAT for Apple Equipment, upon the request of Apple, execute, acknowledge, deliver or file, or cause to be done, executed, acknowledged, delivered or filed, any further acts, deeds, transfers, conveyances or assignments as may be reasonably requested by Apple to transfer, convey or assign to Apple any of the Apple Equipment. Apple will not be responsible for any other costs associated with the Apple Equipment.

 

5.5                     Subject to Section 5.4, Apple owns all Apple Equipment.  The Apple Equipment is and will be held by GTAT as bailee on the terms and conditions set forth in this SOW.  Apple will at all times maintain full and exclusive ownership of and title to the Apple Equipment as bailor.  The term of this bailment arrangement will expire on the earlier of (i) such date as Apple

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

removes all of the Apple Equipment from GTAT’s premises and (ii) such other date on which Apple and GTAT may mutually agree in writing.

 

5.6                     Apple is hereby authorized to file financing statements or other similar documents or notices in any filing office or other location that Apple deems necessary or desirable, including for purposes of confirming its status as bailor, for purposes of giving actual public or constructive notice of the existence of the bailment created under this Agreement or for any other purposes. Apple is also authorized to contact and, if necessary in Apple’s discretion, negotiate with GTAT’s secured lenders to waive or subordinate any such lender’s potential claimed interest in the Apple Equipment to the rights of Apple.

 

5.7                     GTAT will not attempt to sell, lease or loan any of the Apple Equipment, nor assign, transfer, pledge or hypothecate the Apple Equipment in any manner, without the prior written consent of Apple, which Apple may withhold in its sole discretion.  GTAT will not cause or suffer to exist any lien, security interest or encumbrance to be placed on any of the Apple Equipment, except in favor of Apple and any attempt by GTAT to create any such lien, security interest or encumbrance (other than the security interest in favor of Apple) will be void ab initio.  GTAT hereby waives, and subordinates to the prior rights and interests of Apple in the Apple Equipment, in each case, to the maximum extent permitted under applicable law, any and all rights, interests or encumbrances, including, without limitation, any lien that GTAT has or may have or otherwise acquire in the Apple Equipment at any time during the term of this SOW.

 

5.8                     GTAT will use best efforts to ensure that Apple has the benefit of all manufacturer’s warranties and indemnities for the Apple Equipment.

 

5.9                     GTAT will apply Apple asset tags provided by Apple to all Apple Equipment in accordance with the requirements, if any, provided by Apple.  Under no circumstances will GTAT move Apple Equipment from the location designated by Apple, without Apple’s prior written consent, or deny Apple, its agents or contractors access to the Equipment.

 

5.10              Immediately upon Apple’s request or termination of this SOW, GTAT will deliver the Apple Equipment to Apple Ex Works (GTAT’s facility), provided Apple has paid for any Apple Equipment purchased by GTAT.  GTAT agrees to return the Apple Equipment to Apple in the same condition as it was provided to GTAT, except for normal wear and tear.  GTAT will be responsible for physical loss of or damage to the Apple Equipment while in the possession or control of GTAT.

 

5.11              GTAT agrees to use Apple Equipment solely for Apple’s benefit.  GTAT will not use Apple Equipment for any other purpose or permit a third party to use the Apple Equipment except as set forth in this SOW.

 

5.12              The Apple Equipment provided by Apple is provided to GTAT “as is” and Apple disclaims all warranties, express or implied, including the implied warranties of merchantability and fitness for a particular purpose.

 

5.13              GTAT is solely responsible for installing, testing, and maintaining Apple Equipment in its control in good working condition in compliance with applicable manufacturing specifications, for purchasing and maintaining spare parts to repair such Apple Equipment with a minimum of downtime, and for any risk of loss in connection with the Apple Equipment.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

5.14              Apple reserves the right to inspect any Apple Equipment in GTAT’s control at any time.  Apple reserves all its rights and remedies under MDSA, this SOW, the Uniform Commercial Code and all other applicable laws, including, but not limited to, the right to lawfully enter the premises of GTAT and take possession as bailor of any and all Apple Equipment at any time without breach of the peace.

