10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2013

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period              to             

Commission file number: 001-34133

GT Advanced Technologies Inc.

(Exact name of registrant as specified in its charter)

Delaware  (State of incorporation)	03-0606749  (I.R.S. Employer Identification No.)
243 Daniel Webster Highway Merrimack, New Hampshire  (Address of principal executive offices)	03054 (Zip Code)

Registrant’s telephone number, including area code: (603) 883-5200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicated by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

As of November 1, 2013, approximately 123,830,191 shares of the registrant’s common stock, $0.01 par value per share, were issued and outstanding.

GT ADVANCED TECHNOLOGIES INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED September 28, 2013

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets (unaudited)	1
	Condensed Consolidated Statements of Operations (unaudited)	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income (unaudited)	3
	Condensed Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	44
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	71
Signatures		73

PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

GT Advanced Technologies Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

	September 28, 2013		December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	258,472	$	418,095
Accounts receivable, net	7,471		23,829
Inventories	123,189		133,286
Deferred costs	2,274		30,248
Vendor advances	12,630		32,440
Deferred income taxes	22,937		28,226
Refundable income taxes	—		1,516
Prepaid expenses and other current assets	6,340		9,168
Total current assets	433,313		676,808
Property, plant and equipment, net	65,755		77,980
Other assets	92,081		86,920
Intangible assets, net	98,918		90,516
Deferred cost	26,344		24,423
Goodwill	54,765		48,021
Total assets	$	771,176	$	1,004,668
Liabilities and stockholders’ equity
Current liabilities:
Current portion of long-term debt	$	9,063	$	7,250
Accounts payable	20,326		44,848
Accrued expenses	46,947		30,928
Contingent consideration	1,294		4,901
Customer deposits	36,218		111,777
Deferred revenue	13,700		86,098
Accrued income taxes	11,982		21,716
Total current liabilities	139,530		307,518
Long-term debt	86,875		132,313
Convertible notes	165,390		157,440
Deferred income taxes	6,034		24,459
Customer deposits	55,598		71,340
Deferred revenue	48,613		35,848
Contingent consideration	16,229		5,414
Other non-current liabilities	2,418		2,323
Accrued income taxes	27,748		25,762
Total liabilities	$	548,435	$	762,417
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, 10,000 shares authorized, none issued and outstanding	—		—
Common stock, $0.01 par value; 500,000 shares authorized, 123,758 and 119,293 shares issued and outstanding as of September 28, 2013 and December 31, 2012, respectively	1,237		1,193
Additional paid-in capital	208,631		183,565
Accumulated other comprehensive income	1,066		806
Retained earnings	11,807		56,687
Total stockholders’ equity	222,741		242,251
Total liabilities and stockholders’ equity	$	771,176	$	1,004,668

See accompanying notes to these condensed consolidated financial statements.

1

GT Advanced Technologies Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Revenue	$	40,291		$	110,061		$	266,397		$	631,203
Cost of revenue	22,514			75,033			176,389			383,641
Gross profit	17,777			35,028			90,008			247,562
Operating expenses:
Research and development	21,075			18,767			56,039			47,954
Selling and marketing	3,496			3,123			10,870			9,657
General and administrative	17,427			15,428			48,507			45,731
Contingent consideration expense (income)	4,971			(9,943		)	997			(9,261		)
Restructuring charges	4,010			—			6,868			—
Amortization of intangible assets	2,976			2,538			8,098			7,631
Total operating expenses	53,955			29,913			131,379			101,712
(Loss) income from operations	(36,178		)	5,115			(41,371		)	145,850
Other income (expense):
Interest income	122			27			286			50
Interest expense	(6,456		)	(1,620		)	(20,462		)	(3,398		)
Other, net	62			(431		)	73			(968		)
(Loss) income before income taxes	(42,450		)	3,091			(61,474		)	141,534
(Benefit) provision for income taxes	(4,304		)	747			(16,594		)	45,360
Net (loss) income	$	(38,146	)	$	2,344		$	(44,880	)	$	96,174
Net (loss) income per share:
Basic	$	(0.31	)	$	0.02		$	(0.37	)	$	0.81
Diluted	$	(0.31	)	$	0.02		$	(0.37	)	$	0.80
Weighted-average number of shares used in per share calculations:
Basic	122,183			118,769			119,752			118,873
Diluted	122,183			119,874			119,752			120,126

See accompanying notes to these condensed consolidated financial statements.

2

GT Advanced Technologies Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(In thousands)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 28, 2013			September 29, 2012		September 28, 2013			September 29, 2012
Net (loss) income	$	(38,146	)	$	2,344	$	(44,880	)	$	96,174
Other comprehensive (loss) income, net of tax:
Change in fair value of cash flow hedging instruments, net of tax effect of $0, ($274), $11 and ($1,268), respectively	—			338		(54		)	1,752
Foreign currency translation adjustments	66			192		314			(62		)
Other comprehensive income	66			530		260			1,690
Comprehensive (loss) income	$	(38,080	)	$	2,874	$	(44,620	)	$	97,864

See accompanying notes to these condensed consolidated financial statements.

3

GT Advanced Technologies Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended
	September 28, 2013			September 29, 2012
Cash flows from operating activities:
Net (loss) income	$	(44,880	)	$	96,174
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Amortization expense	8,098			7,631
Depreciation expense	11,881			10,256
Convertible notes discount amortization	7,950			62
Contingent consideration expense (income)	997			(13,991		)
Impairment on long lived assets	4,010			—
Deferred income tax expense (benefit)	(23,057		)	(6,275		)
Provision for excess and obsolete inventory	1,848			4,106
Share-based compensation expense	13,883			13,091
Excess tax benefits from share-based awards	(242		)	(285		)
Amortization of deferred financing costs	2,914			697
Loss on disposal of assets	966			2,038
Other adjustments, net	500			864
Changes in operating assets and liabilities (excluding impact of acquired assets and assumed liabilities):
Restricted cash	—			96,202
Accounts receivable	17,510			39,185
Inventories	13,246			(22,435		)
Deferred costs	26,069			189,172
Vendor advances	21,747			(23,204		)
Prepaid expenses and other assets	1,542			2,086
Accounts payable and accrued expenses	(14,738		)	(25,495		)
Customer deposits	(93,812		)	(56,283		)
Deferred revenue	(59,633		)	(337,900		)
Income taxes	(6,216		)	896
Other, net	254			704
Net cash used in operating activities	(109,163		)	(22,704		)
Cash flows from investing activities:
Purchases and deposits on property, plant and equipment	(3,710		)	(35,541		)
Other investing activities	52			293
Net cash used in investing activities	(3,658		)	(35,248		)
Cash flows from financing activities:
Borrowings under credit facility	—			145,000
Principal payments under credit facility	(43,625		)	(1,813		)
Proceeds from issuance of convertible notes	—			220,000
Cash paid for bond hedges	—			(57,923		)
Proceeds from issuance of warrants	—			41,623
Proceeds and related excess tax benefits from exercise of share-based awards	358			1,507
Payments of contingent consideration from business combinations	—			(4,903		)
Payments related to share repurchases to satisfy statutory minimum tax withholdings	(1,516		)	(1,153		)
Deferred financing costs	(2,266		)	(11,471		)
Other financing activities	(35		)	(498		)
Net cash (used in) provided by financing activities	(47,084		)	330,369
Effect of foreign exchange rates on cash	282			(76		)
(Decrease) increase in cash and cash equivalents	(159,623		)	272,341
Cash and cash equivalents at beginning of period	418,095			206,878
Cash and cash equivalents at end of period	$	258,472		$	479,219
Supplemental cash flow information:
Cash paid for interest	$	8,254		$	2,470
Non-cash investing and financing activities:
Decrease in accounts payable and accrued expenses for property, plant and equipment	$	(683	)	$	(3,469	)
Fair value of shares issued for acquisition	$	14,463		$	—
Contingent consideration issued for acquisition	$	6,211		$	—
Unpaid deferred financing costs	—			635

See accompanying notes to these condensed consolidated financial statements.

4

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

1. Basis of Presentation

These accompanying unaudited condensed consolidated financial statements of GT Advanced Technologies Inc. and subsidiaries (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the Securities and Exchange Commission’s (“SEC”) instructions for interim financial information. In the opinion of management, the accompanying financial statements contain all adjustments consisting of normal recurring adjustments necessary to present fairly in all material respects the financial position, results of operations and cash flows for the periods presented. The results for the three and nine months ended September 28, 2013 are not necessarily indicative of the results to be expected for any other interim period or for any future year. The accompanying financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Transition Report on Form 10-K (“Transition Report”) for the nine-month period ended December 31, 2012, filed with the SEC on March 1, 2013.

The condensed consolidated balance sheet as of December 31, 2012 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

Reclassifications

Certain reclassifications have been made to prior year financial statements to conform to the current year presentation. Specifically, contingent consideration income of $9,943 and $9,261 for the three and nine-month periods ended September 29, 2012, respectively, was previously included in general and administrative expense, but is now stated separately in the Company’s condensed consolidated statements of operations.

Recent Developments

The polysilicon, photovoltaic (“PV”) and sapphire (including LED) industries continue to face the significant challenges described in the Company’s Transition Report, including, among others, (i) oversupply of, or limited demand for, end products that are manufactured with equipment sold by the Company; (ii) ongoing trade disputes between the U.S., European Union and South Korea, on the one hand, and China on the other, which have adversely impacted the businesses of the Company’s customers in China (where a majority of the Company’s customers are located) continues to create uncertainty among the Company’s customers and the industries the Company serves; (iii) liquidity challenges being faced by companies in the polysilicon, PV and sapphire industries, due in part to changes in the global capital markets which have resulted in a more stringent lending environment which in turn has caused decreased spending within the industries the Company serves, as customers try to preserve their liquidity; (iv) deterioration of the financial health of the Company’s customers and (v) structural changes in the PV industry which, the Company believes, will require that any recovery in the PV market will be driven by changes in monocrystalline technology and development of other materials for higher efficiency solar cells. As a result, demand for existing multicrystalline products (DSS) will be very limited.

Taking these factors into account, during December 2012, the Company took a number of strategic actions, including, (i) intending to discontinue any significant future investments in the DSS product line and (ii) determining that the vast majority of the amounts in the Company’s backlog attributable to DSS equipment is at risk of not converting into revenue and, accordingly, future sales of DSS will be limited. The Company has taken a number of strategic actions, including idling the Company’s continuously-fed Czochralski (HiCz) Hazelwood facility in St. Louis and shifting the related research and development to Merrimack, New Hampshire. HiCz is a growth technology designed to enable the production of high efficiency monocrystalline solar cells. The factors above triggered impairment assessments that resulted in impairment charges in December 2012 of $60,192 related to PV inventory, $8,352 related to all remaining PV vendor advances, $57,037 related to PV goodwill, and $29,261 related to certain long-lived, intangible and other assets located at the Company’s HiCz Hazelwood facility.

For the three month period ended September 28, 2013, the Company incurred a loss from operations of $36,178 and a net loss of $38,146. For the nine month period ended September 28, 2013, the Company incurred a loss from operations of $41,371, a net loss of $44,880, and used $109,163 in cash for operating activities.

5

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

On October 30, 2013, the Company terminated the 2012 Credit Agreement (the “Credit Agreement”).  As of September 28, 2013, there was approximately $96,000 outstanding borrowings under the 2012 Term Facility which was paid in full on October 30, 2013 by using available cash.  As of October 30, 2013, there are no amounts outstanding under the 2012 Revolving Credit Facility and no outstanding stand-by letters of credit under the 2012 Revolving Credit Facility.  In connection with the termination of the 2012 Credit Agreement, the Company expects to recognize a charge in the fourth quarter of approximately $3,639 relating to deferred issuance costs that will be written off upon the termination of the agreement.  For additional information, refer to Note 21, Subsequent Events.

Management believes that the Company has sufficient cash resources to fund operations for at least the next twelve months.

SDR-400™

During the nine months ended September 28, 2013, the Company determined that it had obtained sufficient evidence that the SDR-400™, a product within the Polysilicon business unit, is an established product in accordance with the Company’s revenue recognition policy and accordingly, there is no longer uncertainty around meeting the requirements of customer acceptance conditions in agreements that contain the standard or demonstrated objective specifications of the SDR-400™. In concluding that the SDR-400™ is now an established product, the Company considered the stability of the product’s technology, the ability to test the product prior to shipment, and the historical performance results of over 30 product installations at one of our customers’ facilities.  As a result of classifying the SDR-400™ as an established product, the Company recognized revenue and gross profit of $3,080 and $681, and $148,740 and $59,501, in the three and nine months ended September 28, 2013, respectively, from two customer arrangements that included SDR-400™’s prior to formal customer acceptance of the products.  Non-refundable payments received under these customer arrangements exceed the recognized revenue and were previously recorded as deferred revenue. The Company continues to report deferred revenue related to these arrangements for advance payments on other deliverables included in the arrangements.  Revenue recognized in the nine months ended September 28, 2013 related to the SDR-400™ was material to both the Polysilicon reporting segment and the consolidated results within the Company’s condensed consolidated statement of operations.

2. Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements included in the Transition Report. There were no significant changes to the significant accounting policies during the nine months ended September 28, 2013.

3. Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Income Taxes (Topic 740): Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance eliminates diversity in practice surrounding the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance requires entities to net an unrecognized tax benefit with a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if the carryforward would be used to settle additional tax due upon disallowance of a tax position. The amendment is effective for fiscal periods beginning after December 15, 2013 with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements.

Recently Adopted Accounting Pronouncements

Effective January 1, 2013, the Company adopted Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The guidance is intended to provide disclosure on items reclassified out of accumulated other comprehensive income either in the notes or parenthetically on the face of the income statement. The required disclosure is in Note 18 below.

6

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

4. Acquisitions

Acquisition of Certain Assets of Thermal Technology, LLC

On May 16, 2013, the Company acquired substantially all of the business of Thermal Technology, LLC, (“Thermal Technology”), a developer and seller of a wide range of high temperature thermal and vacuum products used in the fabrication of advanced materials that are deployed across multiple industries including LED, medical devices, oil and gas and automotive.  This acquisition was achieved by the Company acquiring an entity to which certain assets and trade payables of Thermal Technology had been transferred immediately prior to the acquisition.  The acquisition of Thermal Technology provides the Company with key technologies that will allow the Company, it believes, to address new markets with production equipment options that can be optimized around customers’ specific needs. The purchase consideration consisted of 3.4 million shares of the Company’s common stock valued at an aggregate of $14,463 (as of the date of acquisition) and potential contingent consideration of $35,000 based upon meeting certain financial metrics. The final purchase price is subject to a net working capital adjustment, dependent upon the level of working capital at the acquisition date, that has not yet been finalized.  The fair value of the contingent consideration was $6,211 at the date of acquisition.

The transaction has been accounted for as a business combination and the results are included in the Company’s results of operations from May 16, 2013, the date of acquisition. The acquired business contributed revenues of $3,545 and a loss of $3,071 to the consolidated results of the Company for the period from acquisition to September 28, 2013. The results of the acquired business are included in the Company’s sapphire business reporting segment.

Significant judgment is required in estimating the fair value of intangible assets acquired in a business combination and in assigning their respective useful lives. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management.

The Company employs the income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants, and include the amount and timing of future cash flows (including expected growth rates and profitability), the underlying product life cycles, economic barriers to entry, a brand’s relative market position and the discount rate applied to the cash flows, among others.

Each period the Company will revalue the contingent consideration obligations associated with the acquisition to fair value and record changes in the fair value as contingent consideration expense or income. Increases or decreases in the fair value of the contingent consideration obligations can result from changes in assumed discount periods and rates, changes in the assumed timing and amount of revenue and expense estimates and changes in assumed probability with respect to the attainment of certain financial and operational metrics. Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the amount of contingent consideration expense (income) recorded in any given period.

As of September 28, 2013, the purchase price (including the estimated contingent consideration) and related allocations for the acquisition are preliminary. The Company is currently in the process of investigating the facts and circumstances existing as of the acquisition date in order to finalize its valuation and establish the related tax basis. As a result of the preliminary purchase price allocation, the Company recognized $6,744 of goodwill, which is primarily due to the expected future cash flows from synergies with the operations of the Company and assembled workforce. The goodwill created by the transaction is nondeductible for tax purposes. A summary of the preliminary purchase price allocation for the acquisition of Thermal Technology business is as follows:

Fair value of consideration transferred:

Common stock	$	14,463
Contingent consideration obligations	6,211
Preliminary estimate of net working capital adjustment	(735		)
Total fair value of consideration	$	19,939

7

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

Fair value of assets acquired and liabilities assumed:

Accounts receivable	$	1,008
Inventory	7,861
Property, plant and equipment	1,700
Deferred tax asset	411
Other assets	439
Intangible assets	14,500
Goodwill	6,744
Accounts payable and accrued expenses	(7,057		)
Customer deposits	(2,509		)
Deferred tax liability	(3,149		)
Other current liabilities	(9		)
Total net assets acquired	$	19,939

The purchase consideration includes contingent consideration payable by the Company upon the attainment of certain financial targets through the period ending December 31, 2018. Specifically, the contingent consideration is based upon a portion of revenue achieved for the remainder of 2013 to 2018, subject to certain thresholds and a cap on total payments. The Company determined the fair value of the contingent consideration obligations based on a probability-weighted income approach derived from future revenue estimates. The undiscounted range of outcomes that the Company used to value the contingent consideration arrangement was between $7,507 and $20,205. During the three and nine months ended September 28, 2013, the Company recorded contingent consideration income of $1,075 and $934, respectively, related to change in the fair value of the liability at September 28, 2013.

The Company incurred transaction costs of $1,188, which consisted primarily of legal and accounting fees. These costs have been recorded as general and administrative expense for the nine months ended September 28, 2013. The acquisition of Thermal Technology’s business did not have a material effect on the Company’s results of operations. Pro forma results of operations have not been presented due to the immaterial impact the amounts would have had on the Company’s historical results of operations.

Acquisition of Certain Assets of Twin Creeks Technologies, Inc.

On November 8, 2012, the Company acquired certain assets and intellectual property of Twin Creeks Technologies, Inc. (“Twin Creeks”), a privately owned company involved in the development of an ion implanter technology, which the Company refers to as the Hyperion ion implanter. The assets were purchased from Twin Creeks’ lenders in a private sale for total consideration with a fair value of $15,372. The purchase consideration consisted of $10,172 in cash and a potential additional $40,000 of contingent consideration. The fair value of the contingent consideration was estimated at $5,200 at the date of acquisition.

The acquisition of these select assets, including the associated in-process research and development, is intended to have a broad application in the production of engineered substrates for power semiconductors, uses within the sapphire and LED industries and thin wafers for solar applications and certain other potential applications. In addition, the Company expects to pursue the development of thin sapphire laminates for use in applications such as cover and touch screen devices.

The transaction has been accounted for as a business combination and is included in the Company’s results of operations from the acquisition date of November 8, 2012. The acquired assets did not contribute revenues from the acquisition date to September 28, 2013.  The goodwill created by the transaction is expected to be deductible for tax purposes.  The results of the acquired assets, including goodwill, are included in the Company’s PV and sapphire segments.

As of September 28, 2013, the valuation of acquired assets, and assumed liabilities is preliminary. The Company is in the process of investigating the facts and circumstances existing as of the acquisition date in order to finalize its valuation.

8

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

Based on new information gathered about facts and circumstances that existed as of the acquisition date related to the valuation of certain acquired assets and assumed liabilities, the Company updated the preliminary valuations of assets acquired during the three months ended March 30, 2013 which resulted in an increase to goodwill of $2,000 and a decrease to deferred tax assets of $2,000 as reflected in the table below. The adjustments have been retrospectively applied to the December 31, 2012 balance sheet. These adjustments had no impact on the statement of operations or statement of cash flows. A summary of the preliminary purchase price allocation for the acquisition of certain assets and assumed liabilities of Twin Creeks is as follows:

Fair value of consideration transferred:

Cash	$	10,172
Contingent consideration obligations	5,200
Total fair value of consideration	$	15,372

Fair value of assets acquired and liabilities assumed:

Property, plant and equipment	$	1,529
Other assets	23
In-process research and development	12,300
Goodwill	2,907
Accounts payable	(1,362		)
Other current liabilities	(25		)
Total net assets acquired	$	15,372

The purchase consideration includes contingent consideration payable by the Company in the form of a royalty on net sales of hydrogen ion implantation systems, related equipment, parts and accessories and materials made from hydrogen ion implantation systems and of royalties from any sub-licenses granted by the Company of the underlying intellectual property acquired. These payments are subject to the Company’s right to set-off up to $6,000 for infringement claims brought by third-parties related to the intellectual property acquired. The royalty amount payable is capped at the earlier of payment of $40,000 of royalties or the end of the 15-year term of the license agreement. The Company determined the fair value of the contingent consideration obligations based on a probability-weighted income approach derived from assessments of future revenue. The weighted-average undiscounted probable outcome that the Company initially used to value the contingent consideration arrangement was $27,562. During the three and nine months ended September 28, 2013, the Company recorded contingent consideration expense of $6,046 and $6,747, respectively, related to change in the fair value of the liability at September 28, 2013.

Intangible assets are composed of the estimated fair value of acquired in-process research and development (“IPR&D”) related to the Hyperion™ ion implanter technology. At the date of acquisition and through September 28, 2013, the Hyperion™ ion implanter technology had not reached commercial technological feasibility nor had an alternative future use and is therefore considered to be IPR&D. The estimated fair value was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flows from the Hyperion™ tool were based on certain key assumptions, including estimates of future revenue and expenses and taking into account the stage of development of the technology at the acquisition date and the time and resources needed to complete development. The Company used a discount rate of 28% and cash flows that have been probability-adjusted to reflect the risks of product commercialization. This discount rate used is comparable to the estimated internal rate of return on Twin Creeks operations and represents the rate that market participants would use to value the intangible assets.

The major risks and uncertainties associated with the timely and successful completion of development of the IPR&D include the Company’s ability to demonstrate technological feasibility of the product and to successfully complete this task

9

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

within budgeted costs. Consequently, the eventual realized value of the acquired IPR&D may vary from its estimated fair value at the date of acquisition.

The acquisition of certain select assets of Twin Creeks did not have a material effect on the Company’s results of operations for the three and nine months ended September 28, 2013. Pro forma results of operations have not been presented due to the immaterial impact the amounts would have had on the Company’s historical results of operations.

5. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability. As a basis for classifying the assumptions used, a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, is applied as follows: (Level 1) observable inputs such as quoted prices in active markets for identical assets or liabilities; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. There were no transfers between such levels in the nine month period ended September 28, 2013.

The following table provides the assets and liabilities measured and reported at fair value on a recurring basis at September 28, 2013 and December 31, 2012:

	September 28, 2013
	Total Carrying		Fair Value Measurements Using
	Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market mutual funds	$	179,144	$	179,144	$	—	$	—
Liabilities:
Contingent consideration	$	17,523	$	—	$	—	$	17,523

	December 31, 2012
	Total Carrying		Fair Value Measurements Using
	Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market mutual funds	$	200,041	$	200,041	$	—	$	—
Forward foreign exchange contracts	230		—		230		—
Liabilities:
Contingent consideration	$	10,315	$	—	$	—	$	10,315

The Company’s money market mutual funds are valued using readily available quoted market prices for identical assets.

The Company’s counterparties to its forward foreign exchange contracts are financial institutions. These forward foreign exchange contracts are measured at fair value using a valuation which represents a good faith estimate of the midmarket value of the position, based on estimated bids and offers for the positions, which are updated each reporting period. The Company considers the effect of credit standings in these fair value measurements (level 2). There have been no changes in the valuation techniques used to measure the fair value of the Company’s forward foreign exchange contracts (see Note 8 below for additional information about the Company’s derivatives and hedging activities).

10

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

The Company has classified contingent consideration related to its acquisitions within Level 3 of the fair value hierarchy because the fair value is derived using significant unobservable inputs, which include discount rates and probability-weighted cash flows. The Company determined the fair value of its contingent consideration obligations based on a probability-weighted income approach derived from financial performance estimates and probability assessments of the attainment of certain targets. The Company establishes discount rates to be utilized in its valuation models based on the cost to borrow that would be required by a market participant for similar instruments. In determining the probability of attaining certain technical, financial and operation targets, the Company utilizes data regarding similar milestone events from its own experience, while considering the inherent difficulties and uncertainties in developing a product. On a quarterly basis, the Company reassesses the probability factors associated with the financial, operational and technical targets for its contingent consideration obligations. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period.

The key assumptions as of September 28, 2013 related to the contingent consideration from the acquisition of certain assets of Twin Creeks used in the model include: (i) discount rate of 28% for purposes of discounting the low and base case scenarios associated with achievement of the revenue based earn-out. The probabilities assigned to these scenarios were 25%, and 75% for the low and base case scenarios, respectively. An increase or decrease in the probability of achievement of any scenario could result in a significant increase or decrease to the estimated fair value of the contingent consideration liability.

The key assumptions as of September 28, 2013 related to the contingent consideration from the acquisition of substantially all of the business of Thermal Technology used in the model include: (i) discount rate of 20.4% for purposes of discounting the most likely scenario associated with achievement of the revenue based earn-out. An increase or decrease in the probability of achievement of the projected revenues could result in a significant increase or decrease to the estimated fair value of the contingent consideration liability.

During the three months ended June 29, 2013, the Company reversed the contingent consideration liability related to the Confluence Solar acquisition with a corresponding reduction to contingent consideration expense.  This reversal of approximately $4,816 was the result of failing to achieve the required operational and technical targets required to earn such consideration.

The Company recorded contingent consideration expense (income) in the condensed consolidated statements of operations of $4,971 and $997 for the three and nine months ended September 28, 2013 and ($9,943) and ($9,261) for the three and nine months ended September 29, 2012, and all of which was allocated to the corporate services reporting segment.  Changes in the fair value of the Company’s Level 3 contingent consideration obligations during the three and nine months ended September 28, 2013 and three and nine months ended September 29, 2012 were as follows:

	Three Months Ended					Nine Months Ended
	September 28, 2013		September 29, 2012			September 28, 2013		September 29, 2012
Fair value as of the beginning of the period	$	12,552	$	14,762		$	10,315	$	23,713
Acquisition date fair value of contingent consideration obligations related to acquisitions	—		—			6,211		—
Changes in the fair value of contingent consideration obligations	4,971		(9,943		)	997		(9,261		)
Payments of contingent consideration obligations	—		—			—		(9,633		)
Fair value at the end of the period	$	17,523	$	4,819		$	17,523	$	4,819

The carrying amounts reflected in the Company’s condensed consolidated balance sheets for cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and customer deposits approximate fair value due to their short-term maturities. The Company did not hold any short-term investments at September 28, 2013 or December 31, 2012. The following table provides the carrying and fair values of the Company’s long-term debt obligations and convertible notes as of September 28, 2013 and December 31, 2012:

11

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

			Fair Value Measurements Using
Description	Total Carrying Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
2012 Term Facility, including current portion
September 28, 2013	$	95,938	$	—	$	96,138	$	—	$	96,138
December 31, 2012	$	139,563	$	—	$	139,563	$	—	$	139,563
3.00% Senior Convertible Notes
September 28, 2013	$	165,390	$	—	$	282,659	$	—	$	282,659
December 31, 2012	$	157,440	$	—	$	157,300	$	—	$	157,300

Certain assets have been measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3). The following table presents nonrecurring fair value measurements recognized for the nine-month period ended September 28, 2013 and for the nine-month period ended December 31, 2012

	September 28, 2013				December 31, 2012
	Fair Value		Total Losses		Fair Value		Total Losses
Long-lived asset group at our Hazelwood facility	$	1,155	$	4,010	$	5,165	$	29,261

For Level 3 assets that were measured at fair value on a non-recurring basis during the nine-month period ended September 28, 2013, the following table presents the fair value of those assets as of the measurement date, valuation techniques and related unobservable inputs of those assets:

	Fair Value		Valuation Technique(s)	Unobservable Input	Range, Median or Average
Long-lived asset group at our Hazelwood facility	$	1,155	Cost Approach and Market Approach	Depreciation factors	Average of 75%

The fair value of the long-lived asset group of the Hazelwood facility at December 31, 2012 was calculated based on a probability assessment of potential outcomes. An estimation of fair value, assuming the assets would be used by a market participant as is, was determined using a cost approach which was based on current replacement and/or reproduction costs of the asset as new, less depreciation factors attributable to physical, functional and economic obsolescence and utilizing data from various indexes. A separate estimate of fair value was determined using a market approach assuming an orderly liquidation. At December 31, 2012, equal weighting was applied to the cost and market approaches, however, due to a lack of interest by market participants, the Company’s fair value as of September 28, 2013 of $1,155 is primarily based on expected value upon liquidation.

Significant changes in any of the significant unobservable inputs used could result in significantly higher or lower fair value measurements.

6. Goodwill and Other Intangible Assets

The following table contains the change in the Company’s goodwill during the nine months ended September 28, 2013:

	Photovoltaic			Sapphire
	Business			Business		Total
Balance as of December 31, 2012
Goodwill	$	61,399		$	43,659	$	105,058
Accumulated impairment losses	(57,037		)	—		(57,037		)
	$	4,362		$	43,659	$	48,021
Acquisition of Thermal Technology, LLC	—			6,744		6,744
Balance as of September 28, 2013
Goodwill	$	61,399		$	50,403	$	111,802
Accumulated impairment losses	(57,037		)	—		(57,037		)
	$	4,362		$	50,403	$	54,765

As noted in Note 4, during the three months ended March 30, 2013, the Company updated the preliminary valuation of assets acquired of Twin Creeks, which resulted in an increase to goodwill of $2,000 and a decrease to deferred tax assets of $2,000.  This adjustment was retrospectively recorded as of December 31, 2012 in the balance sheet and table above.

No impairment losses have been recorded on the Company’s goodwill during the nine months ended September 28, 2013.

Acquired intangible assets subject to amortization at September 28, 2013 and December 31, 2012 consisted of the following:

12

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

	Weighted
	Average	September 28, 2013						December 31, 2012
	Amortization	Gross		Accumulated				Gross		Accumulated
	Period	Amount		Amortization		Net		Amount		Amortization		Net
Finite-lived intangible assets
Photovoltaic:
Technology	9.5 years	$	74,200	$	19,977	$	54,223	$	72,200	$	14,951	$	57,249
Trade names / Trademarks	8.6 years	7,100		3,388		3,712		7,100		3,036		4,064
Subtotal:		81,300		23,365		57,935		79,300		17,987		61,313
Polysilicon:
Technology	2.6 years	1,500		1,500		—		1,500		1,500		—
Subtotal:		1,500		1,500		—		1,500		1,500		—
Sapphire:
Customer relationships	6.4 years	7,300		2,331		4,969		4,100		1,651		2,449
Technology	9.3 years	28,600		5,983		22,617		17,300		4,181		13,119
Order backlog	1.2 years	500		500		—		500		500		—
Trade names	8.0 years	1,100		435		665		1,100		332		768
Non-compete agreements	5.8 years	1,000		568		432		1,000		433		567
Subtotal:		38,500		9,817		28,683		24,000		7,097		16,903
Total finite-lived intangible assets		121,300		34,682		86,618		104,800		26,584		78,216
Indefinite-lived intangible assets
In-process research and development		12,300		—		12,300		12,300		—		12,300
Total intangible assets		$	133,600	$	34,682	$	98,918	$	117,100	$	26,584	$	90,516

The weighted average remaining amortization periods for the (i) photovoltaic, (ii) polysilicon and (iii) sapphire intangibles were 7.09 years, 0 years and 6.44 years, respectively, as of September 28, 2013. As of September 28, 2013, the estimated future amortization expense for the Company’s intangible assets is as follows:

Year Ending December 31,	Amortization Expense
2013 (remaining three months)	$	2,975
2014	11,881
2015	11,852
2016	11,519
2017	11,052
2018	10,990
Thereafter	38,649

13

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

7. Customer Concentrations

The following customers comprised 10% or more of the Company’s total revenue or accounts receivable for the, or as of, the periods indicated:

Three Months Ended

Nine Months Ended

As of

September 28, 2013

September 29, 2012

September 28, 2013

September 29, 2012

September 28, 2013

December 31, 2012

% of

% of

% of

% of

Accounts

% of

Accounts

% of

Revenue

Total

Revenue

Total

Revenue

Total

Revenue

Total

Receivable

Total

Receivable

Total

Photovoltaic Customers

Customer #1

*

*

*

*

*

*

*

*

*

*

$

2,478

10

%

Polysilicon Customers

Customer #2

$

17,600

44

%

*

*

*

*

*

*

*

*

*

*

Customer #3

7,919

20

%

*

*

$

108,579

41

%

*

*

*

*

*

*

Customer #4

*

*

*

*

45,268

17

%

*

*

*

*

9,085

38

%

Customer #5

*

*

*

*

34,915

13

%

*

*

*

*

*

*

Customer #6 (1)

*

*

$

43,459

39

%

*

*

$

139,337

22

%

*

*

*

*

Customer #7

*

*

39,142

36

%

*

*

*

*

$

1,200

16

%

3,248

14

%

Customer #8

*

*

*

*

*

*

82,316

13

%

*

*

*

*

Customer #9

*

*

*

*

*

*

77,870

12

%

*

*

*

*

Customer #10

*

*

*

*

*

*

*

*

1,450

19

%

*

*

Sapphire Customers

Customer #11

*

*

*

*

*

*

63,950

10

%

*

*

*

*

*                      Amounts from these customers were less than 10% of the total as of, or for, the respective period.

(1)                   Presented in the table are revenues from a significant customer in the Polysilicon segment.  Total revenue recognized from this customer for the three months ended September 29, 2012 was $43,769 or 40% of total revenue.  Total revenue recognized from this customer for the nine months ended September 29, 2012 was $174,127 or 28% of total revenue. Not included in the table above for the three and nine months ended September 29, 2012 are $310 or less than 1% and $34,790 or 6% of total revenue for these periods for sales to this customer that have been included in the Sapphire segment.

The Company requires most of its customers to either post letters of credit and/or make advance payments of a portion of the selling price prior to delivery. Approximately $3,174 (or 42%) and $16,557 (or 69%) of total accounts receivable as of September 28, 2013 and December 31, 2012, respectively, were secured by letters of credit.

8. Derivative and Hedging Activities

The Company enters into forward foreign currency exchange contracts to hedge portions of foreign currency denominated inventory purchases. These contracts typically expire within 12 months of entering into the contract. As of September 28, 2013, the Company had no open forward foreign currency exchange contracts.

14

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

The following table sets forth the balance sheet locations and fair value of the Company’s forward foreign currency exchange contracts at December 31, 2012:

Instruments Designated as Cash Flow Hedges

	Balance Sheet Location	December 31, 2012
Forward foreign currency exchange contracts—assets	Prepaid expenses and other current assets	$	230

The following table sets forth the effect of the Company’s forward foreign currency exchange contracts designated as hedging instruments on the condensed consolidated statements of operations for the three and nine months ended September 28, 2013 and September 29, 2012:

Instruments Designated as Cash Flow Hedges

	Amount of		Location of Gain or	Amount of Gain or			Location of
	(Gain) or Loss		(Loss) Reclassified	(Loss) Reclassified			Gain or (Loss)	Amount of Gain or
	Recognized in OCI		from AOCI	from AOCI			Recognized in	(Loss) Recognized in
	on Derivative		into Income	into Income			Income on Derivative	Income on Derivative
	(Effective Portion)		(Effective Portion)	(Effective Portion)			(Ineffective Portion)	(Ineffective Portion)
Three Months Ended
September 28, 2013	$	—	Cost of revenue	$	—		Other, net	$	—
September 29, 2012	173		Cost of revenue	(498		)	Other, net	—
Nine Months Ended
September 28, 2013	4		Cost of revenue	60			Other, net	—
September 29, 2012	641		Cost of revenue	(2,775		)	Other, net	—

Derivatives Not Designated as Hedging Instruments

	Location of
	Gain or (Loss)	Amount of Gain or
	Recognized in	(Loss) Recognized in
	Income on Derivative	Income on Derivative
Three Months Ended
September 28, 2013	Other, net	$	—
September 29, 2012	Other, net	(287		)
Nine Months Ended
September 28, 2013	Other, net	$	—
September 29, 2012	Other, net	(886		)

15

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

During the nine months ended September 28, 2013, there were no losses reclassified into earnings as a result of the Company discontinuing cash flow hedging. No amount of accumulated gain included in other comprehensive income as of September 28, 2013 is expected to be reclassified into earnings over the next twelve months.

9. Inventories

Inventories consisted of the following:

	September 28, 2013		December 31, 2012
Raw materials	$	109,137	$	97,957
Work-in-process	8,563		5,100
Finished goods	5,489		30,229
	$	123,189	$	133,286

10. Other Assets

Other assets consisted of the following:

	September 28, 2013		December 31, 2012
Inventory	$	36,724	$	33,834
Vendor advances	18,524		20,664
Deferred financing fees	7,945		8,787
Deferred income taxes	21,222		15,424
Other	7,666		8,211
	$	92,081	$	86,920

11. Warranty

The following table presents warranty activities:

	Nine Months Ended
	September 28, 2013			September 29, 2012
Product warranty liability, beginning of the period	$	10,711		$	4,764
Accruals for warranties issued	7,157			9,029
Payments under warranty	(5,500		)	(4,578		)
Product warranty liability, end of period	$	12,368		$	9,215

16

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

12. Restructuring Charges and Asset Impairments

October 2012 Restructuring

As part of a program to reduce costs and increase operational efficiencies, the Company announced, on October 31, 2012, a plan to streamline worldwide operations to better align its cost structure with market conditions by reducing its global workforce and closing or consolidating certain facilities. In the nine months ended September 28, 2013 the Company recorded $362 of severance related expense, of which $145, $159, $14 and $44 related to the corporate, PV, polysilicon and sapphire segments, respectively.

Hazelwood Facility Idling

On January 10, 2013, the Company announced its plan to idle operations at its Hazelwood, Missouri facility (“Hazelwood facility”). The idling of the Hazelwood facility is part of the Company’s effort to reduce costs and optimize its research and development activities and the idling of the facility was completed by March 30, 2013. In connection with this action, the Company terminated the employment of 37 of the Hazelwood facility employees at various dates in the first quarter of fiscal 2013. The Company determined that as of December 31, 2012 it was probable that employees would be entitled to receive severance and related benefits and that these amounts were estimable and accordingly recorded the expense during the three months ended December 31, 2012. In connection with the idling of the Hazelwood facility, the Company recorded $29,782 of restructuring and asset impairment expense during the three months ended December 31, 2012 to the PV segment, comprised of $521 of severance and related benefits and $29,261 for the write-down to fair value of certain long-lived, intangible assets and other assets associated with the Hazelwood facility. During the three months ended September 28, 2013, the Company recorded $4,010 of additional asset impairment expense related to the certain long-lived intangible assets and other assets noted above. At December 31, 2012, equal weighting was applied to the cost and market approaches, however, due to a lack of interest by market participants, the Company’s fair value as of September 28, 2013 of $1,155 is primarily based on expected value upon liquidation. During the nine months ended September 28, 2013, the Company recorded $1,854 of additional charges related to the Hazelwood facility’s lease exit costs, $642 of other contract termination costs related to this facility and $4,010 of impairment charges related to the fair value of the HiCz fixed assets, respectively. The Company has determined the long-lived asset group of the Hazelwood facility, which has a carrying value of $1,155, does not meet the held-for-sale criteria at September 28, 2013.

The Company reports expense for its restructuring charges and asset impairments separately in the condensed consolidated statements of operations. The restructuring charges and remaining accrued expenses, which are included in accrued expenses on the Company’s condensed consolidated balance sheet as of September 28, 2013 are as follows:

	Employee Related Benefits			Lease Exit and Contract Termination Costs			Asset Impairments			Total
Balance as of December 31, 2012	$	2,076		$	133		$	—		$	2,209
Charges	362			2,496			4,010			6,868
Cash payments	(2,044		)	(1,065		)	—			(3,109		)
Asset impairments	—			—			(4,010		)	(4,010		)
Balance as of September 28, 2013	$	394		$	1,564		$	—		$	1,958

13. Income Taxes

The Company has concluded that the effective tax rate for the year is no longer sensitive to the projected ordinary income for the year given that small fluctuations in profits do have a material impact on the effective tax rate. As a result and in accordance with authoritative guidance for accounting for income taxes in interim periods, the Company has computed its provision using its estimated annual effective tax rate which takes into account operations in the U.S. and in other tax

17

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

jurisdictions. Changes in the mix of income recognized between the U.S. and foreign tax jurisdictions impacts the Company’s effective tax rate. Any discrete tax adjustments are recorded in the specific quarter they arise.

The Company’s effective tax rate for the three and nine months ended September 28, 2013 and September 29, 2012, was 10.1% and 26.9%, and 24.2% and 32%, respectively. The effective rate differs from the U.S. federal statutory rate due to a favorable permanent adjustment related to contingent consideration which is non-includable for tax purposes and the jurisdictional mix of income/loss. The Company incurred proportionally larger losses in the U.S., a higher tax jurisdiction than in lower tax jurisdictions, namely Hong Kong.

A reconciliation of the change in unrecognized tax benefits for the nine months ended September 28, 2013 is as follows:

Unrecognized tax benefits at December 31, 2012	$	26,322
Increases related to current year tax positions	272
Increases related to prior year tax positions	372
Settlements with tax authorities	(1,464		)
Unrecognized tax benefits at September 28, 2013	$	25,502

The Company also recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. During the three and nine month period ending September 28, 2013, the Company recorded an income tax provision of $277 and $355, respectively, related to interest and penalty accruals.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is subject to examination by federal, state, and foreign tax authorities. The Company’s U.S. tax returns have been settled through fiscal years ending March 31, 2008. The Company continues to be under examination by the Internal Revenue Service, or IRS for its fiscal years ending March 28, 2009 and April 3, 2010. In addition, the statute of limitations is open for all state and foreign jurisdictions.  During the nine months ended September 28, 2013 and September 29, 2012, the Company paid $16,109 and $51,079 for estimated taxes, respectively.

In September 2013, the U.S. Department of the Treasury and the Internal Revenue Service released final regulations relating to guidance on applying tax rules to amounts paid to acquire, produce or improve tangible personal property as well as rules for materials and supplies. These regulations are effective for tax years beginning on or after January 1, 2014, with early adoption permitted. Transition guidance providing the procedural rules to comply with such regulations is expected to be released in the near term. The Company is currently assessing these rules, but does not believe there will be a material impact on the condensed consolidated financial statements when they are adopted.

14. Commitments and Contingencies

Purchase Commitments

The Company’s commitments to purchase raw materials, research and development and other services from various suppliers and vendors are estimated to be $329,147 and $214,611 as of September 28, 2013 and December 31, 2012, respectively. The majority of these commitments as of September 28, 2013 are due within the next twelve months.

As a result of the factors outlined under the “Recent Developments” in Note 1 above, the Company expects to terminate purchase commitments with vendors for DSS inventory components in fiscal 2013 and beyond. These purchase contracts generally require a payment to the vendors to reimburse them for costs incurred, if any, through the termination date. No amount has been accrued as of September 28, 2013, as these purchase orders have not been terminated at September 28, 2013. The gross amount of remaining purchases under these purchase orders was $14,284 as of September 28, 2013, and the Company may negotiate with the vendors to determine the amount payable upon termination of these purchase orders.

18

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

Litigation Contingencies

The Company is subject to various routine legal proceedings and claims incidental to its business which management believes will not have a material effect on the Company’s financial position, results of operations or cash flows.

In October 2013, the Company settled a vendor contract dispute. The terms of the settlement, which includes no admission of liability or wrongdoing by the Company or by any other defendants, provides for a full and complete release of all claims that were or could have been brought against the Company. The Company paid $3,250 in the fourth quarter to settle this matter. The Company has recorded this expense in general and administrative expense during the three months ended September 28, 2013.

Customer Indemnifications

In certain cases, the Company indemnifies, under pre-determined conditions and limitations, its customers for infringement of third-party intellectual property rights by the Company’s products or services (and, in limited instances, the Company also indemnifies other third parties for certain potential damages). The Company generally seeks to limit its liability for such indemnity to an amount not to exceed the sales price of the products or services (or the price paid for products or services) subject to its indemnification obligations, but not all agreements contain such limitations on liability. The Company does not believe, based on information available, that it is probable that any material amounts will be paid under these indemnification provisions.

15. Long-Term Debt and Convertible Notes

Bank of America Credit Agreement

On January 31, 2012, the Company, its principal U.S. operating subsidiary (the “U.S. Borrower”) and its Hong Kong subsidiary (the “Hong Kong Borrower”) entered into a credit agreement (the “2012 Credit Agreement”), with Bank of America, N.A., as administrative agent, Swing Line Lender and L/C Issuer (or “Bank of America”) and the lenders from time to time party thereto. The 2012 Credit Agreement consists of a term loan facility (the “2012 Term Facility”) provided to the U.S. Borrower in an aggregate principal amount of $75,000 with a final maturity date of January 31, 2016, a revolving credit facility (the “U.S. Revolving Credit Facility”) available to the U.S. Borrower in an aggregate principal amount of $25,000 with a final maturity date of January 31, 2016 (this revolving facility is no longer available pursuant to the 2013 Amendment) and a revolving credit facility (the “Hong Kong Revolving Credit Facility”; together with the U.S. Revolving Credit Facility, the “2012 Revolving Credit Facility”; and together with the 2012 Term Facility, the “2012 Credit Facilities”) available to the Hong Kong Borrower in an aggregate principal amount of $150,000 (which was reduced to $125,000 pursuant to the 2013 Amendment) with a final maturity date of January 31, 2016.

On various dates between June 15, 2012 and June 25, 2012, the Company, the U.S. Borrower and the Hong Kong Borrower requested and received approval for increases in the 2012 Term Facility for the U.S. Borrower in an aggregate amount equal to $70,000 (the “Incremental Term Loans”) pursuant to the 2012 Credit Agreement.

As a result of the Incremental Term Loans, the aggregate term loan under the 2012 Credit Agreement was increased from $75,000 to $145,000, all of which was borrowed by the U.S. Borrower. The Company pre-paid $40,000 of the 2012 Term Facility pursuant to the 2013 Amendment which payment did not reduce the amortization of the Term Loan.

All of the material terms and conditions related to the Incremental Term Loans were identical to the terms and conditions that apply to the 2012 Term Facility, including the final maturity date of January 31, 2016 and the interest rate. The Incremental Term Loans amortize over the same period, and in proportional amounts, as the 2012 Term Facility, commencing with the first amortization payment under both term facilities in June 2012.

On October 30, 2013, the Company terminated the 2012 Credit Agreement (the “Credit Agreement”).  As of September 28, 2013, there was approximately $96,000 outstanding borrowings under the 2012 Term Facility, which was paid in full on October 30, 2013 by using available cash.  As of October 30, 2013, there are no amounts outstanding under the 2012 Revolving Credit Facility and no outstanding stand-by letters of credit under the 2012 Revolving Credit Facility.  In connection with the termination of the 2012 Credit Agreement, the Company expects to recognize a charge in the fourth quarter of approximately $3,639 relating to deferred issuance costs that will be written off upon the termination of the agreement.  For additional information, refer to Note 21, Subsequent Events.

19

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

Interest expense related to 2012 Term Facility and 2012 Revolving Credit Facility was $1,859 and $6,839 for the three and nine month periods ended September 28, 2013, respectively, and $1,470 and $3,185 for the three and nine month periods ended September 29, 2012, respectively, which includes amortization of debt fees related to both facilities, as well as the associated commitment fees. The weighted average interest rates for the three and nine month periods ended September 28, 2013 was 4.69% and 4.25%, respectively. There was no interest capitalized on construction-in-process contracts for the three or nine-months ended September 28, 2013. The balance of deferred financing costs at September 28, 2013 was $3,639 and is included in other assets on the condensed consolidated balance sheet.

The Company used amounts available under the Hong Kong Revolving Credit Facility in connection with standby letters of credit related to customer deposits. As of September 28, 2013, the Company had $539 of outstanding letters of credit pursuant to the Hong Kong Revolving Credit Facility resulting in $124,461 of available credit under the Hong Kong Revolving Credit Facility.

3.00% Convertible Senior Notes due 2017

On September 28, 2012, the Company issued $220,000 aggregate principal amount of 3.00% Convertible Senior Notes due 2017 (the “Notes”). The net proceeds from the issuance of the Notes were approximately $212,592, after deducting fees paid to the initial purchasers and other offering costs. The Notes are senior unsecured obligations of the Company, which pay interest in cash semi-annually (on April 1 and October 1 of each year) at a rate of 3.00% per annum beginning on April 1, 2013. The Notes are governed by an Indenture dated September 28, 2012 with U.S. Bank National Association, as trustee (the “Indenture”). The Notes are not redeemable by the Company.

The Notes will mature on October 1, 2017, unless earlier repurchased or converted in accordance with their terms prior to such date. The Notes may be converted, under certain conditions, based on an initial conversion rate of 129.7185 shares of common stock per $1,000 principal amount of Notes (approximately 28.5 million shares) (which represents an initial effective conversion price of the Notes of $7.71 per share), subject to adjustment as described in the Indenture.

The effective interest rate on the liability component of the Notes was 10.7% as of September 28, 2013. Interest expense incurred in connection with the Notes consisted of the following:

	Three Months Ended		Nine Months Ended
	September 28, 2013		September 28, 2013
Contractual coupon rate of interest	$	1,659	$	4,969
Discount amortization	3,158		8,633
Interest expense - Convertible Notes	$	4,817	$	13,602

The carrying value of our Notes consisted of the following:

	September 28, 2013
Principal balance	$	220,000
Discount, net of accumulated amortization of $10,506	(54,610		)
Carrying amount	$	165,390

The Company will be required to repay the following principal amounts under the 2012 Term Facility, Incremental Term Loans and Notes:

20

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

	Principal
Fiscal Year Ending	Payments
2013 (remaining 3 months)	$	3,625
2014	12,688
2015	14,500
2016	65,125
2017	220,000
Total	$	315,938

On October 30, 2013, the principal amounts due in the fiscal years ending 2013, 2014, 2015 and 2016 were paid in full using available cash. For additional information, refer to Note 21, Subsequent Events.

16. Share-Based Compensation

The Company recorded $4,555, $13,883, $4,818, and $13,091 of expense related to share-based compensation during the three and nine months ended September 28, 2013 and September 29, 2012, respectively. Share-based compensation cost capitalized as part of inventory was not material for all periods presented.

During the nine months ended September 28, 2013, no option awards were granted.

During the nine months ended September 28, 2013, the Company granted restricted stock units to certain executives, employees and directors of the Company for 3,158 shares of the Company’s common stock. Restricted stock units provide for the holder to receive shares of the Company’s common stock at the time such units vest or restrictions on such units lapse in accordance with the terms of the restricted stock unit agreement. The total fair value of the restricted stock units, which was based on the fair value of the Company’s common stock on the date of grant, was $10,771 or $3.41 per share on a weighted average basis.

During the nine months ended September 28, 2013, the Company granted certain executives 890 market based restricted stock units which are earned based upon achievement of certain stock price thresholds (and if these price thresholds are satisfied, the units vest upon meeting certain continued service requirements).  The total fair value of these market-based restricted stock units was determined through the use of a Monte Carlo simulation model, which utilizes multiple input variables that determine the probability of satisfying the market condition requirements applicable to each award; these inputs include the expected volatility factor, risk free interest rate, expected term (in years) and expected dividend yield. The total fair value of these restricted stock units was $2,688, or $3.02 per share on a weighted average basis.

As of September 28, 2013, the Company had unamortized share-based compensation expense related to stock options, restricted stock unit awards, market-based restricted stock unit awards and performance-based restricted stock unit awards of approximately $23,516 after estimated forfeitures. The remaining unamortized share-based compensation expense related to stock options, restricted stock unit awards and performance and market-based restricted stock unit awards will be recognized over an estimated weighted average remaining requisite service period of 1.69 years.

17. Stockholders’ Equity

The following table presents the changes in stockholders’ equity for the nine months ended September 28, 2013:

21

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

	Common Stock					Additional Paid-in			Retained			Accumulated Other		Total Stockholders’
	Shares		Par Value			Capital			Earnings			Comprehensive Income		Equity
Balance as of January 1, 2013	119,293		$	1,193		$	183,565		$	56,687		$	806	$	242,251
Net loss	—		—			—			(44,880		)	—		(44,880		)
Other comprehensive income	—		—			—			—			260		260
Common stock issued for Thermal Tech acquisition (net of $46 of registration costs)	3,356		33			14,384			—			—		14,417
Option exercises and vesting of restricted stock units	1,448		14			101			—			—		115
Share-based compensation expense	—		—			13,490			—			—		13,490
Excess tax deficiency from share-based award activity	—		—			(1,396		)	—			—		(1,396		)
Minimum tax withholding payments for employee share-based awards	(339	)	(3		)	(1,513		)	—			—		(1,516		)
Balance as of September 28, 2013	123,758		$	1,237		$	208,631		$	11,807		$	1,066	$	222,741

18. Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income by component, net of tax, for the three and nine months ended September 28, 2013 are as follows:

22

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

	Unrealized Gains and Losses on Cash Flow Hedges			Foreign Currency Items		Total
Beginning balance as of June 29, 2013	$	(591	)	$	1,591	$	1,000
Other comprehensive income (loss) before reclassifications				66		66
Amounts reclassified from accumulated other comprehensive income	—			—		—
Net other comprehensive income	$	—		$	66	66
Balance as of September 28, 2013	$	(591	)	$	1,657	$	1,066

	Unrealized Gains and Losses on Cash Flow Hedges			Foreign Currency Items		Total
Beginning balance as of January 1, 2013	$	(537	)	$	1,343	$	806
Other comprehensive income (loss) before reclassifications	(3		)	314		311
Amounts reclassified from accumulated other comprehensive income	(51		)	—		(51		)
Net other comprehensive income	$	(54	)	$	314	260
Balance as of September 28, 2013	$	(591	)	$	1,657	$	1,066

There were no amounts reclassified out of accumulated other comprehensive income for the three months ended September 28, 2013. The reclassification out of accumulated other comprehensive income for the nine months ended September 28, 2013 was ($51). Such reclassifications impacted cost of revenue within the Company’s condensed consolidated statement of operations.

19. Earnings Per Share

Basic earnings (loss) per share is computed by dividing the Company’s earnings (loss) by only the weighted average number of common shares outstanding during the period. For a period in which the Company reports net income, diluted earnings per share is computed by dividing the Company’s earnings by the weighted average number of common shares and, when dilutive, the weighted average number of potential common shares outstanding during the period, as determined using the treasury stock method. Potential common shares consist of common stock issuable upon the exercise of outstanding stock options and the vesting of restricted stock units.

The following table sets forth the computation of the weighted average shares used in computing basic and diluted earnings per share:

23

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

	Three Months Ended		Nine Months Ended
	September 28, 2013	September 29, 2012	September 28, 2013	September 29, 2012
Weighted average common shares—basic	122,183	118,769	119,752	118,873
Dilutive common stock options and restricted stock unit awards (1) (2) (3)	—	1,105	—	1,253
Weighted average common and common equivalent shares—diluted	122,183	119,874	119,752	120,126

(1) Holders of the Notes may convert the Notes into shares of the Company’s common stock, at the applicable conversion rate, subject to certain conditions. Since it is the Company’s stated intent to settle the principal amount of the Notes in cash, the Company has used the treasury stock method for determining the potential dilution in the diluted earnings per share computation. Since the average price of the Company’s common stock was less than the effective conversion price for such Notes during the reporting periods, the Notes were not dilutive for such periods.

(2) Upon exercise of outstanding warrants, holders of the Warrants may acquire up to 28,500 shares of the Company’s common stock at an exercise price of $9.9328. If the market price per share of the Company’s common stock for the period exceeds the established strike price, the Warrants will have a dilutive effect on its diluted net income per share using the treasury-stock-type method.  Since the average price of the Company’s common stock was less than the strike price of the warrants for the reporting periods, such Warrants were also not dilutive.

(3) As the Company was in a loss position for the three and nine months ended September 28, 2013, certain shares have not been included in the calculation of earnings per share, as their impact would be anti-dilutive. The total number of shares excluded from the calculation of earnings per share because they would be anti-dilutive was 11,584 and 11,463 for the three and nine months ended September 28, 2013, respectively. In addition, for the three and nine months ended September 29, 2012, the total number of shares excluded from the calculation of earnings per share because they would be anti-dilutive was 3,739 and 2,961 shares, respectively.

As shares have been placed in escrow for any indemnifications and liabilities in connection with the acquisition of substantially all of the business of Thermal Technology, LLC, these shares have not been included in the calculation of basic earnings per share. Upon the resolution of any contingencies and indemnifications, which will be with the associated release of the shares from escrow, such shares will be included in basic earnings per share as calculated in the period the contingencies are resolved.

20. Segment and Geographical Information

Segment Information

The Company reports its results in three segments: the PV business, the polysilicon business and the sapphire business. The Company evaluates performance and allocates resources based on revenues and gross margin of each segment. The Company defines segment gross margin as the cost of goods sold associated with segment revenues. Operating expenses are reviewed and evaluated at the consolidated level and are not allocated to the respective operating segments for purposes of allocating resources or evaluating performance of the business segment.

The PV business manufactures and sells directional solidification, or DSS, crystallization furnaces and ancillary equipment used to cast crystalline silicon ingots by melting and cooling polysilicon in a precisely controlled process. These ingots are used to make photovoltaic wafers which are, in turn, used to make solar cells.

The polysilicon business manufactures and sells Silicon Deposition Reactors (SDR™) and related equipment used to produce polysilicon, the key raw material used in silicon-based solar wafers and cells, while also providing engineering services and related equipment.

24

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

The sapphire business manufactures and sells advanced sapphire crystal growth systems, as well as sapphire materials used in LED applications, and sapphire components used in other specialty markets. On May 16, 2013, the Company acquired substantially all of the business of Thermal Technology which are included in the sapphire segment. Thermal Technology is a developer and seller of a wide range of high temperature thermal and vacuum products used in the fabrication of advanced materials that have been deployed across multiple industries including LED, medical devices, oil and gas and automotive. The acquisition of Thermal Technology provides the Company with key technologies, in particular a sapphire annealing furnace product, that we believe will allow us to address potential new markets with production equipment options that can be optimized around customer’s specific needs.

Financial information for the Company’s reportable segments is as follows:

	Three Months Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Revenue:
PV	$	4,369		$	1,556		$	20,144		$	42,357
Polysilicon	28,564			95,856			217,279			371,320
Sapphire	7,358			12,649			28,974			217,526
Total revenue	40,291			110,061			266,397			631,203
Gross Profit:
PV	$	2,893		$	(3,312	)	$	2,290		$	14,473
Polysilicon	20,032			35,095			95,119			148,412
Sapphire	(5,148		)	3,245			(7,401		)	84,677
Total gross profit	17,777			35,028			90,008			247,562
Research and development	21,075			18,767			56,039			47,954
Sales and marketing	3,496			3,123			10,870			9,657
General and administrative	17,427			15,428			48,507			45,731
Contingent consideration expense (income)	4,971			(9,943		)	997			(9,261		)
Restructuring charges	4,010			—			6,868			—
Amortization of intangible assets	2,976			2,538			8,098			7,631
Income (loss) from operations	(36,178		)	5,115			(41,371		)	145,850
Interest income	122			27			286			50
Interest expense	(6,456		)	(1,620		)	(20,462		)	(3,398		)
Other, net	62			(431		)	73			(968		)
Income (loss) before taxes	$	(42,450	)	$	3,091		$	(61,474	)	$	141,534

Geographic Information

The following table presents revenue by geographic region, which is based on the destination of the shipments:

25

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

	Three Months Ended				Nine Months Ended
	September 28, 2013		September 29, 2012		September 28, 2013		September 29, 2012
China	$	8,969	$	14,038	$	39,652	$	267,001
Korea	17,796		83,001		54,343		216,431
Other Asia	9,334		9,191		161,349		134,829
Europe	848		397		1,767		1,604
United States	3,298		2,285		9,158		7,623
Other	46		1,149		128		3,715
Total	$	40,291	$	110,061	$	266,397	$	631,203

A summary of long-lived assets by geographical region is as follows:

	September 28, 2013(1)		December 31, 2012(1)
United States	$	158,202	$	150,738
Luxembourg	59,646		63,024
China	664		1,382
Taiwan	84		121
Hong Kong	842		1,252
Total	$	219,438	$	216,517

(1) Long-lived assets at September 28, 2013 and December 31, 2012, include intangible assets and goodwill of $153,683 and $138,537, respectively, all located in the United States, with the exception of $1,711 and $61,313 of goodwill and intangibles, respectively, at December 31, 2012, which are located in Luxembourg.  At September 28, 2013 the amounts of goodwill and intangibles that were not located in the United States, but in Luxembourg were $1,711 and $57,935, respectively.

26

GT Advanced Technologies Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(In thousands, except per share data)

21. Subsequent Event

Agreements with Apple Inc.

On October 31, 2013, GTAT Corporation (“GTAT”), a wholly-owned subsidiary of GT Advanced Technologies Inc, and Apple Inc. (“Apple”) entered into a Master Development and Supply Agreement and related Statement of Work (the “MDSA”), pursuant to which GTAT will supply sapphire material exclusively to Apple for consumer electronics.  GTAT has granted Apple certain intellectual property rights in connection with its sapphire growth technologies.

On October 31, 2013, GTAT also entered into a Prepayment Agreement with Apple pursuant to which GTAT will receive approximately $578 million (the “Prepayment Amount”), in four separate installments, as payment in advance for the purchase of sapphire goods.  GTAT is required to repay this amount ratably over a five year period ending in January 2020, either as a credit against Apple purchases of sapphire goods under the MDSA or as a direct cash payment.  GTAT’s obligation to repay the Prepayment Amount may be accelerated under certain circumstances.  GTAT’s obligations under the Prepayment Agreement are secured by certain of its assets.  While the MDSA specifies GTAT’s minimum and maximum supply commitments, there are no minimum purchase requirements under the terms of the MDSA.

Finally, on October 31, 2013, GTAT entered into a lease agreement (the “Lease Agreement”) with an affiliate of Apple in order to lease a facility in Mesa, Arizona that GTAT will use for the purpose of manufacturing the sapphire goods under the MDSA.

The foregoing does not purport to be a complete description of the MDSA, the Prepayment Agreement or the Lease Agreement, which are filed with this Quarterly Report on Form 10-Q.

Termination of Credit Agreement with Bank of America N.A.

On October 30, 2013, GT Advanced Technologies Inc. terminated its credit agreement (the “Credit Agreement”), with Bank of America, N.A., (“Bank of America”) and the other lenders from time to time party thereto.  As of September 28, 2013, there was approximately $96 million outstanding under the term loan component of the Credit Agreement, which was paid in full on October 30, 2013 by the Company using its available cash.  As of October 30, 2013, there were no amounts outstanding under the revolving loan component of the Credit Agreement and no outstanding stand-by letters of credit under the Credit Agreement.

27

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statements Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are identified by the use of words such as, but not limited to, “anticipate,” “believe,” “continue,” “could,” “estimate,” “prospects,” “forecasts,” “expect,” “intend,” “may,” “will,” “plan,” “target,” and similar expressions or variations intended to identify forward-looking statements and include statements about our expectations of future periods with respect to, among other things:

·      the polysilicon, photovoltaic and sapphire industries will continue to face significant challenges;

·      Company expects to incur a charge in the fourth quarter related to deferred issuance costs;

·      Company has sufficient cash to fund operations for the next twelve months;

·      Company expects to pursue the development of thin sapphire laminates for use in certain applications;

·      Company does not expect new tax rules and regulations will have a material impact on consolidated financial statements;

·      Company expects to terminate purchase commitments for DSS inventory components in fiscal 2013 and beyond and will negotiate with vendors to determine the amount payable upon termination;

·      the Company does not expect current legal proceedings to have a material effect on its financial position, results of operations or cash flow;

·      material amounts not expected to be paid by Company under indemnification provisions;

·      products acquired in connection with the acquisition of the business of Thermal Technology will allow the Company to address potential new markets;

·      Company expects to commence manufacturing of sapphire material in the near future in Arizona;

·      Company intends to continue to sell ASF systems in select markets;

·      all information identified under the heading “Factors Affecting the Results of Our Operations;”

·      the causes for success of the Company’s sapphire materials business;

·      expected limited demand for equipment products through the remainder of calendar year 2013;

·      timing of delivery of our equipment products;

·      Company expects that most customers will substantially perform on their contractual obligations (but expects that some customers will not);

·      Company expects to continue to invest in new research and development projects and attempt to expand certain existing product bases and introduce new products;

·      Any expected future benefits or obligations under our recent sapphire materials supply arrangement;

·      Company’s operating results will not be affected to any significant degree by a sudden change in market interest rates on its investment portfolio;

28

·      the focus of the Company’s business will change as a greater portion of its operations will be providing sapphire material;

·Company expects that the operations at its Arizona facility, which will only produce sapphire material, will constitute more of its overall business than in the past and expects that the size of  future sapphire operations will be larger than that currently conducted in Salem;

·      Company expects limited sales of ASF furnaces in the near future;

·      Margins related to the sapphire material business will be lower than those of the equipment business;

·      there will be limited sales of new DSS systems to PV manufacturers and, to the extent the Company makes sales, the prices for which we sell DSS equipment will be significantly below those historically charged to customers;

·      Company intends to discontinue any significant additional investments in our DSS product line;

·      Company will attempt to sell any DSS furnaces in inventory, but expect that demand for these will be limited;

·      the recovery of the solar industry, will be driven by next-generation technology adoption that is aimed at producing lower cost, higher efficiency monocrystalline wafers and cells;

·      the HiCz equipment offering will be commercially available during late-2014;

·      Company expects to have no meaningful sales or revenue from the PV segment in 2013 and beyond;

·      If the HiCz tool does not gain market acceptance in 2014, the PV business segment could experience prolonged periods without contributing any meaningful revenue to the business;

·      Company expects demand for its products among its Asian customers will be limited for the short-term;

·      trade friction will continue and grow more adversarial and have a negative impact on the PV and polysilicon industry and exacerbates the declining demand that the industry has experienced for PV products;

·      success of the sapphire material business will be important to overall business and will be tied to one customer;

·      Company expects that dependence on a limited number of customers will continue;

·      Demand for consumables will increase as the Company’s sells more ASF units;

·      Company expects to hire a significant number of employees for its sapphire material operations;

·      Company expects to improve its product portfolio and that will result in increased revenues;

·      HiCz offering will target improved ingot efficiencies compared to that of multicrystalline silicon materials and lower PV production costs;

·      Company expects to recognize revenue from customers in Europe and Asia in the future;

29

·      increasing governmental budgetary pressures will likely result in reduced, or the elimination of, government subsidies and economic incentives for on-grid solar electricity applications;

·      Company expects sapphire material business will constitute a larger component of our business than in the past;

·      Company expects quarterly results will continue to fluctuate;

·      Company does not anticipate paying dividends in the foreseeable future;

·      the Company does not expect to sell any HiCz™ material in the future;

·      limited investment for additional generation PV capital equipment is expected in 2013 and beyond;

·      Hyperion ion implanter tool could reduce cost of PV manufacturing;

·      all information regarding future product releases (including HiCz, Hyperion ion implanted, silicon carbide equipment and the performance of those tools);

·      because of the high level of PV manufacturing overcapacity, Company expects very limited investment in additional generation capital equipment for 2013 and beyond;

·      Company expects to have no meaningful sales or revenue from the PV segment in 2013;

·      Company will not take certain inventory for which it had previously made down payments to vendors;

·      Company’s success in the PV market will depend upon success in commercializing the HiCz™ equipment offering;

·      expected conversion of backlog into revenue;

·      Company expects to make acquisitions of businesses or technologies that will result in the diversification of our businessand the impact of such diversification; and

·      likelihood of customers going to other equipment suppliers is increasing.

These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, factors discussed in Part II, Item 1A “Risk Factors” and included elsewhere in this Quarterly Report on Form 10-Q.

Forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q (or other date as specified in this Quarterly Report on Form 10-Q) or, as of the date given if provided in another filing with the SEC. We undertake no obligation, and disclaim any obligation, to publicly update or review any forward-looking statements to reflect events or circumstances after the date of such statements.

Company Overview

GT Advanced Technologies Inc., through its subsidiaries (referred to collectively as “we,” “us” and “our”) is a leading diversified technology company producing advanced materials and innovative crystal growth equipment for the global consumer electronics, power electronics, solar and LED industries. Its technical innovations accelerate the use of  advanced materials, enabling a new generation of products across this diversified set of global markets.

We operate through three business segments: our  sapphire business, polysilicon business and our photovoltaic, or PV, business.

Sapphire Business

Our sapphire business manufactures and sells sapphire material, sapphire growth equipment and certain other related sapphire technologies. Our sapphire material is manufactured using our advanced sapphire crystal growth furnace, or ASF system, at our facility in Salem, Massachusetts and, we expect to commence manufacturing of sapphire material in the near future in Arizona, this facility however is still in development.  Our proposed sapphire material production operations in Arizona will principally be used to provide sapphire materials for a consumer electronics company, as described further below.  We intend to continue to sell our ASF systems to sapphire manufacturers in certain select markets, including the LED industry.

On May 16, 2013, we acquired substantially all of the business of Thermal Technology, LLC, or Thermal Technology, a developer and seller of a wide range of high temperature thermal and vacuum products used in the fabrication of advanced materials. The acquisition of Thermal Technology provides us with technologies that we believe will allow us to address new markets with production equipment options that can be optimized around customer’s specific needs. The purchase consideration consisted of 3.4 million shares of our common stock valued at approximately  $14.5 million (as of the date of acquisition) and contingent consideration based upon meeting certain financial metrics.

Polysilicon Business

Our polysilicon business manufactures and sells silicon deposition reactors, or SDR, used to react gases at high temperatures to produce polysilicon, the key raw material used in silicon-based solar wafers and cells, while also offering engineering services and related equipment. In addition, the polysilicon business sells hydrochlorination technology and equipment which is utilized to convert silicon tetrachloride into trichlorosilane (TCS), which is used as seed material in the manufacture of high purity silicon. Hydrochlorination technology is designed to improve the efficiency and lower the costs of polysilicon production.

Photovoltaic Business

Our PV business manufactures and sells directional solidification, or DSS, crystallization furnaces and ancillary equipment used to cast crystalline silicon ingots by melting and cooling polysilicon in a precisely controlled process. These ingots are used to make photovoltaic wafers which are, in turn, used to make solar cells.

In addition, we are currently developing an equipment offering based on the continuously-fed Czochralski (HiCz™) growth technology which is targeted at improving the ingot performance compared to that of multicrystalline silicon materials.  We have not yet, however, commercialized the HiCz™ monocrystalline equipment offering.

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Recent Developments

Agreements with Apple Inc.

On October 31, 2013, GTAT Corporation (“GTAT”), a wholly-owned subsidiary of GT Advanced Technologies Inc., and Apple Inc. (“Apple”) entered into a Master Development and Supply Agreement and related Statement of Work (the “MDSA”), pursuant to which GTAT will supply sapphire material exclusively to Apple for consumer electronics.  GTAT has granted Apple certain intellectual property rights in connection with its sapphire growth technologies.

On October 31, 2013, GTAT also entered into a Prepayment Agreement with Apple pursuant to which GTAT will receive approximately $578 million (the “Prepayment Amount”), in four separate installments, as payment in advance for the purchase of sapphire goods.  GTAT is required to repay this amount ratably over a five year period ending in January 2020, either as a credit against Apple purchases of sapphire goods under the MDSA or as a direct cash payment.  GTAT’s obligation to repay the Prepayment Amount may be accelerated under certain circumstances.  GTAT’s obligations under the Prepayment Agreement and the MDSA are secured by certain of its assets.  While the MDSA specifies GTAT’s minimum and maximum supply commitments, there are no minimum purchase requirements under the terms of the MDSA.

Finally, on October 31, 2013, GTAT entered into a lease agreement (the “Lease Agreement”) with an affiliate of Apple in order to lease a facility in Mesa, Arizona that GTAT will use for the purpose of manufacturing the sapphire goods under the MDSA.

The foregoing does not purport to be a complete description of the MDSA, the Prepayment Agreement or the Lease Agreement, each of which are filed with this Quarterly Report on Form 10-Q.

Termination of Credit Agreement with Bank of America N.A.

On October 30, 2013, we terminated our 2012 Credit Agreement (the “Credit Agreement”) with Bank of America N.A. and certain other lenders. As of September 28, 2013, there was approximately $96 million outstanding under the 2012 Term Facility which was paid in full on October 30, 2013 by using available cash.  We were in compliance with the terms of the Credit Agreement upon its termination.  As of October 30, 2013, there were no amounts outstanding under the 2012 revolving credit facility and no outstanding stand-by letters of credit under the 2012 revolving credit facility component of the Credit Agreement.    In connection with the termination of the 2012 Credit Agreement, the Company expects to recognize a charge in the fourth quarter of approximately $3.6 million relating to deferred issuance costs that will be written off upon the termination of the agreement.

Acquisition of the Business of Thermal Technology, LLC

On May 16, 2013, we acquired certain assets and liabilities of Thermal Technology, a developer and seller of a wide range of high temperature thermal and vacuum products used in the fabrication of advanced materials that have been deployed across multiple industries including LED, medical devices, oil and gas and automotive. The acquisition of Thermal Technology’s business provides us with key technologies that we believe will allow us to address potential new markets. The purchase consideration consisted of approximately 3.4 million shares of our common stock (with a value of approximately $14.5 million on the date of acquisition) and contingent consideration based upon meeting certain financial metrics.

The acquisition has been accounted for as a business combination and is included in our results of operations from  the date of acquisition. The acquired business contributed revenues of approximately $3.5 million for the period from acquisition to September 28, 2013. The results of the acquired business are included in our sapphire business reporting segment.

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SDR-400™

During the three months ended June 29, 2013, we determined that we had obtained sufficient evidence that the SDR-400™, a product within the Polysilicon business unit, is an established product in accordance with our revenue recognition policy, and accordingly, there is no longer uncertainty around meeting the requirements of customer acceptance conditions in agreements that contain the standard or demonstrated specifications of the SDR-400™. In concluding that the SDR-400™ is now an established product, we considered the stability of the product’s technology, the ability to test the product prior to shipment, and the historical performance results of over 30 product installations at one of our customers’ facilities. As a result of classifying the SDR-400™ an established product, we recognized revenue and gross profit of $3.1 million and $0.7 million, and $148.7 million and $59.5 million, in the three and nine months ended September 28, 2013, respectively, from two customer arrangements that included SDR-400™’s, prior to formal customer acceptance of the products.  Nonrefundable payments received under these customer arrangements exceed the recognized revenue and were previously recorded as deferred revenue. We continue to report deferred revenue related to these arrangements for advance payments on other deliverables included in the arrangements.  We recognized revenue of $3.1 million in the three months ended September 28, 2013 from one customer that purchased SDR-400 units.

Factors Affecting the Results of Our Operations

The following are some of the factors, trends and events that we expect will affect our future results of operations:

As a result of the agreements that we have entered into with Apple Inc. in October 2013, our business will undergo a transition from being principally a provider of crystal growth equipment to being a provider of both crystal growth equipment and sapphire materials. The success of our sapphire materials business will be driven, in large part, by the continued funding of Apple pursuant to the prepayment agreement (which may be halted under certain circumstances), our ability to timely commence operations at our Arizona facility and Apple purchasing sapphire materials from us in adequate quantities.  Apple is under no obligation to purchase any sapphire materials from us.  If Apple does not purchase a sufficient amount of sapphire materials, we may be required to repay all or a portion of the $578 million prepayment using our own cash resources, which repayment must be satisfied over the five year period ending January 2020.  Sales of sapphire material to Apple have not yet commenced.

Demand for our polysilicon and PV equipment products and services are driven by end-user demand for solar power and demand for our sapphire equipment and materials are driven by end-user demand for sapphire material, including LED-quality material. In each of our three business segments, the end-user demand for the output of our equipment has either declined substantially or supply has surpassed demand. In order to decrease inventories, we believe that companies selling polysilicon, solar cells and wafers and sapphire material, including some of our equipment customers, have had to sell at prices that provide little or no margin. In certain cases, customers’ have been unable to decrease inventories. We expect that these circumstances, which have resulted in limited demand for our equipment products, will continue through the remainder of calendar year 2013.

The current limited demand for our equipment products and the excess capacity or limited demand in the end markets our equipment customers serve is exacerbated by trade tensions between China and the U.S. In October 2012, the U.S. Commerce Department issued a final ruling and levied anti-dumping duties on billions of dollars of solar panels and cells from China (and set countervailing duties as well). This final ruling will negatively impact our equipment customers in China. This follows a May 2012 Department of Commerce announcement of a preliminary determination that China had violated fair trade policies by “dumping” into the U.S. certain solar products at prices that were intended to advantage Chinese manufacturers. The Chinese government responded by saying these actions were deliberately provoking trade friction between the two nations. In July 2013, the Chinese Ministry of Commerce imposed preliminary anti-dumping duties on U.S. and Korean polysilicon makers, and for certain manufacturers these duties were above 50%. And in September 2013, the Chinese Ministry of Commerce imposed an additional 6.5% “anti-subsidy” trade duty, over and above the duty imposed in July 2013 on U.S. polysilicon companies who received government subsidies. We believe that certain of our customers are delaying any purchasing or expansion plans until these various trade matters are resolved and we do not expect such resolution to take place during 2013 and, in fact, expect that they will grow more adversarial.  In July 2013, the European Union and China were able to solve their recent dispute over Chinese solar panels in the European market by instituting a price floor on solar panels imported into Europe from China.  We believe this is a positive development as the agreement removes some of the uncertainty that was stalling industry decisions and may help improve the financial health for some of our Chinese PV customers. While this is a positive development, we do not expect to see an immediate effect as these customers will need some period of time to recover financially before they are in a position to make significant capital investments.

We have made investments in developing new technology, such as our HiCz puller, silicon carbide furnace and Hyperion™ ion implanter. During the fiscal year ending December 31, 2013, we do not expect to recognize any significant revenue from these investments.

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In addition, our results of operations are affected by a number of other factors including the availability and market price of polysilicon, alumina material, helium and certain process consumables, availability of raw materials, foreign exchange rates, interest rates, commodity prices (including molybdenum, steel and graphite prices) and macroeconomic factors, including the availability of capital that may be needed by our customers, as well as political, regulatory and legal conditions in the international markets in which we conduct business, including China.

Order Backlog

Our order backlog as of September 28, 2013 primarily consists of amounts due under written contractual commitments and signed purchase orders for PV, polysilicon and sapphire equipment not yet shipped to customers, deferred revenue (which represents amounts for equipment that has been shipped to customers but not yet recognized as revenue) and short-term contracts or sales orders for sapphire materials. Substantially all of the contracts in our order backlog for PV, polysilicon and sapphire equipment require the customer to either post a standby letter of credit in our favor and/or make advance payment prior to shipment of equipment.

From the date of a written commitment, we generally would expect to deliver PV equipment products over a period ranging from three to nine months, sapphire equipment products over a period ranging from six to eighteen months and polysilicon equipment products over a period ranging from twelve to eighteen months, however, in certain cases revenue may be recognized over longer periods. Although most of our orders require non-refundable deposits, our order backlog as of any particular date should not be relied upon as indicative of our revenues for any future period.

If a customer fails to perform its outstanding contractual obligations on a timely basis, and such failure continues after notice of breach and a cure period, we may terminate the contract. Our contracts generally do not contain cancellation provisions and in the event of a customer breach, the customer may be liable for cash damages resulting from the material breach of the terms of the agreement. During the nine months ended September 28, 2013, we have identified certain contracts in our order backlog that have not been terminated or modified, however, we expect that the customers associated with these contracts will not fulfill their obligations under these respective contracts. As a result, during the nine months ended September 28, 2013, we modified or removed contracts from our reported order backlog resulting in a $368.2 million reduction (almost 97% of the reduction was attributable to four contracts), $358.0 of which are from such contracts that have not been legally terminated or modified, but we have removed amounts from our reported backlog. During the nine-month period ended December 31, 2012, we terminated, modified or removed contracts resulting in a $220.5 million reduction in our order backlog (81% of the reduction was attributable to six contracts). During the nine months ended September 28, 2013, we recorded revenues of $19.3 million from three terminated contracts and during the nine-month period ended September 29, 2012, we recorded revenues of $14.9 million from terminated contracts.

Although we have a reasonable expectation that most of our customers will substantially perform on their contractual obligations that are included in our reported order backlog, we attempt to monitor those contracts that we believe to be at risk. Due to recent industry market conditions, as noted above, we have removed certain amounts from our reported order backlog that are attributable to contracts that we do not believe our customers will fulfill (even though such contracts have not been legally terminated).

We conduct negotiations with certain customers who have requested that we extend their delivery schedules or make other contract modifications, or who have not provided letters of credit or made payments in accordance with the terms of their contracts. We engage in a certain level of these negotiations in the ordinary course. We monitor the effect, if any, that these negotiations may have on our future revenue recognition. If we cannot come to an agreement with these customers or if we believe our customers cannot or will not perform their obligations, our reported order backlog could be reduced. Other customers with contracts in our order backlog that are not currently under negotiation, or that we consider to be at risk, may approach us with similar requests in the future, or may fail to provide letters of credit or to make payments when due. If we cannot come to an agreement with these customers, our order backlog could be further reduced. If we do come to an agreement with customers on extending delivery schedules, the timing of expected revenue recognition could be pushed into periods later than we had anticipated.

The table below sets forth our order backlog as of September 28, 2013 and December 31, 2012:

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	September 28, 2013				December 31, 2012
Product Category	Amount		% of Backlog		Amount		% of Backlog
	(dollars in millions)
Photovoltaic business	$	2	—	%	$	4	1	%
Polysilicon business	301		46	%	529		42	%
Sapphire business	355		54	%	716		57	%
Total	$	658	100	%	$	1,249	100	%

Our order backlog totaled $658.3 million as of September 28, 2013. Our order backlog attributable to our PV, polysilicon and sapphire businesses as of September 28, 2013, included deferred revenue of $62.3 million, of which $0.9 million related to our PV business, $56.2 million related to our polysilicon business and $5.2 million related to our sapphire business.  Cash received in deposits related to our order backlog where deliveries have not yet occurred was $89.8 million as of September 28, 2013.

As of September 28, 2013, our order backlog consisted of contracts with 9 PV customers, contracts with 13 polysilicon customers, and contracts with 74 sapphire equipment and material customers. Orders reflected in our backlog at September 28, 2013 are attributable to customers that have been in backlog for at least the past two quarters.  Our order backlog as of September 28, 2013, included $261.3 million, $144.1 million and $105.0 million attributed to three different customers, each of which individually represents 40%, 22% and 16%, respectively, of our order backlog.

Results of Operations

The following tables set forth the results of operations as a percentage of revenue for the three and nine months ended September 28, 2013 and September 29, 2012:

	Three Months Ended				Nine Months Ended
	September 28, 2013		September 29, 2012		September 28, 2013		September 29, 2012
Statements of Operations Data:*
Revenue	100	%	100	%	100	%	100	%
Cost of revenue	56		68		66		61
Gross profit	44		32		34		39
Research and development	52		17		21		8
Selling and marketing	9		3		4		2
General and administrative	43		14		18		7
Contingent consideration expense (income)	12		(9	)	—		(1	)
Restructuring charges	10		—		3		—
Amortization of intangible assets	7		2		3		1
(Loss) income from operations	(89	)	5		(15	)	22
Interest expense	(16	)	(1	)	(8	)	(1	)
(Loss) income before income taxes	(105	)	4		(23	)	21
Provision (benefit) for income taxes	(11	)	1		(6	)	7
Net (loss) income	(94	)%	3	%	(17	)%	14	%

*   Percentages subject to rounding.

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Three and Nine Months Ended September 28, 2013 compared to Three and Nine Months Ended September 29, 2012

Revenue.  The following table sets forth total revenue for the nine months ended September 28, 2013 and September 29, 2012:

	Three Months Ended									Nine Months Ended
Business Category	September 28, 2013		September 29, 2012		Change			% Change		September 28, 2013		September 29, 2012		Change			% Change
	(dollars in thousands)									(dollars in thousands)
Photovoltaic business	$	4,369	$	1,556	$	2,813		181	%	$	20,144	$	42,357	$	(22,213	)	(52	)%
Polysilicon business	28,564		95,856		(67,292		)	(70	)%	217,279		371,320		(154,041		)	(41	)%
Sapphire business	7,358		12,649		(5,291		)	(42	)%	28,974		217,526		(188,552		)	(87	)%
Total revenue	$	40,291	$	110,061	$	(69,770	)	(63	)%	$	266,397	$	631,203	$	(364,806	)	(58	)%

Revenue from our PV business increased 181% to $4.4 million for the three months ended September 28, 2013, as compared to $1.6 million for the three months ended September 29, 2012. Revenue from our PV business decreased 52% to $20.1 million for the nine months ended September 28, 2013, as compared to $42.4 million for the nine months ended September 29, 2012. The increase for the three months ended September 28, 2013 is primarily due to final payments received during the quarter for DSS units shipped in prior periods. The decrease in revenue for the nine months ended September 28, 2013 is primarily due to lower average selling prices and lower number of units sold as compared to the corresponding period in the preceding year.  The trend of decreased demand for DSS products, impacting both volume and average selling prices, began in fiscal year 2012 and, we believe, is the result of the current excess capacity of solar wafers and cells.

Revenue from our polysilicon business decreased 70% to $28.6 million for the three months ended September 28, 2013, as compared to $95.9 million for the three months ended September 29, 2012. Revenue from our polysilicon business decreased 41% to $217.3 million for the nine months ended September 28, 2013, as compared to $371.3 million for the nine months ended September 29, 2012. The decrease for the three months ended September 28, 2013 was driven primarily by decreased demand for polysilicon products. The decrease for the nine months ended September 28, 2013 was driven primarily by revenue recognized ratably on certain contracts in the prior year nine month period that did not recur in the current year period. Included in the three and nine month periods in the prior year polysilicon revenue are certain polysilicon contracts that granted contractual rights which required us to recognize revenue ratably over the contract period. Revenue recognition from these contracts commenced when all other elements had been delivered and other contract criteria have been met.  These rights expired on December 31, 2012 and all revenue under these contracts was recognized by this date.  During the nine months ended September 29, 2012, we recognized revenue on a ratable basis from these contracts of $138.1 million.

Polysilicon revenue may fluctuate significantly from period to period due to the timing of shipments and the length of time it takes to complete our obligations under the contracts. As a result of this variability, our polysilicon business tends to have a higher level of deferred revenue than our other business segments. Approximately 90% and 93% of our deferred revenue balances at September 28, 2013 and December 31, 2012, respectively, relate to our polysilicon business.

Our sapphire business revenue during the three and nine months ended September 28, 2013 is attributable to the sale of sapphire equipment and material used mostly, we believe, in sapphire-based LED applications and other specialty markets.  Revenue from our sapphire business was $7.4 million for the three months ended September 28, 2013, as compared to $12.6 million for the three months ended September 29, 2012. Revenue from our sapphire business was $29.0 million for the nine months ended September 28, 2013, as compared to $217.5 million for the nine months ended September 29, 2012. The decrease in revenue for our sapphire business in both periods was primarily related to the reduction in the number of ASF systems shipped as compared to the comparable periods in the prior year.  The acquisition of the business of Thermal Technologies did not contribute a material portion of revenues for the period from May 16, 2013 to September 28, 2013.

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A substantial percentage of our revenue results from sales to a small number of customers. Two of our customers accounted for 64% of our revenue for the three months ended September 28, 2013 and two customers accounted for 75% of our revenue for the three months ended September 29, 2012. Three of our customers accounted for 71% of our revenue for the nine months ended September 28, 2013 and four customers accounted for 57% of our revenue for the nine months ended September 29, 2012. No other customer accounted for more than 10% of our revenue during the respective periods.

Gross Profit and Gross Margins.  The following tables set forth gross profit and gross margin for the three and nine months ended September 28, 2013 and September 29, 2012.

	Three Months Ended												Nine Months Ended
	September 28, 2013			September 29, 2012			Change			% Change			September 28, 2013			September 29, 2012		Change			% Change
	(dollars in thousands)												(dollars in thousands)
Gross profit												Gross profit
Photovoltaic business	$	2,893		$	(3,312	)	$	6,205				Photovoltaic business	$	2,290		$	14,473	$	(12,183	)
Polysilicon business	20,032			35,095			(15,063		)			Polysilicon business	95,119			148,412		(53,293		)
Sapphire business	(5,148		)	3,245			(8,393		)			Sapphire business	(7,401		)	84,677		(92,078		)
Total	$	17,777		$	35,028		$	(17,251	)	(49	)%	Total	$	90,008		$	247,562	$	(157,554	)	(64	)%

	Three Months Ended				Nine Months Ended
	September 28, 2013		September 29, 2012		September 28, 2013		September 29, 2012
Gross margins
Photovoltaic business	66	%	(213	)%	11	%	34	%
Polysilicon business	70	%	37	%	44	%	40	%
Sapphire business	(70	)%	26	%	(26	)%	39	%
Overall	44	%	32	%	34	%	39	%

Overall gross profit as a percentage of revenue, or gross margin, increased to 44% for the three months ended September 28, 2013, from 32% for the three months ended September 29, 2012 and decreased to 34% for the nine months ended September 28, 2013, from 39% for the nine months ended September 29, 2012.

Our gross margins in our PV, polysilicon and sapphire businesses tend to vary depending on the volume, pricing and timing of revenue recognition.

Our PV gross margins for the three and nine months ended September 28, 2013 were 66% and 11%, respectively, as compared to (213%) and 34% for the three and nine months ended September 29, 2012. The increase for the three months ended September 28, 2013 was primarily due to the collection of a long outstanding payment from a customer and final acceptance from another customer, each with minimal corresponding costs of goods sold.  The decrease for the nine months ended September 28, 2013 as compared to the same period in the prior year was due primarily to the average selling prices on DSS units being below our historical prices realized in 2012.

Our polysilicon gross margins for the three and nine months ended September 28, 2013 were 70% and 44%, respectively, as compared to 37% and 40% for the three and nine months ended September 29, 2012. The increases in polysilicon gross margins for the three and nine months ended September 28, 2013 were primarily due to the recognition of revenue of approximately $17.0 million due to a contract termination with minimal corresponding costs of goods sold.

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Our sapphire gross margins for the three and nine months ended September 28, 2013 were (70)% and (26)%, as compared to 26% and 39% for the three and nine months ended September 29, 2012. The decrease in gross margins for the sapphire business during the three and nine months ended September 28, 2013 was primarily related to the reduction in the number of ASF systems recognized when compared to the prior year periods.  The decrease is also related to negative margins in the materials business in the three and nine months ended September 28, 2013 driven primarily by decreased levels of production at our material manufacturing facility.  During the three months ended September 29, 2012, we recorded significantly higher revenues in connection with the sale of our ASF systems when compared to revenue for the three months ended September 28, 2013. Margins on the sale of our sapphire equipment are higher than our margins on sapphire materials and therefore the consolidated margin is lower in periods where a fewer number of ASF systems are recognized as revenue.

Operating Expenses.  The following table sets forth total operating expenses for the three and nine months ended September 28, 2013 and September 29, 2012:

	Three Months Ended									Nine Months Ended
	September 28, 2013		September 29, 2012			Change		% Change		September 28, 2013		September 29, 2012			Change		% Change
	(dollars in thousands)									(dollars in thousands)
Operating expenses
Research and development	$	21,075	$	18,767		$	2,308	12	%	$	56,039	$	47,954		$	8,085	17	%
Selling and marketing	3,496		3,123			373		12	%	10,870		9,657			1,213		13	%
General and administrative	17,427		15,428			1,999		13	%	48,507		45,731			2,776		6	%
Contingent consideration expense (income)	4,971		(9,943		)	14,914		(150	)%	997		(9,261		)	10,258		(111	)%
Restructuring charges	4,010		—			4,010		100	%	6,868		—			6,868		100	%
Amortization of intangible assets	2,976		2,538			438		17	%	8,098		7,631			467		6	%
Total	$	53,955	$	29,913		$	24,042	80	%	$	131,379	$	101,712		$	29,667	29	%

Total operating expenses increased 80% to $54.0 million for the three months ended September 28, 2013, as compared to $29.9 million for the three months ended September 29, 2012, and increased 29% to $131.4 million for the nine months ended September 28, 2013, as compared to $101.7 million for the nine months ended September 29, 2012.

Research and development expenses consist primarily of payroll and related costs, including stock-based compensation expense, for research and development personnel who design, develop, test and deploy our PV, polysilicon and sapphire equipment, materials and services. We expect to continue to invest in new product development and improvements and attempt to expand certain of our existing product bases in each of our segments, as well as continue efforts to introduce new products.  Research and development expenses increased 12% to $21.1 million for the three months ended September 28, 2013, as compared to $18.8 million for the three months ended September 29, 2012, and increased 17% to $56.1 million for the nine months ended September 28, 2013, as compared to $48.0 million for the nine months ended September 29, 2012. The increases for the three and nine months ended September 28, 2013, as compared to the three and nine months ended September 29, 2012 primarily related to: an increase in employee compensation of $1.8 million and $7.2 million respectively, and an increase in other research expenses of $0.6 million and $1.4 million, respectively. In addition, the increase in research and development expense for the nine months ended September 28, 2013 was offset by a decrease in product receiving and shipping of $0.3 million.

Selling and marketing expenses consist primarily of payroll and related costs, stock-based compensation expense and commissions for personnel engaged in marketing, sales and support functions, as well as advertising and promotional expenses. Selling and marketing expenses increased 12% to $3.5 million for the three months ended September 28, 2013, as compared to $3.1 million for the three months ended September 29, 2012, and increased 13% to $10.9 million for the nine months ended

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September 28, 2013, as compared to $9.7 million for the nine months ended September 29, 2012. The increases in selling and marketing expenses for the three and nine months ended September 28, 2013 were driven by an increase in non-production materials of $0.4 million and $0.5 million, respectively. In addition, the increase in sales and marketing expenses for the nine months ended September 28, 2013 was also attributable to an increase in employee compensation of $0.7 million, principally a result of increased internal sales commissions in our polysilicon business. Sales commissions are accrued based on operational factors such as deposits, shipments and final acceptances received from customers rather than when revenue is recognized and thus may vary from quarter to quarter.

General and administrative expenses consist primarily of the following components: payroll, stock-based compensation expense and other related costs, including expenses for executive, finance, business applications, human resources and other administrative personnel; and fees for professional services. General and administrative expenses increased 13% to $17.4 million for the three months ended September 28, 2013, as compared to $15.4 million for the three months ended September 29, 2012,  and increased 6% to $48.5 million for the nine months ended September 28, 2013, as compared to $45.7 million for the nine months ended September 29, 2012. The increases in general and administrative expenses for the three and nine months ended September 28, 2013 were primarily driven by an increase in outside legal and accounting services and settlement of a contract vendor dispute of $3.8 million and $3.4 million, respectively. These increases were offset by a decrease in other general and administrative expenses of $0.2 million and $1.2 million, respectively. In addition the increase in general and administrative costs for the three months ended September 28, 2013 was offset by a decrease in personnel costs of $1.3 million. In addition, the increase in general and administrative expenses for the nine months ended September 28, 2013 was driven by a $0.2 million increase in personnel costs and a $0.1 million increase in travel and entertainment expenses.