 

6.                   Liquidated Damages.

 

6.1                     Without limiting the foregoing or any other remedies available to Apple: (i) on the [***]following the required delivery date for any Goods, GTAT will remit to Apple the applicable amount set forth in the table below for each quantity of Goods that has not been delivered prior to such [***]; and (ii) on the [***] following the required delivery date for any Goods, GTAT will remit to Apple the additional applicable amount set forth in the table below for each quantity of Goods that has not been delivered prior to such [***].  The foregoing remedy is non-exclusive and Apple will be entitled to pursue any other legal or equitable remedies.

 

	
Good
    	
 
    	
[***] Late
    	
 
    	
[***] Late
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    

 

6.2                     Without limiting the foregoing or any other remedies available to Apple: If GTAT or any applicable GTAT Related Entities breaches the confidentiality obligations set forth in the MDSA, Apple Restricted Information Agreement or Apple Restricted Project Agreement, then GTAT will pay to Apple, as liquidated damages, an amount equal to [***]. The foregoing remedy is non-exclusive and Apple will be entitled to pursue any other legal or equitable remedies.

 

6.3                     Without limiting the foregoing or any other remedies available to Apple: If GTAT, any of its affiliates, distributors or channel partners or customers violates the exclusivity obligations set forth in Section 9.1 herein, GTAT will pay to Apple, as liquidated damages, an amount equal to [***] produced and used in connection with a violation of the exclusivity obligations set forth in Section 9.1.  In addition, if GTAT, or any GTAT Related Entities, supply (whether by sale, lease or otherwise) sapphire growth furnaces or sapphire growth or production services to any entity in breach of the restrictions set forth in Section 9.1, GTAT will pay, as additional liquidated damages, an amount equal to [***]. The foregoing remedies are non-exclusive and Apple will be entitled to pursue any other legal or equitable remedies.

 

6.4                     Without limiting the foregoing or any other remedies available to Apple:  [***]. The foregoing remedies are non-exclusive and Apple will be entitled to pursue any other legal or equitable remedies.

 

6.5                      Without limiting the foregoing or any other remedies available to Apple:  If GTAT or any applicable GTAT Related Entity fails to comply with any or all of the provisions of Section 12, then GTAT will pay to Apple, as liquidated damages, [***].

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

7.                   New GTAT Technologies.

 

7.1                     If any sapphire Fabrication and Processing Technology (including all Intellectual Property Rights therein) that is (i) currently in development by or for GTAT as of the Effective Date of the SOW or (ii) may be developed or acquired in the future by or for GTAT, should, at any time during the Term, reach a point, as mutually agreed by the parties, that it is suitable for evaluation and consideration for immediate commercial utilization by Apple in Consumer Electronic Products (each a “New Fabrication Technology” and collectively “New Fabrication Technologies”), then GTAT will take the following actions:

 

7.1.1            GTAT will present each New Fabrication Technology to Apple (before disclosing or offering such New Fabrication Technology to any other person or party for commercial license, sale, use or otherwise) in writing, describing in reasonable detail the New Fabrication Technology and its potential applications for Apple’s evaluation.

 

7.1.2            Apple will have a period of [***] from the date of receipt of such presentation (unless extended by the mutual agreement of both Parties and assuming GTAT provides all reasonable details to enable Apple’s evaluation, otherwise the [***] period will commence upon receipt from GTAT of all such information in writing) to evaluate its interest in such New Fabrication Technology. Apple’s evaluation may include using the New Fabrication Technology in a field trial of commercially distributed Apple products.  GTAT will provide, at Apple’s request, reasonable quantities of New Fabrication Technology samples (the “NFT Samples”). NFT Samples will be provided to Apple at GTAT’s actual cost (i.e. no profit margin added), but the [***]. To the extent Apple or its supply chain partners need to utilize a New Fabrication Technology to facilitate the evaluation process, such New Fabrication Technology may be used without compensation of any type, including license fees.

 

7.1.3            If Apple determines that it is interested in acquiring rights to use or purchase any such New Fabrication Technology, the parties will negotiate in good faith, during the [***]evaluation period, the terms of a license, commercial contract, or other agreement governing Apple’s rights with respect to such New Fabrication Technology.

 

7.1.4            For each New Fabrication Technology, GTAT will not propose, negotiate or enter into any agreement with a third party relating to such New Fabrication Technology, whether such agreement is exclusive or non-exclusive, prior to the expiration of Apple’s [***] evaluation period described above.

 

7.1.5            For each New Fabrication Technology, GTAT will not propose, negotiate or enter into any agreement with a third party that grants any exclusive licenses or other exclusive rights with respect to such New Fabrication Technology sooner than one year following the end of Apple’s [***] evaluation period for such New Fabrication Technology.  For avoidance of doubt, one year following the end of Apple’s [***] evaluation period, GTAT may enter into any arrangement with any other party relating to such New Fabrication Technology including, but not limited to, granting exclusive rights thereunder in any application.

 

7.1.6            For each New Fabrication Technology:

 

(a)         If Apple in good faith proposes, but the parties do not enter into, an agreement for any New Fabrication Technology during the [***] after it was presented to Apple,

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

GTAT will not, at any time, thereafter offer such New Fabrication Technology to any third party on any term or terms more favorable to such third party than the terms GTAT last offered to Apple.

 

(b)         If GTAT made no offer in response to an Apple proposal, then GTAT will not, at any time, thereafter offer such New Fabrication Technology to any third party on any term or terms more favorable to such third party than the terms Apple offered to GTAT.

 

(c)          If Apple and GTAT reach an agreement related to any New Fabrication Technology, then GTAT will not, at any time, thereafter offer such New Fabrication Technology to any third party on any term or terms more favorable to such third party than the terms to which Apple and GTAT agreed.

 

7.1.7            For the avoidance of doubt, if GTAT presents a New Fabrication Technology to Apple, and GTAT subsequently materially improves the New Fabrication Technology (the “Improved NFT”), before GTAT may offer such Improved NFT to any third party, such Improved NFT must first be presented to Apple again pursuant to all the terms of this Section 7, unless such Improved NFT was developed pursuant to an exclusive contractual agreement between GTAT and another party and such agreement prohibits GTAT from otherwise performing its obligations under this Section.

 

7.1.8            If any Fabrication and Processing Technology is useful in connection with both sapphire and other materials, then GTAT may offer such Fabrication and Processing Technology to others prior to Apple, but only if it is offered for specific use not involving sapphire and not on terms that would preclude GTAT from otherwise fulfilling its obligations to Apple under Section 7.

 

7.1.9            “Fabrication and Processing Technology” means all processes, materials, methods and Technology useful in the production [***].

 

8.                   Purchase of Additional Furnaces.

 

8.1                     GTAT will offer to sell additional Furnaces and Similar Furnaces to Apple at the [***]:

 

Upon Apple’s request, GTAT promptly will provide to Apple invoices and other documentation supporting such actual costs.  [***].

 

8.2                     [***].

 

8.3                     Apple’s purchase of additional Furnaces and Similar Furnaces will be made under the terms of Apple’s Master Equipment Purchase Agreement (the “MEPA”).  Apple and GTAT will negotiate in good faith to execute the MEPA as soon as possible following the Effective Date, but in any event prior to the second Milestone Payment made under the Prepayment Agreement.

 

9.                   Exclusivity.

 

9.1            During the Exclusivity Period, and subject only to the exceptions and limitations set forth in this Section:

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

9.1.1            neither GTAT, nor any GTAT Related Entities, will directly or indirectly, without Apple’s express written permission: (i) supply to any entity (other than Apple) any [***], nor (ii) license to any entity (other than Apple) [***] nor (iii) provide services [***] to any entity (other than Apple) or otherwise enable any such entity to use or produce sapphire goods (whether for the benefit of such entity or for any third party), in each case for use in or in connection with Consumer Electronics Products; and

 

9.1.2            GTAT and GTAT Related Entities will include [***].

 

9.1.3            With respect to any exclusive licenses or distribution agreements GTAT has executed or may execute with any third parties with respect to Intellectual Property Rights that pertain to Sapphire Technology ***: (a) GTAT will pay all license fees, royalties and other compensation (including any annual minimum royalties or sales amounts), and comply with all other requirements and conditions of the applicable license or distribution agreements, as necessary for GTAT to retain its exclusivity thereunder throughout the Term or, if shorter, for the maximum period permitted under the applicable license or distribution agreement; and (b) GTAT will use best efforts to enforce its exclusivity rights thereunder (including, where possible, by enforcing or causing the licensor to enforce the licensed Intellectual Property Rights against third-party infringers) for the benefit of Apple with respect to any activities of a kind that GTAT would be restricted from undertaking under this Section 9.