Contingent Consideration Expense (Income). Contingent consideration expense (income) consists of the accretion of our contingent consideration liabilities to their respective fair values. Contingent consideration expense (income) for the three and nine months ended September 28, 2013 was $5.0 million and $1.0 million, respectively, as compared to ($9.9) million and ($9.3) million in the three and nine months ended September 29, 2012. The increase in contingent consideration expense of $14.9 million and $10.3 million for the three and nine months ended September 28, 2013, respectively related to contingent consideration recorded in connection to the Twin Creeks acquisition, relating to the change in the fair value of the liability at September 28, 2013. Additionally the increase for the nine months ended September 28, 2013 when compared to the prior year period was related to the operational and technical targets not being satisfied during the previous period by the contractual target dates in connection with the Confluence Solar acquisition, therefore we determined that the earn-out opportunities related to these targets were not achieved and we recognized a total decrease in the fair value of contingent consideration in our condensed consolidated statements of operations in the nine months ended September 29, 2012.

Restructuring Charges.  Total restructuring and asset impairment charges for the three months ended September 28, 2013 were $4.0 million in asset impairments related to our Hazelwood facility. Total restructuring and asset impairment charges for the nine months ended September 28, 2013 were $6.9 million, which was comprised of $1.9 million in lease exit costs related to the Hazelwood facility’s lease, $0.6 million of other contract termination costs related to the Hazelwood facility, $0.4 million of severance and related benefits and $4.0 million in asset impairments. There were no comparable amounts in the prior year comparable periods.

Amortization Expense.  Amortization of intangible assets consists of the amortization of intangible assets obtained in business or technology acquisitions. Amortization expense attributed to intangible assets increased 17% to $3.0 million for the three months ended September 28, 2013, as compared to $2.5 million for the three months ended September 29, 2012, and increased 6% to $8.1 million for the nine months ended September 28, 2013, as compared to $7.6 million for the nine months ended September 29, 2012. The balance within amortization expense is driven by the amortization of identified intangible assets related to our acquisitions of Confluence Solar, Crystal Systems and the business of Thermal Technology.

Interest Expense. Interest expense includes interest paid on our debt obligations as well as amortization of deferred financing costs. The increase during the three and nine months ended September 28, 2013 as compared to the same periods in the prior year is due to i) higher interest rate on our 2012 Credit Facility with Bank of America N.A. (and certain other lenders) which was increased pursuant to an amendment to this credit facility in February 2013 (or the 2013 Amendment); ii) an increase in amortization of deferred financing fees related to the issuance of the 3.00% Senior Convertible Notes due 2017 and iii) the amortization of the 3.00% Senior Convertible Notes discount. The increase in amortization of deferred financing costs is due to the amortization of deferred financing fees paid in connection with our 3.00% Senior Convertible Notes and in connection with the 2013 Amendment for which we accelerated recognition on a portion of the deferred financing costs.

(Benefit) Provision for Income Taxes. Our effective tax rate at the end of an interim period is calculated using an estimate of the annual effective tax rate expected to be applicable for the full fiscal year.

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Our Company’s effective tax rate for the three and nine months ended September 28, 2013 and September 29, 2012, was 10.1% and 26.9%, and 24.2% and 32%, respectively. The effective rate differs from the U.S. federal statutory rate due to a favorable permanent adjustment related to contingent consideration which is non-includable for tax purposes and the jurisdictional mix of income/loss. We incurred proportionally larger losses in the U.S., a higher tax jurisdiction than in lower tax jurisdictions, namely Hong Kong.

We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. We are subject to examination by federal, state, and foreign tax authorities. Our U.S. tax returns have settled for fiscal years through March 31, 2008. The Company is under examination by the Internal Revenue Service, or IRS, for our fiscal years ending March 28, 2009 and April 3, 2010.  In addition, the statute of limitations is open for all state and foreign jurisdictions.

Liquidity and Capital Resources

Overview

We fund our operations generally through cash generated from operations, proceeds from credit facilities and convertible notes and proceeds from exercises of stock awards.

Our cash and cash equivalents balance decreased by $159.6 million during the nine months ended September 28, 2013, from $418.1 million as of December 31, 2012 to $258.5 million as of September 28, 2013. On September 28, 2013, we held $239.3 million of cash and cash equivalents in the United States and we held $19.2 million outside the U.S. The decrease was principally attributable to $43.6 million principal payments on the outstanding term loan as prescribed by the amendment to our credit agreement entered into in February 2013, payments of $3.7 million for the purchase of property, plant and equipment, a net loss of $44.9 million (after adjustments for non-cash items such as stock based compensation) and the balance consisted of cash utilized to fund working capital and operating costs.  On October 30, 2013, we terminated our credit agreement, or the Credit Agreement, with Bank of America, N.A., as administrative agent, Swing Line Lender and L/C Issuer and the lenders from time to time party thereto.  As of September 28, 2013, there was approximately $96 million outstanding borrowings under the term loan component of the Credit Agreement, which amount was paid in full on October 30, 2013 by using our available cash.

In October 2013, we settled a vendor contract dispute. The terms of the settlement, which includes no admission of liability or wrongdoing by us, provides for a full and complete release of all claims that were or could have been brought against us. We have agreed that we paid $3.25 million to the vendor in this matter. The Company’s settlement payment has been recorded as a general and administrative expense in the three months ended September 28, 2013.

Historically, we manage our cash inflows through the use of customer deposits, milestone billings and debt financings intended to allow us in turn to meet our cash outflow requirements, which primarily consist of vendor payments and prepayments for contract related costs (raw material and components costs) as well as payroll and overhead costs as we perform on our customer contracts. The following discussion of the changes in our cash balance refers to the various sections of our Condensed Consolidated Statements of Cash Flows, which appears in Item 1 of this Quarterly Report on Form 10-Q.

Historically, our principal uses of cash are for raw materials and components, wages, salaries and investment activities, such as the purchase of property, plant and equipment, business acquisitions, repurchases of our common stock and payments on outstanding debt. In the past we have outsourced a significant portion of our equipment manufacturing and therefore we require minimal capital expenditures to meet our production demands.  In May 2013, we acquired the business of Thermal Technology in a business acquisition through the issuance of shares of our common stock and a contingent consideration payment obligation.

The following table summarizes our primary cash flows in the periods presented:

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	Nine Months Ended
	September 28, 2013			September 29, 2012
	(dollars in thousands)
Cash provided by (used in):
Operating activities	$	(109,163	)	$	(22,704	)
Investing activities	(3,658		)	(35,248		)
Financing activities	(47,084		)	330,369
Effect of foreign exchange rates on cash	282			(76		)
Net (decrease) increase in cash and cash equivalents	$	(159,623	)	$	272,341

Cash Flows from Operating Activities

For the nine months ended September 28, 2013, our cash used in operations was $109.2 million. Our cash used in operations was driven primarily by a decrease in customer deposits of $93.8 million and a decrease in deferred revenue of $59.6 million. These amounts were offset by a decrease in deferred costs of $26.1 million and a decrease in vendor advances of $21.7 million.  The use of cash is primarily the result of a number of polysilicon transactions which were recognized in revenue and earnings in the nine months ended September 28, 2013, for which payment had been received in the prior year.

For the nine months ended September 29, 2012, our cash used in operations was $22.7 million. Our cash used in operations was driven primarily by a decrease in deferred revenue of $337.9 million, a decrease in customer deposits of $56.3 million, a decrease in accounts payable and accrued expenses of $25.5 million and an increase in vendor advances of $23.2 million. These items were partially offset by a decrease in deferred cost of $189.2 million, a decrease in restricted cash of $96.2 million, net income of $96.2 million and a decrease in accounts receivable of $39.2 million.

Cash Flows from Investing Activities

For the nine months ended September 28, 2013, our cash used in investing activities was $3.7 million, comprised primarily of capital expenditures for the period.

For the nine months ended September 29, 2012, our cash used in investing activities was $35.2 million. This is comprised primarily of capital expenditures for the period which were approximately $35.5 million. These capital expenditures were primarily used for expanding our sapphire business and improving our business information systems.

Cash Flows from Financing Activities

For the nine months ended September 28, 2013, cash used by financing activities was $47.1 million, driven primarily by $43.6 million principal payments under our amended credit agreement with Bank of America and $2.3 million of financing costs on the outstanding term loan as prescribed by this amended credit agreement.

For the nine months ended September 29, 2012, cash provided by financing activities was $330.4 million, driven primarily by borrowings of $145.0 million made under our credit facility, $220.0 million in proceeds from the issuance of convertible notes and $41.6 million in proceeds from the issuance of warrants.  These cash inflows were offset by cash paid for bond hedges of $57.9 million, payments of deferred financing costs of $11.5 million, payments of contingent consideration from business combinations of $4.9 million and principal payments under the credit facility of $1.8 million.

We believe that our existing cash, as well as cash that we are eligible to receive under the Prepayment Agreement with Apple Inc.  which will be used principally in connection with our sapphire material operations at our Arizona facility (see further description below), cash we received on our 3.0% convertible notes and customer deposits will be sufficient to satisfy working capital requirements, commitments for capital expenditures, and other cash requirements for at least the next twelve months. We, however, consistently review strategic opportunities in an effort to find opportunities to improve our products, technologies, operations, overall business and increase shareholder value, these opportunities may include business acquisitions, technology licenses, dividends to shareholders, prepayment of our outstanding convertible notes using cash, accelerated prepayments of outstanding indebtedness and joint ventures. If we were to engage in any of the foregoing, it could require that we utilize a significant amount of our available cash and, as a

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result, we may be required to increase our outstanding indebtedness or raise additional capital in through the sale of equity, debt, convertible notes or a combination thereof, which may not be available on favorable terms, or at all.

Long Term Debt

Bank of America Credit Agreement

On January 31, 2012, we, our U.S. operating subsidiary (the “U.S. Borrower”) and our Hong Kong subsidiary (the “Hong Kong Borrower”) entered into a credit agreement (the “2012 Credit Agreement”), with Bank of America, N.A., as administrative agent, Swing Line Lender and L/C Issuer (“Bank of America”) and the lenders from time to time party thereto. The 2012 Credit Agreement consisted of a term loan facility (the “2012 Term Facility”) provided to the U.S. Borrower in an aggregate principal amount which was initially $75.0 million with a final maturity date of January 31, 2016, a revolving credit facility (the “U.S. Revolving Credit Facility”) available to the U.S. Borrower in an aggregate principal amount which was initially $25.0 million with a final maturity date of January 31, 2016 and a revolving credit facility (the “Hong Kong Revolving Facility”; together with the U.S. Revolving Credit Facility, the “2012 Revolving Credit Facility”; together with the “Term Facility”, the “2012 Credit Facilities”) available to the Hong Kong Borrower in an aggregate principal amount which was initially $150.0 million with a final maturity date of January 31, 2016 (which amount was reduced to $125 million pursuant to the 2013 Amendment).

On October 30, 2013, the Company terminated our 2012 Credit Agreement.  As of September 28, 2013, there was approximately $96 million outstanding borrowings under the 2012 Term Facility which was paid in full on October 30, 2013 by using available cash.  As of October 30, 2013, there are no amounts outstanding under the 2012 Revolving Credit Facility and no outstanding stand-by letters of credit under the 2012 Revolving Credit Facility. In connection with the termination of the 2012 Credit Agreement, the Company expects to recognize a charge in the fourth quarter of approximately $3.6 million relating to deferred issuance costs that will be written off upon the termination of the agreement. As of September 28, 2013 and October 30, 2013 we were in compliance with the covenants in the 2012 Credit Agreement.

3.00% Convertible Senior Notes due 2017

On September 28, 2012, we issued $220.0 million aggregate principal amount of 3.00% Convertible Senior Notes due 2017 (the “Notes”).The net proceeds from the issuance of the Notes were approximately $212.6 million, after deducting fees paid to the initial purchasers and other offering costs. The Notes are senior unsecured obligations, which pay interest in cash semi-annually at a rate of 3.00% per annum. The Notes are governed by an Indenture dated September 28, 2012 with U.S. Bank National Association, as trustee. The Notes are not redeemable by us and all remained outstanding at September 28, 2013.

Convertible Note Hedge Transactions and Warrant Transactions

In connection with the issuance of the Notes, we entered into separate convertible note hedge transactions and warrant transactions with certain counterparties. For additional information on the convertible note hedge transactions and warrant transactions, see Note 10 to the notes to our consolidated financial statements in Item 8 “Financial Statements and Supplementary Data” included in our Transition Report on Form 10-K filed for the nine-month period ended December 31, 2012.

Prepayment Agreement with Apple Inc.

On October 31, 2013, our wholly-owned subsidiary, GTAT Corporation, entered into a Prepayment Agreement with Apple Inc. pursuant to which Apple is scheduled to make prepayments to GTAT in the aggregate amount of approximately $578 million, referred to herein as the Prepayment Amount, in four separate installments (the final installment to be made in April 2014), for the purpose of GTAT acquiring ASF systems and related equipment. GTAT is required to repay this amount ratably over a five year period ending in January 2020, and GTAT is required to repay this amount ratably over a five year period ending in January 2020, either as a credit against Apple purchases of sapphire goods under the MDSA or as a direct cash payment. GTAT’s obligation to repay the Prepayment Amount may be accelerated under certain circumstances. GTAT, our principal U.S operating subsidiary, has granted Apple a security interest in certain of its assets to secure GTAT’s obligations under the Prepayment Agreement There are no minimum purchase requirements under the terms of the Master Development and Supply Agreement.

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Off-Balance Sheet Arrangements

We do not have, as of September 28, 2013, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Standby Letters of Credit

As of September 28, 2013, we had $0.5 million of standby letters of credit outstanding against the 2012 Revolving Credit Facility, which represented performance guarantees issued against customer deposits. There were no standby letters of credit outstanding against the 2012 Revolving Credit Facility when the 2012 Credit Agreement was terminated on October 30, 2013.

Contractual Obligations and Commercial Commitments

As of September 28, 2013, there have been no material changes to our “Contractual Obligations and Commercial Commitments” table in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Transition Report on Form 10-K for the nine month ended December 31, 2012, other than:

i)As of September 28, 2013, purchase commitments under agreements totaled $329.1 million, substantially all of which are due within twelve months. As of September 28, 2013, prepayments under certain of these purchase commitments amounted to $31.2 million.

ii)As part of the acquisition of Thermal Technology on May 16, 2013, we may be obligated to pay the former shareholders of Thermal Technology amounts based on future revenues of Thermal Technology through 2018.  As of the acquisition date, we determined the fair value of the contingent consideration was $6.2 million based on a probability weighted approach of projected future cash flows under three different scenarios.   The maximum potential payment for the period 2014 through 2018 is $35.0 million.  Additionally, we are obligated to pay a percentage of Thermal Technology revenues for 2013 to the extent those revenues exceed set targets.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Income Taxes (Topic 740): Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance eliminates diversity in practice surrounding the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance requires entities to net an unrecognized tax benefit with a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if the carryforward would be used to settle additional tax due upon disallowance of a tax position. The amendment is effective for fiscal periods beginning after December 15, 2013 with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements.

Recently Adopted Accounting Pronouncements

Effective January 1, 2013, we adopted Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The guidance is intended to provide disclosure on items reclassified out of accumulated other comprehensive income either in the notes or parenthetically on the face of the income statement. The required disclosure is in Note 18.

Critical Accounting Policies and Estimates

For the nine months ended September 28, 2013, there were no significant changes to our critical accounting policies and estimates included in our Transition Report on Form 10-K for the nine-month period ended December 31, 2012, as filed with the SEC on March 1, 2013.

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Investment Risks

We maintain an investment portfolio which, at September 28, 2013, consisted of $179.1 million of money market mutual funds. At any time a rise in market interest rates could have an adverse impact on the fair value of our investment portfolio. Conversely, declines in market interest rates could have a material impact on the interest earnings of our investment portfolio. We do not currently hedge these interest rate exposures. We place our investments with high quality issuers and have investment policies limiting, among other things, the amount of credit exposure to any one issuer. We seek to limit default risk by purchasing only investment grade securities. Based on investment positions as of September 28, 2013, a hypothetical movement of plus or minus 50 basis points based on current market interest rates would not have a material impact to the value of our investment portfolio or the income earned in an annual period. We also have the ability to hold our investments until maturity, and therefore do not expect our operating results or cash flows to be affected to any significant degree by the effect of a sudden change in market interest rates on our investment portfolio.

We may elect to invest a significant amount of our cash in fixed income portfolios. As with most fixed income portfolios, the ones that we have invested in from time to time, or may elect to invest in, include overnight money market funds, government securities, certificates of deposit, commercial paper of companies and other highly-liquid securities that are believed to be low-risk. Certain money market funds in which we have invested, however, could hold positions in securities issued by both sovereign states and banks located in jurisdictions experiencing macroeconomic instability, some of which may not currently be considered low-risk. Certain sovereign states and banks located in these jurisdictions, have experienced severe disruptions lately, in part, from the belief that they may be unable to repay their debt, and the value of the securities issued by these institutions have experienced volatility. While we do not believe that we have any direct exposure to the riskiest securities, for example, we do not directly hold any securities issued by the governments of Greece, Spain, Portugal, France and Ireland, the funds that we may invest in may hold these securities. In addition, these money market funds could hold Euros or Euro-based securities. To the extent that volatility was to have a significant impact on the Euro, a portion of any cash held in money market accounts could lose its value. Further, if the financial upheavals were to spread to other sovereign states, such as the United Kingdom, our cash could also be at risk due to the fact that the funds in which we have placed our cash do invest directly in the securities issued by the sovereign states, corporations and banks in these jurisdictions.

Foreign Currency Risk

Although our reporting currency is the U.S. dollar and substantially all of our existing sales contracts are denominated in U.S. dollars, we incur costs denominated in other currencies. In addition, although we maintain our cash balances primarily in the U.S. dollar, from time to time, we maintain cash balances in currencies other than the U.S. dollar. As a result, we are subject to currency risk.

Our primary foreign currency exposure relates to fluctuations in foreign currency exchange rates, primarily the Euro for certain inventory purchases from vendors located in Europe. Fluctuations in exchange rates could affect our gross and net profit margins and could result in foreign exchange and operating losses or gains due to such volatility. Changes in the customer’s delivery schedules can affect related payments to our vendors which could cause fluctuations in the cash flows and when we expect to make payments when these cash flows are realized or settled.

Exchange rates between a number of currencies and U.S. dollars have fluctuated significantly over the last few years and future exchange rate fluctuations may occur.

We enter into forward foreign currency exchange contracts that qualify as cash flow hedges to hedge portions of certain of our anticipated foreign currency denominated inventory purchases. These contracts typically expire within 12 months. Consistent with the nature of the economic hedges provided by these forward foreign currency exchange contracts, increases or decreases in their fair values would be effectively offset by corresponding decreases or increases in the U.S. dollar value of our future foreign currency denominated inventory purchases (i.e., “hedged items”). We are not currently party to any forward foreign currency exchange contracts.

As of September 28, 2013, we had no forward foreign currency exchange contracts.

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Interest Rate Risk

3.00% Convertible Senior Notes due 2017

On September 28, 2012, we issued $220 million aggregate principal amount of our 3.00% Convertible Senior Notes due 2017, or the Notes. The Notes were issued under the indenture with U.S. Bank National Association, as trustee, dated September 28, 2012. For additional information on the 2012 Credit Agreement, see Note 10 Long Term Debt and Revolving Credit Facility to the notes to our consolidated financial statements in Item 8 “Financial Statements and Supplementary Data” included in our Transition Report on Form 10-K filed for the nine-month period ended December 31, 2012.

The interest rate on the Notes is fixed at 3.0% per annum. The fair market value of the Notes is subject to interest rate risk and market risk due to the convertible feature of the Notes. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. The fair market value of the Notes will also increase as the market price of our stock increases and decrease as the market price falls. The interest and market value changes affect the fair market value of the Notes but do not impact our financial position, cash flows or results of operations.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 28, 2013. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 28, 2013, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting during the three months ended September 28, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

We are subject to various routine legal proceedings and claims incidental to our business, which our management believes will not have material effect on our financial position, results of operations or cash flows.

Item 1A.  Risk Factors

Our business, operating results and cash flows can be impacted by a number of factors, any one of which could cause our actual results to vary materially from recent results or from our anticipated future results. You should carefully consider the risks described below and the other information in this Quarterly Report on Form 10-Q. These are the risks and uncertainties we believe are most important for our business as of the date of this Quarterly Report on Form 10-Q. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or which are similar to those faced by

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other companies in our industry or business in general, may also impair our business operations. If any of the following risks or uncertainties actually occurs, our business, financial condition and operating results would likely suffer. In that event, the market price of our common stock could decline and an investor in our common stock could lose all or part of their investment.

Risks Related to Our Business Generally

The focus of our business will change as a greater portion of our operations will be providing sapphire material and if we are unable to successfully transition our business and establish sapphire material operations our business will be harmed.

As a result of a contract we entered into on October 31, 2013, we expect that we will be providing sapphire materials for use in the consumer electronics market.  Historically, we have been a provider of crystal growth equipment, with a very limited part of our business being a supplier of sapphire materials produced at our Salem, Massachusetts facility.  We expect that the operations at our Arizona facility, which will only produce sapphire material, will constitute more of our overall business than in the past and we expect that the size of our future sapphire operations will be larger than that currently conducted in Salem.  We have very limited experience operating a material manufacturing operation of this scale, and if we are unable to timely establish and maintain operations of the scale contemplated, our business and results of operations would be significantly impacted.  Among the risks we face are: (i) hiring and maintaining a workforce necessary to run the facility, (ii) the specifications to operate the ASF systems in the facility will consistently be adhered to, including supplying power and water (some of which are beyond our control), (iii) ensuring that the components and parts necessary to generate sapphire and operate and maintain the ASF systems are available in time and quantity from our supply necessary to meet our expected delivery schedules.

In addition, we must supply sapphire material that meets agreed upon specifications by agreed upon deadlines. If we are unable to do so, we will be subject to significant warranty claims and liquidated damages.  We may be unable to make these payments and any such failure will have material adverse consequences for our business and results of operations

Through the remainder of 2013 and the first quarter of 2014, we expect that we will sell a very limited number of ASF units to our customers as we ramp up our sapphire material operations.  For this same reason, we expect to convert very limited amounts in our sapphire business backlog into revenue during this period.

If Apple does not purchase sufficient quantities of sapphire material we may be unable to meet our obligations to repay advances that were provided to us.

Apple has committed to make a $578 million prepayment to us. We must repay this amount ratably over a five year period ending January 2020, either as a credit against Apple purchases of sapphire goods or as a direct cash payment.  We have granted certain exclusivity rights to Apple with respect to the sapphire material generated with such ASF systems.  Therefore, our sapphire material business will depend on purchases of sapphire material from Apple.  If Apple purchases no sapphire material, or limited sapphire material, we would be required to repay (on a quarterly basis), significants amounts of the prepayment amount using our cash resources, which would limit our ability to invest in or operate other portions of our business, including our equipment operations.  In addition, these repayments may exhaust all of our cash and, if we are unable to make a payment when due, we will be in default and Apple will have the right to acquire control and possession of the ASF systems (and to be paid in cash for any deficiency).  In addition, in order to secure payment of a portion of the prepayment, we have also granted Apple a security interest in certain of the assets of GTAT Corp. (our principal U.S. subsidiary).  The prepayment installments may also be cancelled prior to payment, or repayment accelerated, under certain circumstances, including if the ASF systems do not generate sapphire material to specification prior to an agreed upon date or we are unable to comply with certain financial covenants.  Finally, if the repayment of the prepayment were to be accelerated, it would likely produce a cross-default under our 3.0% convertible notes (correspondingly, an acceleration of the 3.0% senior convertible notes would likely produce a cross-default under the Prepayment Agreement), and we may not have sufficient resources at such time to satisfy these obligations.  In addition, a portion of the prepayment can be used for working capital by GTAT, but must be used within a short period for the purchase of sapphire equipment under the supply arrangement.

Even if Apple does purchase adequate amounts of sapphire material, the margins related to this business (when operating at expected capacity) will be much lower than those of our equipment business.

We expect that oversupply of, or limited demand for, polysilicon, solar panels and sapphire material, including LED quality material, may have an adverse impact on our equipment business and, unless such oversupplies are reduced or demand increases in the near future due to development of new technologies or otherwise, the negative impact on our equipment business could last for an extended period.

Our equipment sales are principally to customers that manufacture polysilicon (which is a key component for making solar wafers and cells), silicon ingots (which are, through various cutting and finishing processes, used for making solar cells, modules and wafers) and sapphire boules (which are, through various cutting and finishing processes, used for

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making, among other things, LED wafers). Each of the polysilicon, solar wafer, modules and cell and LED wafer markets are currently experiencing significant oversupply and/or significant decreased demand. For example, our PV business experienced a 52% decrease in revenue for the nine months ended September 28, 2013 as compared to the same period in the prior year. The consequence of this oversupply and decreased demand is that those who sell into these markets (many of whom are customers for our equipment) are either required to sell at very low prices (including sometimes selling at a loss) or are unable to sell at all. Many customers are experiencing large inventories. As a consequence of these conditions, demand for all of our equipment, particularly our polysilicon reactors, DSS furnaces and ASF units, has dropped significantly in the past few quarters. During the nine-month period ended December 31, 2012, we recorded net negative bookings for our PV, polysilicon and sapphire equipment in an aggregate amount of $151.0 million. Given the state of the markets we serve, our future bookings may be even less in twelve months ended December 31, 2013. This has had an adverse impact on our business and will continue to have such an effect, including requiring that we sell products at prices below what we usually charge or resulting in the absence of any meaningful new sales.

In addition, certain customers have requested that we delay delivery of equipment or reduce the number of equipment units they are required to purchase under existing contracts (and we expect that we may receive similar requests in the future). If the existing inventories of polysilicon, solar, modules cells/wafers and LED/sapphire materials are not reduced in the near future or demand increases, as a result of new solar or sapphire technologies that increase demand for end-products incorporating polysilicon, solar cells or sapphire material or due to other reasons, we expect that our business and results of operations will be significantly and materially impacted.

Our Photovoltaic business segment has historically depended upon the Directional Solidification System (DSS) furnace for its revenue and we expect that there will be very limited, if any, revenue attributable to DSS sales in the future. Additionally, we do not expect to commercially launch our next photovoltaic tool until late in 2014.

Particularly in the latter half of 2012, the global solar industry continued to experience a significant downturn that has negatively impacted the growth of the industry and the profitability of PV producers and the companies who supply the equipment and materials used in the production of PV products such as wafers, cells and modules. The principal product line of our PV business has been the DSS family of casting furnaces that are used to produce multicrystalline ingots and MonoCast™ ingots.

Because of the high level of PV manufacturing overcapacity, we expect very limited investment in additional generation capital equipment for 2013 and beyond. While we have sold a significant amount of DSS furnaces that we held in inventory, we do have some DSS furnaces that remain in in inventory and we will endeavor to sell any DSS furnaces that we have in our inventory, but expect that demand for these will be limited and prices will be lower than we have historically charged. Our next generation PV equipment offering, our HiCz tool, is still under development and is projected to be commercially available late in 2014. Therefore, we do not expect to have any meaningful sales or revenue from our PV segment in 2013. If our HiCz tool does not gain market acceptance in 2014, our PV business segment could experience prolonged periods without contributing any meaningful revenue to the business. In addition, with the idling of our facility in Hazelwood, Missouri earlier in 2013, we will no longer sell HiCz material generated by our HiCz™ tools and, while the revenue from the sale of this material was minimal, we no longer expect to have this as a source of revenue in the future.

Impairment charges negatively impacted our financial results in recent fiscal periods and additional charges, of comparable or greater magnitude, may be required in the future as a result of the prolonged downturn in the markets we serve.

We assess our goodwill and other intangible assets and our long-lived assets for impairment when required by U.S. generally accepted accounting principles. These accounting principles require that we record an impairment charge if circumstances indicate that the asset carrying values exceed their estimated fair values. The estimated fair value of these assets is impacted by general economic conditions in the markets we serve. Deterioration in general economic conditions may result in, among other things: declining revenue which can lead to excess capacity and declining operating cash flow; reductions in management’s estimates for future revenue and operating cash flow growth. All of these factors negatively impacted our PV business during the quarter ended December 31, 2012 and, as a result, we recorded a goodwill impairment charge of $57.0 million, an intangible asset charge of $0.5 million, asset impairments of $29.3 million, inventory write downs of $60.2 million and vendor advance impairments of $8.4 million. More recently, during the nine months ended September 28, 2013, we recorded $1.9 million of additional charges related to the Hazelwood facility’s lease exit costs, $0.6 million of other contract termination costs related to this facility and $4.0 million of impairment charges related to the fair value of the HiCz fixed assets, respectively.  If the PV market were to continue to deteriorate or our PV products, including our HiCz™ tool, were to not generate significant sales in the future, we could be required to take further charges and they may be material.

If our other business segments, polysilicon and sapphire, were to face the same conditions as our PV segment, we may be required to take significant impairment charges for these segments as well. Any future impairment charges may have a material adverse impact on our business and results of operations. In addition, we may be unable to adequately and timely realign our cost structure with softening demand, which would also negatively impact our results.

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China has recently experienced decreased growth rates and certain of the solar and sapphire manufacturers in China, and in Asia generally, have been unwilling or unable to continue to invest in capital equipment purchases.

The rate of growth of the Chinese economy has experienced decreases recently. Since Chinese companies, including solar and LED producers, ship their products to Europe, the decreased growth experienced in China is due, in part we believe, to the adverse economic situation in Europe. The negative impact of this reduced rate of growth is compounded by the fact that the solar industry, including solar and wafer, module and cell manufacturers and polysilicon manufacturers, are confronting markets that are either experiencing decreased demand or are generating more capacity than the industry requires. These market conditions are making it difficult for these companies to generate adequate returns and many such companies are not making any capital investments in their operations, which results in much lower demand for our equipment products. For several years, Chinese solar manufacturers relied on, we believe, easily available credit and companies were increasing rates of investment in capital equipment. These companies utilized these financial resources to build up their manufacturing capacity. We believe that Chinese companies have incurred some of the highest levels of debt in the solar industry. Now, however, in many cases, lenders to Chinese solar companies, in particular, are no longer extending credit on favorable terms, or at all. Some of this debt is maturing and certain of these companies are unlikely to be able to make payments when due. As a result, we expect that the demand for our equipment products will continue to remain limited for the short-term amongst our Chinese customer base (which are among our largest equipment customers). Also, it may be the case that customers with orders in our backlog are unable to accept delivery of our equipment or may re-negotiate terms, including requests for reduced prices, delayed delivery and decreases in the number of units shipped. Any of the foregoing would have a negative impact on our business and results of operations. These circumstances are making competition among equipment suppliers to sell to a limited number of purchasers very challenging. As competition increases, it may be the case that our competitors engage in business practices that we will not engage in (or are legally prohibited from engaging in) in order to gain business, including providing incentives or benefits that are prohibited under the U.S. Foreign Corrupt Practices Act.

Current or future credit and financial market conditions could materially and adversely affect our business and results of operations in several ways.

Over the past few years, financial markets in the United States, Europe and Asia experienced disruption, including, among other things, volatility in security prices, tightened liquidity and credit availability, rating downgrades of certain investments and declining valuations of others and increased bankruptcy filings by companies in a number of industries (including several companies in the solar industry). These economic developments adversely affect businesses such as ours in a number of ways. The tightening of credit in financial markets for solar companies and sapphire companies has resulted in reduced funding worldwide, including China (where many of our customers are located), and a higher level of uncertainty for solar cell, wafer and module manufacturers and manufacturers incorporating sapphire material into their products. As a result, some of our equipment customers have been delayed in securing, or prevented from securing, funding adequate to honor their existing contracts with us or to enter into new contracts to purchase our equipment products. We believe a reduction in the availability of funding for new manufacturing facilities and facility expansions in the solar and sapphire industries, or reduction in demand for solar panels or sapphire material has caused, and may continue to cause, a decrease in orders for our products.

We currently require most of our equipment customers to prepay a portion of the purchase price of their orders and to provide letters of credit prior to shipping equipment. We use these customer deposits to prepay our suppliers in order to reduce the need to borrow to cover our cash needs for working capital. This practice may not be sustainable if the recent market disruptions continue or grow worse. Some of our customers who have become financially distressed have failed to provide letters of credit or make payments in accordance with the terms of their existing contracts. If customers fail to post letters of credit or make payments, and we do not agree to revised contract terms, it could have a significant impact on our business, results of operations and financial condition. The impact of these disruptions are increasingly being felt in China, and by certain of our customers which are located in China and other countries in Asia, and accounts in part for the decline in our total revenue and order backlog for the nine-month period ended September 28, 2013 as compared to the same period in the prior year.

We may experience further revenue and backlog reductions in the future. Credit and financial market conditions may similarly affect our suppliers. We may lose advances we make to our suppliers in the event they become insolvent because our advances are not secured or backed by letters of credit. The inability of our suppliers to obtain credit to finance development or manufacture our products could result in delivery delays or prevent us from delivering our products to our customers.

A portion of the prepayment amount we are due under the prepayment agreement can be used by GTAT for limited purposes, but must be used within a short period for the purchase of sapphire equipment under the supply agreement. If we are unable to generate sufficient cash or access credit markets on favorable terms, this obligation to purchase sapphire equipment may have a material impact on our financial position in 2014.

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Ongoing trade disputes with China may adversely impact the businesses of our Chinese customers, which could harm our business and our stock price.

The current limited demand for our equipment products and  the excess capacity in the end markets our equipment customers serve is exacerbated by trade tensions between China and the U.S. In October 2012, the U.S. Commerce Department issued a final ruling and levied anti-dumping duties on billions of dollars of solar panels and cells from China (and set countervailing duties as well). This final ruling has negatively impacted our equipment customers in China and we expect that this effect will continue in the future. This follows a May 2012 Department of Commerce announcement of a preliminary determination that China had violated fair trade policies by “dumping” into the U.S. certain solar products at prices that were intended to advantage Chinese manufacturers. The Chinese government responded by saying these actions were deliberately provoking trade friction between the two nations. In July 2013, the Chinese Ministry of Commerce imposed preliminary anti-dumping duties on U.S. and Korean polysilicon makers, and for certain manufacturers these duties were above 50%.  And in september 2013, the Chinese Ministry of Commerce imposed an additional 6.5% “anti-subsidy” trade duty, over and above the duty imposed in July 2013 on U.S. polysilicon companies who received government subsidies.  We believe that certain of our customers are delaying any purchasing or expansion plans until these various trade matters are resolved and we do not expect such resolution to take place during 2013 and, in fact, expect that they will grow more adversarial. In July 2013, the European Union and China were able to solve their recent dispute over Chinese solar panels in the European market by instituting a price floor on solar panels imported into Europe from China. We believe this is a positive development as the agreement removes some of the uncertainty that was stalling industry decisions and may help improve the financial health for some of our Chinese PV customers. While this may be a positive development, we do not expect to see an immediate effect as these customers will need some period of time to recover financially before they are in a position to make significant capital investments. Retaliatory tariffs and trade tensions with China, on the one hand, and the U.S. and Europe (as well as South Korea, where some of our equipment customers are located) on the other hand, is causing uncertainty in the industry and is having a material adverse impact on our business since we sell into China and our equipment customers sell end products into Europe and the U.S. Our business and results of operations would be negatively affected if further anti-dumping or other duties were imposed or a trade war was to occur with China (or if the duties already imposed are not removed). In addition, we expect that any further announcements about or imposition of duties by the U.S. government or E.U. on solar cells imported from China or relating to duties imposed on polysilicon manufacturers by the Chinese government (or similar actions) could negatively impact our stock price and may have a material adverse effect on our business and results of operations.

Servicing our debt and other payment obligations requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

Our ability to make scheduled payments, or to refinance, our obligations under the Prepayment Agreement (if not recouped through delivery of sapphire material) or our 3.0% Convertible Senior Notes due 2017 and any other indebtedness depends on our future performance and available cash, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt, our other repayment obligations and make necessary capital expenditures (particularly if there were to be a default under either or both the Prepayment Agreement and 3.0% Convertible Senior Notes due 2017 that would accelerate the payments due thereunder). If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt or repayment obligations.

If our customers delay or cancel equipment purchases, we may be required to modify or cancel contractual arrangements with our suppliers which may result in the loss of deposits or pre-paid advances, which losses have been significant in the past.

As a result of our customer delays or contract terminations, we reschedule or cancel, from time to time, purchase orders with our vendors to procure materials and, in certain cases, we are required to forfeit deposits and/or reimburse the vendor for costs incurred to the date of termination plus predetermined profits. We have recorded significant losses resulting from rescheduled and/or canceled commitments to our vendors as a result of customer delays, contract modifications and terminations. For example, we expect to terminate purchase commitments for DSS inventory components in fiscal 2013 and beyond. The gross amount outstanding under the purchase orders was $14.3 million at September 28, 2013 and we will negotiate with our vendors to determine the amount payable upon termination. Certain of the vendors from whom we

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purchased materials have been unable to deliver the ordered components because economic conditions had an adverse impact on their ability to operate their businesses and we were unable to recover advances paid to those vendors for components that were not delivered and, in some cases, these lost advances were significant amounts. In cases where we are not able to cancel or modify vendor purchase orders due to customer delays or terminations, our purchase commitments may exceed our order backlog requirements and we may be unable to redeploy the undelivered equipment. In addition, we expect that we may be required to pay advances to vendors in the future without being able to recover that advance if the vendor is placed in bankruptcy, becomes insolvent or otherwise experiences financial distress.

Delays in deliveries, or cancellations of orders, for equipment products of all of our segments could cause us to have inventories in excess of our short-term needs and may delay our ability to recognize, or prevent us from recognizing, revenue on contracts in our order backlog.   Alternatively, we may be required to sell products below our historical selling prices, which was the case for certain recent DSS equipment sales. We have recently experienced significant increases in the amount of inventory that we held in order to meet certain anticipated demands for our products including our DSS equipment and ASF systems. Contract breaches or cancellation of orders may require us to reschedule and/or cancel additional commitments to vendors in the future and require that we write-down any inventory purchased that we are unable to deploy or require that we sell products at prices that are below our historical prices, which would also have a negative impact on our gross margins.

We may also build up significant inventory of sapphire materials if it is not purchased by sapphire material customers.  Due to certain restrictions in our supply agreement on the sale of that material, we may not be able to sell that material at all, which would have a negative impact on our margins and our operations.

Amounts included in our order backlog may not result in actual revenue or translate into profits.

Our order backlog is primarily based on signed purchase orders or other written contractual commitments. We cannot guarantee that our order backlog will result in actual revenue in the originally anticipated period, or at all. Beginning with the three-month period ended December 31, 2012, we identified certain contracts in our order backlog that have not been terminated or modified, however, we expect that certain customers will not fulfill their obligations under these respective contacts. During the nine-month period ended September 28, 2013, we removed contracts which had not been terminated or modified from our reported order backlog resulting in a $358.0 million reduction. Almost 99 percent of the reduction was attributable to two contracts that have not been terminated or modified, but we have removed amounts from our reported backlog. In addition, the contracts included in our order backlog may not generate margins equal to our historical operating margins. Our customers may experience project delays or default on the terms of their contracts with us as a result of external market factors and economic or other factors beyond our or their control. If a customer fails to perform its contractual obligations and we do not reasonably expect such customer to perform its obligations, we may terminate the contract, which would result in a decrease in our reported order backlog. In addition, our backlog is at risk to varying degrees to the extent customers request that we extend the delivery schedules and make other modifications under their contracts in our order backlog. Any contract modifications that we negotiate could likely include an extension of delivery dates, and could result in lower pricing or in a reduction in the number of units deliverable under the contract, thereby reducing our order backlog and resulting in lesser (or no) revenue recognized from such contracts. Our order backlog includes contracts with customers to whom we have sent notices of breach for failure to provide letters of credit or to make payments when due. If we cannot come to an agreement with these customers, it could result in a further reduction of our order backlog. Other customers with contracts, however, may approach us with requests for delays in the future, or may fail to make payments when due, which could further reduce our order backlog. If our order backlog fails to result in revenue in a timely manner, or at all, we could experience a reduction in revenue, profitability and liquidity.

We face competition in each of our business segments, and if our competitors are able to manufacture products that employ newer technologies or are otherwise more widely used than our products, and if we are unable to modify our products to adapt to such future changes, we may be unable to attract or retain customers.

The PV energy and sapphire industries are both highly competitive and continually evolving as participants strive to increase their market share and new entrants strive to capture market share. In addition, the PV energy industry (which includes polysilicon and solar wafer, module and cell manufacturers) also has to compete with the larger conventional electric power industry. The PV energy and sapphire industries are also rapidly evolving and are highly competitive. Particularly with respect to the solar cell industry, new technologies are leading to rapid improvements in cell efficiencies and performance. Technological advances are, we believe, also resulting in lower manufacturing costs for these products. These developments may render existing products and/or product manufacturing equipment sold by our PV energy and sapphire businesses obsolete. We will therefore need to keep pace with technological advances in these industries in order to compete effectively

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in the future, which may require significant expenditures on research and development or investments in acquisition of other businesses and technologies. For example, our success in the sapphire equipment market depends on our ability to expand into new applications that are based on continued advancement in the design and manufacture of sapphire and LEDs (including sapphire and non-sapphire- based LEDs) and lighting technology by others, as well as the continued demand for sapphire in the LED market (while we believe sapphire is currently one of the preferred substrate materials for certain LED applications in certain markets, the use of silicon substrates and substrates incorporating other materials in LED applications is currently developing).  In addition, we have agreed that we will no longer sell ASF systems for use in generating sapphire in certain select markets (so we will no longer be able to sell sapphire equipment into those certain markets). Our success in the PV market will depend on our success in commercializing our monocrystallization, or HiCz™, technology offering. Our failure to further refine our technologies and/or develop and introduce new solar power and sapphire products could cause our products to become uncompetitive or obsolete, which could adversely affect demand for our products, and our financial condition, results of operations, business and/or prospects. Many of our competitors, in each of our business segments, have, and future competitors may also have, substantially greater financial, technical, manufacturing and other resources than we do. These resources may provide our competitors with an advantage because they can realize economies of scale, synergies and purchase certain raw materials, commodities and key components at lower prices. Current and potential competitors of ours may also have greater brand name recognition, more established distribution networks and larger customer bases, and may be able to devote more resources to the research, development, promotion and sale of their products or to respond more quickly to evolving industry standards and changes in market conditions. In addition, given the ability of other parties to access our equipment, we also face low-cost competitors who may be able to offer similar products at very competitive prices.

We may not be able to maintain our current share of the market in our respective business segments as competitive intensity increases and particularly as our customers are targeted by local low-cost competitors in China and other countries. In addition, these overall markets are shrinking as demand drops and/or capacity increases. We believe that certain PV customers have already begun purchasing our competitors’ equipment and installing them in their facilities. Our efforts to capitalize on technological developments in the markets in which we operate, such as the HiCz tool (which is in development), may not result in increased market share and require that we make substantial capital investments without any corresponding increase in revenues. In addition, customers may place orders to supply equipment for new facilities or future expansions with our competitors, and we believe the likelihood that our customers and others will go to competitors has increased over time. Our failure to adapt to changing market conditions and to compete successfully with existing or new competitors and/or new technological developments may have a material adverse effect on our financial condition, results of operations, business and/or prospects.

In relation to our polysilicon business, we are not the only provider of polysilicon production equipment to the market based on a Siemens-type CVD reactor design. Although we believe our SDR reactor to be re-designed and distinct from the competing products offered by our competitors, there can be no assurance that our SDR reactor will compete successfully with their products which would have a material adverse effect on our financial condition, results of operations, business and or prospects. In addition, alternative technologies for producing polysilicon exist and, to the extent that they become more widely available, the demand for our SDR reactor may also be adversely effected. Furthermore, we believe that companies that currently produce polysilicon for their own internal use and consumption compete indirectly with our polysilicon business, as any increase in the supply of polysilicon may have an adverse effect of the demand for our SDR reactor.

We intend to pursue business and technology acquisition and investment opportunities in the future as part of our business plan to grow and diversify our business and we expect that one or more of these acquisitions or investments will expand our product offerings into markets we have not previously served.

Our business plan is focused on growing and diversifying our product and technology offerings. Acquiring Crystal Systems, a sapphire manufacturer, was part of this business plan to extend our offerings beyond polysilicon and PV markets. We expect that achieving these goals of growth and diversification will include the acquisition of businesses and technologies from third parties or investments in third parties (that may lead to future acquisitions or rights to technology) and expect that in the future we will continue to engage in negotiations for such acquisitions, investments or joint venture arrangements. In order to achieve our objective of diversifying our business to technologies outside of polysilicon, photovoltaic and sapphire, we expect that some of these acquisitions will be in markets or industries that may be unrelated to those markets we currently serve. This business diversification plan involves risks. Our stock may be valued differently depending on what markets we serve in the future. Diversification may also require significant time and resource commitments from our senior management, which will limit the amount of time these individuals will have available to devote to our existing operations. This diversification may also involve the complexities in managing an employee base that is already located in several different

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locations and in effectively deploying, operating and utilizing our internal systems, including those related to financial reporting, and other systems we depend on.

We may also have very little experience in dealing with these new markets and products. Any failure or any inability to effectively manage and integrate new businesses and technologies could have a material adverse effect on our business, financial condition and results of operations. In addition, and amounts that we invest may not generate any returns for us and we could lose the entire amount of the investment.

Finally, we may not be successful in acquiring any new businesses or technologies, despite our efforts to do so, and there can be no certainty that we will acquire any other companies or technologies that allow us to diversify. If we do not close acquisitions in accordance with our business plan or make successful investments, we may not be able to diversify revenue and our performance will be tied to the polysilicon, PV and sapphire equipment markets (as well as demand for sapphire material from Apple, and if any of these experience difficulties, our business, financial condition and results of operations would be negatively impacted.

We currently depend on a small number of customers in any given fiscal period for a substantial part of our sales and revenue.

In each fiscal period, we depend on a small number of customers for a substantial part of our sales and revenue. For example, in the three months ended September 28, 2013, two customers accounted for 64% of our revenue and in the nine months ended December 31, 2012, three customers accounted for 68% of our revenue. In addition, as of September 28, 2013, we had a $658.3 million order backlog of which $510.4 million was attributable to three customers.  We expect that our success in the sapphire material business, which will be very important to our overall business, will be tied to one customer. The failure of our principal sapphire material customer to place orders for sapphire material or the failure of our major equipment customers to make any payments, the loss of existing orders or lack of new orders in the future, or a change in the product acceptance schedule by such customers could significantly reduce our revenues and have a material adverse effect on our financial condition, results of operations, business and/or prospects. While we have sought to diversify our business and customer base, including a larger sapphire materials operation, we anticipate that our dependence on a limited number of customers will continue for the foreseeable future. There is a risk that existing customers will elect not to do business with us in the future, particularly as we face increased competition in each of our business segments, and/or that these customers will experience financial difficulties. Furthermore, due to the cost of our equipment products, our equipment customers are often dependent on the equity capital markets and debt markets to finance their purchases. As a result of on-going turmoil in the capital and debt markets, these customers could experience financial difficulties and become unable to fulfill their contracts with us. There is also a risk that these customers will attempt to impose new or additional requirements on us that reduce the gross margins that we are able to generate through sales to such customers. If we do not develop relationships with new customers, we may not be able to increase, or even maintain, our revenue, and our financial condition, results of operations, business and/or prospects may be materially adversely affected.

General economic conditions may have an adverse impact on demand for our equipment products and result in charges for excess or obsolete inventory.