 

9.2                     The restrictions set forth in Section 9 will [***].

 

9.3                     Except as mutually agreed otherwise in writing, the Mesa Facility and all of the Furnaces will be used exclusively to manufacture Goods for Apple.  However, if GTAT anticipates that there will be idle capacity at the Mesa Facility, based on Apple’s Forecast, then GTAT can advise Apple of the anticipated amount of idle capacity and request Apple’s permission to use the Mesa Facility and Furnaces to produce and supply sapphire goods to other customers for uses in products other than Consumer Electronic Products.  GTAT must obtain Apple’s prior written approval for all such proposed uses for the benefit of other customers.  Apple’s approval will not be unreasonably withheld or delayed.   GTAT will compensate Apple for its use of the Mesa Facility in an amount to be agreed upon by the parties and which will take into account depreciation costs of Equipment and the Mesa Facility and other expenses.  Any such use of the Mesa Facility will be subject to the exclusivity restrictions set forth in this Section 9; any breach of those restrictions will be subject to payment of the liquidated damages set forth in Section 6.3; and GTAT must, on monthly basis, report to Apple the number of sapphire boules produced in the Mesa Facility for production of goods sold to others.

 

9.4                     “Consumer Electronic Products” [***]

 

9.5                     “Permitted Products” means the following categories of products:

 

9.5.1            [***]

 

9.5.2            [***]

 

9.5.3            [***]

 

9.5.4            [***]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

9.5.5            [***]

 

9.5.6            [***]

 

9.5.7            [***]

 

9.6                     Subject to Section  9.7 below, “Exclusivity Period” means [***].

 

9.7                     [***]:

 

9.7.1            [***]

 

9.7.2            [***]

 

9.7.3            [***]

 

9.7.4            [***]

 

9.7.5            [***]

 

9.7.6            [***]

 

9.8                     This Section 9 replaces Section 1.4 of Attachment 2 of the MDSA in its entirety.

 

10.            Intellectual Property.

 

10.1              For purposes of this SOW, all results, reports, findings, conclusions, work papers, notebooks, electronic records, samples, prototypes, deliverables, and any other information or materials in any form or format arising out of performance of the Development Services by or for GTAT [***] (the “Project Work Product”) except GTAT Background Technology (defined below) will be the sole property of Apple and will become part of the Confidential Information to be protected under this SOW.  “GTAT Background Technology” means GTAT’s inventions, data, improvements, discoveries, ideas, processes, methodologies, formulas, techniques, works of authorship, trade secrets and know-how, whether patentable or not, conceived, reduced to practice, authored, or otherwise created or developed by or for GTAT (i) [***], (ii) [***] if conceived, reduced to practice, authored, or otherwise created or developed by GTAT separately and independently of its provision of any Development Services and any Apple Confidential Information or Project Materials, or [***] in or to (i), (ii) and (iii).

 

10.2              GTAT (i) represents and warrants that as of the Effective Date of this SOW and (ii) covenants that during the Term of this SOW:

 

10.2.1     All Technology and Intellectual Property Rights necessary for Apple’s use or exploitation of the Project Work Product (i) not owned by GTAT and that are necessary for Apple’s use or exploitation of the Project Work Product are the subject of valid license or other agreements that grant to GTAT all necessary rights to sublicense or otherwise permit Apple’s use or exploitation of the Project Work Product for use in Consumer Electronic Products or (ii) are owned by GTAT or its Related Entities.

 

10.2.2     GTAT is not under, and will remain free of, any obligation in conflict or in any way inconsistent with the provisions of the MDSA or this SOW.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

10.2.3     GTAT is not aware of any facts, circumstances or other information about the performance of sapphire boules, [***], the use of the Furnaces to produce the boules, or the manufacturing and/or post-processing of sapphire boules, [***] that would in any way prevent, impede, interfere with, hinder or delay (a) GTAT’s ability to timely meet its obligations under this SOW, (b) Apple’s ability to further process the Goods for timely incorporation into Apple Consumer Electronic Products or (c) Apple’s ability to use sapphire materials in Apple Consumer Electronic Products in a way that would meet Apple’s and its customer’s reasonable expectations.  If, after the Effective Date of this Agreement, GTAT becomes aware of any facts, circumstances or other information relating to item (c) above, GTAT will inform Apple of the same; provided, however that GTAT will not be required to take any affirmative steps or perform any diligence.