Purchasing our equipment products requires significant capital expenditures, and demand for such products is affected by general economic conditions. A downturn in the global construction market has reduced demand for solar panels in new residential and commercial buildings, which in turn reduces demand for our products that are used in the manufacture of PV wafers, cells and modules and polysilicon for the solar power industry (including our DSS units and SDR reactors). In addition, a downturn or lack of growth in the sapphire material market, and the sapphire-based LED and general illumination markets in particular, have resulted in reduced demand for our sapphire material and our ASF systems. Uncertainties about economic conditions, negative financial news, potential defaults by or rating downgrades of debt issued by governmental entities and corporate entities, tighter credit markets and declines in asset values have, in the recent past, caused our customers to postpone or cancel making purchases of capital equipment and materials. We believe that increasing governmental budgetary pressures will likely result in the reduction, or the elimination of, government subsidies and economic incentives for on-grid solar electricity applications. A prolonged downturn in the global economy, combined with decreased governmental incentives for solar power usage, would have a material adverse effect on our business in a number of ways, including decreased demand for our PV and polysilicon equipment products, which would result in lower sales, reduced backlog and contract terminations.

Uncertainty about future economic conditions makes it challenging for us to: forecast demand for our equipment products and our operating results, make business decisions and identify the risks that may affect our business. For example, our equipment inventory balances have increased substantially recently and, during the three month period ended December 31, 2012, we determined

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that we were unable to deploy certain of our PV inventory and had to take a significant impairment charge.  If our remaining PV inventory, or the inventory we have built up for polysilicon or sapphire equipment, cannot be sold or utilized in our operations and becomes excess or obsolete, we could be required to take another write down or multiple write downs and the amount or amounts may be material. If we are not able to timely and appropriately adapt to changes resulting from the difficult macroeconomic environment, including by maintaining appropriate inventory levels, our business, results of operations and financial condition may be materially and adversely affected.

Our success depends on the sale of a limited number of products.

A significant portion of our operating profits has historically been derived from sales of DSS units, SDR reactors, STC converters, hydrochlorination equipment and ASF units, which sales accounted for 68% of our revenue for the three months ended September 28, 2013. There can be no assurance that sales of this equipment will increase beyond, or be maintained at, past levels or that any sales of sapphire materials (or any other future product offering) will offset any decrease in sales of DSS furnaces, ASF systems or SDR reactors (or result in any revenue). Additionally, we have already experienced decreased demand for all of our equipment products, and specifically sales of our STC converters and DSS furnaces are substantially lower than in prior periods due to changes in technology and decreased demand, and further changes in technology will also, we expect, result in a further reduction in demand and decreased average selling prices for our DSS multicrystalline furnace, if we are able to sell any of these DSS furnaces at all. Due to these circumstances, we intend to discontinue any significant additional investments in our DSS product line and will only be selling furnaces that we have in inventory. Factors affecting the level of future sales of our products include factors beyond our control, including, but not limited to, demand for solar products and sapphire material (including sapphire-based LED material and sapphire use in general illumination and in consumer electronics), development and/or use of alternatives to sapphire in LED applications (including in general illumination) and competing product offerings by other equipment manufacturers. We may be unable to diversify our product offerings and thereby increase or maintain our revenue and/or maintain our profits in the event of a decline in ASF systems and SDR reactors sales and to off-set the discontinuation of our DSS product line.

If sales of our PV, polysilicon or sapphire products continue to decline for any reason, our financial condition, results of operations, business and/or prospects could be materially adversely affected.

We depend on a limited number of third party suppliers.

We use certain component parts supplied by either a single or a small number of third party suppliers in our polysilicon, PV and sapphire equipment products and ancillary equipment and in our manufacture of sapphire material, and certain of these components are critical to the manufacture and operation of certain of our products. For example, we use specialist manufacturers to provide vessels and power supplies which are essential to the manufacture and operation of our polysilicon products. In addition, certain of our products consist entirely of parts and components supplied by third party suppliers, and in these instances filling orders depends entirely upon parties over which we exercise little or no control, and if these contractors were unable to supply, or refused to supply, the parts and components, we would be unable to complete orders which would have a negative impact on our reputation and our business.

Our sapphire materials businesses, as well as the customers for our ASF units, also depend on suppliers of raw materials and components that are utilized during the manufacturing process. For example, the supply of qualified meltstock and crucibles used to grow sapphire materials is limited and we expect demand will increase as we sell more ASF units, and as a result, there may be an insufficient availability of these items for our sapphire materials business and sapphire research and development as currently operated or available for the purchasers of our ASF systems, which would prevent us from growing our sapphire equipment and materials business.  This risk is exacerbated as we intend to expand our sapphire materials business and will be requiring significantly more raw materials and components than in the past (and we could face monetary and other penalties under our sapphire material supply agreement if we are unable to deliver sapphire material pursuant to the MDSA).

Similar shortages may arise if and when we commercialize a HiCz equipment offering.

Further, our agreements with raw material and equipment component suppliers are typically short term in nature, which leaves us vulnerable to the risk that our suppliers may change the terms on which they have previously supplied products to us or cease supplying products to us at any time and for any reason.

There is no guarantee that we will maintain relationships with our existing suppliers or develop new relationships with other suppliers. We are also dependent on our suppliers to maintain the quality of the raw materials, components and

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equipment we use and if the the quality were to be below our standards, our equipments offerings and materials may not function as designed. We may be unable to identify replacement or additional suppliers or qualify their products in a timely manner and on commercially reasonable terms, or at all. Raw materials and component parts supplied by new suppliers may also be less suited to our products than the raw materials and component parts supplied by our existing suppliers. Certain of the component parts used in our products have been developed, made or adapted specifically for us. Such parts are not generally available from other vendors and could be difficult or impossible to obtain elsewhere. As a result, there may be a significant time lag in securing an alternative source of supply. In addition, the inability of our suppliers to support our demand could be indicative of a marketwide scarcity of the materials, which could result in even longer interruptions in our ability to supply our products.

We utilize raw materials in manufacturing our sapphire materials and all of our equipment and the prices for these materials fluctuate significantly and any increases in price or decrease in availability will harm our business.

In the ordinary course of business, we are exposed to market risk from fluctuations in the price of raw materials and commodities necessary in the manufacture of our products, such as graphite, steel, copper, helium and molybdenum. We experience similar commodity risks in connection with the consumable materials utilized in our equipment products, and in certain cases, there is very limited access to these commodities. We may not be able to pass along fluctuations in our Costs of Materials to our equipment customers or material customer customers. The increase in the price of these commodities, due to further limitations of availability or to greater demand, will make our products less attractive and will harm our sapphire material and all of our equipment businesses (and the margins we achieve in connection with the sale of sapphire materials may drop even further or may be negative). If we bring more entrants into the photovoltaic, polysilicon and sapphire equipment markets, these commodity risks increase. Any significant increase in these prices would increase our expenses, decrease demand for our products and hurt our profitability (or prevent us from being profitable). In addition, demand for our products will be negatively impacted if the prices of raw materials that are used to create polysilicon, PV materials and sapphire materials were to increase.

Our failure to obtain sufficient raw materials, commodities, component parts for our equipment (or to generate sapphire material) and/or third party equipment that meet our requirements in a timely manner and on commercially reasonable terms could interrupt or impair our ability to assemble our products, and may adversely impact our goal of expanding our business, as well as result in a loss of market share. Further, such failure may prevent us from delivering our products as required by the terms of our contracts with our customers (including our obligations to deliver sapphire material), and may harm our reputation and result in breach of contract and other claims being brought against us by our customers (including damages we could be required to pay if we fail to timely deliver sapphire material in accordance with specifications). Any changes to our current supply arrangements, whether to the terms of supply from existing suppliers or a change in our suppliers, may also increase our costs in a material amount.

The prices for polysilicon and sapphire material, as well as silicon ingots, have, in the past, dropped as a result of either increased supply or decreased demand, and, at the same time, the prices for the inputs to create this output has either remained consistent or increased, which has resulted in decreased margins for polysilicon and sapphire and PV manufacturers, and if these circumstances were to continue or dampen the demand for our PV, polysilicon and sapphire equipment business would be negatively impacted.

The prices for polysilicon, sapphire and PV materials have decreased due, in part, to either excess supply or decreasing demand for these materials. At certain times, these price drops were accompanied by an increase in the costs (or the costs have remained stable) for the consumable materials that are used in our equipment to make polysilicon, sapphire boules and PV ingots and wafers. These two factors, operating in tandem, result in decreased margins for the manufacturers selling polysilicon, sapphire boules and PV ingots and wafers, and, depending on circumstances, could result in negative margins. If this situation were to persist, we would expect that the demand for our polysilicon reactors, ASF units and our PV equipment and sapphire material would drop and may hamper the adoption of any new technologies we introduce (including our proposed HiCz™ equipment offering, which is still currently in development). The on-going global economic uncertainty and tightened credit markets may exacerbate these circumstances.

We may face product liability claims and/or claims in relation to third party equipment.

It is possible that our equipment and materials products could result in property damage and/or personal injury (or death), whether due to product malfunctions, defects, improper use or installation or other causes. We cannot predict whether or not product liability claims will be brought against us or the effect of any resulting negative publicity on our business, which may include loss of existing customers, failure to attract new customers and a decline in sales. The successful assertion of product liability claims against us could result in potentially significant monetary damages being payable by us, and we may not have adequate resources to satisfy any judgment against us. Furthermore, it may be difficult or impossible to determine whether any damage or injury was due to product malfunction, operator error, failure of the product to be operated and maintained in

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accordance with our specifications or the failure of the facility in which our equipment products are used to comply with the facility specifications provided to our customers or other factors beyond our control.  For example, one of our significant equipment customers experienced chamber leakage involving a number of DSS units in its facilities which we believe was the result of their facility failing to conform to specifications. We nonetheless agreed to replace certain chambers at our cost. Other customers may experience similar issues in the future as a result of product defects, facilities not complying with specifications or other reasons. To date, we have not received any product liability or other claims with respect to these or any other accidents.

In addition, we have provided third party equipment in connection with our equipment product sales (or incorporated third party components into our equipment offerings). There can be no guarantee that such third party equipment will function in accordance with our intended or specified purpose or that the customer’s personnel, in particular those who are inexperienced in the use of the specialized equipment sold by us, will be able to correctly install and operate it, which may result in the return of products and/or claims by the customer against us. In the event of a claim against us due to third party equipment, we may be unable to recover all or any of our loss from the third party equipment or component provider. The bringing of any product liability claims against us, whether ultimately successful or not, could have a material adverse effect on our financial condition, results of operations, business and/or prospects.

Our future success depends on our management team and on our ability to attract and retain key technical employees and to integrate new employees into our management team successfully.

We are dependent on the services of our management team and our technical personnel. Although certain members of our management team are subject to agreements with us, any and all of them may choose to terminate their employment with us on thirty or fewer days’ notice. The loss of any member of the management team could have a material adverse effect on our financial condition, results of operations, business and/or prospects. There is a risk that we will not be able to retain or replace these or other key employees. Integrating new employees into our management team could prove disruptive to our daily operations, require a disproportionate amount of resources and management attention and ultimately prove unsuccessful. In addition, we are implementing our succession planning measures for our management, key staff and skilled employees. However, if we fail to successfully implement these succession plans for management and key staff when necessary, our operating results would likely be harmed.

We also depend on our technical personnel to grow our business. Recruiting and retaining capable personnel, particularly those with expertise in the polysilicon, PV and the sapphire industry, is vital to our success. There is substantial competition for qualified technical personnel, and qualified personnel are currently, and for the foreseeable future are likely to remain, a limited resource. Locating candidates with the appropriate qualifications can be costly, time-consuming and difficult. There can be no assurance that we will be able to attract new, or retain existing, technical personnel. We may need to provide higher compensation or increased training to our personnel. If we are unable to attract and retain qualified personnel, or are required to change the terms on which our personnel are employed, our financial condition, results of operations, business and/or prospects may be materially adversely affected.  In addition, we expect that we will need to hire a significant number of employees to operate our expanded sapphire material operations, and, if we are unable to hire sufficient qualified personnel, our sapphire materials business could be harmed and we may be unable to deliver sapphire material as required by our customer which may result in monetary penalties and a breach under our contractual commitments.

New technologies we deploy may not gain market acceptance which could result in decreased cash resources and harm our results of operations.

We have expended significant financial resources and technical expertise in developing new products and services that we expect will improve our product portfolio and result in increased revenues. These investments, however, may not result in increased revenues and may require that we incur expenses that result in decreasing our cash balances. For example, we have already spent approximately $60 million (and may have additional significant capital spending) in connection with our acquisition of Confluence Solar, which we ultimately expect will result in a PV equipment offering, or HiCz™, that is to be designed to produce high efficiency monocrystalline solar ingots, and which is expected to lower PV production costs. In addition, we have purchased certain select assets and intellectual property from a third party related to the Hyperion ion implant technology and have invested significant amounts in our internal research and development efforts for other technologies, including silicon carbide growth technologies.

The HiCz, Hyperion ion implantation and silicon carbide development efforts, which are among the new product offerings were are in the process of developing, require that we expend significant cash and time resources. If we are not

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successful in commercializing one or more of these new product lines, we would lose the significant investments we made in our internal development efforts and in the acquisitions we have made. In addition, certain of these proposed products, such as the Hyperion ion implantation tool, may take years to bring to market and we may be unable to timely generate revenue from these projects, if we are able to generate any revenue at all.

We also have no experience in manufacturing and selling HiCz equipment, the Hyperion ion implantation equipment and silicon carbide manufacturing equipment, and we may be unable to commercialize these products or ensure they gain wide-spread market acceptance. We may also have issues with installing these products in customer facilities or in training customers to properly operate this equipment, which would likely prevent us from recognizing revenue on sales of this equipment. If we are unable to bring any of these products to market and generate substantial sales, we may be unable to recover any or all of the investments we have made in them. Given the pace of technological advancements in the PV equipment industry, it is possible that monocrystalline production may not gain meaningful market share as other companies develop products that generate solar cells offering even higher efficiency. Alternatively, there are competing monocrystalline production techniques that may result in a more efficient solar wafer and/or equipment that can make comparable quality silicon at equipment prices below what we charge or at which our equipment makes ingots. We face similar challenges and competition with respect to any ion implantation, silicon carbide or other equipment product we may bring to market. Any of the foregoing would have a significant and negative impact on our business and results of operation.

We may be unable to protect our intellectual property adequately and may be required to initiate litigation to enforce our intellectual property rights.

Our ability to compete effectively against our competitors in the PV, polysilicon and sapphire markets will depend, in part, on our ability to protect our current and future proprietary technologies, product designs, product uses and manufacturing processes under relevant intellectual property laws including, but not limited, to laws relating to patents and trade secrets. We own various patents and patent applications in the United States and other countries relating to our products, product uses and manufacturing processes. To the extent that we rely on patent protection, our patents may provide only limited protection for our technology and may not be sufficient to provide competitive advantages to us. For example, competitors could develop similar or more advantageous technologies or design around our patents or otherwise employ alternative products, equipment or processes that may successfully compete with our products and technology. In addition, patents are of limited duration. Any issued patents may also be challenged, invalidated or declared unenforceable. If our patents are challenged, invalidated or declared unenforceable, other companies will be better able to develop products that compete with ours, which could adversely affect our competitive business position, business prospects and financial condition. Further, we may not have, or be able to obtain, effective patent protection in all of our key sales territories. Our patent applications may not result in issued patents and, even if they do result in issued patents, the patents may not include rights of the scope that we seek. The patent position of technology-oriented companies, including ours, is uncertain and involves complex legal and factual considerations. Accordingly, we do not know what degree of protection we will obtain from our proprietary rights or the breadth of the claims allowed in patents issued to us or to others. Further, given the costs of obtaining patent protection, we may choose not to protect certain innovations that later turn out to be important to our business.

Third parties may infringe, misappropriate or otherwise violate our proprietary technologies, product designs, manufacturing processes and our intellectual property rights therein, which could have a material adverse effect on our financial condition, results of operations, business and/or prospects. For example, we have filed a lawsuit in the Hillsborough County Superior Court (Southern District) in New Hampshire against Advanced Renewable Energy Company, LLC (“ARC”), Kedar Gupta, its Chief Executive Officer and Chandra Khattak, an ARC employee, for the misappropriation of trade secrets relating to sapphire crystallization processes and equipment. Because the laws and enforcement mechanisms of various countries that we seek protection in may not allow us to adequately protect our intellectual property rights, the strength of our intellectual property rights will vary from country to country. Litigation to prevent, or seek compensation for such infringement, misappropriation or other violation, such as the ARC lawsuit described above, may be costly and may divert management attention and other resources away from our business without any guarantee of success.

Further, we conduct significant amounts of business in China, yet enforcement of Chinese intellectual property related laws (including trade secrets) has historically been weak, primarily because of ambiguities in Chinese laws and difficulties in enforcement. Accordingly, the intellectual property rights and confidentiality protections available to us in China may not be as effective as in the United States or other countries.

We also rely upon proprietary manufacturing expertise, continuing technological innovation and other know-how or trade secrets to develop and maintain our competitive position. While we generally enter into confidentiality and non-

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disclosure agreements with our employees and third parties to protect our intellectual property, such confidentiality and non-disclosure agreements could be breached and are limited, in some instances, in duration and may not provide meaningful protection for the trade secrets or proprietary manufacturing expertise that we hold. We have had in the past and may continue to have certain of our employees terminate their employment with us to work for one of our customers or competitors. Adequate or timely remedies may not be available in the event of misappropriation, unauthorized use or disclosure of our manufacturing expertise, technological innovations and trade secrets. In addition, others may obtain knowledge of our manufacturing expertise, technological innovations and trade secrets through independent development or other legal means and, in such cases, we may not be able to assert any trade secret rights against such a party.

We may face claims in relation to the infringement or misappropriation of third-party intellectual property rights.

We may be subject to claims that our products, processes or product uses infringe the intellectual property rights of others. These claims, even if meritless, could be expensive and time consuming to defend. In addition, if we are not successful in our defense of such claims, we could be subject to injunctions and/or damages, or be required to enter into licensing arrangements requiring royalty payments and/or use restrictions. In some instances, licensing arrangements may not be available to us or, if available, may not be available on acceptable terms.

Due to the competitive nature of the industries in which we participate, we may face potential claims by third parties of infringement, misappropriation or other violation of such third parties’ intellectual property rights. From time to time we have received and may in the future receive notices or inquiries from other companies suggesting that we may be infringing their patents or misappropriating their intellectual property rights. Such notices or inquiries may, among other things, threaten litigation against us. Furthermore, the issuance of a patent to us does not guarantee that we have the right to practice the patented invention. Third parties may have blocking patents that could be used to prevent us from marketing our own patented product and practicing our own patented technology. In addition, third parties could allege that our products and processes make use of their unpatented proprietary manufacturing expertise and/or trade secrets, whether in breach of confidentiality and non-disclosure agreements or otherwise. If an action for infringement, misappropriation, or other violation of third party rights were successfully brought against us, we may be required to cease our activities on an interim or permanent basis and could be ordered to pay compensation, which could have a material adverse effect on our financial condition, results of operations, business and/or prospects. Additionally, if we are found to have willfully infringed certain intellectual property rights of another party, we may be subject to treble damages and/or be required to pay the other party’s attorney’s fees. Alternatively, we may need to seek to obtain a license of the third party’s intellectual property rights or trade secrets, which may not be available, whether on reasonable terms or at all, and such technology may be licensed to other parties thereby limiting any competitive advantage to us. In addition, any litigation required to defend such claims brought by third parties may be costly and may divert management attention and other resources away from our business, without any guarantee of success. Moreover, we may also not have adequate resources to devote to our business in the event of a successful claim against us.

From time to time, we hire personnel who have obligations to preserve the secrecy of confidential information and/or trade secrets of their former employers. Some former employers monitor compliance with these obligations. While we have policies and procedures in place that are intended to guard against the risk of breach by our employees of confidentiality obligations to their former employers, there can be no assurance that a former employer of one or more of our employees will not allege a breach and seek compensation for alleged damages. If such a former employer were to successfully bring such a claim, our know-how and/or skills base could be restricted and our ability to produce certain products and/or to continue certain business activities could be affected, to the detriment of our financial condition, results of operations, business and/or prospects.

The international nature of our business subjects us to a number of risks, including unfavorable political, regulatory, labor and tax conditions in foreign countries.

We have substantial marketing and distribution operations that take place outside the United States, primarily in China, and much of our historical sales are to customers outside the United States. We also have contracts with customers in Europe and expect to recognize revenue from sales to customers in Asia and Europe in the future. In addition, we have transitioned our global operations center to Hong Kong, further increasing our exposure to the risks of operating in Asia. As a result, we are subject to the legal, political, social and regulatory requirements and economic conditions of many jurisdictions other than the United States. Risks inherent to maintaining international operations, include, but are not limited to, the following:

·trade disputes between the United States and countries where we deliver our products to our customers, as well as trade disputes between countries in which our equipment customers manufacture and those countries in

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which our customers sell end-products, including their sales of solar wafers, cells and modules, and sapphire materials produced with our furnaces or reactors, which could result in government or trade organization actions that have the effect of increasing the price for our and our customers’ products which would have a corresponding decrease in the demand for our products;

·withholding taxes or other taxes on our foreign income, and tariffs or other restrictions on foreign trade and investment, including currency exchange controls imposed by or in other countries;

·the inability to obtain, maintain or enforce intellectual property rights in other jurisdictions, at a reasonable cost or at all;

·difficulty with staffing and managing widespread and growing international operations;

·complying with regulatory and legal requirements in the jurisdictions in which we operate and sell products;

·effectively operating and maintaining our internal controls and financial reporting processes across multiple countries;

·trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make our product offering less competitive in some countries; and

·establishing ourselves and becoming tax resident in foreign jurisdictions.

Our business in foreign markets requires us to respond to rapid changes in market conditions in these countries. Our overall success as a global business depends, in part, on our ability to succeed under differing legal, regulatory, economic, social and political conditions. There can be no assurance that we will be able to develop, implement and maintain policies and strategies that will be effective in each location where we do business. As a result of any of the foregoing factors, our financial condition, results of operations, business and/or prospects could be materially adversely affected.

We are a global corporation with significant operations in Asia, and challenges by various tax authorities to our global operations could, if successful, increase our effective tax rate and adversely affect our earnings.

We are a Delaware corporation that operates through various subsidiaries in a number of countries throughout the world, including in Asia. We established our global operations center in Hong Kong and have significant operations in Asia. Our income taxes are based upon the applicable tax laws, treaties, and regulations in the many countries in which we operate and earn income as well as upon our operating structures in these countries. While we believe that we carefully analyze and account for the tax risks and uncertainties under the applicable rules, multiple tax authorities could contend that a greater portion of our and our subsidiaries’ income should be subject to income or other tax in their respective jurisdictions. If successful, these challenges could result in an increase to our effective tax rate. In addition, if we continue to generate revenue in higher tax jurisdictions, as was the case during the nine-month period ended December 31, 2012, our effective tax rate may continue to increase.

We continue to monitor the impact of various international tax proposals and interpretations of the tax laws and treaties in the countries where we operate, including those in the United States, China, Hong Kong, and other countries. If enacted, certain changes in tax laws, treaties, regulations, or their interpretation could result in a higher tax rate on our earnings, which could result in a significant negative impact on our earnings and cash flow from operations.

Compliance with the legal systems of the countries in which we offer and sell our products could increase our cost of doing business.

We offer and sell our products internationally, including in some emerging markets. As a result, we are and/or may become subject to the laws, regulations and legal systems of the various jurisdictions in which we carry on business and/or in which our customers or suppliers are located. Among the laws and regulations applicable to our business are health and safety and environmental regulations, which vary from country to country and from time to time. We must therefore design our products and ensure their manufacture so as to comply with all applicable standards. Compliance with legal and regulatory requirements, including compliance with any change in existing legal and regulatory requirements, may cause us to incur material costs and may be difficult, impractical or impossible. In addition, China’s legal system, where we do a significant amount of business, is rapidly evolving and, as a result, the interpretation and enforcement of many laws

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(including intellectual property laws), regulations and rules are not always uniform and legal proceedings in China often involve uncertainties and legal protections afforded are uncertain and may be limited. In addition, any litigation brought by or against us in China may be protracted and may result in substantial costs and diversion of resources and management attention and the anticipated outcome would be highly uncertain.

Accordingly, foreign laws and regulations which are applicable to us may have a material adverse effect on our financial condition, results of operations, business and/or prospects. As a result of the procedural requirements or laws of the foreign jurisdictions in which we carry on business and/or in which our customers or suppliers are located, we may experience difficulty in enforcing supplier or customer agreements or certain provisions thereof, including, for example, the limitations on the product warranty we typically include in our equipment sales contracts. In some jurisdictions, enforcement of our rights may not be commercially practical in light of the duration, cost and unpredictability of such jurisdiction’s legal system. Any inability by us to enforce, or any difficulties experienced by us in enforcing, our contractual rights in foreign jurisdictions may have a material adverse effect on our financial condition, results of operations, business and/or prospects.

We are subject to export restrictions and laws affecting trade and investments, and the future sale of our products may be further limited or prohibited in the future by a government agency or authority.

As a global company headquartered in the United States, our products and services are subject to U.S. laws and regulations that may limit and/or restrict the export (and re-export from other countries) of some of our products, services and related product and technical information. We are also subject to the export and import laws of those foreign jurisdictions to which we sell or from which we re-export our products. Compliance with these laws and regulations could significantly limit our operations and our sales in the future and failure to comply could result in a range of penalties, including restrictions on exports of all of our products for a specified time period, or forever, and severe monetary penalties. In certain circumstances, these restrictions may affect our ability to interact with our foreign subsidiaries and otherwise limit our trade with third parties (including vendors and customers) operating inside and outside the U.S. In addition, as we introduce new products, we may need to obtain licenses or approvals from the US and other governments to ship them into foreign countries. Failure to receive the appropriate approvals may mean that our development efforts (and expenses related to such development) may not result in any revenue, particularly as most of our customers are located in foreign jurisdictions. This would have a material and adverse impact on our business and our development efforts.

In addition, certain customers of our sapphire materials business operate in the defense sector or are subcontractors of companies in the defense industry, and our products may be incorporated in, among other things, missiles, military aircraft and aerospace systems. In addition, Crystal Systems has received funding from the U.S. government in connection with certain research work for certain U.S. government agencies. Certain work performed pursuant to certain of these contracts is not commercially available, but we may make it available commercially in the future. The State Department, the Commerce Department or other government agencies may, however, determine that our sapphire material or other products, including our ASF systems, PV furnaces and/or polysilicon reactors, are important to the military potential of the U.S. If so, we may be subject to more stringent export licensing requirements or prohibited from selling certain of our sapphire materials (for certain applications or end uses), ASF systems, PV furnaces and/or polysilicon reactors to any customer outside the U.S. or to customers in certain jurisdictions. The U.S. government has, and will likely continue to, vigorously enforce these laws in light of continuing security concerns. If the export or sale of any of our current or future products outside the U.S. are limited or restricted by the U.S. government or any foreign government, our operations and results of operations would be negatively impacted.

We face particular political, market, commercial, jurisdictional and legal risks associated with our business in China.

We have had significant equipment sales in China. Further, we have significant facilities and operations in China. Accordingly, our financial condition, results of operations, business and/or prospects could be materially adversely affected by economic, political and legal conditions or developments in China.

In November 2012, China selected a new leadership group to run the government of the country.  In China, the government has significant impact on what industries will receive financial and government assistance. At this point, the new government’s economic priorities are unclear, but it may be the case that they will not be supportive of alternative energy industries, such as solar manufacturing, or of sapphire manufacturing. The Chinese government is able to exercise such control through its direct control over capital investments or changes in tax regulations that may be applicable to us. In addition, a substantial portion of the productive assets in China remain government owned. The Chinese government also exercises significant control over Chinese economic growth through the allocation of resources, controlling payment of foreign currency denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. If the solar and/or sapphire industries are not a priority, our customers will likely have a difficult

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time expanding their operations and may have difficulty continuing their operations (particularly if direct and indirect financial support for our customers is reduced). This would have a negative impact on all of our business segments and, we expect, our results of operations.

Any factors that result in slower (or decreased) growth in China could result in decreased capital expenditures by solar and sapphire product manufacturers, which in turn could reduce demand for our equipment products. Additionally, China has historically adopted laws, regulations and policies which impose additional restrictions on the ability of foreign companies to conduct business in China or otherwise place them at a competitive disadvantage in relation to domestic companies. Any adverse change in economic conditions or government policies in China could have a material adverse effect on our overall growth and therefore have an adverse effect on our financial condition, results of operations, business or prospects.

We have expanded our presence in China, including in the areas of customer service, certain manufacturing services, administrative functions, sales and research and development. As we adopt a greater presence in China, we are increasingly exposed to the economic, political and legal conditions and developments in China, which could further exacerbate these risks, including the risk that we may not be able to obtain adequate legal protection in connection with any technological developments resulting from our research and development conducted in China.

We have entered into business combinations and acquisitions that may be difficult to integrate, disrupt our business, expose us to litigation or unknown liabilities, dilute stockholder value and divert management attention.

In the past we have entered into, and may in the future enter into business combinations or purchases. Acquisitions and combinations are accompanied by a number of risks, including the difficulty of integrating the operations and personnel of the acquired company, disruption of our ongoing business, distraction of management, expenses related to the acquisition and potential unknown liabilities and claims associated with acquired businesses. We may be subject to (i) liability for activities of the acquired company prior to the acquisition, including environmental and tax and other known and unknown liabilities and (ii) litigation or other claims in connection with the acquired company, including claims brought by terminated employees, customers, former stockholders or other third parties.

In addition, there may, in particular, be risks and uncertainties in connection with the intellectual property rights and ownership of technology of an acquired company or any assets we may acquire, including (i) the nature, extent and value of the intellectual property and technology assets of an acquired company (or of the acquired assets), (ii) the rights that an acquired company (or company selling assets) has to utilize intellectual property and technology that it claims to have developed or to have licensed, and (iii) actions by third parties against the acquired company (or company selling assets) for intellectual property and technology infringement and the extent of the potential loss relating thereto. Third parties may also be more likely to assert claims against the acquired company (or acquired assets), including claims for breach of intellectual property rights, once the company or assets have been acquired by us.

Any inability to integrate completed acquisitions or combinations in an efficient and timely manner or the inability to properly assess and utilize the intellectual property and technology portfolio without infringing the rights of a third party could have an adverse impact on our results of operations. In addition, we may not be able to recognize any expected synergies or benefits in connection with a future acquisition, combination or asset purchase or we may be unable to effectively implement the business plan for the acquired company or assets, which would prevent us from achieving our financial and business goals for the business.

If we are not successful in completing acquisitions or combinations that we may pursue in the future, we may incur substantial expenses and devote significant management time and resources without a successful result. In addition, future acquisitions could require use of substantial portions of our available cash or result in the incurrence of debt or dilutive issuances of securities. If we were to incur additional debt in the future in connection with an acquisition, or otherwise, it may contain covenants restricting our future activities, may incur significant interest rates or penalties for breach and we may be unable to generate sufficient cash to pay the principal or interest. Also, any issuance of equity securities may be dilutive.

Acquisitions and combinations also frequently require the acquiring company to recognize significant amounts of intangible assets, such as goodwill, patents and trademarks and customer lists, in an acquisition, which amounts may be subject to a future impairment if we are unable to successfully implement the operating strategy for the acquired company or acquired assets.

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We may, in the future, make investments in third party businesses or enter into joint development or similar agreements with third parties and these may require significant expenses and may not result in any technological or financial benefits.

We may in the future enter into, arrangements in which we invest in another business without owning all of the voting control of the entity or without the ability to control the decision-making of the entity or we may enter into joint development or similar arrangements for the development of technology or sale of products. Investments of this nature can require a significant commitment of our time, attention, cash and financial resources and technology sharing. If we do not have a controlling stake in these companies, it is likely that such entities may make their own business decisions that may not always align with our interests. In addition, some of the entities that we invest in, or enter into development projects with, will very likely have the right to manufacture or distribute their own products or certain products of our competitors. If we are unable to provide an appropriate mix of incentives to the companies that we invest in or in which we enter joint venture or similar arrangements, these other parties, through a combination of pricing and marketing and advertising support or otherwise, may take actions that, while maximizing their own short-term profits, may be detrimental to us or our brands, or they may devote more of their energy and resources to business opportunities or products other than those that generate a return for us. Such actions could, in the long run, have an adverse effect on our financial results. In addition, these types of investments may not ultimately generate the returns that we expect when we entered into the arrangements, which could result in a decrease in our cash holdings and loss of our entire investment.

Our ability to supply a sufficient number of products to meet demand could be severely hampered by natural disasters or other catastrophes.

Currently, a portion of our operations are located in Asia and we increased our presence in Asia with our global operations center in Hong Kong. Additionally, a significant portion of our revenue is generated from customers that install our equipment in Asia and many of our suppliers are also located in Asia.  In addition, we expect that we will have a sapphire material manufacturing operation at one location in Arizona. These areas are subject to natural disasters such as earthquakes, floods, drought and hazardous weather conditions. A significant catastrophic event such as earthquakes, floods, war, acts of terrorism or global threats, including, but not limited to, the outbreak of epidemic disease, could disrupt our operations and impair distribution of our products, damage inventory or facilities, interrupt critical functions, cause our suppliers to be unable to meet our demand for parts and equipment, reduce demand for our products, prevent our customers from honoring their contractual obligations to us or otherwise affect our business negatively. Any event that is significantly disruptive to our power supply could impact our ability to meet our supply obligations under our sapphire materials contracts. To the extent that such disruptions or uncertainties result in delays or our inability to fill orders (particularly to meet our obligations to provide sapphire material to our customer that purchases sapphire from our Arizona facility), causes cancellations of customer orders, or results in our inability to manufacture or ship of our products, we may not be excused from performance under our supply agreements and our business, operating results and financial condition could be materially and adversely affected.

We may be subject to concentration of credit risk related to our cash equivalents and short-term investments.

We may be exposed to losses in the event of nonperformance by the financial counterparties to our cash equivalent investments and short term investments. This risk may be heightened as a result of the financial crisis and volatility in the markets. We attempt to manage the concentration risk by making investments that comply with our investment policy. Currently, our cash equivalents are invested in cash deposit accounts and money market mutual funds at our financial institutions. Although we do not currently believe the principal amounts of these investments are subject to any material risk of loss, the recent volatility in the financial markets is likely to significantly impact the investment income we receive from these investments. In general, increases of credit risk related to our cash equivalents and short-term investments could have a material adverse effect on our financial condition, results of operations, business and/or prospects.

Our level of indebtedness may limit our financial flexibility.

As of September 28, 2013 our total consolidated indebtedness was approximately $316 million (which amount includes the portion of our 3.0% convertible notes due 2017 allocated to equity of $65 million) and our unrestricted cash was approximately $258 million (the foregoing amounts do not reflect the repayment, on October 30, 2013, of approximately $96 million under our credit facility with Bank of America N.A.). Our level of indebtedness affects our operations in several ways, including the following:

·a portion of our cash flows from operating activities must be used to service our indebtedness or our repayment obligations and is not available for other purposes;

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·we may be at a competitive disadvantage as compared to similar companies that have less debt;

·the covenants contained in the agreements governing our outstanding indebtedness and future indebtedness may limit our ability to borrow additional funds, pay dividends and make certain investments and may also affect our flexibility in planning for, and reacting to, changes in the economy and in our industry; and

·additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes may have higher costs and more restrictive covenants, or may not be available to us.

Many of these factors are beyond our control. Factors that will affect our ability to raise cash through an offering of our capital stock, convertible debt or a refinancing of our debt include financial market conditions, the value of our assets and our performance at the time we need capital. In addition, our failure to comply with the financial and other covenants relating to our indebtedness (or prepayment agreement) could result in a default under that indebtedness (or prepayment agreement) and acceleration of amounts due, which could adversely affect our business, financial condition and results of operations.

We may face significant warranty claims.

All of our equipment and materials are sold with certain warranties. The warranty is typically provided on a repair or replace basis, and is not limited to products or parts manufactured by us. As a result, we bear the risk of warranty claims on all products we supply, including equipment and component parts manufactured by third parties. There can be no assurance that we will be successful in claiming under any warranty or indemnity provided to us by our suppliers or vendors in the event of a successful warranty claim against us by a customer or that any recovery from such vendor or supplier would be adequate. There is a risk that warranty claims made against us will exceed our warranty reserve and could have a material adverse effect on our financial condition, results of operations, business and/or prospects.

Exchange rate fluctuations may make our products less attractive to non-U.S. customers and otherwise have a negative impact on our operating results.

Our reporting currency is the U.S. dollar and almost all of our equipment contracts are denominated in U.S. dollars. However, greater than 92% of our revenue was generated from sales to customers located outside the United States in the three months ended September 28, 2013, and greater than 98% in the nine-month period ended December 31, 2012 and the fiscal year ended March 31, 2012, and we expect that a large percentage of our future revenue will continue to be derived from sales to customers located outside the United States. Changes in exchange rates between foreign currencies and the U.S. dollar could make our products less attractive to non-U.S. customers and therefore decrease our sales and gross margins. In addition, we incur costs in the local currency of the countries outside the United States in which we operate and as a result are subject to currency translation risk. Exchange rates between a number of foreign currencies and the U.S. dollar have fluctuated significantly over the last few years and future exchange rate fluctuations may occur. Our largest foreign currency exposure is the Euro. In an attempt to mitigate foreign currency fluctuations, we have entered into, from time to time, forward foreign exchange contracts to hedge portions of equipment purchases from vendors located primarily in Europe. Our hedging activities may not be successful in reducing our exposure to foreign exchange rate fluctuations, for example, in the nine months ended December 31, 2012 we were required to take a charge of $0.9 million as a result of certain forward foreign exchange contracts no longer qualifying as cash flow hedges, which may occur again if we delay, cancel or otherwise modify the terms of the equipment purchases that affect the forecasted cash flow transaction being hedged. Future exchange rate fluctuations may have a material adverse effect on our financial condition, results of operations, business and/or prospects.

We have been subject to securities class action lawsuits. Potential similar or related litigation could result in substantial damages and may divert management’s time and attention from our business.

In 2008, the Company, its directors and certain affiliates were defendants in class action suits that alleged certain violations under various sections of the Securities Act of 1933, in connection with our initial public offering. In March 2011, these class actions were settled and we were required to pay $10.5 million into a settlement fund. Of this amount, we contributed $1.0 million and our liability insurers contributed the remaining $9.5 million. Our contribution represented the contractual indemnification obligation to the underwriters.

As a publicly traded company, we may be subject to additional lawsuits relating to violations of the securities laws. Any such litigation would be expensive, time consuming to defend and, if we were unsuccessful in defending such claims, could result in the payments of significant sums. We do maintain insurance, but the coverage may not be sufficient and may not be available in all instances.

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If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, our stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common stock.

We have complied with Section 404 of the Sarbanes-Oxley Act of 2002 by assessing, strengthening and testing our system of internal controls. Even though we concluded our system of internal controls was effective as of December 31, 2012, we need to continue to maintain our processes and systems and adapt them to changes as our business evolves and we acquire new business and technologies. This continuous process of maintaining and adapting our internal controls and complying with Section 404 is expensive and time-consuming, and requires significant management attention. We cannot be certain that our internal control measures will continue to provide adequate control over our financial processes and reporting and ensure compliance with Section 404. Furthermore, as our business changes and if we expand through acquisitions of other companies or make significant investments in other companies or enter into joint development (and similar arrangements), our internal controls may become more complex and we will require significantly more resources to ensure our internal controls remain effective. In addition, if we reduce a portion of our workforce, as we have done in the past, our ability to adequately maintain our internal controls may be adversely impacted. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. If we or our independent registered public accounting firm identify material weaknesses, the disclosure of that fact, even if quickly remediated, could reduce the market’s confidence in our financial statements and harm our stock price.

Interpretations of existing accounting standards or the application of new standards could affect our revenue recognition and other accounting policies, which could have an adverse effect on the way we report our operating results.

Generally accepted accounting principles in the United States are subject to interpretations by the Financial Accounting Standards Board, or FASB, the American Institute of Certified Public Accountants, the SEC and various other organizations formed to promulgate and interpret accounting principles. A change in these accounting principles or their interpretations could affect the reporting of transactions that were completed before the announcement of a change in principles or interpretations. In October 2009, the FASB issued authoritative guidance that provides amendments to the revenue recognition criteria for separating consideration in multiple-deliverable revenue arrangements. This guidance prescribes a methodology for determining the fair value, or best estimated selling price, of deliverables on an individual element basis, including elements for which objective reliable evidence of fair value previously did not exist. As noted in Note 2 to our financial statements included in our most recently filed Transition Report on Form 10-K, under the current revenue guidance, for arrangements containing products considered to be “established”, the majority of our revenue is recognized upon delivery of the product. For arrangements containing products considered to be “new”, or containing customer acceptance provisions that are deemed more than perfunctory, revenue is recorded upon customer acceptance.

If we make incorrect estimates or judgments in applying our revenue recognition policies, for example, if we incorrectly classify a product as “established” when it should have been “new”, it may impact the timing of recognizing that revenue and may result in failing to meet guidance provided by us or require that we restate our prior financial statements. Additional errors in applying estimates or judgments in accounting policies may also adversely impact our operating results and may, in certain cases, require us to restate prior financial statements.

If we are unable to adopt and implement adequate data security procedures, we could lose valuable proprietary information, third parties may be able to access information about the operations of our equipment at customer sites and employee data, any of the foregoing may harm our reputation and our results of operations.

While we have implemented data security measures, a third party may still gain unauthorized access to our servers, laptops or employee mobile devices. We store our important proprietary information on our servers, including equipment specifications, and our employees may access this data remotely. This information is also shared via e-mail and we rely on industry standard encryption tools for transmitting data (which has been attacked in the past). If a competitor were able to access this information, we would lose the competitive advantages we believe we have and we could also lose the benefits that are or could be realized from our research and development efforts. Access to this information may be the result of a third-party by-passing our security measures, third-party encryption tools not providing adequate protection or inadvertent error by an employee that results in this information being accessed by unauthorized users.

In addition, the risks of unintended disclosure of information, proprietary or otherwise, following an acquisition is increased until such time as we can implement proper protection measures. During the time, prior to implementing

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safeguards, third parties may be able to obtain information about the acquired entity or about our business technology and operations.

Some of our servers containing our proprietary and confidential product and customer information are located in foreign jurisdictions, such as China and Hong Kong, and the governments in these jurisdictions may be able to access, review, retain and use the information contained on these servers without any legal recourse on our part or the right to compensation.

In a very limited number of cases, we are able to monitor the operations of our equipment in our customers’ facilities. If a third party were able to access this information, they would be able to view important data about the operations of our equipment and use this customer information to their benefit. In addition, it is very likely that our reputation would be harmed among our customers and they could prevent our remote access in the future or even cease purchasing equipment from us.

Finally, we also store financial reporting information and employee data on our computer systems. If our financial information were tampered with, the results we report may not be accurate and/or we may be required to re-state previous released financial results and investors could lose confidence in our reported financial results. If our employee information were accessed, our employees may lose confidence in our operations, we may confront challenges attracting new employees and may face government penalties if we were found to have taken inadequate measures to protect employee information.

We could be adversely affected by violations of applicable anti-corruption laws or violations of our internal policies designed to ensure ethical business practices.

We operate in a number of countries throughout the world, including in countries that do not have as strong a commitment to anti-corruption and ethical behavior that is required by U.S. laws or by corporate policies. We are subject to the risk that we, our U.S. employees or our employees located in other jurisdictions or any third parties that we engage to do work on our behalf in foreign countries may take action determined to be in violation of anti-corruption laws in any jurisdiction in which we conduct business, including the U.S. Foreign Corrupt Practices Act of 1977 (or the FCPA). In addition, we operate in certain countries in which the government may take an ownership stake in an enterprise and such government ownership may not be readily apparent (thereby increasing potential FCPA violations). Any violation of the FCPA or any similar anti-corruption law or regulation could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our business, results of operations or financial condition. In addition, we have internal ethics policies that we require our employees to comply with in order to ensure that our business is conducted in a manner that our management deems appropriate. If these anti-corruption laws or internal policies were to be violated, our reputation and operations could also be substantially harmed. Further, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.

Risks Relating to Our Polysilicon Business

The market for polysilicon has been cyclical, resulting in periods of insufficient or excess production capacity and could result in variation in demand for our products.

The market for polysilicon has been cyclical. In the recent past, polysilicon supply had increased due principally to expansion by existing manufacturers. This factor, among others, resulted in increased supply and declining prices in polysilicon. An excess in production capacity for polysilicon has, and in the future may, adversely affect demand for our SDR reactors. There can be no certainty that the increased demand during the periods of expansion in polysilicon manufacturing capacity will persist for an extended period of time, or at all. A lack of demand for our SDR reactors could have a material adverse effect on our financial condition, results of operations, business and/or prospects. Conversely, if there are shortages of polysilicon in the future, the PV industry may be unable to continue to grow and/or may decline, and, as a result, demand for our PV products may decrease or may be eliminated.

We license and do not own certain components of the technology underlying our SDR reactor and STC converter products.

Certain components of the technology underlying our SDR reactor and STC converter products are not owned by us, but are licensed under a ninety-nine year license agreement that could be terminated in the event of a material breach by us of such agreement that remains uncured for more than thirty days, or upon our bankruptcy or insolvency. To the extent such components are deemed to be incorporated into our current or future products, any termination of our rights to use such

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technology could have a material adverse effect on our ability to offer our polysilicon products and therefore on our financial condition, results of operations, business and/or prospects if we were unable to secure these rights in a different manner or from an alternative arrangement.

Risks Relating to Our Photovoltaic Business

We intend to discontinue investment in our DSS product line and, as a result, do not expect our PV segment to contribute any material revenues to our business until the HiCz equipment offering, which is still under development, is released.

Our principal product line of our PV business has been the DSS family of casting furnaces that are used to produce multicrystalline ingots and MonoCast™ ingots. Because of the high level of PV manufacturing overcapacity, we expect very limited investment in additional current generation capital equipment for 2013 and beyond. We will endeavor to sell any DSS furnaces that we have in our inventory, but expect that demand for these will be limited. Our next generation PV equipment offering, our HiCz™ tool, is still under development and is projected to be commercially available in late 2014. Until the HiCz™ equipment tool is released and gains commercial acceptance, we do not expect our PV business segment to make any meaningful contribution to our overall revenues. Since the HiCz equipment offering is still under development, however, the timing of a commercial release and the revenue from sales of the tool, if any, are uncertain. If there is a delay in the release of the HiCz™ tool or it does not gain acceptance among PV manufacturers, our PV segment and our overall business will be materially and adversely effected.

Government subsidies and economic incentives for on-grid solar electricity applications could be reduced or eliminated.

Demand for PV equipment, including on-grid applications, has historically been dependent in part on the availability and size of government subsidies and economic incentives. Currently, the cost of solar electricity exceeds the retail price of electricity in most major markets in the world. As a result, federal, state and local governmental bodies in many countries, most notably Germany, Italy, Spain, South Korea, Japan, China and the United States, have provided subsidies in the form of feed-in tariffs, rebates, tax write-offs and other incentives to end-users, distributors, systems integrators and/or manufacturers of PV products to promote the use of solar energy in on-grid applications and to reduce dependency on other forms of energy. Many of these government incentives have expired or are due to expire in time, phase out over time, cease upon exhaustion of the allocated funding and/or are subject to cancellation or non-renewal by the applicable authority. The reduction, expiration or elimination of relevant government subsidies or other economic incentives may result in the diminished competitiveness of solar energy relative to conventional and other renewable sources of energy, and adversely affect demand for PV equipment (and polysilicon equipment) or result in increased price competition, all of which could cause our sales and revenue to decline and have a material adverse effect on our financial condition, results of operations, business and/or prospects. Further, any government subsidies and economic incentives could be reduced or eliminated altogether at any time and for any reason. We believe that government subsidies and incentives will be eliminated in the near future. Also, relevant statutes or regulations may be found to be anti-competitive, unconstitutional or may be amended or discontinued for other reasons. Some government subsidies and incentives have been subject to challenge in courts in certain foreign jurisdictions. New proceedings challenging minimum price regulations or other government incentives in other countries in which we conduct our business or in which our customers conduct business, may be initiated, and if successful, could cause a decrease in demand for our polysilicon and PV equipment products.