 

10.3              Section 4.3 of Attachment 2 of the MDSA is replaced with the following:

 

10.3.1     GTAT hereby grants and conveys to Apple a fully paid-up, royalty-free, worldwide, nonexclusive, irrevocable, perpetual license under any Intellectual Property Rights owned, controlled or licensable by GTAT or its Related Entities to make, have made, use, purchase, sell, offer for sale, license, lease, import, have imported, export, or otherwise distribute or dispose of Sapphire Technology in Apple products (including components thereof) and services, and to practice and have practiced any method in connection with the same by or for Apple or Apple’s Related Entities.  Nothing in this Section 10.3.1 obligates GTAT to disclose or transfer any Sapphire Technology to Apple including, but not limited to, any technology, processes, engineering drawings and designs, know-how, trade secrets, operating conditions and other technical information.

 

10.3.2     [***]

 

10.3.3     [***], GTAT hereby grants and conveys to Apple a fully paid-up, royalty-free, worldwide, nonexclusive, irrevocable, perpetual license under any Intellectual Property Rights in or related to Sapphire Technology whether owned, controlled or licensable by GTAT or its Related Entities that is granted, sold, assigned, or transferred, in-whole or in-part, to a third party, effective immediately prior to the grant, sale, assignment, or transfer of such Intellectual Property Rights, to make, have made, use, purchase, sell, offer for sale, license, lease, import, export, or otherwise distribute or dispose of Apple products (including components thereof) and services, and to practice and have practiced any method in connection therewith by or for Apple or Apple’s affiliates.

 

10.3.4      “Sapphire Technology” means all inventions, data, improvements, discoveries, ideas, processes, methodologies, formulas, techniques, works of authorship, trade secrets and know-how, whether patentable or not, related to [***].

 

10.3.5      GTAT hereby grants and conveys to Apple a fully paid-up, royalty-free, worldwide, non-assignable (except to any of Apple’s Related Entities), non-sublicensable, nonexclusive, irrevocable, perpetual license under any Intellectual Property Rights owned, controlled or licensable by GTAT or its Related Entities to operate, have operated, maintain and have maintained the Furnaces for the purpose of producing sapphire boules.

 

10.3.6      [***]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

10.3.7     GTAT, on behalf of itself, its Related Entities, and their successors and assigns, grants to Apple, its Related Entities, and their successors and assigns, a nonexclusive, perpetual, irrevocable, fully paid-up, royalty-free, worldwide license under the [***] to make, have made, use, purchase, sell, offer for sale, license, lease, import, export, or otherwise dispose of Apple products and services, and to practice and have practiced any method in connection therewith, by or for Apple or its Related Entities.    [***]

 

10.4              For the avoidance of doubt, after the Effective Date of the SOW, any Sapphire Technology that is conceived, reduced to practice, authored, or otherwise created or developed by or for GTAT using any of Apple’s Confidential Information, provided that such Confidential Information does not fall within the standard exceptions to confidentiality set forth in the Confidentiality Agreement, or any GTAT personnel or contractors who had access to Apple’s Confidential Information will be deemed Project Work Product for purposes of Attachment 2 of the MDSA.

 

10.5              Apple may file applications for and prosecute any patents or other Intellectual Property Rights with respect to any Project Work Product in its discretion.  Upon request, Apple will provide GTAT with copies of patent applications, office actions, and related correspondence and responses thereto as soon as reasonably and practically possible. Apple will consider any timely input from GTAT regarding preparation and prosecution of patents.  GTAT is not required to provide and Apple is not required to wait for or incorporate input from GTAT regarding the prosecution of patents.  In order to facilitate cooperation and consultation in the patent prosecution process, either party may request (up to once per calendar year unless otherwise agreed) a joint meeting of the parties’ patent teams (at a mutually convenient time and location) during which the teams would discuss patent filing strategy and updates on pending patent filings.  For the avoidance of doubt, the above will continue to apply until the last Project Work Product created under any SOW is disposed of even after the termination or expiration of this SOW. If Apple notifies GTAT in writing that it has decided not to file, prosecute, or otherwise maintain a patent (or its corresponding patent application and family) on a patentable invention included in the Project Work Product and that Apple does not desire to maintain the invention as confidential, then GTAT may file a patent application for such invention (or take over the continued prosecution and maintenance) in its own name.  The parties will discuss whether to seek patent protection or trade secret protection and Apple will not unreasonably refuse to follow GTAT’s suggestions on such matter.

 

10.6              GTAT, on behalf of itself and its Related Entities, and their respective successors, successors in interest and their permitted assigns, all of whom are and will be bound to the same extent as GTAT, covenants not to assert any claims of infringement of any patents or any other Intellectual Property Rights owned, controlled by, or licensable by GTAT or any GTAT Related Entity against Apple or Apple Related Entities [***] relating to any of their or any Authorized Purchaser’s making, having made, using, purchasing, selling, offering for sale, licensing, leasing, importing, having imported, exporting, or otherwise distributing or disposing of Consumer Electronic Products provided that such Consumer Electronic Products contain Goods (or some portion thereof) purchased from GTAT.

 

10.7              With respect to Annealing Technology which is the result of Development Services paid for by Apple, Apple and GTAT agree as follows:

 

10.7.1      GTAT hereby grants and conveys to Apple a fully paid-up, royalty-free, worldwide, nonexclusive, irrevocable, perpetual license under any Intellectual Property Rights owned, controlled or licensable by GTAT or its Related Entities to make, have made,

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

use, have used, purchase, have purchased, sell, have sold, offer for sale, license, lease, import, have imported, export, or otherwise distribute or dispose of Annealing Technology in Apple Consumer Electronic Products (including components thereof) and services, and to practice and have practiced any method in connection with the same by or for Apple or Apple’s affiliates.

 

10.7.2     “Annealing Technology” means all inventions, data, improvements, discoveries, ideas, processes, methodologies, formulas, techniques, works of authorship, trade secrets and know-how, whether patentable or not, related to [***].

 

10.7.3     Apple may purchase annealing furnaces from GTAT on such terms as the parties may agree from time to time.

 

10.8              [***]

 

11.            Key Personnel.

 

11.1              Apple and GTAT agree that certain GTAT employees (each a “Key Employee”) are critical to GTAT’s ability to support and operate the Mesa Facility successfully and to perform its obligations under the MDSA and SOW. The full list of Key Employees, the date by which each such individual must begin to work full time at their work location, and their work location is specified in Attachment 5 hereto.  As of the Effective Date of the SOW, all Key Employees, wherever located, are dedicated to supporting GTAT in fulfillment of its obligations to Apple under this SOW and the other Collateral Agreements.

 

11.2              If any Key Employee (i) does not commence fulltime employment by the date and at the work location specified in Attachment 5, (ii) is reassigned away from their work location by GTAT, or (iii) has his/her employment with GTAT end for any reason (each a “Key Employee Departure”), then GTAT will promptly notify Apple in writing of such development.

 

11.3              For each Key Employee Departure:

 

11.3.1             Within 5 business days of such Key Employee’s departure, Apple and GTAT will agree on a mitigation strategy for such Key Employee’s position, replacement plan and onboard date for such replacement.

 

11.3.2             GTAT must use best efforts to immediately replace such Key Employee with another employee having equivalent or better skills and experience.  Each such replacement Key Employee will be subject to Apple’s prior approval, which approval will be subject to Apple’s reasonable and sole discretion, and Attachment 5 will be updated to include the replacement Key Employee; and

 

11.3.3             If Apple is not, in its reasonable and sole discretion, satisfied with GTAT’s mitigation efforts under the previously approved replacement plan for such Key Employee (including start date), and GTAT is unable to replace such Key Employee with a new hire, Apple will provide GTAT with written notice and GTAT will, within 15 days of Apple providing written notice, replace such Key Employee by transferring an existing GTAT employee, with equivalent or better skills and experience, from GTAT headquarters to the work location specified in Attachment 5 for such Key Employee.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

12.            Rights Involving Covered Transactions.

 

12.1              In addition to Section 9 of Attachment 1 of the MDSA, the entirety of this Section 12 will apply to this SOW.  For purposes of this SOW, all Covered Transactions will be treated as a Change of Control.