Existing regulations and policies and changes to these regulations and policies may present technical, regulatory and economic barriers to the purchase and use of photovoltaic products.

The market for electricity generation products is heavily influenced by government regulations and policies concerning the electric utility industry, as well as policies promulgated by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of user-owned electricity generation. In the United States and in a number of other countries, these regulations and policies are currently being modified and may be modified again in the future. These regulations and policies could deter end-user purchases of PV products (and polysilicon products) and investment in the research and development of PV technology. For example, without a mandated regulatory exception for PV systems, utility customers are often charged interconnection or standby fees for putting distributed power generation on the electric utility grid. These fees could increase the cost to end-users of PV systems and make such systems less attractive to potential customers, which may have a material adverse effect on demand for our polysilicon and PV products and our financial condition, results of operations, business and/or prospects.

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The photovoltaic industry may not be able to compete successfully with conventional power generation or other sources of renewable energy.

Although the PV industry has experienced advances in recent years, it still comprises a relatively small component of the total power generation market and competes with other sources of renewable energy, as well as conventional power generation. Many factors may affect the viability of widespread adoption of PV technology and thus demand for solar wafer manufacturing equipment, including the following:

·cost-effectiveness of solar energy compared to conventional power generation and other renewable energy sources;

·performance and reliability of solar modules compared to conventional power generation and other renewable energy sources and products;

·availability and size of government subsidies and incentives to support the development of the solar energy industry;

·success of other renewable energy generation technologies such as hydroelectric, wind, geothermal and biomass; and

·fluctuations in economic and market conditions that affect the viability of conventional power generation and other renewable energy sources, such as increases or decreases in the prices of oil, natural gas and other fossil fuels.

As a result of any of the foregoing factors, our financial condition, results of operations, business and/or prospects could be materially adversely affected.

Risks Relating to Our Sapphire Business

We expect that our sapphire material business will constitute a larger component of our business than in the past and if our operations do not meet the demand of our principal sapphire customer our business will be harmed.

Our sapphire material operations will grow due to our supply arrangements with Apple and we expect that sapphire material sales will account for a larger percentage of our revenue than in the past.  If we are unable to timely ramp up our sapphire materials operations in Arizona, we may not be able meet demand, we may not be eligible to receive future advances under the prepayment agreement, and would be subject to penalties (including payment of cash amounts).  We also have no experience operating a manufacturing operation of this scale.  Any failure to ramp up operations, and to maintain those operations, would have a material adverse impact on our business.

If our sapphire equipment and material do not achieve market acceptance, prospects for our sapphire business would be limited.

The customers to whom we sell ASF systems are, we believe, largely manufacturing for the LED industry and, in more limited cases, other industrial markets. Potential customers for sapphire equipment and sapphire-based LED materials manufactured with the ASF system may be reluctant to adopt these offerings as an alternative to existing sapphire materials and lighting technology or sapphire manufacturing processes. In addition, many of the customers who purchase our equipment, we believe, will utilize the material for LED lighting. However, LED lighting is currently more expensive than traditional lighting and if the price does not decrease in the near future, our customers may not have a market in the near term for the material they produce with our ASF systems, which would reduce the demand for our ASF systems.

In addition, potential customers may have substantial investments and know-how related to their existing sapphire, LED and lighting technologies, and may perceive risks relating to the complexity, reliability, quality, usefulness and cost-effectiveness of our sapphire equipment and sapphire material products compared to alternative products and technologies available in the market or that are currently under development. For example, companies are developing general lighting technologies that utilize silicon-based material (in lieu of sapphire) and assert that the production costs are significantly lower than the costs to produce sapphire-based lighting materials. If acceptance of sapphire material and sapphire-based LEDs, particularly in general illumination, do not increase significantly, opportunities to increase the sapphire equipment portion of our business and revenues would be limited.

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In addition, the price of sapphire-based LED material has recently experienced a marked drop due, in part, to the readily available supply of such material. If the price of LED material, which is driven, in large part due to the supply that is generally available, drops, we would expect that our materials and equipment business would be negatively impacted.

Any of the foregoing factors could have an adverse impact on the growth of the sapphire portion of our business. Historically, the sapphire industry has experienced volatility in product demand and pricing. Changes in average selling prices of sapphire material as a result of competitive pricing pressures, availability of material, increased sales discounts and new product introductions by competitors could have an adverse impact on our results of operations.

Crystal growth using the ASF system requires a consistent supply of power and any interruption in the supply of power may result in sapphire material that has reduced or no sales value.

The process for growing sapphire boules using the ASF system technology requires that the system be supplied with a consistent supply of power during the cycle required to grow a boule. If there are certain types of power interruptions, which we have experienced at our Salem and Merrimack facilities, even for a brief period of time, the sapphire boule being generated by that system will be of inferior quality and we would likely be unable to sell that sapphire material to a customer.  Our Arizona sapphire material facility will have a number of ASF systems operating and the power demand will be significant, in particular, at that location and if the power were not consistent, we may breach our material delivery commitments and the consequences could include accelerated repayment of advances made to us and payment of damages to our customer.  Such power interruptions at our facilities could also delay and impair our research and development efforts with respect to sapphire material and ASF systems. In addition, if customers of our ASF system do not have consistent power supplies, our system would not gain market acceptance because it will not create boules of the quality that may be expected by our customers and we would likely not meet the required contractual criteria necessary to receive the final installment payment.

Production and sale of sapphire growth systems for producing materials for the LED and other industries is a new industry and we have limited operating history, which makes it difficult to evaluate the business prospects for this business segment.

Because of our limited operating history in the sapphire industry it is difficult to evaluate our business and prospects. While we have gained contractual acceptances on our ASF systems, our sapphire equipment business, however, presents the difficulties frequently encountered by those businesses that are in the early stage of development, coupled with the risks and uncertainties encountered in new and evolving markets such as the market for sapphire growth technology. We may not be able to successfully address these challenges. If we fail to do so, we may incur losses and our business would be negatively impacted.

While we have commissioned ASF systems at customer sites, our customers generally lack experience in operating the ASF systems. Our sapphire furnaces require a skilled and trained employee base to properly operate and efficiently maintain the systems. While we offer training in connection with the sale of ASF systems, at certain customer sites, we have discovered that those customers have not yet hired the personnel or instituted the operations procedures necessary to properly run the ASF system they purchased. As a result of these factors, we believe that certain ASF systems have generated sapphire material that is not salable. Additionally, even in those cases where the sapphire boule was to specification, the boule has not always been properly oriented by the customer and some or all of the value of the sapphire boule was lost as it was sliced and cored. If our customers do not have the manufacturing expertise to operate the ASF systems, they may be delayed in ramping up their operations and sapphire manufacturing operations, we may not recognize revenue from the sale of these systems (or such recognition may be delayed) and the ASF systems may not gain wider market acceptance, all of which would harm our reputation and the results of our sapphire business segment.

Risks Relating to Our Common Stock

Future sales of our common stock, or the perception in the public markets that these sales may occur, could depress our stock price.

Future sales of substantial amounts of our common stock in the public market or the perception that these sales could occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. In addition, future equity financings could also result in dilution to our stockholders and new securities could have rights, preferences and privileges that are senior to those of our common shares.

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Our certificate of incorporation currently authorizes us to issue up to 500 million shares of common stock, and as of September 28, 2013, we had approximately 124 million shares of common stock outstanding. All of these shares are freely tradable, in the public market under a registration statement or an exemption under the securities laws. Moreover, at September 28, 2013, 10.6 million shares of our common stock were issuable upon the exercise of outstanding vested and unvested options and upon vesting of outstanding restricted stock units.

Our certificate of incorporation and by-laws contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.

It is possible that companies in our industries or certain other investors may consider making a friendly or hostile attempt to gain control of a majority (or all) of our common stock. Some provisions of our certificate of incorporation and by-laws may have the effect of delaying, discouraging or preventing a merger or acquisition that our stockholders may consider favorable, including transactions in which stockholders may receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace or remove our board of directors. These provisions include:

·the removal of directors only by the affirmative vote of the holders of two-thirds of the shares of our capital stock entitled to vote;

·any vacancy on our board of directors, however occurring, including a vacancy resulting from an enlargement of the board, may only be filled by vote of the directors then in office;

·inability of stockholders to call special meetings of stockholders or take action by written consent;

·advance notice requirements for board nominations and proposing matters to be acted on by stockholders at stockholder meetings; and

·authorization of the issuance of “blank check” preferred stock without the need for action by stockholders.

We are a technology-oriented company and, as such, we expect that the price of our common stock may fluctuate substantially.

We operate in industries where there are rapid changes in technologies and product offerings. Broad market, industry and economic factors may adversely affect the market price of our common stock, regardless of our actual operating performance. Factors that could cause fluctuations in our stock price may include, among other things:

·actual or anticipated variations in quarterly operating results;

·changes in market prices for our products or for raw materials;

·changes in our financial guidance or estimates made by us or by any securities analysts who may cover our stock or our failure to meet the estimates made by securities analysts;

·changes in the market valuations of other companies operating in our industry;

·announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures or significant contracts;

·changes in governmental policies with respect to energy;

·additions or departures of key personnel; and

·sales of our common stock, including sales of our common stock by our directors and officers or by our larger stockholders.

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Announcements of contract awards or bankruptcies of solar-related companies could have a significant impact on our stock price.

It is common for equipment manufacturers in the business segments in which we operate to enter into contracts for the sale and delivery of substantial amounts of equipment, involving highly competitive bidding situations. Public announcements of contract awards often cause a reaction in the stock market and affect, sometimes significantly, the trading price of the stock of the manufacturer that received a contract award. It could also have a negative effect on the trading price of stock of competitors that did not receive such contract. This reaction may be unrelated to the historical results of operations or financial condition of the affected companies or, in the case of unsuccessful competitors, any guidance they may have provided with respect to their future financial results. An announcement that a competitor of ours was awarded a significant customer contract could have a material adverse effect on the trading price of our stock.

In addition, there have been several recent announcements that companies offering solar power related services and materials have filed or will file for bankruptcy. For example, Solyndra filed for bankruptcy in August 2011. Such announcements, and future similar announcements, will likely have a negative effect on the trading price of our stock. This will likely be the case even if such companies do not utilize the output for the equipment we sell.

Our quarterly operating results have fluctuated significantly in the past and we expect that our quarterly results will continue to fluctuate significantly in the future.

Our quarterly operating results have fluctuated significantly in the past and we expect that our quarterly results will continue to fluctuate significantly in the future. Future quarterly fluctuations may result from a number of factors, including:

·the size of new contracts and when we are able to recognize the related revenue, especially with respect to our polysilicon products;

·requests for delays in deliveries by our customers;

·delays in customer acceptances of our products;

·delays in deliveries from our vendors;

·our rate of progress in the fulfillment of our obligations under our contracts;

·the degree of market acceptance of our products and service offerings;

·the mix of products and services sold;

·budgeting cycles of our customers;

·product lifecycles;

·changes in demand for our products and services;

·the level and timing of expenses for product development and sales, general and administrative expenses;

·competition by existing and emerging competitors, including in the PV, polysilicon and sapphire industry;

·announcements by our competitors or customers of the awarding of a significant contract;

·termination of or removal of contracts in our reported order backlog;

·our success in developing and selling new products and services, controlling costs, attracting and retaining qualified personnel;

·changes in government subsidies and economic incentives for on-grid solar electricity applications;

·announcements regarding litigation or claims against us or others in the PV, polysilicon or sapphire industries;

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·changes in export licensing or export restrictions with respect to our products;

·changes in our strategy;

·negative announcements regarding solar and sapphire industry participants, such as the bankruptcies of Evergreen Solar and Solyndra, as well as government investigations of Solyndra operations;

·foreign exchange fluctuations; and

·general economic conditions.

Based on these factors, we believe our future operating results will vary significantly from quarter-to-quarter and year-to-year. As a result, quarter-to-quarter and year-to-year comparisons of operating results are not necessarily meaningful nor do they indicate what our future performance will be.

Hedging activity and sales of our common stock related to our 3.00% Convertible Notes, the Convertible Note Hedge and Warrants entered into in connection with the 3.00% Convertible Notes and/or the expectation of distribution of our common stock at maturity of the 3.00% Convertible Notes or the Exercise of the Warrants could depress our stock price.

In September 2012, we issued $220 million aggregate principal amount of 3.00% Convertible Senior Notes due 2017. Upon conversion of these Notes, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The Notes may be converted, under certain conditions specified in the Indenture entered into in connection with the issuance of the Notes, based on an initial conversion rate of 129.7185 shares of common stock per $1,000 principal amount of Notes (which represents an initial effective conversion price of the Notes of $7.71 per share), subject to adjustment as described in the Indenture. It is likely that the some or all of the holders of the Notes will enter into hedging arrangements that involves trading in our common stock or in other instruments, such as options or swaps, based upon our common stock.

In connection with issuing the Notes, we entered into convertible note hedge transactions with certain option counterparties. The convertible note hedge transactions are expected to reduce the potential dilution and/or offset any cash payments we are required to make in excess of the principal amount upon conversion of the Notes. We also entered into warrant transactions with the option counterparties. We believe that the option counterparties or their affiliates entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the Notes. The option counterparties or their affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes (and are likely to do so during any “observation period” related to a conversion of Notes). This activity could also cause or avoid an increase or a decrease in the market price of our common stock. In addition, if any such convertible note hedge and warrant transaction is exercised or unwound early or any such warrant transaction is unwound early, such action could adversely affect the value of our common stock.

All of the foregoing hedging activity could affect our stock price, including by depressing it. Also, the price of our common stock could be depressed by possible sales of our common stock by investors who view the Notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that we expect to occur involving our common stock by investors in the Notes. Our stock price could become more volatile and could be depressed by investors’ anticipation of the potential distribution into the market of substantial additional amounts of our common stock at the maturity of the the Notes or at the time of exercise of the warrants.

We currently do not intend to pay dividends on our common stock and as a result, the only opportunity to achieve a return on an investment in our common stock is if the price appreciates.

We currently do not expect to declare or pay dividends on our common stock in the foreseeable future. As a result, the only opportunity to achieve a return on an investment in our common stock will be if the market price of our common stock appreciates and the shares are sold at a profit. We cannot assure our investors that the market price for our common stock will ever exceed the price that was paid.

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Our actual operating results may differ significantly from our guidance.

From time to time, we release guidance in our quarterly or annual earnings releases, quarterly or annual earnings conference call or otherwise, regarding our future performance that represent our management’s estimates as of the date of release. This guidance, which includes forward-looking statements, is based on projections prepared by our management. These projections are not prepared with a view toward compliance with published guidelines of the American Institute of Certified Public Accountants, and neither our registered public accountants nor any other independent expert or outside party compiles or examines the projections and, accordingly, no such person expresses any opinion or any other form of assurance with respect thereto.

Projections are based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions, some of which will change. We generally state possible outcomes as high and low ranges which are intended to provide a sensitivity analysis as variables are changed but are not intended to represent that actual results could not fall outside of the suggested ranges. The principal reason that we release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors. We do not accept any responsibility for any projections or reports published by any such persons. Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us will not materialize or will vary significantly from actual results. Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release. Actual results will vary from our guidance and the variations may be material. In light of the foregoing, investors are urged not to rely upon, or otherwise consider, our guidance in making an investment decision in respect of our common stock.

Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in our “Risk Factors” in this Form 10-Q could result in the actual operating results being different from our guidance, and such differences may be adverse and material.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(c)           Stock Repurchases.

The following table sets forth information in connection with purchases made by, or on behalf of, us or any affiliated purchaser, of shares of our common stock during the nine months ended September 28, 2013:

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					(d)
					Maximum Number
				(c) Total Number of	(or Approximate Dollar
				Shares Purchased	Value) of Shares that
	(a)	(b)		as Part of Publicly	May Yet Be Purchased
	Total Number of	Average Price		Announced Plans	Under the Plans
	Shares Purchased	Paid per Share		or Programs	or Programs
Month #1 (January 1, 2013 through February 2, 2013)	17,229	$	3.26	—	25,000,000
Month #2 (February 3, 2013 through March 2, 2013)	20,321	$	2.91	—	—
Month #3 (March 3, 2013 through March 30, 2013)	1,897	$	2.72	—	—
Month #4 (March 31, 2013 through May 4, 2013)	3,087	$	3.1	—	—
Month #5 (May 5, 2013 through June 1, 2013)	8,671	$	4.43	—	—
Month #6 (June 2, 2013 through June 29, 2013)	239,700	$	4.23	—	—
Month #7 (June 30, 2013 through August 3, 2013)	—	$	—	—	—
Month #8 (August 4, 2013 through August 31, 2013)	4,712	$	6.69	—	—
Month #9 (September 1, 2013 through September 28, 2013)	43,910	$	6.58	—	—

We did not repurchase any of our common stock on the open market as part of a stock repurchase program during the nine months ended September 28, 2013; however, our employees surrendered, and we subsequently retired, 339,527 shares of our common stock to satisfy the tax withholding obligations on the vesting of restricted stock unit awards issued under our 2008 Equity Incentive Plan and 2011 Equity Incentive Plan.

On November 16, 2011, our board of directors authorized a $100 million share repurchase plan.  Of this amount, we repurchased $75 million during the fiscal year ended March 31, 2012.  Under this repurchase plan, we may purchase up to an additional $25 million of our common stock, however the covenants under our credit-facility prohibit any repurchase.

We do not currently intend to pay any cash dividends on our common stock.

Item 3.  Defaults Upon Senior Securities

None

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

The Company discloses the following pursuant to Item 2.06 of Current Report on Form 8-K;

On November 7, 2013, the Company concluded that it had incurred material charges as follows:

During the three months ended September 28, 2013, the Company recorded $4.0 million of asset impairment expense related to certain long-lived, intangible assets and other assets associated with the Hazelwood facility.  The impairment charges are not expected to result in any future cash expenditures.  Refer to Note 12, Restructuring Charges and Asset Impairments, for further details.

Item 6.  Exhibits

Exhibits are incorporated by reference or are filed with this report as indicated below (numbered in accordance with Item 601 of Regulation S-K).

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		Incorporated by Reference
Exhibit Number	Description of Document	Form	Date Filed	Exhibit #	Filed Herewith
10.1**	Master Development and Supply Agreement between GTAT Corporation and Apple, Inc. dated as of October 31, 2013
10.2**	Statement of work under Master Development & Supply Agreement, dated as of October 31, 2013
10.3**	Facilities Lease For GT Advanced Equipment Holding LLC, dated October 31,2013
10.4**	Prepayment Agreement between GTAT Corporation and Apple, Inc. dated October 31, 2013

31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13a-14(a)/15d-14(a), by Chief Executive Officer.	X
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13a-14(a)/15d-14(a), by Chief Financial Officer.	X
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer and Chief Financial Officer.	X
101.SCH	XBRL Taxonomy Extension Schema Document*	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*	X

*Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

**Portions of this exhibit have been omitted and filed separately with the commission pursuant to a request for confidential treatment.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GT ADVANCED TECHNOLOGIES INC.
	Thomas Gutierrez
	By:	/s/ Thomas Gutierrez
Date: November 7, 2013		President and Chief Executive Officer
		Richard J. Gaynor
	By:	/s/ Richard J. Gaynor
Date: November 7, 2013		Vice President and Chief Financial Officer

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EX-10.1

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

1

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

2

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

4

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

5

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

6

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

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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

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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

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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

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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

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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

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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

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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.	[Company]
By	By
Name	Name
Title	Title
Date	Date
[Covered Party]
By
Name
Title
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

19

EX-10.2

Exhibit 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.

1.1Apple 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.

1.2In 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:

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

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

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

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

1.3.1Timely and continually provide input on the Facility Requirements;

1.3.2Insure 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

1.3.3Timely 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.

1.4In 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.

1.5GTAT 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.

1.6GTAT 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

1.7The 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.

1.8GTAT 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.

1.9GTAT 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.

2.1GTAT 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.  [***].

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

2.3GTAT 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.

2.4The 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.

2.5The 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.

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

3.1.1[***];

3.1.2[***];

3.1.3[***]; or

3.1.4[***]

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

[***]

3.3[***]

3.4[***]

3.5Whenever 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, [***].

3.6GTAT will provide [***].

3.7In 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:

4.1GTAT 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

4.2Subject 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.

4.3The 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.

4.4If 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.

4.4.1Apple 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.

4.4.2The 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.

4.4.3Five 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.

4.4.4An 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.

4.4.5The 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

4.4.6The 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.

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

5.Apple-Owned Equipment.

5.1GTAT 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.

5.2GTAT 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.

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

5.4With 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.

5.5Subject 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.

5.6Apple 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.

5.7GTAT 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.

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

5.9GTAT 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.

5.10Immediately 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.

5.11GTAT 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.

5.12The 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.

5.13GTAT 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

5.14Apple 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.

6.1Without 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
[***]	[***]	[***]
[***]	[***]	[***]

6.2Without 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.

6.3Without 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.

6.4Without 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.

7.1If 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:

7.1.1GTAT 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.

7.1.2Apple 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.

7.1.3If 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.

7.1.4For 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.

7.1.5For 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.

7.1.6For 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.

7.1.7For 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.

7.1.8If 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.

8.1GTAT 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[***].

8.3Apple’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.

9.1During 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

9.1.1neither 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

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

9.1.3With 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.

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

9.3Except 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[***]

9.6Subject 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[***]

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

10.Intellectual Property.

10.1For 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).

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

10.2.1All 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.

10.2.2GTAT 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

10.2.3GTAT 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.

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

10.3.1GTAT 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

10.3.7GTAT, 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.    [***]

10.4For 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.

10.5Apple 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.

10.6GTAT, 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.

10.7With 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 [***].

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

10.8[***]

11.Key Personnel.

11.1Apple 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.

11.2If 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.

11.3For each Key Employee Departure:

11.3.1Within 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.

11.3.2GTAT 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

11.3.3If 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.

12.1In 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.

12.2If 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).

12.3If 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.

13.1The 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.

13.2Either 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.

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

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

13.3Except 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

13.4In 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

EX-10.3

Exhibit 10.3

FACILITY LEASE AGREEMENT

This Facility Lease Agreement (this “Lease”) is entered into by [***] (“Landlord”) and GTAT Corporation, a Delaware corporation (“Tenant”), effective as of October 31, 2013 (the “Effective Date”).  Any capitalized terms used in this Lease shall have the meanings assigned to them in the Glossary attached as Exhibit A, or if not defined in Exhibit A, those assigned to them in the Collateral Agreements.

In consideration of the mutual covenants and agreements contained in this Lease, the receipt and sufficiency of which is acknowledged, Landlord and Tenant agree as follows.

ARTICLE 1
LEASE OF PREMISES AND LEASE TERM

1.1          Premises. Landlord leases to Tenant and Tenant leases from Landlord, all of Landlord’s right, title and interest in and to: (a) the entire industrial building commonly known as [***] Mesa, Arizona, containing approximately [***] rentable square feet, as such building is, or will be, improved by the Landlord Work in accordance with the terms of this Lease (the “Building”), together with the land (the “Land”) on which the Building is located as more fully described in Exhibit B (collectively, the “Premises”), and (b) all fixtures, equipment and other improvements located at or within the Premises, including, without limitation, the fixtures and equipment to be installed by Landlord at its sole cost and expense as part of the Landlord Work.  The Premises includes the exterior surfaces of the Building (including the structural walls, roof and roof membrane), as well as the interior and other portions and components of the Building, and related improvements (including any loading dock areas, equipment pads, [***] and other Exterior Areas) (collectively, the “Improvements”); provided that, the Premises shall in no event include, and Landlord reserves for its sole and exclusive use to provide electrical services to the Premises: (i) the Roof Solar Array; (ii) the Solar Basin; (iii) the Fuel Cell (if any); and (iv) the Electrical Substation (which shall be owned and operated by a utility provider) and the portion of the Land upon which any such Electrical Substation is located.  Landlord further reserves a right of entry as reasonably necessary to maintain, repair, operate and monitor (or to cause the applicable utility provider to do the same) the Roof Solar Array, the Solar Basin, the Fuel Cell, and the Electrical Substation and portion of Land upon which the Electrical Substation is located, which right of entry shall be subject to the terms of Section 9.1, Section 9.5 and Section 9.6.  The location and dimensions of the Building and the Land, as they exist as of the Effective Date, are depicted on the plan attached as Exhibit B-1 as “Phase 1”.  The parties agree that the depiction of the Premises, the Building and the Land on Exhibit B-1, and any reference to square footage or dimensions do not constitute a representation, covenant or warranty of any kind by Landlord.

1.1.1       The parties’ obligations under this Lease are conditioned upon and subject to Landlord acquiring fee title to the Building, Premises and Land (“Landlord’s Acquisition”).  Landlord represents and warrants that as of the date hereof, an agent for Landlord (the “Buyer Agent”) has entered into a binding agreement (the “P&S”) to purchase the Premises from the current owner of the Premises (the “Seller”).  Landlord agrees to inform Tenant of the progress of Landlord’s Acquisition (including, without limitation, promptly notifying Tenant in writing of the consummation of Landlord’s Acquisition), and to respond to all reasonable requests of Tenant concerning the status of the same.  If Landlord does not acquire fee simple title in and to the Premises, subject only to those liens and encumbrances set forth in the Title Commitment which have not been removed by Landlord or Seller on or before the Outside Closing Date (including, without limitation, any encumbrances that would prohibit the use of the Premises for the Permitted Use as reasonably determined by Landlord), then Landlord and Tenant shall each have the option to terminate this Lease by delivering written notice to the other party on or before the date that is seven (7) Business Days after the Outside Closing Date.  Landlord confirms to Tenant that, upon the closing of the Landlord’s Acquisition, Landlord will be the owner of the Premises and all of the fixtures, equipment and other improvements described in clause (b) of Section 1.1 then existing at or within the Premises.

[***] 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

1.1.2       Subject to the terms of the P&S, Tenant shall have the right, at Tenant’s sole cost and expense, to conduct or to cause to be conducted by reputable and qualified companies, at Tenant’s sole cost and expense, such audits, assessments, reviews, investigations, inspections, tests, and studies of the Premises, the environmental condition of the Premises, the condition of all buildings, structures and equipment on or within the Premises, the title to the Premises (including so-called survey matters), the compliance of the Premises with applicable Laws, such other engineering, legal and other matters relating to or affecting the Premises and any other investigation or study of the Premises not specifically prohibited by the P&S as Tenant deems necessary or desirable in connection with its lease of the Premises (“Studies”).  Tenant shall give Landlord reasonable (but in no event less than forty-eight (48) hours) prior notice of Tenant’s intention to conduct any Studies of the Premises. Immediately upon the completion of any physical Study of the Premises, Tenant shall at its sole expense restore any area of the Premises disturbed by Tenant to as near its original condition as reasonably possible.  Tenant shall use commercially reasonable efforts to conduct all such Studies in such manner as will minimize any inconvenience to Seller, Buyer’s Agent and Landlord.  Landlord shall reasonably cooperate with Tenant’s Studies of the Premises and shall provide copies to Tenant of the Due Diligence Reports.  Landlord makes no representations or warranties as to the truth, accuracy or completeness of any of the Due Diligence Reports.  It is the parties’ express understanding and agreement that all of the Due Diligence Reports and any other such materials are provided by Landlord solely for Tenant’s convenience in making its own examination of the Premises, and, in making such examination, Tenant shall rely exclusively on its own independent investigation and evaluation of the Premises and not on the Due Diligence Reports or any other materials supplied by Landlord or Landlord’s Agents. Any Studies undertaken by or on behalf of Tenant pursuant to this Section 1.1.2 shall be at Tenant’s sole risk and expense.  All information regarding or relating to the Premises obtained by Tenant during any Study of the Premises shall be subject to Section 18.21 and held, maintained and treated by Tenant as private, confidential and privileged information. Tenant shall promptly deliver to Landlord, at no cost to Landlord, all third party reports, of the same type as the Due Diligence Reports, prepared for Tenant in connection with any Studies of the Premises.  Tenant will indemnify Landlord, Buyer Agent and Seller (each, a “P&S Party”) against, and hold each P&S Party harmless from, any claims, loss, injury, liability, or damages (including reasonable attorneys’ fees) incurred by such P&S Party as a result of persons or firms entering the Premises on Tenant’s behalf to complete any Study of the Premises as permitted under this Section 1.1.2.

1.1.3       Tenant hereby agrees that: (a) it has read, and (b) this Lease is subject to the following agreements to be entered into by Landlord prior to the closing of Landlord’s Acquisition: (i) Basin Array Access Agreement; (ii) Reliability Center Access Agreement; and (iii) the Access Agreement (collectively, the “Access Agreements”); provided that, Tenant’s obligations under this Lease shall not be materially increased, nor shall Tenant’s rights under this Lease be materially diminished, as a result of the Access Agreements.

1.2          Phased Delivery of Premises.

1.2.1       Phases. Landlord anticipates that it will deliver possession of the Premises to Tenant in multiple phases as each phase of the Premises (each, a “Phase”) becomes ready for delivery to Tenant.  As used in this Lease, the term “Current Demised Premises” shall mean, at any given time, the Premises or the Phase(s), and the portion of the Premises corresponding to such Phase(s), of which Tenant has accepted delivery in accordance with Section 1.4.  Exhibit C describes each of the nine (9) Phases of the Premises.  The Phases are designated on Exhibit C as “Phase 1”, “Phase 2”, “Phase 3”, “Phase 4”, “Phase 5”,”Phase 6”, “Phase A”, “Phase B” and “Phase C”.  Except as expressly set forth in Sections 1.2.2, 1.3 and 1.4, Landlord shall deliver each Phase of the Premises to Tenant in its then “as-is” condition without any representations or warranties regarding condition.

1.2.2       Landlord Work. For each Phase, Landlord, at its sole expense, shall: (a) deliver the portion of the Premises for such Phase as contemplated in the Phasing Plan (for each Phase, the “Applicable Phase Landlord Work”, and collectively for all Phases, the “Landlord Work”) in compliance with: (i) the Phasing Plan, (ii) the Approved Construction Documents, and (iii) all Laws; (b) satisfy the Acceptance Criteria (as described in the Phasing Plan) for such Phase; (c) deliver possession of the

[***] 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

applicable Phase to Tenant free and clear of all tenants and other occupants and in good order, condition and repair, and with all Building Systems serving such Phase in the condition required of such Phase by the Phasing Plan; and (d) deliver to Tenant the Evidence of Completion with respect to such Phase (the requirements set forth in the foregoing clauses (a) through (d), inclusive, are referred to herein as the “Delivery Conditions”).  Notwithstanding the foregoing, if a permanent certificate of occupancy is not available by the Applicable Delivery Date for a Phase due to Landlord Work remaining in subsequent Phases, then, in lieu of a permanent certificate of occupancy, Landlord may provide: (i) all required sign-offs and approvals from Governmental Authorities for: (A) Tenant to lawfully occupy and use the applicable Phase for the purpose contemplated by the Phasing Plan for such Phase (the “Applicable Phase Purpose”), and (B) issuance of a permanent certificate of occupancy in due course for such Phase, and (ii) a certificate from Landlord’s architect certifying to Tenant that all work for such Phase has been completed (other than Punch List items) in a manner that will allow for issuance of a permanent certificate of occupancy for such Phase for the Applicable Phase Purpose in due course.  Landlord shall remain responsible for delivering a permanent certificate of occupancy for such Phase for the Applicable Phase Purpose once the required work in subsequent Phases is complete.  Landlord shall undertake the Landlord Work in a good and workmanlike manner, employing materials of good quality, and in compliance with applicable Laws.  Unless otherwise specified in the Phasing Plan or the Approved Construction Documents, Landlord shall undertake the Landlord Work in the manner and utilizing the practices and procedures, and using materials, finishes and construction techniques, that are selected by Landlord in its reasonable discretion, in consultation with Tenant, in furtherance of the preparation of the Premises for Tenant’s engagement in the manufacturing purposes contemplated under Section 4.1 of this Lease and the Collateral Agreements.

1.2.3       Preparation of Base Building Plans and Specifications.

1.2.3.1    Landlord’s architects and engineers shall prepare the Base Building Plans and Specifications consistent with all applicable Laws and the Phasing Plan.  The parties acknowledge that Tenant shall have a significant role in the preparation of the Base Building Plans and Specifications and has special expertise with respect to the improvements required for Tenant’s Permitted Use.  Landlord and Tenant shall work cooperatively and in good faith to develop and finalize the Base Building Plans and Specifications as expeditiously as reasonably practicable, in a manner designed to achieve simultaneous design review and input from both parties.  To that end: (a) during preparation and review of the Base Building Plans and Specifications: (i) Tenant and its designated representatives and Landlord and Landlord’s architects and engineers shall meet or conference on a weekly basis to discuss the status of the Base Building Plans and Specifications; and (ii) Landlord will use good faith efforts to notify Tenant, and permit Tenant to join, any scheduled working meetings between Landlord and its architects and/or engineers, during which Landlord anticipates the parties, in discussing the Base Building Plans and Specs, will primarily focus on the operation of the Furnaces and/or Tenant’s fabrication equipment; and (b) during construction of the Landlord Work: (i) Tenant and its designated representatives and Landlord and Landlord’s contractor shall meet or conference on a weekly basis to discuss the status of the construction of the Landlord Work; and (ii) Landlord will use good faith efforts to notify Tenant, and permit Tenant to join, any scheduled working meetings between Landlord and its general contractor, during which Landlord anticipates the parties, in discussing the construction of the Landlord Work, will primarily focus on the operation of the Furnaces and/or Tenant’s fabrication equipment.  During weekly meetings/conferences or any other meeting/conference attended by Tenant as permitted under this Section, Tenant agrees to: (A) provide Tenant’s operational perspective as to all issues discussed with respect to the Base Building Plans and Specifications; (B) pro-actively raise any concerns that the development of the Base Building Plans and Specifications may be inconsistent with the Phasing Plan, and propose reasonable resolutions to the same; and (C) otherwise participate in good faith in all such meetings/conferences in order to further the expeditious development of the Base Building Plans and Specifications and construction of the Landlord Work.  Upon Tenant’s reasonable request, Landlord shall provide (or shall cause its contractors to provide) to Tenant copies of current plans, drawings and specifications for the Landlord Work (collectively, the “Progress Plans”) for Tenant’s review; provided, however, Landlord shall not be held liable to any Tenant Party if Landlord, absent bad faith, inadvertently delivers to Tenant an incomplete or outdated version of any such Progress Plan, or fails to deliver any particular Progress Plan. Tenant agrees that Tenant shall provide any insight,

[***] 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

concerns, issues, proposals and suggestions with respect to the Base Building Plans and Specifications and Progress Plans (“Tenant Feedback”) directly to Landlord, and shall only discuss Tenant Feedback with Landlord’s contractors if Landlord is present at such time and involved in such discussion.

1.2.3.2    Prior to submitting the Base Building Plans and Specifications to the applicable Government Authorities to obtain a building permit for the Landlord Work, Landlord shall furnish to Tenant a copy of the Base Building Plans and Specifications for Tenant’s review and approval; provided that, Tenant shall not withhold its approval of the Base Building Plans and Specifications so long as the Base Building Plans and Specifications comply with all Laws and are not materially inconsistent with the Phasing Plan. Tenant shall advise Landlord of Tenant’s approval or disapproval of the Base Building Plans and Specifications within three (3) Business Days after Landlord submits the Base Building Plans and Specifications to Tenant. If Tenant fails to respond within such three (3) Business Day period, Tenant will be deemed to have approved the Base Building Plans and Specifications submitted to Tenant for approval. If Tenant notifies Landlord of its reasonable objections, together with Tenant’s recommendation of modifications reasonably required to make the Base Building Plans and Specifications acceptable to Tenant within such three (3) Business Day Period, Landlord will revise the Base Building Plans and Specifications to meet Tenant’s reasonable objections, and resubmit the Base Building Plans and Specifications to Tenant for its review and approval.  Tenant shall advise Landlord of Tenant’s approval or disapproval of the revised Base Building Plans and Specifications within three (3) Business Days after Landlord submits the same, and such process shall continue until Tenant approves (or is deemed to have approved) the Base Building Plans and Specifications.  If Tenant objects to the Base Building Plans and Specifications for the reason that the Base Building Plans and Specifications are materially inconsistent with the Phasing Plan, and Landlord disputes Tenant’s claim that such inconsistency between the Base Building Plans and Specifications and the Phasing Plan is material, then, either party may immediately submit the dispute to Expedited Arbitration.

1.2.3.3    Tenant’s authorized representative (who shall have an appropriate level of expertise with respect to the Landlord Work contemplated in the Phasing Plan) shall be available promptly upon Landlord’s request, and at Tenant’s cost, to consult and confer with Landlord about the Landlord Work, the Base Building Plans and Specifications and the Approved Construction Documents. Tenant acknowledges that this may require the authorized representative to be on-site during all or part of the construction period.

1.2.4       Change Orders.

1.2.4.1    Landlord may make changes to the Approved Construction Documents in accordance with the provisions of this Section 1.2.4.1.  If Landlord desires to make a change to the Approved Construction Documents, Landlord shall deliver notice of the proposed change to Tenant, together with any material drawings, specifications and other documents necessary to show or describe the proposed change (“Change Order Documents”) (provided, however, Landlord shall not be held liable to any Tenant Party if Landlord, absent bad faith, inadvertently delivers to Tenant incomplete or Change Order Documents in connection with such change). If Landlord’s proposed change is a material change to the Approved Construction Documents, Landlord shall deliver a copy to Tenant of the Change Order Documents. As used herein, the term “material change” means a change to the Approved Construction Documents that: (a) directly and materially affects Tenant’s ability to grow and process sapphire boules in the Premises in accordance with the delivery schedule set forth in the MDSA SOW; or (b) requires the movement of manufacturing materials or Goods (as defined in the MDSA) in the Premises in an manner which would interrupt Tenant’s sapphire manufacturing process. If, within three (3) Business Days after the delivery of such Change Order Documents showing or describing the proposed material change to the Approved Construction Documents, Tenant gives notice to Landlord that Tenant objects to such change, which notice shall be accompanied by Tenant’s recommendation of any modifications reasonably required to make the change acceptable to Tenant, then Landlord shall either withdraw the proposed change or modify the same in accordance with Tenant’s recommendation.  If Tenant fails to respond to Landlord within three (3) Business Days after Landlord delivers the Change Order Documents, Tenant will be deemed to have approved such Change Order Documents.

[***] 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

1.2.4.2    Tenant may require Landlord to make changes to the Approved Construction Documents if: (a) absent such changes to the Approved Construction Documents: (i) Tenant’s ability to grow and process sapphire boules in the Premises in accordance with the delivery schedule set forth in the MDSA SOW would be directly and materially affected; or (ii) Tenant is required to move manufacturing materials or Goods in the Premises in a manner which would interrupt Tenant’s sapphire manufacturing process; (b) such changes comply with all Laws; (c) such changes are consistent with design review requirements of the Master Developer and Governmental Authorities pursuant to applicable Law; (d) such changes are not inconsistent with any express provision of the Phasing Plan; (e) such changes do not materially reduce the quality of the Landlord Work, as determined by Landlord in its reasonable discretion; and (f) Tenant is responsible for all costs and expenses and all delays resulting from such change, including without limitation costs or expenses relating to: (1) any additional architectural or engineering services and related design expenses, (2) any changes to materials in process of fabrication, (3) cancellation or modification of supply or fabricating contracts, (4) removal or alteration of work or plans completed or in process, and (5) delay claims made by any subcontractor (collectively, the “Cost and Delay Liability”).  Tenant may not require Landlord to make any other change to the Approved Construction Documents without Landlord’s prior written approval, which approval may be granted or withheld in Landlord’s sole and absolute discretion. Tenant shall be responsible for all Cost and Delay Liability as a result of any such change approved by Landlord.

1.2.5       Delivery Schedule. Landlord shall deliver each Phase of the Premises to Tenant, with each of the Delivery Conditions satisfied, not later than the Outside Delivery Date specified for such Phase in the schedule attached as Exhibit C.  If for any reason whatsoever Landlord cannot deliver possession of a specific Phase to Tenant, with each of the Delivery Conditions satisfied, on or before the Outside Delivery Date for such Phase, then this Lease shall not be void or voidable, nor shall Landlord, or Landlord’s Agents be liable to Tenant for any loss or damage resulting therefrom; provided that, Tenant shall not be obligated to pay Base Rent until the Commencement Date and Tenant shall not be obligated to pay Additional Rent for a particular Phase until Tenant has accepted such Phase pursuant to a Handover and Acceptance Certificate.

1.2.6       Tenant’s Access to Phases Prior to Applicable Phase Delivery Date.  To the extent reasonably possible, taking into consideration the optimal schedule for installation of the Furnaces in the Premises and the Goods delivery schedule under the MDSA SOW, Landlord will grant Tenant access to each Phase prior to its Applicable Phase Delivery Date as reasonably required for Tenant to perform work within such Phase relating to Tenant’s installation of Tenant’s Property (the “Tenant’s Early Access Work”).  Landlord and Tenant will coordinate the performance of Tenant’s Early Access Work with the performance of any ongoing Landlord Work so that each of Tenant’s Early Access Work and the Landlord Work can proceed without material interference from the other and to maintain harmonious labor relations.

1.3          Punch-List Inspection.  Approximately ten (10) days prior to Landlord’s delivery of possession of a Phase(s) to Tenant, Landlord and Tenant shall make an inspection of such Phase(s) (the “Punch List Inspection”).  During the Punch List Inspection, the parties shall: (a) determine whether the construction and installation of the Applicable Phase Landlord Work for such Phase(s) has been completed, subject to Punch List items, in accordance with the terms of this Lease; and (b) prepare a list of minor work requiring correction or completion by Landlord that will not materially interfere with Tenant using the Phase(s) for the Applicable Phase Purpose (the “Punch List”).  Subject to a Force Majeure Event, Tenant Delay, and Tenant’s compliance with the Logistics Plan, Landlord agrees to use reasonable efforts to complete all Punch List items and correct all defects or incomplete items with respect to a delivered Phase, within sixty (60) days after the Applicable Phase Delivery Date.

1.4          Acceptance.  Except as otherwise expressly provided herein, by accepting delivery of a Phase(s), evidenced by Tenant’s execution of a Handover and Acceptance Certificate with respect to such Phase(s), Tenant shall be deemed to have accepted such Phase as: (a) suitable for the Applicable Phase Purpose; (b) in good and sanitary operating order, condition and repair with the Applicable Phase Landlord Work complete, subject to any Punch List items; (c) AS-IS, WHERE IS and WITH ALL FAULTS, and (d) without representation or warranty by Landlord as to the condition, use or occupancy which may

[***] 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

be made thereof; provided, however, that: (i) Landlord shall, at its sole cost and expense, repair and replace any Construction Defects of which Tenant has notified Landlord in writing within twelve (12) months after the final Applicable Phase Delivery Date for the Premises; (ii) Landlord shall, at no cost to Landlord, assign to Tenant all Transferrable Warranties as the applicable Landlord Work is completed or as soon as is reasonably feasible, and (iii) the foregoing shall not release Landlord from any of its express obligations under this Lease. Tenant acknowledges that: (A) it has been advised by Landlord to satisfy itself with respect to the condition of the Premises and each Phase thereof (including, without limitation, the structural components of the Building and the Building Systems located therein, and the security and environmental aspects thereof) and the present and future suitability of the Premises for the Permitted Use; (B) Tenant has made such inspection and investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to Tenant’s use and occupancy of the Premises; and (C) neither Landlord nor any of Landlord’s Agents has made any oral or written representations or warranties with respect to the condition, suitability or fitness of the Premises other than as specifically set forth in this Lease. Further, Tenant expressly disclaims any implied warranty that the Premises are suited for the Permitted Use.

1.5          Handover and Acceptance Certificate. Landlord shall complete and deliver to Tenant for Tenant’s execution: (a) upon the Commencement Date, a certificate in the form attached as Exhibit D to confirm, among other things, the Commencement Date, the Phase(s) (and approximate rentable square feet thereof) delivered on the Commencement Date, the anticipated Expiration Date, and Tenant’s acceptance of the Phase(s) delivered on the Commencement Date; and (b) upon each Applicable Phase Delivery Date, a certificate in the form attached as Exhibit D-1 to confirm, among other things, the Applicable Delivery Date of the Phase(s) delivered pursuant to such certificate, the Phase(s) (and actual number of rentable square feet thereof) delivered on such Applicable Phase Delivery Date, the Current Demised Premises as of such date, and Tenant’s acceptance of the Phase(s) delivered on such Applicable Phase Delivery Date (each such certificate, a “Handover and Acceptance Certificate”). Tenant may reject handover and acceptance of a delivered Phase(s) only if: (i) Tenant can reasonably demonstrate that Landlord has failed to complete (subject to the Punch List items) such Phase(s) in accordance with the terms of this Lease; and (ii) such failure will materially interfere with the Applicable Phase Purpose for such Phase.

1.6          Construction and Dual Occupancy Logistics Plan. The parties acknowledge that Landlord’s undertaking of the Landlord Work in multiple Phases may occur concurrently with Tenant’s possession of, and operations in, one or more of the Phases of the Premises. In order to enable Landlord to substantially complete the Landlord Work in the Premises in accordance with the Phasing Plan, and to enable Tenant to operate in the Current Demised Premises for the Permitted Use, the parties agree to consult in good faith to establish a construction and dual occupancy logistics plan (the “Logistics Plan”) which shall set forth protocols and procedures for the parties during any such dual occupancy period to minimize interruption and interference of the parties’ respective work or operations. The Logistics Plan shall include, without limitation, protocols with respect to utilities shutoff notifications, access and security procedures, location of laydown areas, mitigation of construction noise and dust, onsite monitoring and feedback by Tenant’s authorized representatives with respect to the Landlord Work and a right of entry for Landlord to complete Punch List items.  The parties shall use commercially reasonable efforts to negotiate, and mutually agree upon, an approved Logistics Plan on or before the Commencement Date. Once approved, the parties shall comply in good faith with the Logistics Plan.

1.7          Commencement and Expiration of Term.  This Lease shall be in full force and effect from the Effective Date. The term of the Lease (“Term”) shall commence on the Commencement Date and shall end on the Expiration Date, unless otherwise extended or earlier terminated in accordance with the terms of this Lease; provided that, with respect to any Phase of the Premises which is not delivered on the Commencement Date (other than the Phase 1 Premises), the Term of the Lease for such Phase shall commence on such Phase’s Applicable Phase Delivery Date.  For purposes of this Lease, the “Commencement Date” shall mean the Applicable Phase Delivery Date for the Phase 1 Premises.  The term “Expiration Date” means the last day of the term of the MDSA 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

ARTICLE 2
RENTAL AND OTHER PAYMENTS

2.1          Base Rent. Tenant will pay Base Rent to Landlord each Lease Year in the amount of [***], in advance, without demand, deduction or offset commencing on the Commencement Date and thereafter on the first (1st) day of each Lease Year during the Term. Tenant shall make all Base Rent payments to the Rent Payment Address or at such other address as Landlord may from time to time designate in writing, or, alternatively at Landlord’s election, via electronic funds transfer as directed by Landlord.  Tenant shall make all Base Rent payments without Landlord’s previous demand, invoice or notice for payment. The term “Lease Year” means: (a) for the first Lease Year, the period commencing on the Commencement Date and ending on the last day of the twelfth (12th) full calendar month following the Commencement Date; and (b) thereafter, each period of twelve (12) consecutive months. Notwithstanding that Landlord may deliver possession of the Premises in Phases, the amount of annual Base Rent for each Lease Year during the Term shall be [***] and such amount shall not be affected by adjustments in the square footage of the Premises based on Phased delivery of the Premises.