 

12.2              If GTAT desires to: (a) sell all or substantially all of the assets of GTAT or the assets used in or related to the manufacture or operation of furnaces and associated equipment and Technology for the production and/or processing of sapphire goods and materials; or (b) undertake a Change of Control (any of the foregoing transactions, a “Covered Transaction”), then GTAT or the applicable GTAT Related Entity will notify Apple in writing promptly upon reaching the determination to do so, and if requested by Apple, will negotiate exclusively with Apple regarding a Covered Transaction for thirty (30) days, or such longer period as the parties may agree, after providing such notice. To give effect to Apple’s exclusive right of negotiation, upon determining that it desires to enter into a Covered Transaction, GTAT and the GTAT Related Entities will not solicit or consider offers from, nor engage in any other negotiations or discussions with, any prospective transaction partner other than Apple regarding a Covered Transaction until thirty (30) days, or such longer period as the parties may agree, have elapsed from the date on which Apple received written notice under this Section or, if earlier, until Apple notifies GTAT in writing that it is waiving its negotiation right in that instance (whichever occurs first).

 

12.3              If GTAT or a GTAT Related Entity receives a bona fide inquiry or indication of interest from a third party seeking to negotiate a Covered Transaction, and GTAT had not determined to pursue a Covered Transaction before receiving such inquiry or indication of interest, GTAT or the GTAT Related Entity will be free to negotiate with such third party, but must: (a) promptly notify Apple of such inquiry or indication of interest; (b) if requested by Apple, negotiate with Apple in good faith on at least a non-exclusive basis regarding a Covered Transaction for thirty (30) days, or such longer period as the parties may agree, after providing such notice; (c) refrain from entering into any exclusivity agreement with such third party or any other commitments or restrictions that would conflict with Apple’s negotiation right as described in the preceding clause; and (d) refrain from entering into any Covered Transaction with a third party during such thirty (30) day period.

 

13.            Term & Termination.

 

13.1              The term of this SOW will commence on the Effective Date of the SOW and will continue until it expires on the [***] year anniversary of the date of the Commencement Date (the “Term”).  Thereafter, the Term will automatically renew for 1-year periods unless either party provides the other with 90 days written notice of its desire to terminate the SOW.

 

13.2              Either party may terminate this SOW for Cause. “Cause” means a party’s material breach of this SOW or any Collateral Agreement that remains uncured for at least 30 days after receipt of written notice of such material breach.

 

13.2.1              If Apple terminates this SOW for Cause, then [***].

 

13.2.2             If GTAT terminates for Cause, then [***].

 

13.3              Except as otherwise set forth in this SOW, neither Apple nor GTAT may terminate this SOW without the written consent of the other.

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

13.4              In addition to the survival of provisions described in Section 13.2, Sections 5.10, 6.2, 10.3.7 will survive any termination or expiration of this SOW.

 

14.            Notices.  Notices and correspondence required by or related to this SOW will be sent to:

 

	
 
    	
 
    	
For Apple
    	
 
    	
For GTAT
    
	
Name
    	
 
    	
Duco Pasmooij
    	
 
    	
Tom Gutierrez
    
	
Title
    	
 
    	
Vice President, Operations
    	
 
    	
President
    
	
Address
    	
 
    	
1 Infinite Loop, [***]
    	
 
    	
243 Daniel Webster Highway
    
	
Address
    	
 
    	
Cupertino, CA 95014
    	
 
    	
Merrimack, NH 03054 (USA)
    
	
Phone
    	
 
    	
[***]
    	
 
    	
[***]
    
	
Email
    	
 
    	
[***]
    	
 
    	
[***]
    

 

[Signature page follows]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

	
AGREED TO AND ACCEPTED
    	
AGREED TO AND ACCEPTED 
    
	
 
    	
 
    
	
GTAT:
    	
APPLE: 
    
	
 
    	
 
    
	
GTAT Corporation
    	
Apple Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    
	
Name: 
    	
Name: Duco Pasmooij 
    
	
Title:
    	
Title: Vice President, Operations
    
	
 
    	
 
    
	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
Date:
    	
 
    

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

ATTACHMENT 1

 

Furnace Qualification Schedule

 

[***]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

ATTACHMENT 2

 

Supply Commitment and Maximum Supply Obligation

 

[***]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

ATTACHMENT 3

 

NTE Price

 

[***]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

ATTACHMENT 4

 

[***] SAPPHIRE GROWTH OR MANUFACTURING PROCESS IMPROVEMENTS

 

[***]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

ATTACHMENT 5

 

Key Personnel

 

[***]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

ATTACHMENT 6

 

[***]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

 

 

ATTACHMENT 7

 

APPLE EQUIPMENT

 

[***]

 

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission

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