2.2          Rent Tax.  Landlord shall pay all Rent Tax due in connection with this Lease or the payment of Rent hereunder.

2.3          Additional Rent.  Tenant shall make all payments of Additional Rent without demand, deduction or offset except as expressly provided in this Lease.  Tenant shall pay all Additional Rent described in this Lease that is not payable with Base Rent within fifteen (15) Business Days after receiving Landlord’s invoice for such Additional Rent.  Tenant shall make all Additional Rent payments to the same location and, except as described in the previous sentence, in the same manner as Tenant’s Base Rent payments. All Additional Rent calculated based on the rentable square footage of the Premises shall be calculated based upon the rentable square footage of the Current Demised Premises for the period in which the invoice for such charges relate.

2.4          Late Payments. If either Landlord or Tenant does not pay any amount due from such party under this Lease within ten (10) Business Days after notice from the other party that the payment is past due, then the defaulting party shall pay to the other party interest on the delinquent payment calculated at the Default Rate from the date when the payment is due through the date the payment is made.

2.5          Net Lease.  Except as otherwise expressly provided in this Lease, the Base Rent payable under this Lease shall be net to Landlord of all costs and obligations of every kind and nature whatsoever relating to the use or occupancy of the Premises, including all Impositions (except to the extent of Landlord’s obligations under this Lease), which shall be performed and paid by Tenant pursuant to this Lease.  Tenant shall perform its obligations under this Lease at its sole cost and expense.

2.6          Independent Obligations. Tenant’s covenant and obligation to pay Rent is independent from any of Landlord’s covenants, obligations, warranties or representations in this Lease.

ARTICLE 3
PROPERTY TAXES

3.1          Payment of Taxes by Landlord.  Except to the extent payable by Tenant pursuant to Section 3.2, Landlord shall pay, prior to delinquency, all Property Taxes for the Premises.

3.2          Payment of Taxes by Tenant. Tenant shall pay, prior to delinquency: (a) all taxes, charges, license fees and or similar fees imposed by reason of the use of the Premises by Tenant, including all applicable sales tax; and (b) all taxes charged against Tenant’s trade fixtures and other personal property (including without limitation the Furnaces and other Tenant’s Property).  If any of Tenant’s trade fixtures and other personal property is taxed with the Premises, Tenant shall pay the taxes attributable to Tenant’s trade fixtures and other personal property to the taxing authority.

[***] 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

3.3          Tax Incentive Programs.  With respect to any taxes payable by Tenant under this Lease, Tenant shall be permitted to seek, and to receive and retain all benefits from, any and all tax increment financing or other tax incentives or beneficial tax arrangements from Governmental Authorities.  Landlord, as the owner of the underlying fee simple interest in the Premises, shall, at no cost to it, cooperate with Tenant to obtain such incentives or arrangements.

ARTICLE 4
USE AND OCCUPANCY

4.1          Permitted Use.  The Premises shall be used solely for the purpose of manufacturing the Goods for Landlord pursuant to the MDSA SOW [***] and such other uses permitted by the terms of the MDSA SOW, and for no other purpose.

4.2          Compliance with Law and Covenants or Restrictions of Record.  Tenant and Tenant’s Agents shall, at Tenant’s expense, faithfully observe and comply with: (a) all applicable Laws pertaining to Tenant’s use of the Premises and Tenant’s obligations under this Lease; and (b) all Private Restrictions pertaining to the Premises or Tenant’s use of the Premises; provided that, Tenant’s obligations under this Lease shall not be materially increased, nor shall Tenant’s rights under this Lease be materially diminished, as a result of the Private Restrictions.  Subject to Landlord’s obligations under Section 1.2.2, Tenant will be responsible for obtaining and maintaining all permits required for the lease, operation and maintenance of the Current Demised Premises by Tenant.

4.3          Nuisance or Waste.  Tenant will not suffer or permit on the Premises any nuisance.  Tenant will not permit or commit any waste of the Premises.  Tenant will use the Premises in a careful, safe and proper manner and will not overload the floor or structure of the Premises or subject the Premises to use that would damage the Premises. Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise, or vibrations to emanate from the Premises, or take any other action that would unreasonably endanger Landlord or the Premises.  Outside storage, including without limitation, storage of trucks and other vehicles, is prohibited without Landlord’s prior written consent, except in the ordinary course of Tenant’s operations at the Premises. Tenant will not use or permit the Premises to be used for any purpose or in any manner that would void Tenant’s or Landlord’s insurance.  If any increase in the cost of any insurance on the Premises is caused by Tenant’s use or occupation of the Premises, or because Tenant vacates the Premises, then Tenant shall pay the amount of such increase to Landlord.  If Tenant occupies the Premises prior to the Commencement Date, such occupancy shall be subject to all obligations of Tenant under this Lease, other than the obligation to pay Rent.

4.4          Signs. Tenant will not place or permit to be placed in, upon, or about the Premises, the Building or the Land any exterior lights, decorations, flags, pennants, banners, advertisements or notices, or erect or install any signs, windows or door lettering, placards, decorations, or advertising media of any type which can be viewed from the exterior the Premises without obtaining Landlord’s prior written consent, which Landlord may grant or withhold in Landlord’s sole discretion.  Any signage shall comply with all applicable Laws.

4.5          OFAC Certification.  Each party certifies that it is not: (a) acting directly or indirectly for or on behalf of any person, group, entity, or nation named by any Executive Order or the United States Treasury Department, through its Office of Foreign Assets Control (“OFAC”) or otherwise, as a terrorist, “Specially Designated Nation,” “Blocked Person,” or other banned or blocked person, entity, nation, or transaction pursuant to any law, order, rule or regulation that is enforced or administered by OFAC or another department of the United States government; and (b)  engaged in this transaction (directly or indirectly) on behalf of, or instigating or facilitating this transaction (directly or indirectly) on behalf of, any such person, group, entity or nation.  Landlord and Tenant each shall, to the fullest extent allowable under applicable Laws, indemnify, defend, and hold harmless the other party from and against any Claims in any manner related to or arising out of any breach of this certification.

[***] 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

4.6Anti-Money Laundering Laws. Tenant has reviewed and understands Landlord’s policies with respect to ethical business conduct and agrees to fully comply with all such policies.  Tenant will comply with all applicable Laws and regulations enacted to combat bribery and corruption, including the United States Foreign Corrupt Practices 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 this Lease (collectively, the “Anti-Corruption Laws”).  Tenant and, to the best of Tenant’s knowledge, its subsidiaries and affiliates, have conducted their businesses in compliance with the Anti-Corruption Laws.  Tenant will not knowingly in violation of Law or any Landlord policy of which Tenant has been notified, directly or indirectly pay, offer, promise, or give anything of value (including any amounts paid or credited by Landlord to Tenant) 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 Landlord.

4.7[***]

4.8Permitted Contests.  Notwithstanding any provision of this Lease to the contrary, Tenant shall not be required to pay, discharge or remove any tax, assessment, levy, fee, rent, charge, lien or encumbrance applicable to the Premises or the use thereof, so long as Tenant is contesting, at its sole cost and expense, the existence, amount or validity thereof, provided that any such contest shall: (a) be by appropriate proceedings conducted in accordance with applicable Law; (b) prevent the collection of or other realization upon the tax, assessment, levy, fee, rent, charge, lien or encumbrance so contested; (c) prevent the sale, forfeiture or loss of the Premises; and (d) not subject Landlord to the risk of any criminal liability or civil penalty, and provided further that any such contest may be conducted only for so long as Tenant, during the pendency of such contest, shall take any and all necessary action to prevent any deterioration or worsening of the condition giving rise to the contest that may result in any personal injury or property damage or cause any of the conditions set forth in the foregoing clauses (a) through (d), inclusive, to no longer be satisfied.  Tenant shall indemnify Landlord against any liability or penalty assessed against Landlord by reason of such nonpayment.  Upon the termination (after final appeal) of any proceeding relating to any contest by Tenant pursuant to this Section 4.8, Tenant shall immediately pay any amount determined in such proceeding to be due or take any action ordered, and in the event Tenant fails to make such payment or take the action, Landlord shall have the right to make any such payment or take the action on behalf of Tenant and charge Tenant therefor, which shall be due and payable upon Tenant’s receipt of written demand from Landlord.

ARTICLE 5
HAZARDOUS MATERIALS

5.1Hazardous Materials Disclosure Certificate.  Prior to executing this Lease, Tenant has completed, executed and delivered to Landlord a Hazardous Materials Disclosure Certificate in the form attached as Exhibit E (“Initial Disclosure Certificate”).  Tenant covenants, represents and warrants to Landlord that the information on the Initial Disclosure Certificate is true and correct in all material respects and accurately describes, in all material respects, the Hazardous Materials which will be manufactured, treated, used or stored on or about the Premises by Tenant or Tenant’s Agents.  Tenant shall, on each anniversary of the Commencement Date, execute and deliver to Landlord an updated Disclosure Certificate (each, an “Updated Disclosure Certificate”) in the form of Exhibit E or in such updated format as Landlord may require.

5.2Definitions.  The term “Hazardous Materials” shall mean and include any substance that is or contains:  (a) any “hazardous substance” as now or hereafter defined in § 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”) (42 U.S.C. § 9601 et seq.) or any regulations promulgated under CERCLA; (b) any “hazardous waste” as now or hereafter defined in the Resource Conservation and Recovery Act, as amended (“RCRA”) (42 U.S.C. § 6901 et seq.) or any regulations promulgated under RCRA; (c) any substance now or hereafter regulated by the Toxic Substances Control Act, as amended (“TSCA”) (15 U.S.C. § 2601 et seq.) or any regulations promulgated under TSCA; (d) petroleum, petroleum by-products, gasoline, diesel fuel, or other petroleum hydrocarbons; (e) asbestos and asbestos-containing

[***] 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

material, in any form, whether friable or non-friable; (f) polychlorinated biphenyls; (g) lead and lead-containing materials; or (h) any additional substance, material or waste: (i) the presence of which on or about the Premises requires reporting, investigation or remediation under any Environmental Laws; (ii) which causes or threatens to cause a nuisance on the Premises or any adjacent area or property or poses or threatens to pose a hazard to the health or safety of persons on the Premises or any adjacent area or property; (iii) which, if it emanated or migrated from the Premises, could constitute a trespass, or (iv) which is now or is later classified or considered to be hazardous or toxic under any Environmental Laws.  As used in this Lease, the term “Environmental Laws” shall mean and include:  (A) CERCLA, RCRA and TSCA; and (B) any other federal, state or local laws, ordinances, statutes, codes, rules, regulations, orders or decrees now or later in effect relating to (1) pollution, (2) the protection or regulation of human health, natural resources or the environment, (3) the treatment, storage or disposal of Hazardous Materials, or (4) the emission, discharge, release or threatened release of Hazardous Materials into the environment.

5.3Environmental Covenants.  During its use and occupancy of the Premises, Tenant will:  (a) not release, discharge or dispose of any Hazardous Materials on, in, at, under, or emanating from, the Premises in violation of any Environmental Law; (b) not permit Hazardous Materials to be present on or about the Premises except: (i) in a manner and quantity necessary for the ordinary performance of Tenant’s business; or (ii) to the extent of Migratory Releases; (c) comply with all Environmental Laws relating to its use of Hazardous Materials on or about the Premises and not engage in or permit others to engage in any activity (other than a Migratory Release) at the Premises in violation of any Environmental Laws; and (d) upon obtaining knowledge thereof, immediately notify Landlord of: (i) any inquiry, test, investigation or enforcement proceeding by any Governmental Authority against Tenant, Landlord as the owner of the Premises, or the Premises or Land relating to any Hazardous Materials or under any Environmental Laws; or (ii) the occurrence of any event or existence of any condition that would cause a breach of any of the covenants set forth in this Article 5.  The term “Migratory Release” means a release of Hazardous Materials on, in or under the Premises caused by the migration or leaching of Hazardous Materials from an area outside of the Premises that is not caused or exacerbated by an act or omission of Tenant.  Without limitation of the foregoing, Tenant acknowledges the Premises are subject to, and Tenant will comply with, [***].

5.4Remediation. If Tenant’s use of Hazardous Materials on or about the Premises results in a release, discharge or disposal of Hazardous Materials on, in, at, under, or emanating from, the Premises in violation of any Environmental Law, Tenant agrees to investigate, clean up, remove or remediate such Hazardous Materials in full compliance with the requirements of: (a) all Environmental Laws; and (b) any Governmental Authority responsible for the enforcement of any Environmental Laws.

5.5Right of Entry and Inspection by Landlord. Subject to the terms of Sections 9.5 and 9.6, upon at least twenty-four (24) hours’ prior written notice to Tenant (except for emergencies for which no notice is required), Landlord will have the right, but not the obligation, to inspect the Premises and surrounding areas for the purpose of determining whether there exists on or about the Premises any Hazardous Material or other condition or activity that is in violation of the requirements of this Lease or of any Environmental Laws.  Such inspections may include, but are not limited to, entering the Premises or adjacent property with drill rigs or other machinery for the purpose of obtaining laboratory samples.  There shall be no limit on the number of Landlord’s inspections for such purpose during the Term of this Lease.  If such inspections reveal the presence of any Hazardous Materials or other condition or activity in violation of the requirements of this Lease, Tenant shall reimburse Landlord for the cost of such inspections within ten (10) days of receipt of a written statement therefor.  Tenant will supply to Landlord such historical and operational information regarding the Premises and surrounding areas as may be reasonably requested to facilitate any such inspection and will make available for meetings appropriate personnel having knowledge of such matters. Tenant will give Landlord at least sixty (60) days’ prior notice of its intention to vacate the Premises so that Landlord will have an opportunity to perform such an inspection prior to such vacation.  This Section 5.5 shall not create a duty on Landlord’s part to inspect the Premises, or liability on the part of Landlord for Tenant’s use, storage, treatment or disposal of Hazardous Materials, it being understood that Tenant shall be solely responsible for all liability in connection with the same.  Landlord shall have the right, but not the obligation, subsequent to an Event of

[***] 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

Default, without in any way limiting Landlord’s other rights and remedies under this Lease, to: (a) enter upon the Premises, or to take such other actions as it deems necessary or advisable, to investigate, clean up, remove or remediate any Hazardous Materials or contamination by Hazardous Materials present on, in, at, under, or emanating from, the Premises in violation of Tenant’s obligations under this Lease; and (b) Landlord shall also have the right, at its election, in its own name, to negotiate, defend, approve and appeal, any action taken or order issued by any Governmental Authority with regard to any such Hazardous Materials or contamination by such Hazardous Materials.  All costs and expenses paid or incurred by Landlord in the exercise of the rights set forth in this Article 5.5 (except for the costs and expenses of inspections performed by Landlord unless Tenant is responsible for such costs and expenses pursuant to this Section 5.5 as the result of its violation of the requirements of this Lease) shall be payable by Tenant upon demand.

5.6Environmental Conditions upon Surrender. Without limiting the terms of Section 17.1, Tenant will surrender the Premises to Landlord upon the expiration or earlier termination of this Lease free of debris, waste or Hazardous Materials placed on, about or near the Premises by Tenant or Tenant’s Agents, and in a condition which complies with the terms of this Article 5, including, without limitation, obtaining any closure permits or other governmental permits or approvals related to Tenant’s use of Hazardous Materials in or about the Premises that are required under applicable Environmental Laws.  If it is determined by Landlord that the condition of all or any portion of the Premises is not in compliance with the provisions of this Lease with respect to Hazardous Materials at the expiration or earlier termination of this Lease, then at Landlord’s sole option, Landlord may require Tenant to hold over possession of the Premises until Tenant can surrender the Premises to Landlord in compliance with the provisions of this Lease, including, without limitation, the conduct or performance of any closures as required by any Environmental Laws.  The burden of proof hereunder shall be upon Tenant.  Any such holdover by Tenant will be with Landlord’s consent, will not be terminable by Tenant in any event or circumstance and will otherwise be subject to the provisions of Section 15.2.

5.7Landlord’s Compliance.  Except for Tenant’s express obligations under this Article 5, Landlord shall comply with all Environmental Laws applicable to the Premises or any portion thereof.

5.8Indemnification; Survival. Tenant shall, to the fullest extent allowable under the Laws, indemnify, defend (with counsel reasonable acceptable to Landlord) and hold harmless the Landlord Parties and the Premises from and against any Claims (including, without limitation, loss in value of the Premises, the Building or the Land, liabilities and expenses (including reasonable attorneys’ fees)) sustained by the Landlord Parties or the Premises in any manner relating to or arising out of: (a) any Hazardous Materials placed on or about the Premises by Tenant or Tenant’s Agents; (b) the presence of any Hazardous Materials (excluding a Migratory Release) on or about the Premises as a result of any release or discharge occurring during Tenant’s use or occupancy of the Premises, except to the extent released, discharged or disposed of on, in, at or under as a result of any act or omission of Landlord or Landlord’s Agents; or (c) Tenant’s breach of any provision of this Article 5. Landlord shall, to the fullest extent allowable under the Laws, indemnify, defend (with counsel reasonable acceptable to Tenant) and hold harmless the Tenant Parties from and against any Claims sustained by any of the Tenant Parties in any manner relating to or arising out of: (i) any Hazardous Materials that exist at the Premises as of the Effective Date; (ii) any Hazardous Materials that are released, discharged or disposed of on, in, at, under, or that emanate from, the Premises as the result of any act or omission of Landlord or Landlord’s Agents; or (iii) Landlord’s breach of any provision of this Article 5.  The terms of this Section 5.8 shall survive the expiration or termination of this Lease.

ARTICLE 6
SERVICES

6.1Utility Services.  Except as otherwise provided in this Section 6.1, Tenant shall contract, in its own name, for and pay when due all charges for the cost of all Utilities billed or metered separately to the Premises and/or Tenant, together with all taxes, assessments, charges and penalties added to or included within such cost. Notwithstanding the foregoing, Landlord shall contract in its own name for all electrical service to the Premises (as necessary for the Phase(s) that have been delivered) necessary to

[***] 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

comply with the Phasing Plan, and shall manage the billing of the cost of electricity incurred by or on behalf of Tenant in connection with its use and operation of the Premises (such costs, without any mark-up or premium whatsoever, the “Electrical Costs”), subject to reimbursement by Tenant for such Electrical Costs in accordance with the terms of this Section 6.1.  Landlord will bill Tenant for the Electrical Costs and Tenant shall pay Landlord for the same, as Additional Rent, within thirty (30) days after Landlord’s delivery of a written invoice for the Electrical Costs. Until Landlord delivers to Tenant the final Phase of the Premises, the calculation of Electrical Costs payable by Tenant will be based upon the electrical service consumed by Tenant in the Current Demised Premises.  If permitted by applicable Laws, Landlord may, at any time and from time to time during the Term, either contract for service from different electrical utility companies (“Alternate Service Providers”) than those providing electrical service on the date hereof (“Utility Service Providers”) or continue to contract for electrical service from the Utility Service Providers; provided, however, that Landlord shall not contract with an Alternate Service Provider without Tenant’s consent, which consent Tenant shall not unreasonably withhold.  Any and all costs associated with a change to any Alternate Service Provider shall be paid by Landlord without reimbursement from Tenant.  Tenant shall cooperate with Landlord, the Utility Service Providers, and any Alternate Service Providers at all times and, as reasonably necessary, shall allow Landlord, Utility Service Providers, and any Alternate Service Providers reasonable access to all utility lines, feeders, risers, wiring, and any other machinery and/or equipment within the Premises as necessary to provide electrical service to the Premises.  Landlord shall not be liable for any loss, injury or damage to property caused by or resulting from any variation, interruption, or failure of Utilities due to any cause whatsoever, or from failure to make any repairs or perform any maintenance of the Utilities, except to the extent caused by or arising out of: (a) the negligence or willful misconduct of Landlord or any of Landlord’s Agents; (b) Landlord’s failure to contract for electrical service for the Premises as necessary to comply with the Phasing Plan; or (c) Landlord’s failure to reasonably manage the billing and other administrative obligations associated with the Electrical Costs.  No temporary interruption or failure of Utilities incident to the making of repairs, alterations, improvements, or due to accident, strike, or conditions or other events shall be deemed an eviction of Tenant or, subject to the terms of Section 18.17, relieve Tenant from any of its obligations hereunder.  In no event shall Landlord be liable to Tenant for any damage to the Premises or for any loss, damage or injury to any property on or in the Premises occasioned by bursting, rupture, leakage or overflow of any plumbing or other pipes (including, without limitation, water, steam, and/or refrigerant lines), sprinklers, tanks, drains, drinking fountains or washstands, or other similar cause in, above, upon or about the Premises, except to the extent caused by or arising out of the negligence or willful misconduct of Landlord or any of Landlord’s Agents.  As used in this Lease, the term “Utilities” means water, sewer use, sewer discharge fees and permit costs and sewer connection fees, gas, heat, electricity, refuse pick-up, janitorial service, telephone and all materials and services or other utilities.

6.2Access to Premises. Tenant, its employees, contractors, agents and invitees shall have access to the Premises 24 hours per day, seven days per week, 365 days per year.

6.3Security Services.  Tenant acknowledges and agrees that, while Landlord may engage security personnel to patrol the Premises, Landlord is not providing any security services with respect to the Premises and that Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with respect to, any loss by theft or any other damage suffered or incurred by Tenant in connection with any unauthorized entry into the Premises or any other breach of security with respect to the Premises.  Tenant hereby agrees to the exercise by Landlord and Landlord’s Agents, within their sole discretion, of such security measures as, but not limited to, the evacuation of the Premises for cause, suspected cause or for drill purposes, the denial of any access to the Premises and other similarly related actions that it deems necessary to prevent any threat of property damage or bodily injury.

ARTICLE 7
MAINTENANCE AND REPAIR

7.1Landlord’s Obligations.  Landlord shall, at its sole cost and expense (and not as a cost or expense that may be charged, directly or indirectly, to Tenant), make all repairs and replacements necessary to keep the Structural Elements, Roof Solar Array, Solar Basin and Fuel Cell (if any) in good condition and repair; provided that, Landlord shall not be responsible for any repairs to, or replacements

[***] 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

of, the Structural Elements necessary as a result of damage to the Structural Elements, in excess of reasonable wear and tear, caused by Tenant’s use of the Premises, whether for the Permitted Use or otherwise. The term “Structural Elements” means the structural foundation, roof and load-bearing walls of the Building and comparable structural elements of the service areas and loading docks located in the Exterior Areas.  Except for Landlord’s obligations under this Lease with respect to  Landlord Work, Landlord is not required to furnish any services or facilities, or to make any repairs or Alterations, in, about or to the Premises other than with respect to the Structural Elements. Tenant acknowledges that Landlord is not required to maintain, repair or rebuild all or any part of the Premises or make repairs at the expense of Landlord pursuant to any Laws at any time in effect, except as expressly provided in this Lease.

7.2Tenant’s Obligations. Except as expressly provided herein, and subject to Section 7.1, Section 10.3, Article 12 and Section 13.1, during the Term, Tenant shall, at its sole cost and expense, be responsible for making all repairs and replacements to the Premises (including, without limitation, the Building Systems), and the Exterior Areas, necessary to keep them in as good order and repair as they were in on the final Applicable Phase Delivery Date, reasonable wear and tear and fire and casualty excepted, and (ii) paying all costs of operating the Premises in the ordinary course of business. Tenant’s repairs shall be at least equal in quality and workmanship to the Landlord Work and Tenant shall make the repairs in accordance with all Laws.

7.3Alterations Required by Laws.  If, after the final Applicable Phase Delivery Date, any Governmental Authority requires any Alteration to the Premises whether or not such Alteration is as a result of Tenant’s particular use of the Premises or as a result of any Alteration to the Premises (other than to a Structural Element) made by or on behalf of Tenant, Tenant shall pay the cost of all such Alterations or the cost of compliance, as the case may be. Landlord shall be responsible for any changes or modifications to the Structural Elements that may be required by applicable Laws; provided, however, if as a result of any use of the Premises by Tenant or Tenant’s Parties, or as a result of any Alteration made to the Premises by or on behalf of Tenant (other than the Landlord Work), any repairs, alterations or improvements are required in or to the Premises to comply with applicable Laws, Tenant shall be solely responsible for the cost of such repairs, alterations or improvements in or to the Premises.

ARTICLE 8
CHANGES AND ALTERATIONS

8.1Landlord Consent Requirements.  Tenant shall not make any: (a) Structural Alteration without the prior written consent of Landlord, which consent may be granted or withheld in Landlord’s sole discretion; or (b) System Alteration without the prior written consent of Landlord, which consent shall not be unreasonably withheld.  Landlord acknowledges that Tenant’s installation of the Furnaces in the Premises along with other related equipment is necessary for the Permitted Use.  Subject to Landlord’s reasonable approval of the plans for Tenant’s installation of the Furnaces and any related equipment and infrastructure, Tenant may install the Furnaces and related equipment in the Premises. Subject to the Collateral Agreements, the Furnaces and related equipment shall at all times be Tenant’s (or GTAT Equipment’s) property and shall be removed by Tenant at the expiration or earlier termination of this Lease.

8.2Installation of Tenant Alterations.  Any Alteration to the Premises made by Tenant shall be at Tenant’s sole cost and expense, in compliance with all applicable Laws and all reasonable requirements of any insurer providing coverage for the Premises or any part thereof. Tenant shall obtain, in advance, and furnish to Landlord any necessary permits for such Alterations, together with proof of Tenant’s (or its contractor’s) builder’s “all risk” insurance in an amount at least equal to the replacement value of the Alterations and liability insurance as required in the attached Exhibit F-1, Tenant will diligently and continuously pursue the Alterations to completion.  Landlord may monitor construction of the Alterations and Tenant shall reimburse Landlord for its reasonable costs (including, without limitation, the reasonable costs of any construction manager retained by Landlord) in reviewing plans and documents and in monitoring construction.

[***] 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

8.3Ownership.  Subject to the terms of Section 8.8 and to the applicable terms of the Collateral Agreements, all Alterations Tenant makes or installs (excluding installation of any of Tenant’s Property) shall become the property of Landlord and a part of the Premises at the expiration or earlier termination of the Term, and Tenant shall surrender the Alterations to Landlord upon expiration or earlier termination of this Lease; provided, however, that Landlord may, require Tenant to remove any Removal Alterations and to repair any damage to the Premises caused by such removal, ordinary wear and tear excepted, all at Tenant’s sole expense. The term “Removal Alterations” shall mean any Structural Alterations: (a) which Landlord, in response to a Removal Inquiry by Tenant, indicated to Tenant must be removed by Tenant at the end of the Term; and (b) with respect to which Tenant did not deliver a Removal Inquiry to Landlord at the time Tenant sought Landlord’s approval of such Structural Alteration (in accordance with the provisions of this Article 8).  As used herein, the term “Removal Inquiry” shall mean an inquiry by Tenant, made to Landlord contemporaneously with Tenant’s request for approval of a Structural Alteration, as to whether or not such Structural Alteration must be removed by Tenant at the end of the Term.

8.4Liens.  Tenant shall be responsible for all costs and charges for any work done by or for Tenant on or about the Premises or in connection with Tenant’s occupancy thereof, and shall keep the Premises free from any mechanics’, materialmen’s, designers’ or other liens arising out of any work performed, materials furnished or obligations incurred by or for Tenant or any Person claiming by, through or under Tenant (“Liens”).  If any such Lien is filed or recorded against Landlord’s interest in the Premises and Tenant, within thirty (30) days after receipt of written notice of such filing or recording, does not release the same of record or provide a bond or other surety satisfactory to Landlord protecting Landlord and the Premises against such Lien, Landlord may, without waiving its rights and remedies based upon such breach by Tenant and without releasing Tenant from any obligation under this Lease, upon notice to Tenant, cause such Lien to be released by any means Landlord deems proper, including, but not limited to, paying the claim giving rise to the Lien or posting security to cause the discharge of the Lien. Tenant shall reimburse Landlord, as Additional Rent, for all amounts Landlord pays (including, without limitation, reasonable attorneys’ fees and costs).

8.5Indemnification.  Tenant shall, to the fullest extent allowable under the Laws, indemnify, defend (with counsel reasonably acceptable to Landlord) and hold harmless the Landlord Parties and the Premises from and against any Liens or Claims in any manner relating to or arising out of any Alterations or any other work performed, materials furnished or obligations in connection with the same incurred by or for Tenant or any Person claiming by, through or under Tenant.

8.6Documentation.  Upon completion of any Structural Alterations, at Landlord’s request, Tenant shall promptly provide Landlord with: (a) an architect’s certificate certifying the Structural Alterations have been completed in conformity with the plans and specifications; (b) a certificate of occupancy (if the alterations are of such a nature as would require the issuance of a certificate of occupancy under applicable Laws); (c) a complete set of as-built plans and specifications; and (d) any other documents or information reasonably requested by Landlord.

8.7Cooperation.  Landlord shall cooperate with Tenant in the application for any permit or authorization required by Laws provided there shall be no cost, liability, obligation or expense to Landlord.

8.8Tenant’s Property.  The terms of this Section 8.8 are and shall remain subject to the Collateral Agreements. Notwithstanding any provision of this Lease to the contrary but subject to the Collateral Agreements, all of the Tenant’s Property shall remain the property of the applicable member of the Tenant Group.  Each member of the Tenant Group shall have the right, at any time and from time to time during the Term, to install, maintain, repair, replace, remove, operate and finance any and all of its Tenant’s Property.  At the expiration of the Term or earlier termination of this Lease, Tenant shall (or shall cause each member of the Tenant Group to) remove all of the Tenant’s Property from the Premises unless either: (a) Tenant is permitted to leave such Tenant’s Property at the Premises pursuant to the terms of Section 17.1; or (b) Landlord gives Tenant a written waiver for same.  At any time that a member of the Tenant Group removes any of its Tenant’s Property, Tenant shall (or shall cause such member of the Tenant Group to) promptly repair the Premises as a result of any damage to, or destruction of, the

[***] 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

Premises caused by such removal. Tenant will indemnify Landlord and Landlord’s Parties against, and hold Landlord and the Landlord Parties harmless from, any claims, loss, injury, liability, or damages (including reasonable attorneys’ fees) incurred by such party as a result of any member of the Tenant Group entering the Premises to remove any of Tenant’s Property from the Premises.  Tenant shall have the right to grant a lien on and a security interest in all of Tenant’s Property and any other assets and personal property of Tenant located at the Premises in favor of any creditor of Tenant (each a “Secured Party”) and such Secured Party shall be permitted to foreclose upon such interest, all without Landlord’s consent.  Landlord waives any and all security interests, liens, claims or other similar rights (including rights of levy or distraint for rent on or in Tenant’s assets or personal property) with respect to Tenant’s Property and any other assets or personal property of Tenant located at the Premises.  Upon the request of Tenant, Landlord shall execute an agreement: (i) confirming Landlord’s consent to the Secured Party’s lien or security interest and Landlord’s waiver as described above; and (ii) providing the Secured Party with the right to access any and all collateral located at the Premises, which agreement shall be in form and substance reasonably satisfactory to Landlord and such Secured Party.

ARTICLE 9
RIGHTS RESERVED

9.1Landlord’s Entry.  Subject to the terms of Sections 9.5 and 9.6, without limiting the terms of Section 5.5, Landlord and Landlord’s Agents may during reasonable times and upon at least twenty-four (24) hours’ prior written notice to Tenant enter the Premises to: (a) inspect the Premises and/or audit Tenant’s records to verify that Tenant has complied with its obligations under this Lease and, subject to any limitations set forth in the Collateral Agreements, its obligations under the Collateral Agreements; (b) subject to any limitations set forth in the Collateral Agreements, perform quality assurance audits, observe progress of the Development Services, discuss the Development Services with relevant Tenant personnel, and inspect records and data relevant to the Development Services; (c) show the Premises to prospective purchasers, mortgagees and, during the last eighteen (18) months of the Term, tenants; (d) maintain, repair, operate and monitor (or cause the applicable utility provider to do the same) the Roof Solar Array, Fuel Cell and Electrical Substation; (e) post notices of non-responsibility or other protective notices if available under applicable Laws; or (f) from time to time, undertake additional improvements to the Building as Landlord deems reasonably necessary to perform Landlord’s obligations under this Lease or to comply with Law. Landlord may in the event of any emergency (which means a sudden or unanticipated event which may cause injury, loss of life or material damage to property) enter the Premises without notice to Tenant for the purpose of protecting life or property. No such entry shall be construed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises.  Landlord may temporarily close entrances, doors, corridors, elevators or other facilities without liability to Tenant by reason of such closure in the case of any such emergency.

9.2Assignment of Warranties, Guaranties, Permits, Contracts and Documents.  Landlord shall use commercially reasonable efforts to ensure that all guarantees, warranties and the like that relate to any of the Landlord Work are assignable to Tenant.  At the end of the Term, Tenant shall assign (or cause the applicable member of the Tenant Group to assign) to Landlord in writing pursuant to a mutually agreeable assignment and assumption agreement to the full extent assignable:  (a) warranties and guarantees relating to the Building and Improvements which are then in effect, and relating to the Furnaces to the extent the Furnaces have or will become the property of Landlord pursuant to the Collateral Agreements; (b) licenses and governmental approvals and permits relating to the Premises and the Building that are held by Tenant; (c) as-built plans, specifications, drawings and architectural and engineering studies relating to the Building; and (d) if requested by Landlord, operations, supply, maintenance, repair, service and other contracts relating to maintenance and operation of the Premises and the Building, but only if and to the extent Tenant and its affiliates are released from all obligations and liabilities with respect to such contracts that first arise after the effective date of such assignment.

9.3Right to Cure.  In addition to the rights set forth in Section 15.7, if either Landlord or Tenant defaults, beyond any applicable notice and cure period, in the performance of any obligation under Article 7 of this Lease and such default may have a material adverse impact on the operation of the

[***] 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

Premises for the Permitted Use or the value of the Premises, then the other party may, but is not obligated to, perform any such obligation on the defaulting party’s part without waiving any rights based upon such default and without releasing the defaulting party from any obligations hereunder.  The defaulting party shall pay to the curing party, within fifteen (15) Business Days after delivery by the curing party to the defaulting party of statements therefor, sums equal to expenditures reasonably made and obligations reasonably incurred by the curing party in connection with the remedying of the defaulting party’s defaults, and such amount due shall bear interest at the Default Rate until paid in full.  Such obligations survive the termination or expiration of this Lease.

9.4Power Source Area.  Subject to the terms of Sections 9.5 and 9.6, Landlord may elect, in Landlord’s sole and absolute discretion to install a fuel-cell system on the Premises to provide electrical service to the Premises (the “Fuel Cell”); provided that: (a) the size and location of the Fuel Cell shall be designed in consultation with Tenant to minimize interference to Tenant and Tenant’s use of the Premises for the Permitted Use; (b) Landlord shall bear all costs and expenses of the Fuel Cell (except for costs or expense resulting or relating to Tenant’s negligence or willful misconduct); and (c) Landlord shall install and maintain the Fuel Cell in compliance with all applicable Laws.

9.5Limitations on Landlord’s Entry Rights.  Notwithstanding any provision of this Lease that grants or reserves to Landlord the right to enter the Premises: (a) any such access to the Premises by Landlord or its agents shall be subject to Tenant’s reasonable security precautions and restrictions; (b) at Tenant’s option, Tenant’s representatives may accompany Landlord or Landlord’s Agents during any such access to the Premises, unless an event of emergency has occurred and there is insufficient time under the circumstances to defer entry until a representative of Tenant is available, and (c) Landlord and Landlord’s Agents shall conduct all of their activities on the Premises in a manner designed to minimize interference to Tenant and Tenant’s use of the Premises, and in a manner designed to protect Tenant’s confidentiality.

9.6Indemnification.  In addition to Landlord’s other indemnification obligations in this Lease, Landlord shall, to the fullest extent allowable under the Laws, indemnify, defend (with counsel reasonably acceptable to Tenant) and hold harmless the Tenant Parties from and against all Claims in any manner relating to or arising out of: (a) any accident, injury, occurrence or damage in, about or on the Premises in any way related to the Roof Solar Array, the Solar Basin, or the Fuel Cell or the operation thereof (except to the extent such Claims arise from or in connection with any negligence or willful misconduct of Tenant or Tenant’s Agents); or (b) any personal injury or property damage caused in or about the Premises by Landlord or Landlord’s Agents negligence or willful misconduct in its exercise of any right under this Lease to enter the Premises.

9.7Excluded Infrastructure.  Notwithstanding any other provision of this Lease, but subject to Tenant’s agreements under Section 11.1.2 with respect to the negligence or willful misconduct of Tenant or Tenant’s Agents, Tenant shall have no obligation to: (a) repair, maintain, replace, alter or improve any or all of the Excluded Infrastructure; (b) obtain permits, licenses or other approvals from Governmental Authorities with respect to any or all of the Excluded Infrastructure or the operation thereof; or (c) to otherwise comply with Laws (including, without limitation, Environmental Laws) applicable to any or all of the Excluded Infrastructure or the operation thereof, or to conditions that may arise in connection therewith.  To the extent any Excluded Infrastructure has not been installed at the Premises as of the Effective Date, then the size and location of such Excluded Infrastructure shall be designed in consultation with Tenant to minimize interference to Tenant and Tenant’s use of the Premises for the Permitted Use.

ARTICLE 10
INSURANCE

10.1Tenant’s Insurance Obligations.  Tenant shall, at Tenant’s sole cost and expense, at all times during the Term, maintain the insurance described in the attached Exhibit F-1.

[***] 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

10.1.1Evidence of Insurance.  Upon the Effective Date, and upon renewal or replacement of coverage, Tenant shall deliver to Landlord certificates of insurance and any additional documentation reasonably requested by Landlord (including, without limitation, policy endorsements) to assure compliance with this Section 10.1. If any of the insurance policies required by this Section 10.1 are cancelled prior to the stated expiration date, Tenant shall promptly replace such coverage so that no lapse in insurance occurs.

10.1.2Copies and Additional Information.  Tenant shall provide to Landlord upon request certified copies of all policies and endorsements.  If Tenant’s insurance carrier will not provide certified copies, each copy of a policy shall include a copy of all endorsements and shall be accompanied by a letter from Tenant’s insurance broker or Tenant’s authorized agent stating that Tenant’s insurance carrier will not provide certified copies of insurance policies and endorsements and that the enclosed copy of the policy and endorsements is a true, correct and complete copy of the respective insurance policy and all endorsements to the best of the broker’s or authorized agent’s knowledge.  In addition, Tenant agrees to reasonably cooperate with Landlord in obtaining any and all information demonstrating Tenant is in compliance with the insurance requirements of this Section 10.1.

10.1.3Claims Reporting.  In the event that Tenant reports any claims to its insurers issuing the coverage required under this Lease, Tenant shall advise Landlord of the same.  Tenant shall diligently pursue coverage of claims under all such insurance policies and keep Landlord advised of any claim denials, whether partial denials or full denials, and the basis for the same.

10.1.4Modification of Insurance Requirements.  From time to time during the Term, but not more often than once in any five (5) year period, Landlord may require that the types of insurance specified herein be modified as to the insurance amounts and/or coverages provided, but only to the extent then reasonable and customary for tenants of similar properties with similar uses.

10.1.5Tenant’s Failure to Insure.  Notwithstanding any contrary language in this Lease and any notice and cure rights this Lease provides Tenant, if Tenant fails to provide Landlord with evidence of insurance as required under Section 10.1.1, and provided that such failure continues for at least ten (10) Business Days following written notice thereof to Tenant from Landlord, Landlord may assume that Tenant is not maintaining the insurance required under Section 10.1.  In such event, and without further notice or demand to Tenant, Landlord may, but is not obligated to, obtain such insurance for Landlord’s benefit.  Landlord’s exercise of this right shall not cure Tenant’s breach or waive any right the Landlord has with respect to Tenant’s default.  Upon demand, Tenant shall pay to Landlord, as Additional Rent, all reasonable costs and expenses Landlord incurs in obtaining such insurance, and such amount due shall bear interest at the Default Rate until paid in full.

10.2Landlord’s Insurance Obligations.  Landlord shall, at Landlord’s sole cost and expense, at all times during the Term maintain the insurance described in the attached Exhibit F-2. Landlord in its sole discretion may elect to self-insure any or all coverage set for in Exhibit F-2.

10.3Waiver of Subrogation Under Property Insurance Policies.  Notwithstanding any other provision of this Lease, but subject to the terms of Section 10.4 and as long as the insurance is not invalidated thereby, Landlord and Tenant hereby waive, and shall cause their respective property insurers to waive, release and discharge the other party, its employees, and agents and their insurers for any loss or damage with respect to the Premises, or any contents thereof (including the Furnaces and other Tenant’s Property), which loss or damage is covered by the property insurance required by this Lease (whether or not the property insurance is actually maintained by the party suffering the loss or damage and regardless of whether or not the loss or damage falls within a deductible or other self-insured mechanism), and Landlord and Tenant, respectively, will look only to its insurance coverage (regardless of whether Landlord or Tenant maintains any such coverage) in the event of any such Claim.

10.4Certain Conduct Resulting in Insurance Costs.  If the recklessness or willful misconduct of either Landlord or Tenant (which shall apply only to the extent that conduct of any person or entity may be imputed, as a matter of law, to such party) causes property damage to the other party

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and such damage is covered by insurance maintained or which is required to be maintained under this Lease, then the party causing such damage shall be responsible for paying the following amounts: (a) the deductible attributable to such insured event, not to exceed $2,000,000 per event of loss (and, if the loss is not insured, then an amount not to exceed $2,000,000 per event of loss); and (b) any increase in the property insurance premiums for or allocable to the Premises or the Tenant’s Property maintained within the Premises following the insured event for the balance of the Term.

ARTICLE 11
RELEASE AND INDEMNIFICATION

11.1Release and Indemnification.

11.1.1Waiver of Liability/Assumption of Risk. Tenant agrees that its use and occupancy of the Premises is at its own risk and, to the full extent permitted by Law, hereby releases Landlord and the Landlord Parties from all claims for any damage or injury except to the extent of any Excluded Liability. To the fullest extent allowed by law except to the extent of any Excluded Liability, Landlord shall not be responsible or liable for any property damage, bodily injury or injury to the business (or loss of income therefrom), goods, wares, merchandise or other property of Tenant in or about the Premises, whether such damage or injury is caused by or results from: (a) fire, steam, electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures or any other cause; (c) conditions arising in or about the Premises or from other sources or places; or (d) any act or omission of any other party.  Landlord shall not be liable for any such damage or injury, even though the cause of, or the means of repairing, such damage or injury are not accessible to Tenant. Tenant agrees that any employee or agent to whom the Premises or any part thereof shall be entrusted by or on behalf of Tenant shall be acting as Tenant’s agent with respect to the Premises or any part thereof, and neither Landlord or any other Landlord Party shall be liable for any loss of or damage to the Premises or any part thereof.  The term “Excluded Liability” means Landlord’s liability under this Lease to the extent resulting from or relating to: (i) the negligence or willful misconduct of Landlord or Landlord’s Agents; and (ii) Landlord’s breach of this Lease (including Landlord’s failure to perform Landlord’s obligations hereunder).

11.1.2Indemnification by Tenant.  In addition to Tenant’s other indemnification obligations in this Lease (including without limitation in Sections 1.1.3, 4.5, 4.8, 5.8, 8.5, 8.8, 15.4 and 18.10), but subject to Landlord’s agreements in Section 11.1.3, Tenant shall, to the fullest extent allowable under the Laws, indemnify, defend (with counsel reasonably acceptable to Landlord) and hold harmless the Landlord Parties from and against all Claims in any manner relating to or arising out of: (a) any negligence or willful misconduct of Tenant or Tenant’s Agents; (b) any accident, injury, occurrence or damage in, about or on the Premises; or (c) any use or occupancy of the Premises or any part thereof by the Tenant Parties.  In the event that Landlord or Landlord’s Agents caused or contributed to cause the Claims for which indemnity is sought under this Section 11.1.2, the damages and expenses (including, without limitation, reasonable attorneys’ fees) shall be allocated, or reallocated, as the case may be, between the indemnified and the indemnifying party, in such proportion as appropriately reflects the relative fault of the two parties, and the liability of the indemnifying party shall be proportionately reduced. The indemnity provisions of this Section shall survive termination or expiration of this Lease.

11.1.3Indemnification by Landlord.  Subject to Tenant’s waivers, releases and agreements in this Article 11 and elsewhere in this Lease, and subject to Tenant’s agreements in Section 11.1.2 and the qualifications with reference to the use of the term “negligence” set forth below, in addition to Landlord’s other indemnification obligations in this Lease (including without limitation in Sections 4.5, 5.8, 9.6 and 18.10) Landlord shall, to the fullest extent allowable under the Laws, indemnify, defend and hold harmless Tenant from and against all Claims brought against Tenant by third parties to the extent caused by or resulting from the negligence or willful misconduct of Landlord or any of Landlord’s Agents.  For purposes of this indemnification obligation, the term “negligence” shall not include Landlord’s failure to act in respect of matters which are or were the obligation of Tenant under this Lease, including, without limitation, Claims caused by, incurred or resulting from Tenant’s operations or by Tenant’s use and occupancy of the Premises, whether relating to its original design or construction, latent defects,

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alteration, maintenance, or use by Tenant or any person thereon, including, without limitation, supervision or otherwise, or from any breach of, default under, or failure to perform any term or provision of this Lease by Tenant or Tenant’s Agents.  In the event that Tenant or Tenant’s Agents caused or contributed to cause the Claims for which indemnity is sought under this Section 11.1.3, the damages and expenses (including, without limitation, reasonable attorneys’ fees) shall be allocated, or reallocated, as the case may be, between the indemnified and the indemnifying party, in such proportion as appropriately reflects the relative fault of the two parties, and the liability of the indemnifying party shall be proportionately reduced. The indemnity provisions in this Section shall survive termination or expiration of this Lease.

11.1.4Claim Procedure.  The indemnification obligations of Landlord and Tenant under this Lease are conditioned on the indemnified party promptly notifying the indemnifying party in writing after any of the indemnified parties receives notice of a claim or loss for which indemnification is or may be sought under this Lease.  Failure to provide such notice will relieve the indemnifying party of its indemnity obligations only to the extent that such failure actually prejudices the indemnifying party.  The indemnifying party will have the right to control, in a manner not adverse to the indemnified parties, the defense and settlement of any claims.  The indemnified parties may employ counsel, at their own expense, with respect to any such claim (provided that if counsel is employed due to a conflict of interest or because the indemnifying party does not assume control of the defense, the indemnifying party will bear such expense).  The indemnifying party will not admit liability or enter into any settlement of a claim that adversely affects the indemnified parties’ rights or interests without the indemnified parties’ prior written approval, which shall not be unreasonably withheld or delayed.

ARTICLE 12
DAMAGE OR DESTRUCTION

12.1Notification.  Tenant shall give Landlord written notice promptly after any damage or destruction to the Premises from a fire or other casualty which damage or destruction could have a material adverse impact on operation of the Premises for the Permitted Use or the value of the Premises. Tenant’s notice shall provide a general description of the nature and extent of the damage or destruction, and shall include copies of any documents or notices received in connection with the same. Thereafter, Tenant shall promptly send Landlord copies of all notices, correspondence and pleadings relating to any such casualty.

12.2Restoration.  Unless this Lease is terminated by Landlord or Tenant pursuant to Section 12.3, if the Premises is damaged or destroyed by any fire or other casualty, then: (a) Landlord shall, at its sole expense, as promptly as practicable after such fire or other casualty, repair, reconstruct or replace the Premises (other than Tenant’s Alterations) and the Electrical Substation (or Landlord shall cause the applicable utility to repair, reconstruct or replace the Electrical Substation) to as nearly as possible the same condition in which they existed prior to such damage or destruction, and (b) Tenant shall, at its sole expense, as promptly as practicable after Landlord has completed its restoration work, repair, reconstruct or replace such portion of Tenant’s Alterations that were not constructed by Landlord to as nearly as possible the same condition in which they existed prior to such damage or destruction.  The work to be performed by Landlord and Tenant pursuant to this Section 12.2 is referred to herein as the “Restoration Work.”

12.3Termination.

12.3.1If the Premises is damaged or destroyed by fire or other casualty, an independent architect or engineer shall, at Landlord’s sole cost and expense, reasonably estimate the period of time required for Landlord and Tenant to perform the Restoration Work.  Such architect or engineer shall provide a detailed written statement of such estimate to Landlord and Tenant within thirty (30) days after the date of such destruction or damage (“Landlord’s Restoration Estimate”).  If such architect or engineer determines that the Restoration Work cannot reasonably be expected to be completed within a period of 365 days from the date work were to commence thereon, then, subject to Section 12.6, Landlord or Tenant may terminate this Lease by giving written notice to the other party within thirty (30) days after such determination by Landlord’s architect or engineer.

[***] 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

12.3.2If the Premises is destroyed or damaged by fire or other cause that is not insurable under a fire, extended coverage and so-called “all-risk” insurance policy with coverage against vandalism and malicious conduct, and such destruction or damage renders at least twenty-five percent (25%) of the Premises untenantable, then, subject to Section 12.6, Landlord may terminate this Lease by giving written notice to Tenant within thirty (30) days after the date of such fire or other casualty.

12.3.3If all or any portion of the Premises is damaged by fire or other casualty, and neither Landlord nor Tenant elects to terminate this Lease pursuant to the foregoing provisions of this Section 12.3, and Landlord shall fail to substantially complete the portion of the Restoration Work for which it is responsible within the period estimated in Landlord’s Restoration Estimate, subject to a Force Majeure Event and Tenant Delays, then, subject to Section 12.6, Tenant may deliver written notice to Landlord (the “Casualty Termination Notice”) of Tenant’s intent to terminate the Lease, provided that, Tenant shall deliver to Landlord such Casualty Termination Notice within thirty (30) days after the expiration of the period set forth in Landlord’s Restoration Estimate.  Tenant’s termination of this Lease pursuant to this Section 12.3.3, subject to Section 12.6, shall be effective sixty (60) days after Landlord’s receipt of the Casualty Termination Notice; provided, however if Tenant fails to deliver the Casualty Termination Notice within the required 30-day period, or if Tenant timely delivers to Landlord the Casualty Termination Notice and Landlord substantially completes the portion of the Restoration Work for which it is responsible prior to the expiration of the 60-day notice period, subject to a Force Majeure Event and Tenant Delays, then the Lease shall continue in existence and any Casualty Termination Notice so delivered shall be deemed null and void.  If Landlord fails to substantially complete the portion of the Restoration Work for which it is responsible within sixty (60) days after Landlord receives the Casualty Termination Notice, then, subject to Section 12.6, this Lease shall terminate on the sixty-first (61st) day after Landlord’s receipt of the Casualty Termination Notice.

12.4Damage or Destruction at End of Term.  If the Premises is damaged or destroyed during the last eighteen (18) months of the Term, Landlord shall provide written notice to Tenant (“Landlord’s Restoration Estimate”), within thirty (30) days after the date of such damage or destruction, stating whether, in Landlord’s reasonable determination, the Restoration Work can be completed by the date that is twelve (12) months prior to the expiration of the Term.  If Landlord reasonably determines that the Restoration Work cannot be completed by such date, then, subject to Section 12.6, either Landlord or Tenant may terminate this Lease by providing written notice to the other within thirty (30) days after the date of Landlord’s notice.  If Landlord fails to provide Landlord’s Restoration Estimate within thirty (30) days after the date of such damage or destruction during the last eighteen (18) months of the Term, then Tenant, subject to Section 12.6, may terminate this Lease by giving written notice to Landlord within thirty (30) days after the expiration of the 30-day period in which the Landlord Restoration Estimate was required to be given.

12.5Rent Abatement.  In the event of repair and restoration as herein provided, the monthly installments of Base Rent shall be abated proportionately corresponding to the time during which, and to the portion of the floor area of the Premises of which, Tenant is deprived on account of such repair or restoration, as reasonably determined by Landlord; provided that, Tenant shall not be entitled to such abatement to the extent that such damage or destruction resulted from the acts or inaction of Tenant or Tenant’s Agents.  Except as expressly provided in the immediately preceding sentence with respect to abatement of Base Rent, Tenant shall have no claim against Landlord for, and hereby releases Landlord and Landlord’s Agents from responsibility for and waives its entire claim of recovery for any cost, loss or expense suffered or incurred by Tenant as a result of any damage to or destruction of the Premises or the Building or the repair or restoration thereof, including, without limitation, any cost, loss or expense resulting from any loss of use of the whole or any part of the Premises and/or any inconvenience or annoyance occasioned by such damage, repair or restoration.  To the extent permitted by the Laws, Tenant waives the benefits of any Law that provides Tenant any abatement or termination rights by virtue of a casualty not specifically described in this Section 12.5.  Subject to the Collateral Agreements, neither Landlord nor any mortgagee shall have any right to, or interest in, any proceeds of insurance relating to Tenant’s Property.

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12.6Termination of MDSA SOW.  Notwithstanding anything to the contrary in this Article 12, the termination rights granted to Landlord and Tenant in this Article 12 shall only be effective in the event the term of the MDSA SOW has expired or the MDSA SOW has been terminated pursuant to its terms as the result of an event constituting Cause.

ARTICLE 13
EMINENT DOMAIN

13.1If twenty-five percent (25%) or more of either the Premises or the Building is taken for any public or quasi-public purpose by any Governmental Authority, by exercise of the right of appropriation, inverse condemnation, condemnation or eminent domain, or sold to prevent such taking (each such event being referred to as a “Condemnation”), Landlord may, at its option, terminate this Lease as of the date title vests in the condemning party.  If twenty-five percent (25%) or more of the Premises is taken and if the Premises remaining after such Condemnation and any repairs by Landlord would be untenantable for the conduct of Tenant’s business operations, Tenant shall have the right to terminate this Lease as of the date title vests in the condemning party.  If either party elects to terminate this Lease as provided herein, such election shall be made by written notice to the other party given within thirty (30) days after the nature and extent of such Condemnation have been finally determined.  If neither Landlord nor Tenant elects to terminate this Lease to the extent permitted above, Landlord shall promptly proceed to restore the Premises (other than Tenant’s Alterations), to the extent of any Condemnation award received by Landlord, to substantially the same condition as existed prior to such Condemnation, allowing for the reasonable effects of such Condemnation. A proportionate abatement shall be made to the Base Rent corresponding to the time during which, and to the portion of the floor area of the Premises (adjusted for any increase thereto resulting from any reconstruction) of which, Tenant is deprived on account of such Condemnation and restoration, as reasonably determined by Landlord. Except as expressly provided in the immediately preceding sentence with respect to abatement of Base Rent and as provided below in Section 13.2, Tenant shall have no claim against Landlord for, and hereby releases Landlord and Landlord’s Agents from responsibility for and waives its entire claim of recovery for any cost, loss or expense suffered or incurred by Tenant as a result of any Condemnation or the repair or restoration of the Premises following such Condemnation, including, without limitation, any cost, loss or expense resulting from any loss of use of the whole or any part of the Premises and/or any inconvenience or annoyance occasioned by such Condemnation, repair or restoration.

13.2Tenant shall have the right to participate with Landlord and to be a party in any condemnation proceeding.  Landlord and Tenant shall cooperate to maximize the total award made by the Condemnation authority.  Landlord shall be entitled to any and all compensation, damages, income, rent, awards, or any interest therein whatsoever which may be paid or made in connection with any Condemnation, and Tenant shall have no claim against Landlord for the value of any unexpired term of this Lease or otherwise; provided that, Tenant shall be entitled to receive any award separately allocated by the condemning authority to Tenant for either or both of: (a) Tenant’s relocation expenses; and (b) the value of Tenant’s Property (specifically excluding fixtures, Alterations and other components of the Premises which under this Lease or by law are or at the expiration of the Term will become the property of Landlord), provided that such award does not reduce any award otherwise allocable or payable to Landlord.

13.3The provisions of this Article 13 are Tenant’s sole and exclusive rights and remedies in the event of a Condemnation.  To the extent permitted by the Laws, Tenant waives the benefits of any Law that provides Tenant any abatement or termination rights or any right to receive any payment or award (by virtue of a Condemnation) not specifically described in this Article 13.

ARTICLE 14
TRANSFERS

14.1Restriction on Transfers. Except as provided below, this Lease and the rights and obligations of Tenant under this Lease are personal to GTAT Corporation, a Delaware corporation (“GTAT”), and GTAT may not Transfer this Lease or any right or obligation under this Lease, without the

[***] 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

prior written consent of Landlord which may be granted or withheld in Landlord’s sole and absolute discretion.  For purposes of this Section 14.1, any Change of Control or Covered Transaction will be considered a Transfer. Notwithstanding the foregoing, Tenant may Transfer this Lease to any permitted successor or assignee of GTAT under the MDSA or the MDSA SOW, or to any direct or indirect successor or assignee thereof permitted under the MDSA or the MDSA SOW; provided that, such successor or assignee must agree in writing prior to the date of such Transfer to be bound by all of the terms and conditions of this Lease as of the date of Transfer. No Transfer shall release Tenant from any liability or obligation under this Lease and Tenant shall remain liable to Landlord after such a Transfer as a principal and not as a surety.  Any purported or attempted Transfer, in whole or in part, without Landlord’s consent will be null and void and will constitute an Event of Default.

14.2Costs.  Tenant shall pay to Landlord, as Additional Rent, all reasonable costs and expenses Landlord incurs in connection with any Transfer, including, without limitation, reasonable attorneys’ fees and costs, regardless of whether Landlord consents to the Transfer.

14.3Permitted Subleases.  Provided Tenant shall provide Landlord prior written notice, and verification of Tenant’s relationship to the Permitted Sublessee, Tenant may assign this Lease or sublease all or any portion of the Premises to any Person that is 100% owned and controlled by GTAT (“Permitted Sublessee”), but any such assignment or sublease shall not release GTAT from any of its obligations or liabilities under this Lease.

ARTICLE 15
DEFAULTS; REMEDIES

15.1Events of Default.  The occurrence of any of the following constitutes an “Event of Default” by Tenant under this Lease:

15.1.1Failure to Pay Rent.  Tenant fails to pay Base Rent or any Additional Rent as and when due and such failure continues for five (5) Business Days after Landlord delivers written notice thereof to Tenant except that Tenant shall not be entitled to notice more than twice in any consecutive twelve (12) month period and the failure to timely pay Base Rent or any other Additional Rent when due on the third and any subsequent instance of late payment in a consecutive twelve (12) month period shall be an immediate default.

15.1.2Failure to Observe or Perform.  Tenant fails to observe or otherwise breaches or fails to perform any of the other provisions of this Lease to be observed or performed by Tenant under this Lease and such failure continues for a period of thirty (30) days after Landlord delivers written notice to Tenant of Tenant’s breach or failure; provided that if Tenant cannot reasonably cure its breach or failure within a 30-day period, Tenant’s breach or failure is not an Event of Default if Tenant commences to cure its breach or failure within the 30-day period and thereafter diligently pursues the cure to completion.

15.1.3Collateral Agreements.  The MDSA SOW is terminated pursuant to its terms as the result of an event constituting Cause.

15.1.4Other Defaults.  (a) Tenant makes a general assignment or general arrangement for the benefit of creditors; (b) a petition for adjudication of bankruptcy or for reorganization or rearrangement is filed by Tenant; (c) a petition for adjudication of bankruptcy or for reorganization or rearrangement is filed against Tenant and is not dismissed within one hundred twenty (120) days; (d) a trustee or receiver is appointed to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease and possession is not restored to Tenant within one hundred twenty (120) days; or (e) substantially all of Tenant’s assets, substantially all of Tenant’s assets located at the Premises, or Tenant’s interest in this Lease is subjected to attachment, execution or other judicial seizure not discharged within sixty (60) days (collectively, an “Insolvency”).  If a court of competent jurisdiction determines that any act described in this Section 15.1.4 does not constitute an Event of Default, and the court appoints a trustee to take possession of the Premises (or if Tenant

[***] 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

remains a debtor in possession of the Premises) and such trustee or Tenant Transfers Tenant’s interest hereunder, then Landlord is entitled to receive, as Additional Rent, the amount by which the Rent (or any other consideration) paid in connection with the Transfer exceeds the Rent otherwise payable by Tenant under this Lease.

15.2Remedies.  Upon the occurrence and during the continuance of any Event of Default, Landlord may at any time and from time to time, and without preventing Landlord from exercising any other right or remedy, exercise any one or more of the following remedies:

15.2.1Termination of Tenant’s Possession/Re-entry and Reletting Right.  Terminate Tenant’s right to possess the Premises by any lawful means with or without terminating this Lease, in which event Tenant shall immediately surrender possession of the Premises to Landlord.  In such event, this Lease shall continue in full force and effect (except for Tenant’s right to possess the Premises) and Tenant shall continue to be obligated for and shall pay all Rent as and when due under this Lease.  Unless Landlord specifically states that it is terminating this Lease, Landlord’s termination of Tenant’s right to possess the Premises is not to be construed as an election by Landlord to terminate this Lease or Tenant’s obligations and liabilities under this Lease.  If Landlord terminates Tenant’s right to possess the Premises, Landlord shall not be obligated to, but may re-enter the Premises and remove all persons and property from the Premises.  Landlord may store any property Landlord removes from the Premises in a public warehouse or elsewhere at the cost and for the account of Tenant.  Subject to Section 15.3, upon such re-entry, Landlord may but shall not be obligated to relet all or any part of the Premises to a third party or parties for Tenant’s account.

15.2.2Termination of Lease.  Terminate this Lease effective on the date Landlord specifies in Landlord’s notice to Tenant.  Upon termination, Tenant shall immediately surrender possession of the Premises to Landlord in accordance with the terms of this Lease.  If Landlord terminates this Lease, Landlord may recover from Tenant and Tenant shall pay to Landlord on demand all damages Landlord incurs by reason of Tenant’s default, including, without limitation: (a) all Rent due and payable under this Lease as of the effective date of the termination; and (b) any amount necessary to compensate Landlord for any detriment proximately caused Landlord by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course would likely result from Tenant’s failure to perform, including, but not limited to, any Re-entry Costs, and taking into account Landlord’s obligation to mitigate damages.

15.2.3Other Remedies.  Exercise any other right or remedy available to Landlord under this Lease, or otherwise at law or in equity. Without limitation, Landlord may, at its option, make any payment or perform any covenant for the account of Tenant and, if Landlord makes any expenditure or incurs any obligation for the payment of money, the same shall be due and payable by Tenant upon demand, together with interest thereon at the Default Rate from the date paid by Landlord until repaid.

15.3Mitigation of Damages. In the event of the occurrence of an Event of Default by Tenant hereunder, Landlord shall exercise commercially reasonable efforts to mitigate Landlord’s damages arising from such Event of Default.

15.4Costs.  Tenant shall reimburse and compensate Landlord on demand and as Additional Rent for any actual loss Landlord incurs resulting from Landlord’s exercise of any of its remedies under Section 15.2.  Such loss shall include all reasonable legal fees, costs and expenses Landlord incurs negotiating, settling or enforcing any of Landlord’s rights or remedies or otherwise protecting Landlord’s interests under this Lease.  Tenant shall also, to the fullest extent allowable under the Laws, indemnify, defend (with counsel reasonably acceptable to Landlord) and hold harmless the Landlord Parties from and against all Claims Landlord or any of the other Landlord Parties incurs if Landlord or any of the other Landlord Parties becomes or is made a party to any claim or action: (a) instituted by or against any Person holding any interest in the Premises by, under or through Tenant, except to the extent resulting solely from an act or omission of Landlord or any of Landlord’s Agents; (b) for foreclosure of any lien for labor or material furnished to or for Tenant or such other Person; or (c) otherwise arising out of or resulting from any negligence or willful misconduct of Tenant or such other Person.  In addition, Landlord

[***] 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

shall be entitled to reimbursement of all of Landlord’s reasonable fees, expenses and damages, including, but not limited to, reasonable attorneys’ and other professional fees and expenses, Landlord incurs in connection with protecting its interests in any bankruptcy or insolvency proceeding involving Tenant, including, without limitation, any proceeding under any chapter of the Bankruptcy Code.

15.5Landlord’s Default.  If Landlord defaults in the performance of any of its obligations under this Lease, Tenant shall notify Landlord of the default and Landlord shall have thirty (30) days after receiving such notice to cure the default.  If Landlord is not reasonably able to cure the default within a thirty (30) day period, Landlord shall have an additional reasonable period of time to cure the default as long as Landlord commences the cure within the 30-day period and thereafter diligently pursues the cure to completion.  In no event shall Landlord be liable to Tenant or any other Person for consequential, special, indirect or punitive damages, including, without limitation, lost profits in connection with this Lease. In the event of a default by Landlord which is not cured after notice and within the applicable cure period Tenant shall be entitled to exercise all remedies at law and in equity, subject to the terms and conditions of this Lease.

15.6No Waiver.  No failure by either party to insist upon the performance of any provision of this Lease or to exercise any right or remedy upon a breach or default thereof, and no acceptance by Landlord of full or partial Rent during the continuance of any such breach or default, shall constitute a waiver of any such breach or default. None of the terms of this Lease to be kept, observed or performed by Landlord or Tenant, and no breach or default thereof, may be waived, altered or modified except by a written instrument executed by Landlord and Tenant.  One or more waivers by either party shall not be construed as a waiver of a subsequent breach or default of the same provision.  No statement on a payment check from Landlord or Tenant or in a letter accompanying a payment check shall be binding on the other party and the payee party may, with or without notice to the payor party, negotiate such check without being bound to the conditions of any such statement.  If Landlord or Tenant pays any amount other than the actual amount due the other party, receipt or collection of such partial payment does not constitute an accord and satisfaction.  The payee party may retain any such partial payment, whether restrictively endorsed or otherwise, without prejudice to the other party’s right to collect the balance properly due.  If all or any portion of any payment is dishonored for any reason, payment shall not be deemed made until the entire amount due is actually collected by the party entitled thereto.  The foregoing provisions apply in kind to the receipt or collection of any amount by a lock box agent or other Person on Landlord’s behalf.

15.7Self-Help Rights.  In addition to the rights set forth in Section 9.3, if Landlord or Tenant fails to timely pay or perform any of its respective obligations under this Lease, which failure is not cured within all applicable notice, grace and cure periods, then the other party shall have the right but not the obligation to advance any such payment and/or perform any such obligation on the defaulting party’s behalf, in which event the amount of any such advance and/or the out-of-pocket cost of any such performance shall (a) bear interest at the Default Rate until paid in full, and (b) together with any accrued interest, be deemed Additional Rent payable by the defaulting party hereunder within fifteen (15) Business Days after delivery by the curing party of an invoice for such amount.

15.8Dispute Resolution. Disputes arising under, or in connection with, this Lease (excluding an action for forcible detainer which shall be litigated in a court of competent jurisdiction, or any other action required under applicable Laws to be litigated in a court of competent jurisdiction) 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, California.  Judgment upon any award(s) rendered by the arbitrator may be entered in any court having jurisdiction thereof.  Notwithstanding the foregoing, 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.

[***] 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

15.9Bankruptcy.

15.9.1Timely Performance.  Tenant acknowledges that in entering into this Lease, Landlord is relying upon the financial condition and operating experience of Tenant, Tenant’s agreement to timely perform its obligations under this Lease, and all defaults under this Lease being cured promptly. Accordingly, Tenant agrees that if an Insolvency occurs: (a) all obligations that accrue or become due under this Lease (including the obligation to pay Rent), from and after the date that an Insolvency shall be timely performed exactly as provided in this Lease; (b) Rent obligations under this Lease that accrue or become due from and after the date of an Insolvency that are not paid as required by this Lease shall, in the amount of such Rents, constitute administrative expense claims allowable under the Bankruptcy Code with priority of payment at least equal to that of any other actual and necessary expenses incurred after the commencement of the Insolvency; (c) any extension of the time period within which Tenant may assume or reject this Lease without an obligation to cause all obligations accruing or coming due under this Lease from and after the date that an action is commenced to be performed as and when required under this Lease shall be harmful and prejudicial to Landlord; (d) any time period designated as the period within which Tenant must cure all defaults and compensate Landlord for all pecuniary losses which extends beyond the date of assumption of this Lease shall be harmful and prejudicial to Landlord; (e) any assignment of this Lease must result in all terms and conditions of this Lease being assumed by the assignee without alteration or amendment, and any assignment which results in an amendment or alteration of the terms and conditions of this Lease without the express written consent of Landlord shall be harmful and prejudicial to Landlord; (f) any proposed assignment of this Lease to an assignee: (i) that does not possess financial condition adequate to operate in the Premises or operating experience characteristics comparable to Tenant as of the Effective Date, shall be harmful and prejudicial to Landlord; and (ii) the rejection (or deemed rejection) of this Lease for any reason shall constitute cause for immediate relief from the automatic stay provisions of the Bankruptcy Code, and Tenant stipulates that such automatic stay shall be lifted immediately and possession of the Premises will be delivered to Landlord immediately without the necessity of any further action by Landlord.

15.9.2No Waiver.  No provision of this Lease shall be deemed a waiver of Landlord’s rights or remedies under the Bankruptcy Code or applicable law to oppose any assumption and/or assignment of this Lease, to require timely performance of Tenant’s obligations under this Lease, or to regain possession of the Premises as a result of the failure of Tenant to comply with the terms and conditions of this Lease or the Bankruptcy Code.

15.9.3Rent.  Notwithstanding anything in this Lease to the contrary, all amounts payable by Tenant to or on behalf of Landlord under this Lease, whether or not expressly denominated as such, shall constitute “rent” for the purposes of the Bankruptcy Code.

15.9.4Successors.  For purposes of this Section addressing the rights and obligations of Landlord and Tenant in the event that an action is commenced, the term “Tenant” shall include Tenant’s successor in bankruptcy, whether a trustee, Tenant as debtor in possession or other responsible person.

ARTICLE 16
CREDITORS; ESTOPPEL CERTIFICATES

16.1Subordination; Non-Disturbance.  Upon written request of Landlord, or any first mortgagee, lien of indenture holder or first deed of trust beneficiary of Lessor (“Requesting Entity”), Tenant shall, within fifteen (15) Business Days after Landlord’s reasonable request, in writing, subordinate its rights under this Lease to the lien of any mortgage, lien of indenture or first deed of trust, or to the interest of any lease in which Landlord is lessee, and to all advances made or later to be made thereunder. However, as a condition to Tenant’s obligation to sign any subordination agreement, Tenant shall have the right to obtain from the Requesting Entity, a written subordination, non-disturbance and attornment agreement in a form reasonably acceptable to Tenant providing that, such Requesting Entity shall: (a) recognize Tenant’s rights under this Lease for the full Term and agrees not to disturb Tenant’s quiet possession of the Premises as long as there is no Event of Default by Tenant, and (b) upon succeeding to Landlord’s interest in the Premises, become bound to Tenant as Landlord under this Lease. The holder of any security interest may, upon written notice to Tenant, elect to have this Lease

[***] 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

prior to its security interest regardless of the time of the granting or recording of such security interest. In any foreclosure sale or transfer in lieu of foreclosure, Tenant shall attorn to the purchaser, transferee or lessor as the case may be, and recognize that party as Landlord under this Lease, provided such party acquires and accepts the Premises subject to all of Tenant’s rights under this Lease.

16.2Estoppel Certificates. Upon written request of either Landlord or Tenant, the other party shall execute, acknowledge and deliver to the requesting party a written statement (“Estoppel Certificate”) in form reasonably satisfactory to the requesting party certifying: (a) that this Lease is unmodified and in full force and effect (or, if there have been any modifications, that the Lease is in full force and effect, as modified, and stating the modifications); (b) that this Lease has not been canceled or terminated; (c) the last date of payment of Rent and the time period covered by such payment; (d) whether there are then existing any breaches or defaults by the requesting party under this Lease known to the certifying party, and, if so, specifying the same; (e) specifying to the certifying party’s actual knowledge any existing claims or defenses in favor of the requesting party against the enforcement of this Lease (or of any guaranties); and (f) such other factual statements as the requesting party, any lender, prospective lender, investor or purchaser may reasonably request.  The certifying party will deliver the statement to the requesting party within fifteen (15) Business Days after the requesting party’s reasonable request.  The requesting party may give any such statement provided by the certifying party to any lender, prospective lender, investor or purchaser of all or any part of the Premises and any such party may conclusively rely upon such statement as true and correct.

16.3Failure to Deliver.  Tenant shall deliver any subordination instrument required pursuant to Section 16.1 or any Estoppel Certificate to Landlord within fifteen (15) Business Days following Landlord’s initial written request.  If Tenant fails to do so, and such failure continues unremedied for an additional five (5) Business Days following a Reminder Notice from Landlord, Landlord and any lender, prospective lender, investor or purchaser may conclusively presume that, except as otherwise represented by Landlord: (a) the terms and provisions of this Lease have not been changed; (b) this Lease has not been canceled or terminated; (c) not more than one month’s Rent has been paid in advance; and (d) Landlord is not in default in the performance of any of its obligations under this Lease.

ARTICLE 17
TERMINATION OF LEASE

17.1Surrender of Premises.  Tenant will surrender each Phase of the Premises to Landlord at the expiration or earlier termination of this Lease in accordance with Section 5.6, above, and in as good order, condition and repair (subject to any repairs and replacements which Landlord is expressly obligated to make under this Lease) as such Phase was delivered to Tenant on the Applicable Phase Delivery Date, reasonable wear and tear and damage by casualty or condemnation excepted.  On or before the expiration or earlier termination of this Lease, Tenant shall remove from the Premises Tenant’s Property (subject to Landlord’s (or Landlord’s affiliate’s) rights under the Collateral Agreements) and any Removal Alterations, but Tenant shall not have any other obligation to remove any Alterations (other than the Removal Alterations) at the expiration or earlier termination of the Term. Tenant will promptly repair any damage to the Premises caused by its or a member of the Tenant Group’s removal of the Tenant’s Property and Removal Alterations. Upon Tenant’s reasonable written request, Landlord shall provide Tenant reasonable access to the Premises for a period of one hundred eighty (180) days following the expiration or earlier termination of this Lease for the removal of Tenant’s Property; provided, however, Landlord may determine in its reasonable discretion the days and times during which Tenant may enter the Premises for such purpose, and Tenant shall minimize any interference with Landlord’s use of the Premises while Tenant is on the Premises. All property of Tenant or a member of the Tenant Group not removed on or before the last day of the Term shall be deemed abandoned if not removed by Tenant within 180 days after written notice from Landlord. Tenant will indemnify and hold Landlord harmless from, any claims, loss, injury, liability, or damages (including reasonable attorneys’ fees) incurred by any Landlord Party as a result of persons or firms entering the Premises on Tenant’s behalf to complete to remove Tenant’s Property following expiration or earlier termination of this Lease.

[***] 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

17.2Holding Over.  If Tenant possesses the Premises without Landlord’s written consent after the Term expires or is otherwise terminated, Tenant shall be deemed to be occupying the Premises as a tenant from month-to-month, subject to all provisions, conditions and obligations of this Lease applicable to a month-to-month tenancy, except that: (a) Base Rent will equal 200% of the Base Rent payable by Tenant in the last year of the Term; and (b) either Landlord or Tenant may terminate the month-to-month tenancy at any time upon thirty (30) days prior written notice to the other party.

ARTICLE 18
MISCELLANEOUS PROVISIONS

18.1Notices.  Except as provided in the Phasing Plan: (i) any notice required or permitted hereunder will be in writing, and will be given to the appropriate party at the Tenant Notice Address or Landlord Notice Address, as applicable, or at such other address as the party may hereafter specify in writing; and (ii) 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.

18.2Successors.  The covenants and agreements contained in this Lease bind and inure to the benefit of Landlord, its successors and assigns, and bind Tenant and its successors and assigns and inure to the benefit of Tenant and its permitted successors and assigns.  The term “Landlord,” as used herein, shall mean only the owner of the Premises or of a lease of the Premises, at the time in question, so that in the event of any transfer or transfers of title to the Premises, or of Landlord’s interest in a lease of the Premises, the transferor shall be relieved and freed of all obligations of Landlord under this Lease accruing after such transfer, and it shall be deemed, without further agreement, that such transferee has assumed and agreed to perform and observe all obligations of Landlord under this Lease during the period it is the holder of Landlord’s interest under this Lease.

18.3Captions.  The section headings in this Lease are for convenience only and are not to be considered in construing or interpreting the Lease.  References to sections, schedules, and exhibits are references to sections of, schedules and exhibits to the Lease, and the word “herein” and words of similar meaning refer to the Lease in its entirety and not to any particular section or provision.  The word “party” means a party to the Lease and the phrase “third party” means any person, partnership, corporation or other entity not a party to the Lease.  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.

18.4Relationship of Parties.  Nothing in this Lease 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, this Lease is not for the benefit of any third parties.

18.5Entire Agreement; Amendment. The parties agree that this Lease, including the exhibits, addenda and schedules attached to the Lease, the Collateral Agreements (to the extent referenced herein), constitute 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.  Except as expressly provided herein, the Lease may not be amended or modified except by a written amendment specifically referencing the Lease, 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 Lease and any such item will be treated as if attached.

18.6Severability.  If a court of competent jurisdiction finds any provision of this Lease 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 Lease will continue in full force and effect

[***] 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

18.7Landlord’s Limited Liability.  Tenant shall look solely to Landlord’s interest in the Premises and the rents and profits therefrom for recovering any judgment or collecting any obligation from Landlord or any other Landlord Party with respect to any breach of this Lease.

18.8Survival.  All obligations under this Lease (together with interest on payment obligations at the Default Rate) accruing prior to expiration or other termination of this Lease survive the expiration or other termination of this Lease.  Further, all of Landlord’s and Tenant’s releases and indemnification, defense and hold harmless obligations under this Lease survive the expiration or other termination of this Lease for the duration of the application statute of limitations, unless otherwise expressly provided in this Lease.

18.9Attorneys’ Fees.  If either Landlord or Tenant commences any litigation or judicial action to determine or enforce any of the provisions of this Lease, the prevailing party in any such litigation or judicial action is entitled to recover all of its costs and expenses (including, but not limited to, reasonable attorneys’ fees, costs and expenditures) from the non-prevailing party.

18.10Brokers.  Landlord and Tenant each represents and warrants to the other that it has not had any dealings with any realtors, brokers, finders or agents in connection with this Lease and each releases and agrees, to the fullest extent allowable under the Laws, to indemnify, defend and hold the other harmless from and against any Claims based on the failure or alleged failure to pay any realtors, brokers, finders or and from any cost, expense or liability for any compensation, commission or changes claimed by any realtors, brokers, finders or agents claiming by, through or on behalf of it with respect to this Lease or the negotiation of this Lease.

18.11Governing Law. This Lease is governed by, and shall be interpreted under, the internal laws of the State without giving effect to conflicts of law principles.

18.12Time is of the Essence.  Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor.

18.13Landlord’s Authority. Landlord and each individual signing this Lease on behalf of Landlord represents and warrants that they are duly authorized to sign on behalf of and to bind Landlord and that this Lease is a duly authorized, binding and enforceable obligation of Landlord. Landlord has been duly organized or formed, is validly existing and in good standing under the laws of its state of formation and is qualified as a foreign limited liability company to do business in the State. The authorization, execution, delivery, and performance of this Lease will not result in any breach of or default under any document, instrument or agreement to which Landlord is a party or by which Landlord is bound.

18.14Tenant’s Authority. Tenant and each individual signing this Lease on behalf of Tenant represents and warrants that they are duly authorized to sign on behalf of and to bind Tenant and that this Lease is a duly authorized, binding and enforceable obligation of Tenant. Tenant has been duly organized or formed, is validly existing and in good standing under the laws of its state of formation and is qualified as a foreign corporation to do business in the State. The authorization, execution, delivery, and performance of this Lease will not result in any breach of or default under any document, instrument or agreement to which Tenant is a party or by which Tenant or the Premises is bound.

18.15No Merger.  There shall be no merger of this Lease nor of the leasehold estate created by this Lease with the fee estate in or ownership of the Premises by reason of the fact that the same Person may acquire or hold or own, directly or indirectly: (a) this Lease or the leasehold estate created by this Lease or any interest in this Lease or in such leasehold estate; and (b) the fee estate or ownership of the Premises or any interest in such fee estate or ownership.  No such merger shall occur unless and until all persons, corporations, firms and other entities having any interest in: (i) this Lease or the leasehold estate created by this Lease; and (ii) the fee estate in or ownership of the Premises or any part thereof sought to be merged shall join in a written instrument effecting such merger and shall duly record the same.

[***] 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

18.16Provisions are Covenants and Conditions.  All provisions of this Lease, whether covenants or conditions, are deemed both covenants and conditions.

18.17Force Majeure.  Neither party will be liable for any failure to perform under this Lease (excluding, however, the payment of money) 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 personnel or contractors of the party invoking force majeure), major upheavals, government action, government restrictions, blockade, embargo, utility disruptions, including power and water, or accident (“Force Majeure Event”), 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 Force Majeure 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 of Tenant’s Property, will not constitute a Force Majeure Event, and the provisions of this Section 18.17 will not apply.

18.18Non-Subordinated Lease.  This is a nonsubordinated lease. Landlord shall not be obligated to subordinate its rights in the Premises to any loan or money encumbrance that Tenant shall place against Tenant’s leasehold estate in the Premises.

18.19Quiet Enjoyment.  Landlord covenants and agrees that Tenant shall have the right to peaceful and quiet enjoyment and occupancy of the Premises during the Term, subject to the terms and conditions of this Lease free from molestation or hindrance by Landlord or any Person claiming by, through or under Landlord, if Tenant pays all Rent as and when due and keeps, observes and fully performs all other covenants, obligations and agreements of Tenant under this Lease within all applicable notice, grace and cure periods.

18.20Counterparts.  This Lease may be executed in one or more counterparts, each of which shall be deemed an original but all of which will constitute one and the same instrument.  Signature and acknowledgment pages may be detached from individual counterparts and attached to a single or multiple original(s) in order to form a single or multiple original(s) of this document.

18.21Nondisclosure of Lease Terms.  The terms and conditions of this Lease constitute proprietary information of Landlord and Tenant. Accordingly, Landlord and Tenant shall not, without mutual consent (which consent either party may grant or withhold in its sole and absolute discretion), directly or indirectly disclose the terms and conditions of this Lease to any other Person other than Landlord’s and Tenant’s employees, professional consultants and agents who have a legitimate need to know such information (and who shall also keep the same in confidence) or to Landlord’s prospective purchasers or lenders or Tenant’s prospective assignees or subtenants, who in each case shall have agreed in writing to keep the same in confidence, or pursuant to a court or governmental subpoena or order, or to the extent otherwise required by law, provided that if either party receives such a subpoena or order or is required by law to disclose the other party’s proprietary information, it shall give timely notice to the other, and takes reasonable steps to obtain protective treatment of the proprietary information.  In the event either party is expressly permitted to disclose any proprietary information of the other party (or such other party’s applicable affiliate) pursuant to the terms of the Collateral Agreements, then, provided such disclosing party complies (or causes its applicable affiliate to comply) fully with such relevant terms of the Collateral Agreements, such disclosure shall not be deemed a violation under this Section 18.21.

18.22Construction of the Terms. The terms and provisions of this Lease represent the results of negotiations between Landlord and Tenant, each of which are sophisticated parties and each of which has been represented or been given the opportunity to be represented by counsel of its own choosing, and neither of which has acted under any duress or compulsion, whether legal, economic or otherwise.  Consequently, the terms and provisions of this Lease shall be interpreted and construed in accordance with their usual and customary meanings, and Landlord and Tenant each waive the application of any rule of law that ambiguous or conflicting terms or provisions contained in this Lease are

[***] 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

to be interpreted or construed against the party who prepared the executed Lease or any earlier draft of the same.  Whenever required by the context of this Lease, the singular includes the plural and the plural includes the singular.  This Lease shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party which prepared the instrument, the relative bargaining powers of the parties or the domicile of any party.

[***] 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

Landlord and Tenant each caused this Lease to be executed and delivered by their duly authorized representatives to be effective as of the Effective Date.

	LANDLORD:
Date executed by Landlord:	[***]
	By:	[***]
		By
		Name:	[***]
		Title:	[***]
	TENANT:
Date executed by Tenant:	GTAT CORPORATION,
	a Delaware corporation
	By
	Name:
	Title:

[Signature page to Facility Lease]

EXHIBIT “A”

GLOSSARY

“Access Agreements” shall have the meaning set forth in Section 1.1.3.

“Additional Rent” means any charge, fee or expense (other than Base Rent) payable by Tenant under this Lease, however denoted.

“Alteration” means any change, alteration, modification, addition, decoration, improvement or any other work to the Premises that would directly or indirectly involve the penetration or removal (whether permanent or temporary) of, or require access through, in, under, or above any floor, wall or ceiling, or surface or covering thereof in the Premises.

“Alternate Service Providers” shall have the meaning set forth in Section 6.1.

“Anti-Corruption Laws” shall have the meaning set forth in Section 4.6.

“Applicable Phase Delivery Date” means with respect to each Phase, the date on which Landlord delivers possession of such Phase of the Premises to Tenant with each of the Delivery Conditions satisfied and Tenant executes the Handover and Acceptance Certificate with respect to such Phase of the Premises; provided that, failure by Tenant to execute the Handover and Acceptance Certificate with respect to a Phase (other than due to a rejection of handover and acceptance of such Phase in accordance with Section 1.5, of which Tenant has given Landlord prior written notice) shall not affect the Applicable Phase Delivery Date of such Phase.  The Applicable Phase Delivery Date for the Phase 1 Premises shall also be the Commencement Date.

“Applicable Phase Landlord Work” shall have the meaning set forth in Section 1.2.2.

“Applicable Phase Purpose” shall have the meaning set forth in Section 1.2.2.

“Approved Construction Documents” means the Base Building Plans and Specifications that have been approved by Tenant in accordance with the terms of Section 1.2.3, as the same may be modified pursuant to Sections 1.2.4.1 and 1.2.4.2.

“Authorized Purchasers” shall have the meaning set forth in the MDSA.

“Bankruptcy Code” means the United States Bankruptcy Code as the same now exists and as the same may be amended, including any and all rules and regulations issued pursuant to or in connection with the United States Bankruptcy Code now in force or in effect after the Effective Date.

“Base Building Plans and Specifications” means the plans and specifications for the Landlord Work prepared by Landlord’s architects and engineers in accordance with the terms and provisions of Section 1.2.3 hereof.

“Base Rent” means the base rent payable by Tenant under this Lease, in the amount specified in Section 2.1.

“Building” shall have the meaning set forth in Section 1.1.

“Building Systems” means the base Building mechanical, life safety, electrical, plumbing and HVAC systems of the Building.

“Business Days” means any day other than Saturday, Sunday or a federal or State holiday.

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“Buyer Agent” shall have the meaning set forth in Section 1.1.1.

“Casualty Termination Notice” shall have the meaning set forth in Section 12.3.3.

“Cause” shall have the meaning set forth in Article 13 of the MDSA SOW.

“Change of Control” shall have the meaning set forth in the MDSA SOW.

“Change Order Documents” shall have the meaning set forth in Section 1.2.4.

“Claims” means all claims, actions, proceedings, demands, liabilities, settlements, damages, costs, fines, penalties, forfeitures, losses or expenses, including, without limitation, reasonable attorneys’ fees and the costs and expenses of enforcing any indemnification, defense or hold harmless obligation under the Lease.

“Collateral Agreements” means, collectively: (a) the MDSA; (b) the MDSA SOW; (c) the Prepayment Agreement between Apple Inc. and Tenant, dated as of October 31, 2013, and all exhibits and attachments thereto; (d) the Membership Interest Pledge Agreement between Apple Inc. and Tenant, dated as of October 31, 2013, and all exhibits and attachments thereto; (e) the Intellectual Property Agreement among Apple Inc., Tenant, GT Advanced Technologies Limited, GT Sapphire Systems Holding LLC and GT Sapphire Systems Group LLC, dated as of October 31, 2013, and all exhibits and attachments thereto.

“Commencement Date” shall have the meaning set forth in Section 1.7.

“Condemnation” shall have the meaning set forth in Section 13.1.

“Condemning Authority” means any Person with a statutory or other power of eminent domain.

“Construction Defect” means a failure of the Landlord Work to materially comply with the Approved Construction Documents, any requirement of Law or Section 1.2.2 of this Lease, which adversely affects Tenant’s use of the Premises for the Permitted Use; provided that, if either party disputes whether a specific failure of the Landlord Work to comply with the Approved Construction Documents is material, either party may immediately submit the dispute to Expedited Arbitration.

“Cost and Delay Liability” shall have the meaning set forth in Section 1.2.4.2.

“County” means Maricopa County, Arizona.

“Covered Transaction” shall have the meaning set forth in the MDSA SOW.

“Default Rate” means interest at a rate equal to the lesser of: (a) the greater of: (i) 8% per annum; or (ii) an annual rate equal to two (2) percentage points above the prime annual interest rate published from time to time by The Wall Street Journal under the masthead “Money Rates” as the Prime Rate in effect at the due date (and thereafter adjusted quarterly) (provided, if for any reason The Wall Street Journal does not publish a Prime Rate, the Prime Rate shall be the prime rate announced by a reasonably equivalent responsible financial periodical reasonably selected by the party to whom interest at the Default Rate is owed); or (b) the maximum interest rate permitted by law.

“Delivery Conditions” shall have the meaning set forth in Section 1.2.2.

“Development Services” shall have the meaning set forth in the MDSA SOW.

“Due Diligence Reports” means the following third party produced reports and surveys relating specifically to the Premises undertaken by Landlord or Buyer Agent on or before the closing of Landlord’s

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Acquisition: (a) environmental; (b) soils/geotechnical; (c) building assessment; (d) ALTA survey; and (e) the Title Commitment (including the underlying documents referenced in the Title Commitment).

“Electrical Costs” shall have the meaning set forth in Section 6.1.

“Electrical Substation” means any electrical substations located on or adjacent to the Land that provide electrical service to the Premises, and any conduit or other infrastructure connecting such electrical substations to the Building and the Improvements.

“Estoppel Certificate” shall have the meaning set forth in Section 16.2.

“Environmental Laws” shall have the meaning set forth in Section 5.2.

“Event of Default” means the occurrence of any of the events specified in Section 15.1 of the Lease, or the occurrence of any other event which this Lease expressly labels as an “Event of Default”.

“Evidence of Completion” means, collectively, the following documents relating to the applicable Phase: (a) a certificate of occupancy for the applicable Phase for the Applicable Phase Purpose; (b) any and all other permits which Landlord is obligated to obtain to deliver the Applicable Phase Landlord Work in compliance with the Phasing Plan, and which are necessary for the occupancy and operation of the Phase for the Applicable Phase Purpose (provided that, Tenant is responsible for any and all permits required to operate the Premises for the Permitted Use in accordance with Section 4.2); and (c) a certificate from Landlord’s architect stating that the Landlord Work for such Phase has been completed in accordance with the requirements of Section 1.2.2 of the Lease, subject to Landlord’s completion of the Punch List items.

“Excluded Infrastructure” means the following, whether existing as of the Effective Date or subsequently installed: (a) the Electrical Substation; (b) the Fuel Cell; (c) the Roof Solar Array; (d) the Solar Basin; and (e) any conduit or other infrastructure connecting the fuel cell or Roof Solar Array to the Building and the Improvements.

“Excluded Liability” shall have the meaning set forth in Section 11.1.1.

“Expiration Date” shall have the meaning set forth in Section 1.7.

“Expedited Arbitration” means an arbitration proceeding in accordance with the terms of Section 15.8; provided that: (a) the arbitral proceedings, including the formation of the tribunal, will be expedited in order to permit the tribunal to render a final decision fully resolving the dispute before it within thirty (30) days from the date it receives the file from the ICC; (b) the ICC may only propose arbitrators whose schedule will permit them to resolve any disputes in conformity with a 30-day schedule; and (c) the parties agree that the only issue for determination in the arbitration is: (i) with respect to a party’s right to seek an Expedited Arbitration pursuant to Section 1.2.3.2, whether an inconsistency between the Base Building Plans and Specifications and the Phasing Plan is material; or (ii) with respect to a party’s right to seek Expedited Arbitration to resolve a dispute regarding a Construction Defect, whether a specific failure of the Landlord Work to comply with the Approved Construction Documents is material.

“Exterior Areas” means the paved areas, parking areas, driveways, concrete walkways, service areas, loading docks, landscaped areas, turf, plazas, and other areas of the Premises outside the interior of the Building.

“Force Majeure Event” shall have the meaning set forth in Section 18.17.

[***]

“Fuel Cell” shall have the meanings set forth in Section 9.4.

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“Furnace(s)” shall have the meaning set forth in the MDSA SOW.

“Governmental Authority(ies)” means all governmental and quasi-governmental departments, agencies and authorities.

“GTAT” shall have the meaning set forth in Section 14.1.

“GTAT Equipment” means GT Advanced Equipment Holding LLC, a Delaware limited liability company.

“Handover and Acceptance Certificate” shall have the meaning set forth in Section 1.5.

“Hazardous Materials” shall have the meaning set forth in Section 5.2.

“ICC” means the Rules of Arbitration of the International Chamber of Commerce.

“Impositions” means all taxes (excluding Property Taxes and Rent Tax, but including personal property taxes for which Tenant is responsible pursuant to clause (b) of Section 3.2, transaction privilege taxes and possessory interest taxes, if any), any assessments hereinafter imposed in accordance with applicable Laws for public improvements or benefits (including, if applicable, improvement districts and community facilities districts), water, sewer, electrical, natural gas, telephone, television, communication and other fees, rates and charges, whether foreseen or unforeseen, together with any interest or penalties imposed upon the late payment thereof, and all other charges which at any time during or in respect of the Term of this Lease may be assessed, levied, confirmed or imposed upon or in respect of, or be a lien upon: (a) the Premises; (b) any Base Rent or Additional Rent payable by Tenant hereunder; (c) this Lease and the leasehold estate hereby created; or (d) the possession or use of the Premises, in each case as the result of the use or occupancy of the Premises by Tenant.  Impositions shall not include any costs or expenses attributable to (i) the Excluded Infrastructure (other than use charges attributable to the consumption electrical service at the Premises), or (ii) installation of the Landlord Work.

“Improvements” shall have the meaning set forth in Section 1.1.

“Initial Disclosure Certificate” shall have the meaning set forth in Section 5.1.

“Insolvency” shall have the meaning set forth in Section 15.1.4.

“Land” shall have the meaning set forth in Section 1.1.

“Landlord” shall have the meaning set forth in Section 18.2.

“Landlord Notice Address” [***].

“Landlord Party(ies)” means Landlord, any ground lessor, and any property manager retained by Landlord, and their respective officers, directors, partners, shareholders, members, and employees.

“Landlord Work” shall have the meaning set forth in Section 1.2.2.

“Landlord’s Agents” means, collectively: (i) Landlord’s agents, advisors, employees, partners, shareholders, directors, officers, members, invitees and independent contractors, and (ii) Landlord’s affiliates.

“Landlord’s Restoration Estimate” shall have the meaning set forth in Section 12.3.1.

“Laws” means any law, regulation, rule, order, statute or ordinance of any governmental or private entity in effect on or after the Effective Date and applicable to the Premises or the use or occupancy of the Premises, including, without limitation, Environmental Laws and Private Restrictions.

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“Lease” means this Facility Lease Agreement, as the same may be amended or modified after the Effective Date in accordance with the terms of the Lease.

“Lease Year” shall have the meaning set forth in Section 2.1

“Liens” shall have the meaning set forth in Section 8.4.

“Logistics Plan” shall have the meaning set forth in Section 1.6.

“Master Developer” means [***].

“MDSA” means that certain Master Development and Supply Agreement, between Apple Inc. and Tenant, dated as of October 31, 2013.

“MDSA SOW” means that certain Statement of Work #1 incorporated in the MDSA.

“Migratory Release” shall have the meaning set forth in Section 5.3.

“Notices” means all notices, demands, requests or consents that may be or are required to be given, demanded or requested by either party to the other as provided in the Lease.

“Occupant” means any sublessee, licensee, concessionaire, franchisee or user of all or any portion of the Premises under a sublease, license, concession or franchise or similar agreement approved by Landlord in its sole discretion (unless otherwise permitted herein), whether with the Tenant or any other Person.

“OFAC” shall have the meaning set forth in Section 4.5.

“Outside Delivery Date” means for each Phase of the Premises, the date set forth on the attached Exhibit C, by which the Applicable Delivery Date for such Phase shall have occurred, which date shall be extended one (1) day for each day of Tenant Delay and/or delay by a Force Majeure Event.

“Outside Closing Date” means December 30, 2013.

“P&S” shall have the meaning set forth in Section 1.1.1.

“P&S Party” shall have the meaning set forth in Section 1.1.2.

“Permitted Use” means, collectively, the uses of the Premises that are permitted pursuant to Section 4.1.

“Person” means any individual, partnership, corporation, limited liability company, trust, unincorporated organization, governmental authority or any other form of entity.

“Phase” shall have the meaning set forth in Section 1.2.1.

“Phasing Plan” means the document attached as Exhibit C, and all schedules attached thereto.

“Premises” shall have the meaning set forth in Section 1.1.

“Private Restrictions” means all recorded covenants, conditions and restrictions affecting the Land now in force or which may hereafter be in force with Tenant’s consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided that, if it is reasonably necessary to subject the Premises to a covenant, condition, restriction or other encumbrance in order for Landlord to deliver the Premises to Tenant with the Landlord Work completed, Landlord shall notify Tenant of such encumbrance

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but Tenant shall have no consent right with respect to such encumbrance unless such encumbrance would have a material adverse effect on Tenant’s ability to manufacture the Goods at the Premises in accordance with the delivery schedule set forth in the MDSA SOW, or would cause Tenant to incur substantial costs to comply with such encumbrance.

“Progress Plans” shall have the meaning set forth in Section 1.2.3.1.

“Property Taxes” means any general real property tax, personal property tax, government property lease excise tax, improvement tax, assessment, special assessment, reassessment, in lieu tax, levy, charge, penalty or similar imposition imposed by any authority having the direct or indirect power to tax, including but not limited to: (a) any city, county, state or federal entity; (b) any school, agricultural, lighting, drainage or other improvement or special assessment district; (c) any governmental agency; or (d) any Person having the authority to assess the Premises under any of the Private Restrictions.

“Punch List” shall have the meaning set forth in Section 1.3.

“Punch List Inspections” shall have the meaning set forth in Section 1.3.

“Re-entry Costs” means all costs and expenses Landlord incurs re-entering or reletting all or any part of the Premises, including, without limitation, all costs and expenses Landlord incurs: (a) maintaining or preserving the Premises after an Event of Default; (b) recovering possession of the Premises, removing persons and property from the Premises and storing such property (including court costs and reasonable attorneys’ fees); (c) reletting, renovating or altering the Premises; and (d) real estate commissions, advertising expenses and similar expenses paid or payable in connection with reletting all or any part of the Premises.

“Reminder Notice” means a written notice from meeting the requirements for notice set forth in this Lease and reminding a party of a specific consent, approval or other action to be taken by such party that was not provided, acted upon or taken by a specified date set forth in this Lease.

“Removal Alterations” shall have the meaning set forth in Section 8.3.  The Removal Alterations shall not include any of the Landlord Work.

“Rent” means, collectively, Base Rent and Additional Rent.

“Rent Payment Address” means the Landlord Notice Address, or such other address designated by Landlord in writing.

“Rent Tax” means any tax or excise on rent or on other sums or charges required to be paid by Tenant under this Lease, and gross receipts tax, transaction privilege tax or other tax, however described, which is levied or assessed by the United States of America, the state in which the Building is located or any city, municipality or political subdivision thereof, against Landlord in respect to the Base Rent, Additional Rent or other charges payable under this Lease or as a result of Landlord’s receipt of such rents or other charges accruing under this Lease.

“Requesting Entity” shall have the meaning set forth in Section 16.1.

“Roof Solar Array” means that certain solar module system which is connected to the roof of the Building, but which is excluded from the Premises and is reserved for the sole and exclusive use by Landlord.

“Seller” shall have the meaning set forth in Section 1.1.1.

“Solar Basin” means the exterior solar basin existing on the Land as of the Effective Date.

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“State” means the State of Arizona.

“Structural Alterations” means any Alterations made by or at the request of Tenant involving either: (a) the Structural Elements; or (b) any hardscaped portion of the Premises outside of the interior of the Building.

“Structural Elements” shall have the meaning set forth in Section 7.1.

“Studies” shall have the meaning set forth in Section 1.1.2.

“System Alterations” means any Alterations that materially affect any of the Building Systems.

“Tenant” means the tenant identified in the Lease and such tenant’s permitted successors and assigns.

“Tenant Delay” means any delay of Landlord’s completion of the Landlord Work to the extent such delay is: (a) caused by any act or default on the part of the Tenant or the Tenant’s Agents that results in any material interference with the performance by Landlord or Landlord’s Agents of the Landlord Work; (b) due to changes requested by Tenant to be made to the Phasing Plan, Base Building Plans and Specifications or the Approved Construction Documents (except to the extent of a request by Tenant to change the Approved Construction Documents to resolve: (i) a failure of the Approved Construction Documents to comply with Law, or (ii) a material inconsistency with the Phasing Plan as agreed to by the parties or pursuant to a final decision in accordance with an Expedited Arbitration); or (c) due to delays by Tenant in approving or objecting to any change proposed by Landlord under, and in accordance with, Section 1.2.4.1 hereof.

“Tenant Feedback” shall have the meaning set forth in Section 1.2.3.1.

“Tenant Group” means, collectively, all of the following Persons: (a) Tenant; (b) each Occupant; (c) each affiliate of Tenant (including GTAT Equipment) or any Occupant; and (d) any other Person claiming by, through or under Tenant or any Occupant.

“Tenant Notice Address” means GTAT Corporation, 243 Daniel Webster Highway, Merrimack, New Hampshire 03054.

“Tenant Party(ies)” means Tenant and its officers, directors, partners, shareholders, members employees.

“Tenant’s Agents” means Tenant’s agents, advisors, employees, partners, shareholders, directors, officers, members, members of the Tenant Group, invitees and independent contractors.

“Tenant’s Property” means, collectively, all of the following, as now or may hereafter exist at the Premises: (a) all trade fixtures of any member of the Tenant Group; (b) all furniture, furnishings, equipment (including equipment having the characteristics of leasehold improvements) and other personal property of any member of the Tenant Group, which includes, without limitation, each of the following, even if it is bolted or otherwise affixed to the floors, walls or other structural portions of the Building, or would otherwise constitute fixtures under applicable law: inventory, racking, shelving, conveyer equipment, material handling equipment, lifts, cabling, antennae, machinery, air compressors, communication equipment, data cabinets, hoist equipment, plug-in light fixtures, propane tanks, storage racks, trash compactors, signs, desks, tables, movable partitions, vending machines, computer stations, printers, computer software and hardware, and forklifts, and (c) the Furnaces and all related equipment.

“Term” shall have the meaning set forth in Section 1.7.

“Title Commitment” means the Title Insurance Commitment from [***] to Buyer’s Agent, [***].

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“Transfer” means to assign, delegate or otherwise transfer this Lease or any rights or obligations under this Lease, or to sublet the Premises or any part thereof, or permit the use of the Premises or any part thereof by any persons other than GTAT or its employees, agent and invitees, whether in conjunction with a change in ownership, merger, acquisition, the sale or transfer of all, or substantially all or any part of, GTAT’s business or assets, or otherwise, voluntarily, by operation of law, reverse triangular merger or otherwise.

“Transferrable Warranties” means to the extent assignable, those warranties, if any, in favor of Landlord relating to the Building and Improvements.

“Updated Disclosure Certificate” shall have the meaning set forth in Section 5.1.

“Utilities” shall have the meaning set forth in Section 6.1.

“Utility Service Providers” shall have the meaning set forth in Section 6.1.

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EXHIBIT B

LEGAL DESCRIPTION OF LAND

[***]

B-1

EXHIBIT B-1

SITE PLAN OF BUILDING AND LAND

[***]

B-2-1

EXHIBIT C

PHASING PLAN

[***]

C-1

EXHIBIT D

FORM OF INITIAL HANDOVER AND ACCEPTANCE CERTIFICATE

THIS HANDOVER AND ACCEPTANCE CERTIFICATE is made as of                                       , 201    , by [***] (“Landlord”), and GTAT CORPORATION, a Delaware corporation (“Tenant”), who agree as follows:

1.Landlord and Tenant entered into a Lease Agreement dated                               , 2013, in which Landlord leased to Tenant and Tenant leased from Landlord certain Premises described therein in the building located at 3740 South Signal Butte Road, Mesa, Arizona (the “Building”).  All capitalized terms herein are as defined in the Lease.

2.Pursuant to the Lease, Landlord and Tenant agreed to and do hereby confirm the following matters as of the date hereof:

a.the Commencement Date of the Lease is                           , 201    ;

b.the Expiration Date of the Lease is                       , 20    ; (if known)

3.Tenant confirms that as of the date hereof:

a.Tenant accepts possession of the following Phase(s) of the Premises:                 ;

b.the number of rentable square feet of the Current Demised Premises is                 ;

c.Other than Punch List items, Landlord is not required by the Lease to perform any work or furnish any improvements to the Phases of the Premises set forth in Section 3.a.;

d.Landlord has fulfilled all of its obligations under the Lease with respect to the Current Demised Premises as of the date hereof; and

e.the Lease is in full force and effect and has not been modified, altered, or amended, except as follows:                                                                      .

The confirmations of Tenant set forth in Section 3.c and Section 3.d are based solely on Tenant’s Punch List Inspection, and nothing in this Handover and Acceptance Certificate shall be deemed to release Landlord from its obligations under the Lease with respect to Construction Defects.  The provisions of this Handover and Acceptance Certificate shall inure to the benefit of, or bind, as the case may require, the parties and their respective successors and assigns, and to all mortgagees of the Building, subject to the restrictions on assignment and subleasing contained in the Lease, and are hereby attached to and made a part of the Lease.

[Signatures appear on next page]

D-1

LANDLORD:
[***]
By:	[***]
	By:
	[***]
TENANT:
GTAT CORPORATION,
a Delaware corporation
By:
Name:
Title:

D-2

EXHIBIT D-1

FORM OF HANDOVER AND ACCEPTANCE CERTIFICATE

THIS HANDOVER AND ACCEPTANCE CERTIFICATE is made as of                                       , 201    , by [***] (“Landlord”), and GTAT CORPORATION (“Tenant”), who agree as follows:

1.Landlord and Tenant entered into a Lease Agreement dated                               , 2013, in which Landlord leased to Tenant and Tenant leased from Landlord certain Premises described therein in the building located at 3740 South Signal Butte Road, Mesa, Arizona (the “Building”).  All capitalized terms herein are as defined in the Lease.

2.Tenant confirms that as of the date hereof:

a.the Expiration Date of the Lease is                       , 20    ; (if known)

b.Tenant accepts possession of the following Phase(s) of the Premises:                 ;

c.the number of rentable square feet of the Current Demised Premises is                 ;

d.Other than Punch List items, Landlord is not required by the Lease to perform any work or furnish any improvements to the Phases of the Premises set forth in 2.b., above;

e.Landlord has fulfilled all of its obligations under the Lease with respect to the Current Demised Premises as of the date hereof; and

f.the Lease is in full force and effect and has not been modified, altered, or amended, except as follows:                                                                      .

The confirmations of Tenant set forth in Section 2.d and Section 2.e are based solely on Tenant’s Punch List Inspection, and nothing in this Handover and Acceptance Certificate shall be deemed to release Landlord from its obligations under the Lease with respect to Construction Defects. The provisions of this Handover and Acceptance Certificate shall inure to the benefit of, or bind, as the case may require, the parties and their respective successors and assigns, and to all mortgagees of the Building, subject to the restrictions on assignment and subleasing contained in the Lease, and are hereby attached to and made a part of the Lease.

[Signatures appear on next page]

D-1-1

LANDLORD:
[***]
By:	[***]
	By:
	Name:	[***]
	Title:	[***]
TENANT:
GTAT CORPORATION,
a Delaware corporation
By:
Name:
Title:

D-1-2

EXHIBIT E

HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE

Your cooperation in this matter is appreciated.  Initially, the information provided by you in this Hazardous Materials Disclosure Certificate is necessary for Landlord to evaluate your proposed uses of the premises (the “Premises”) and to determine whether to enter into a lease agreement with you as tenant.  If a lease agreement is signed by you and Landlord (the “Lease”), on an annual basis in accordance with the provisions of Section 5.1 of the Lease, you are to provide an update to the information initially provided by you in this certificate.  Any questions regarding this certificate should be directed to, and when completed, the certificate should be delivered to:

Landlord:                                                
                                                
                                                
Attention:                              
Phone:  (      )

Name of (Prospective) Tenant:

Mailing Address:

Contact Person, Title and Telephone Number(s):

Contact Person for Hazardous Waste Materials Management and Manifests and Telephone Number(s):

Address of (Prospective) Premises:

Length of (Prospective) initial Term:

1.GENERAL INFORMATION:

Describe the proposed operations to take place in, on, or about the Premises, including, without limitation, principal products processed, manufactured or assembled, and services and activities to be provided or otherwise conducted.  Existing tenants should describe any proposed changes to on-going operations.

E-1

2.USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS

2.1Will any Hazardous Materials (as hereinafter defined) be used, generated, treated, stored or disposed of in, on or about the Premises?  Existing tenants should describe any Hazardous Materials, which continue to be used, generated, treated, stored or disposed of in, on or about the Premises.

Wastes	Yes o	No o
Chemical Products	Yes o	No o
Other	Yes o	No o

If Yes is marked, please explain:                                 
                                                                                              

2.2If Yes is marked in Section 2.1, attach a list of any Hazardous Materials to be used, generated, treated, stored or disposed of in, on or about the Premises, including the applicable hazard class and an estimate of the quantities of such Hazardous Materials to be present on or about the Premises at any given time; estimated annual throughput; the proposed location(s) and method of storage (excluding nominal amounts of ordinary household cleaners and janitorial supplies which are not regulated by any Environmental Laws, as hereinafter defined); and the proposed location(s) and method(s) of treatment or disposal for each Hazardous Material, including the estimated frequency, and the proposed contractors or subcontractors.  Existing tenants should attach a list setting forth the information requested above and such list should include actual data from on-going operations and the identification of any variations in such information from the prior year’s certificate.

3.STORAGE TANKS AND SUMPS

3.3Is any above or below ground storage or treatment of gasoline, diesel, petroleum, or other Hazardous Materials in tanks or sumps proposed in, on or about the Premises?  Existing tenants should describe any such actual or proposed activities.

Yes o No o

If yes, please explain:                           
                                                                           

4.WASTE MANAGEMENT

4.4Has your company been issued an EPA Hazardous Waste Generator I.D. Number?  Existing tenants should describe any additional identification numbers issued since the previous certificate.

Yes o No o

E-2

4.5Has your company filed a biennial or quarterly reports as a hazardous waste generator?  Existing tenants should describe any new reports filed.

Yes o No o

If yes, attach a copy of the most recent report filed.

5.WASTEWATER TREATMENT AND DISCHARGE

5.6Will your company discharge wastewater or other wastes to:

o storm drain?	o sewer?
o surface water?	o no wastewater or other wastes discharged.

Existing tenants should indicate any actual discharges.  If so, describe the nature of any proposed or actual discharge(s).

5.7Will any such wastewater or waste be treated before discharge?

Yes o No o

If yes, describe the type of treatment proposed to be conducted.  Existing tenants should describe the actual treatment conducted.

6.AIR DISCHARGES

6.8Do you plan for any air filtration systems or stacks to be used in your company’s operations in, on or about the Premises that will discharge into the air; and will such air emissions be monitored?  Existing tenants should indicate whether or not there are any such air filtration systems or stacks in use in, on or about the Premises which discharge into the air and whether such air emissions are being monitored.

Yes o No o

If yes, please describe:                                                

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6.9Do you propose to operate any of the following types of equipment, or any other equipment requiring an air emissions permit?  Existing tenants should specify any such equipment being operated in, on or about the Premises.

o Spray booth(s)	o Incinerator(s)
o Dip tank(s)	o Other (Please describe)
o Drying oven(s)	o No Equipment Requiring Air Permits

If yes, please describe:                                               

6.10Please describe (and submit copies of with this Hazardous Materials Disclosure Certificate) any reports you have filed in the past thirty-six months with any governmental or quasi-governmental agencies or authorities related to air discharges or clean air requirements and any such reports which have been issued during such period by any such agencies or authorities with respect to you or your business operations.

7.HAZARDOUS MATERIALS DISCLOSURES

7.11Has your company prepared or will it be required to prepare a Hazardous Materials management plan (“Management Plan”) or Hazardous Materials Business Plan and Inventory (“Business Plan”) pursuant to Fire Department or other governmental or regulatory agencies’ requirements?  Existing tenants should indicate whether or not a Management Plan is required and has been prepared.

Yes o No o

If yes, attach a copy of the Management Plan or Business Plan.  Existing tenants should attach a copy of any required updates to the Management Plan or Business Plan.

8.ENFORCEMENT ACTIONS AND COMPLAINTS

8.12With respect to Hazardous Materials or Environmental Laws, has your company ever been subject to any agency enforcement actions, administrative orders, or consent decrees or has your company received requests for information, notice or demand letters, or any other inquiries regarding its operations?  Existing tenants should indicate whether or not any such actions, orders or decrees have been, or are in the process of being, undertaken or if any such requests have been received.

Yes o No o

If yes, describe the actions, orders or decrees and any continuing compliance obligations imposed as a result of these actions, orders or decrees and also describe any requests, notices or demands, and attach a copy of all such documents.  Existing tenants should describe and attach a copy of any new actions, orders, decrees, requests, notices or demands not already delivered to Landlord pursuant to the provisions of Article 5 of the Lease.

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8.13Have there ever been, or are there now pending, any lawsuits against your company regarding any environmental or health and safety concerns?

Yes o No o

If yes, describe any such lawsuits and attach copies of the complaint(s), cross-complaint(s), pleadings and other documents related thereto as requested by Landlord.  Existing tenants should describe and attach a copy of any new complaint(s), cross-complaint(s), pleadings and other related documents not already delivered to Landlord pursuant to the provisions of Article 5 of the Lease.

8.14Have there been any problems or complaints from adjacent tenants, owners or other neighbors at your company’s current facility with regard to environmental or health and safety concerns?  Existing tenants should indicate whether or not there have been any such problems or complaints from adjacent tenants, owners or other neighbors at, about or near the Premises and the current status of any such problems or complaints.

Yes o No o

If yes, please describe.  Existing tenants should describe any such problems or complaints not already disclosed to Landlord under the provisions of the signed Lease Agreement and the current status of any such problems or complaints.

9.PERMITS AND LICENSES

9.15Attach copies of all permits and licenses issued to your company with respect to its proposed operations in, on or about the Premises, including, without limitation, any Hazardous Materials permits, wastewater discharge permits, air emissions permits, and use permits or approvals.  Existing tenants should attach copies of any new permits and licenses as well as any renewals of permits or licenses previously issued.

As used herein, “Hazardous Materials” shall mean and include any substance that is or contains (a) any “hazardous substance” as now or hereafter defined in § 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”) (42 U.S.C. § 9601 et seq.) or any regulations promulgated under CERCLA; (b) any “hazardous waste” as now or hereafter defined in the Resource Conservation and Recovery Act, as amended (“RCRA”) (42 U.S.C. § 6901 et seq.) or any regulations promulgated under RCRA; (c) any substance now or hereafter regulated by the Toxic Substances Control Act, as amended (“TSCA”) (15 U.S.C. § 2601 et seq.) or any regulations promulgated under TSCA; (d) petroleum, petroleum by-products, gasoline, diesel fuel, or other petroleum hydrocarbons; (e) asbestos and asbestos-containing material, in any form, whether friable or non-friable; (f) polychlorinated biphenyls; (g) lead and lead-containing materials; or (h) any additional substance,

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material or waste (i) the presence of which on or about the Premises (A) requires reporting, investigation or remediation under any Environmental Laws (as hereinafter defined), (B) causes or threatens to cause a nuisance on the Premises or any adjacent property or poses or threatens to pose a hazard to the health or safety of persons on the Premises or any adjacent property, or (C) which, if it emanated or migrated from the Premises, could constitute a trespass, or (ii) which is now or is hereafter classified or considered to be hazardous or toxic under any Environmental Laws; and “Environmental Laws” shall mean and include (a) CERCLA, RCRA and TSCA; and (b) any other federal, state or local laws, ordinances, statutes, codes, rules, regulations, orders or decrees now or hereinafter in effect relating to (i) pollution, (ii) the protection or regulation of human health, natural resources or the environment, (iii) the treatment, storage or disposal of Hazardous Materials, or (iv) the emission, discharge, release or threatened release of Hazardous Materials into the environment.

The undersigned hereby acknowledges and agrees that this Hazardous Materials Disclosure Certificate is being delivered to Landlord in connection with the evaluation of a Lease Agreement and, if such Lease Agreement is executed, will be attached thereto as an exhibit.  The undersigned further acknowledges and agrees that if such Lease Agreement is executed, this Hazardous Materials Disclosure Certificate will be updated from time to time in accordance with Section 5.1 of the Lease.  The undersigned further acknowledges and agrees that Landlord and its partners, lenders and representatives may, and will, rely upon the statements, representations, warranties, and certifications made herein and the truthfulness thereof in entering into the Lease Agreement and the continuance thereof throughout the term, and any renewals thereof, of the Lease Agreement.  I [print name]                               , acting with full authority to bind the (proposed) Tenant and on behalf of the (proposed) Tenant, certify, represent and warrant that the information contained in this certificate is true and correct.

(PROSPECTIVE) TENANT:
	,
a
By:
Title:
Date:

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EXHIBIT F-1

Minimum Tenant Insurance Requirements

1.Tenant shall obtain and maintain in full force and effect, at its own cost and expense, during the term of the Lease and after termination as may be specified below, the following minimum types and limits of insurance and any other insurance required by law, regulation or orders in the State.  Such insurance shall be maintained with reputable and solvent insurance companies having, where available, an A.M. Best’s insurance rating of A-VII or better or a comparable financial rating from a reputable rating bureau, and lawfully authorized to do business in the State, and will comply with all those requirements as stated herein.  In no way do these minimum insurance requirements limit the liability assumed elsewhere in this Lease, including but not limited to Tenant’s defense and indemnity obligations.

2.Minimum Insurance Requirements.

(i)Commercial General Liability insurance, including coverage for bodily injury, property damage, personal and advertising injury, products liability, completed operations liability, premises and operations liability (including explosion, collapse, and underground hazard) and contractual liability and including severability of interests provisions.  Such insurance must have limits of not less than $1,000,000 per occurrence and $2,000,000 in the annual aggregate.  Such insurance must include Landlord Parties as additional insureds for liabilities falling within Tenant’s indemnity obligations pursuant to the Lease.

(ii)Workers’ Compensation insurance with statutory limits, as required by any state, territory, province or nation having jurisdiction over Tenant’s employees, and Employer’s Liability insurance with limits not less than $1,000,000.

(iii)Automobile Liability insurance covering any owned, non-owned or hired vehicles used by Tenant in connection with the Premises, in compliance with all statutory requirements and with limits of not less than $1,000,000 for bodily injury and property damage.

(vi)Umbrella/Excess Liability insurance, on a follow form basis, providing coverage excess of the Commercial General Liability, Employer’s Liability and Automobile Liability insurance, with limits of not less than $20,000,000 per occurrence and in the annual aggregate.  Such insurance must include Landlord Parties as additional insureds for liabilities falling within Tenant’s indemnity obligations pursuant to the Lease.

(v)Crime/Employee Dishonesty/Fidelity insurance covering the dishonest acts of Tenant’s employees and agents, acting alone or in collusion with others, and including third party coverage, with Landlord, its subsidiaries and affiliates included as a loss payees, with limits of not less than $1,000,000.

(vi)Property Insurance providing coverage on a full replacement cost basis on all property owned by Tenant or for which Tenant is legally liable, or which is installed by or on behalf of Tenant, and which is located within the Premises, including, without limitation, fittings, installations, alterations, additions, partitions, fixtures, Furnaces and anything in the nature of a leasehold improvement with respect to all risks of physical loss. Landlord, its subsidiaries and affiliates shall be included on such coverage as loss payees, as their interests may appear.

3.All insurance to be provided by Tenant shall be designated as primary to and non-contributory with any and all insurance maintained by or otherwise afforded to Landlord Parties.  Except to the extent prohibited by law, and except with respect to Tenant’s crime/employee dishonesty/fidelity and property insurance, Tenant shall require its insurers to waive all rights of recovery from or subrogation against Landlord Parties and their respective insurers, but only to the extent of liabilities falling within Tenant’s

F-1

indemnity obligations pursuant to the terms of this Lease. Tenant, by endorsement or otherwise, shall ensure that its property insurance policy contains a waiver of subrogation against Landlord in accordance with the terms of Section 10.3 of this Lease.

4.At the time this Lease is executed, or within a reasonable time thereafter, and within a reasonable time after coverage is renewed or replaced, Tenant will deliver to Landlord evidence that the foregoing coverages required from Tenant are in place, at the Landlord Notice Address.

Landlord’s receipt or acceptance of evidence of coverage that does not comply with these requirements, or Tenant’s failure to provide evidence of coverage, shall not constitute a waiver or modification of the insurance requirements as set forth herein.  In the event of cancellation of coverage, Tenant shall promptly replace coverage so that no lapse in insurance occurs.  All deductibles and self-insured retentions are to be paid by Tenant, except as otherwise specifically provided in this Lease.

F-2

EXHIBIT F-2

Landlord Insurance Requirements

1.Landlord shall obtain and maintain in full force and effect, at its own cost and expense, during the term of the Lease, the following minimum types and limits of insurance and any other insurance required by law, regulation or orders in the State.  Such insurance shall be maintained with reputable and solvent insurance companies having, where available, an A.M. Best’s insurance rating of A-VII or better or a comparable financial rating from a reputable rating bureau, and lawfully authorized to do business in the State, and will comply with all those requirements as stated herein; provided, however, that nothing contained herein shall prohibit Landlord from providing any or all of the insurance on a self-insured basis.  In no way do these minimum insurance requirements limit the liability assumed elsewhere in this Lease, including but not limited to Landlord’s defense and indemnity obligations.

2.Minimum Insurance Requirements.

(i)Commercial General Liability insurance, including coverage for bodily injury, property damage, personal and advertising injury, and contractual liability and including severability of interests provisions.  Such insurance must have limits of not less than $1,000,000 per occurrence and $2,000,000 in the annual aggregate.

(ii)Workers’ Compensation insurance with statutory limits, as required by any state, territory, province or nation having jurisdiction over Landlord’s employees, and Employer’s Liability insurance with limits not less than $1,000,000.

(iii)Automobile Liability insurance covering any owned, non-owned or hired vehicles used by Landlord in connection with the Premises, in compliance with all statutory requirements and with limits of not less than $1,000,000 for bodily injury and property damage.

(iv)Property Insurance providing coverage on a full replacement cost basis on the Building and the machinery, boilers and equipment contained within the Building (but excluding the property that Tenant is required to insure pursuant to Exhibit F-1), on an extended perils basis, including fire, lighting, vandalism, and malicious mischief.

(v)Such other insurance as Landlord deems reasonable and appropriate given the intended use of the Premises and its location.

Landlord, by endorsement or otherwise, shall ensure that its property insurance policy contains a waiver of subrogation against Tenant in accordance with the terms of Section 10.3 of this Lease.

F-2-1

EX-10.4

Exhibit 10.4

PREPAYMENT AGREEMENT

between

GTAT CORPORATION

and

APPLE INC.

Dated as of October 31, 2013

PREPAYMENT AGREEMENT

THIS PREPAYMENT AGREEMENT #C56-13-03457, is entered into as of October 31, 2013 (this “Agreement”), between GTAT Corporation, a Delaware corporation having its principal place of business at 243 Daniel Webster Highway, Merrimack, NH 03054 (“GTAT” or “Supplier”) and Apple Inc., a California corporation having its principal place of business at 1 Infinite Loop, Cupertino, California 95014, United States (“Apple”).

RECITALS

WHEREAS, concurrently with execution of this Agreement, Apple and GTAT are entering into a Master Development and Supply Agreement, #C56-13-02947, effective October 31, 2013 (such agreement, as the same may be amended, modified and supplemented from time to time, the “MDSA”) and a Statement of Work to MDSA (such statement of work, as the same may be amended, modified and supplemented from time to time, the “SOW”), providing certain terms and conditions for Apple’s purchase of goods that GTAT will develop, manufacture, sell and deliver to Apple for use in connection with Apple’s products; and

WHEREAS, Apple has agreed, subject to certain conditions described below, to make a prepayment to GTAT up to Five Hundred Seventy Eight Million U.S. Dollars (US$578,000,000) (the “Prepayment”) as payment in advance for the purchase of Goods (as defined in the SOW) by Apple pursuant to the MDSA and SOW; and

WHEREAS, Apple would not be willing to make the Prepayment if GTAT did not execute this Agreement and the other Transaction Documents (defined as provided below).

NOW, THEREFORE, in consideration of the premises of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

1.Definitions.

Certain capitalized terms have the meaning set forth of Attachment 1.  Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the MDSA or SOW.

2.Prepayment.

(a)Subject to Sections 2(c) and (d) below, and provided that, at the time for each payment (i) no Trigger Event (as defined below) has occurred and (ii) there are no ongoing disputes under the Facility Lease Agreement which have a material impact on the use of the manufacturing facility to be located in Mesa, AZ that Apple is purchasing and developing (the “Mesa Facility”) for its intended purpose, Apple will make the Prepayment by remitting funds to an account designated by GTAT as follows (the “Milestone Payments”):

·$[***] within [***] Business Days after execution of all of the Transaction Documents;

·$[***] by close of business on [***];

[***] 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

·$[***]  by close of business on [***];

·$[***]  by close of business on [***].

(b)The Prepayment proceeds shall be used exclusively to [***].

(c)Apple reserves the right to conduct audits of [***].  In addition, if any portion of any previous Milestone Payment has not been transferred to the SPE pursuant to Section 4(d) below and the SPE Loan Agreement, Apple shall be entitled to receive immediate repayment of such amount and may withhold any subsequent Milestone Payment until such amount has been received or the transfer under the SPE Loan Agreement has occurred.

(d)Apple shall be entitled to not pay the first Milestone Payment and any subsequent Milestone Payment until Apple, in its sole discretion, has received documentary evidence that all liens held by Bank of America related to GTAT’s loan facility with Bank of America have been terminated and released.  Apple shall be entitled to not pay any Milestone Payment if GTAT does not take any reasonable action requested by Apple that Apple deems necessary to perfect and continue the security interests granted to Apple under the Transaction Documents and such lack of cooperation prevents or precludes Apple from being able to perfect or continue such security interest. If GTAT has not met the technology specifications in Exhibit B to this Agreement by the deadlines set forth in Exhibit B, Apple shall be entitled to cancel any subsequent Milestone Payment and to receive repayment within five (5) Business Days of all or a portion of all previous Milestone Payments.  If Apple and GTAT have not executed the MEPA (as defined in the SOW) prior to the payment of the second Milestone Payment, Apple shall be entitled to cancel and not pay the second Milestone Payment and any subsequent Milestone Payment and to receive repayment within five (5) Business Days of all or a portion of all previous Milestone Payments.

(e)Subject to any right to accelerate repayment hereunder, each calendar quarter beginning January 1, 2015 and through the calendar quarter ending December 31, 2019, Apple shall recoup Twenty Eight Million Nine Hundred Thousand U.S. Dollars (US$28,900,000) during that calendar quarter towards the Prepayment Balance (the “Quarterly Recoupment Amount”) from accounts payable owed by Apple to GTAT [***].

(f)Provided that GTAT is, and remains at all times, in compliance with [***].  Nothing in the immediately preceding sentence shall relieve GTAT of its obligations under Section 2(h).

(g)If GTAT elects to terminate the exclusivity restrictions set forth in Section 9 of the SOW, it shall repay the Prepayment Balance to Apple within 180 days of such election.  The exclusivity restrictions in the SOW will remain in effect until GTAT makes such repayment.

(h)Notwithstanding Section 2(e) or 2(f) above, if Apple has not recouped the Prepayment in full by January 1, 2020, GTAT will by January 13, 2020 pay the Prepayment Balance to Apple by transfer of immediately available funds to an account designated by 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

3.Execution of Transaction Documents.

(a)Contemporaneously with execution of this Agreement, GTAT will deliver (i) evidence of the formation of a Delaware Limited Liability Company as a wholly-owned subsidiary (the “SPE”) and (ii) the LLC Agreement and GTAT Board resolution forming the SPE, which documents shall be in form and substance acceptable to Apple.  The LLC Agreement will contain customary provisions that ensure the SPE is and remains bankruptcy-remote.

(b)Contemporaneously with execution of this Agreement, the parties will execute the Transaction Documents, all of which shall be in form and substance acceptable to Apple.

4.Covenants.  GTAT shall:

(a)cause its obligations under this Agreement, the MDSA, and the SOW at all times to rank at least pari passu with all its other unsecured and unsubordinated obligations for indebtedness, except for those preferred by operation of law;

(b)participate in conference calls or meetings with Apple regarding GTAT’s financial condition, at least once each quarter, or more frequently as reasonably requested by Apple;

(c)immediately notify Apple of the occurrence of any Trigger Event or any event that would constitute a Trigger Event upon notice thereof by Apple, and any event which, to the best of GTAT’s knowledge, with the passing of time or giving of notice to Apple, or both, would constitute a Trigger Event;

(d)within two (2) Business Days of any Milestone Payment, loan such Milestone Payment to the SPE pursuant to the SPE Loan Agreement, and cause the SPE to use the Prepayment [***];

(e)not encumber its membership interests in the SPE or its interests in the Furnaces other than as set forth in the SPE Loan Agreement, the SPE Loan Assignment Agreement and the Pledge Agreement;

(f)operate the SPE consistent with the LLC Agreement and not cause the SPE to have any business other than ownership of the Mesa Furnaces;

(g)deliver to Apple:

(i)as soon as available after the end of each fiscal year of GT Advanced Technologies Inc. (and, in any event, the earlier of 90 days after the end of such fiscal year or as soon as publicly available) copies of the annual, audited, consolidated financial statements for GT Advanced Technologies Inc. in English that are or will be filed with the Securities and Exchange Commission (containing a balance sheet and statements of income, and cash flows, and notes thereto, as of the end of and for such fiscal year and the immediately preceding fiscal year);

[***] 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

(ii)as soon as available (and in any event within 60 days after the end of each fiscal quarter of GT Advanced Technologies Inc.) copies of all interim unaudited quarterly consolidated financial statements for GT Advanced Technologies Inc. in English that are or will be filed with the Securities and Exchange Commission (containing a consolidated balance sheet and consolidated statements of income, and cash flows, and notes thereto, as of the end of and for the interim period covered thereby and the comparable interim period in the immediately preceding fiscal year); and

(iii)as soon as available (and in any event within 30 Business Days after the end of each fiscal quarter of GT Advanced Technologies Inc.) a statement setting forth in reasonable detail: (1) the amount of the Prepayment recouped by Apple or repaid by GTAT during the previous fiscal quarter of the GTAT, (2) the Prepayment Balance as of the last day of such fiscal quarter of GTAT, (3) Consolidated Cash Balance as of the last day of such fiscal quarter; and (4) the Projections.

(h)at the time of delivery of the financial statements provided for in Section 4(g) above, provide to Apple a duly completed Compliance Certificate substantially in the form of Exhibit C hereto stating that no Trigger Event or event which with the passing of time or giving of notice to Apple, or both, would constitute a Trigger Event, exists, or if any Trigger Event orsuch other event does exist, specifying the nature and extent thereof and what action GTAT proposes to take with respect thereto.

5.Trigger Events.  Each of the following events shall constitute a “Trigger Event” immediately upon Apple giving GTAT notice of the occurrence thereof, which notice may consist of any written notice to GTAT, including by electronic mail:

(a)if Apple has given GTAT notice of one or more breaches under the SOW or the MDSA for which the cumulative liquidated damages for such breach(es) is One Hundred Million US Dollars (US$100,000,000) or more;

(b)any breach by GTAT of Section 2 or 4 of this Agreement;

(c)termination of the SOW by Apple for Cause (as defined in the SOW);

(d)any indebtedness of GTAT or Supplier Affiliate in excess of One Hundred Million US Dollars (US$100,000,000) (“Material Debt”) in the aggregate is accelerated, or the holder (i.e., creditor) or holders of Material Debt or any trustee or agent on its or their behalf, pursuant to their rights under the applicable debt instrument, cause Material Debt to become due or require the prepayment, repurchase, redemption or defeasance thereof, before its scheduled maturity, provided that if any convertible notes or bonds issued by the Consolidated Entities become redeemable prior to their maturity because the stock of GT Advanced Technologies Inc. or the trading price of such notes has reached the conversion price is not a Trigger Event under this provision;

(e)if GTAT notifies Apple in writing that it will no longer perform its material obligations under the MDSA or SOW for any or no reason;

[***] 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

(f)if GTAT or any Supplier Affiliate is subject to an Insolvency Proceeding or if an Insolvency Proceeding is filed against GTAT or any Supplier Affiliate and, if such Insolvency Proceeding is involuntary, is not dismissed within sixty (60) days;

(g)if any Transaction Document shall have not been executed or becomes invalid or unenforceable in its entirety;

(h)if as of the last day of any fiscal quarter of GTAT, [***];

(i)if as of the last day of any fiscal quarter of GTAT, [***];

(j)if the Projections show a Cash Balance of less than [***] at the end of the six-month period reflected in the applicable Projections;

(k)if the Consolidated DPO is more than [***]; or

(l)if two of any of the following have occurred at the end of any fiscal quarter of GTAT and both are continuing forty-five (45) days following the end of that fiscal quarter:

(i)the Consolidated Cash Balance is below One Hundred Twenty Five Million United States Dollars (US$125,000,000);

(ii)the Projections show a Consolidated Cash Balance of less than $100 million at the end of the following fiscal quarter; or

(iii)Consolidated DPO is more than 70 days.

6.Remedies.

(a)Upon the occurrence and during the continuance of any Trigger Event, Apple may take any or all of the following actions, in each case, in its discretion:

(i)demand repayment of the entire Prepayment Balance, in which event, GTAT shall immediately repay such balance;

(ii)accelerate the Prepayment Balance;

(iii)from time to time, apply the Prepayment Balance to any amounts Apple owes to GTAT from time to time after such Trigger Event;

(iv)foreclose on GTAT’s membership interests in the SPE pursuant to the Pledge Agreement;

(v)foreclose on the collateral under the GTAT Security Agreement; or

(vi)foreclose on the SPE’s assets pursuant to the Secured Guarantee 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

Upon electing to take any or all of the foregoing actions, Apple shall give written notice thereof to GTAT; provided, the failure by Apple to give any such notice shall not affect the right ofApple to take any or all such actions as it may deem appropriate in its discretion or any other right or remedy of Apple hereunder.

(b)The rights described in this Section 6 are in addition to any other rights and remedies available under this Agreement, the SOW, the MDSA, or applicable law or in equity except to the extent that such rights and remedies are inconsistent with the express terms of this Section 6 (in which case the terms of this Section 6 shall apply).

7.Miscellaneous.

(a)THE PARTIES ACKNOWLEDGE THAT EACH HAS READ THE AGREEMENT, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS.  FURTHER, THE PARTIES AGREE THAT THE AGREEMENT IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THEM, WHICH SUPERSEDES ALL PROPOSALS AND PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THEM RELATING TO THE SUBJECT MATTER HEREOF, EXCLUDING ANY NONDISCLOSURE AGREEMENTS, THE MDSA, AND THE SOW.

(b)No provision of this Agreement shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision or any provision of the MDSA or the SOW.  GTAT and Apple each acknowledge that it has been advised by its counsel in the preparation, negotiation and execution of this Agreement, the MDSA, and the SOW.

(c)Notwithstanding any provision to the contrary contained herein, in the MDSA or in the SOW, to the extent the obligations of GTAT shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of GTAT hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code of the United States).

(d)In the event of any conflict between the provisions of this Agreement and either the MDSA or the SOW, the order of precedence will be (i) this Agreement; (ii) the SOW; and (iii) the MDSA.

(e)This Agreement was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. All references to “$” are to the legal tender of the United States of America.

(f)The parties may amend this Agreement in the manner set forth in Section 24 of Attachment 1 to the MDSA.

(g)Except as provided in Section 5, all notices will be provided as set forth in Section 19 of Attachment 1 to the MDSA.

[***] 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

(h)If a court of competent jurisdiction finds any provision of this 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 this Agreement will continue in full force and effect.  If this Agreement is held unenforceable in a final non-appealable judgment, order or other decision of a federal, state, local or foreign court having jurisdiction as a result of any provision in the MDSA also being held unenforceable or the MDSA or SOW is so held unenforceable, GTAT shall promptly refund the Prepayment Balance in immediately available funds to a bank account designated by Apple.

(i)No party hereto may assign or delegate its rights or obligations under this Agreement without the other’s prior written consent; provided, however, that Apple may assign all of its rights and obligations under this Agreement without the consent of GTAT (x) in connection with the sale of all or substantially all of its assets relating to Apple, or (y) to an affiliate of subsidiary of Apple, and in each case, Apple shall give written notice to GTAT of such assignment.  This Agreement shall be binding upon, and inure to the benefit of, the successors, representatives, and administrators of the parties.

(j)If any lawsuit or other action or proceeding relating to this Agreement is brought by either party hereto against the other party hereto, the prevailing party shall be entitled to recover reasonable attorneys’ fees, costs and disbursements (in addition to any other relief to which the prevailing party may be entitled).

(k)THE VALIDITY, CONSTRUCTION AND EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO ITS LAWS REGARDING CHOICE OF APPLICABLE LAW.

(l)Any disputes arising out of this Agreement shall be resolved under the terms and procedures set forth in Sections 15 and 16 of Attachment 1 to the MDSA.

(m)The parties agree that this Agreement relates to a transaction involving not less than one million United States dollars ($1,000,000) in the aggregate and the parties have submitted to the jurisdiction of the courts of the State of California, in each case, within the meaning of California Code of Civil Procedure section 410.40, and the federal courts with jurisdiction in such territory.

(n)This Agreement may be executed in any number of counterparts each of which shall be an original with the same effect as if the signatures thereof and hereto were upon the same instrument.  The delivery of an executed signature page by facsimile or similar electronic means (including .PDF file) shall have the same effect as the delivery of an original.

(o)Captions, headings and the table of contents in this Agreement are for convenience only, and are not to be deemed part of this 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

IN WITNESS WHEREOF, each of GTAT and Apple has caused this Prepayment Agreement to be executed and delivered by its duly authorized officer on the date first set forth above.

GTAT CORPORATION

By:

Title:

APPLE INC.

By: Peter Oppenheimer

Title: Senior Vice President, Chief Financial Officer

[***] 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

Definitions

“Apple Furnace Lease Agreement” means the agreement pursuant to which the SPE leases the Furnaces to Apple.

“Business Day” is a day other than a Saturday, Sunday or day on which banks in San Francisco, California, U.S.A. are authorized or required to be closed for business.

“Conditional Assignment Agreement” means the agreement pursuant to which GTAT conditionally assigns its interests in the SPE Loan Agreement to Apple.

“Consolidated Cash Balance” means, as set forth in the Consolidated Entities’ financial statements filed with the Securities and Exchange Commission, as of any date of determination, the sum of the following as stated on the consolidated balance sheet of GTAT and the Consolidated Entities, to the extent the following are permitted under GTAT’s guidelines for the investment of its cash and cash equivalents (excluding restricted cash): (i) cash; (ii) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, a government, maturing within twelve (12) months of the date of acquisition; (iii) certificates of deposit, time deposits and bankers’ acceptances maturing within twelve (12) months of the date of acquisition, and overnight bank deposits, in each case which are issued by a leading commercial bank, and not subject to offset rights; (iv) repurchase obligations with a final maturity of not more than twelve (12) months for underlying investments entered into with any bank meeting the qualifications specified in clause (iii); (v) commercial paper maturing within twelve (12) months of the date of acquisition; and (vi) AAA rated Money Market funds with at least $1.0 billion in assets and seeks to maintain a stable Net Asset Value (NAV) of $1.00 per share.

“Consolidated DPO” means, as of any date of determination, for GTAT and the Consolidated Entities, the average of the opening accounts payable and the ending accounts payable for that fiscal quarter divided by the cost of goods sold plus the change in inventory for that fiscal quarter, all multiplied by 91 days.  As an example, if in Fiscal Quarter 1, the opening accounts payable were $16.42 million, the ending accounts payable were $45.29 million, the cost of goodssold was $109.71 million, the ending inventory was $150.74 and the opening inventory was $119.64, Consolidated DPO is 35.72 days, calculated as follows:

DPO = 91 days x [(opening a/p + ending a/p)/2]/[cost of goods sold + (ending inventory — opening inventory)] or

91 x [(16.42) + (45.29)/2]/(109.71 + (150.74-119.64)] = 35.72 days.

“Consolidated Entities” means any Supplier Affiliate that, together with GTAT, is consolidated on the financial statements and reports as filed with the Securities and Exchange Commission.

“GTAT Furnace Lease Agreement” means the agreement pursuant to which the SPE leases the Mesa Furnaces or the Furnace Components, as applicable, to GTAT.

“GTAT Security Agreement” means the security agreement between Apple and GTAT pursuant to which GTAT grants to Apple a security interest in all of GTAT’s assets.

“Mesa Facility Agreement” means the agreement pursuant to which Apple leases the Mesa Facility to GTAT.

“Insolvency Proceeding” means a judicial or extra-judicial settlement with creditors, an assignment for the benefit of creditors, bankruptcy or an equivalent proceeding in the applicable jurisdiction, or a liquidation or dissolution proceeding, or appointment of a receiver or trustee (or the like) in bankruptcy or similar proceeding.

“LLC Agreement” means the agreement that is the formation document of the SPE.

“Pledge Agreement” means the agreement pursuant to which GTAT pledges its membership interests in the SPE to Apple.

“Prepayment Balance” means, at any time, the portion of the Prepayment that has not, in accordance with this Agreement, been applied to purchases of Goods by Apple or repaid to Apple as of such time.

“Projections” means the consolidated rolling (forward) six-month cash flow projections of GTAT and the Consolidated Entities, by month, detailing the sources and uses of cash, and ending cash balance (excluding restricted cash) by month over the rolling six-month period.

“Secured Guarantee Agreement” means the agreement pursuant to which the SPE guarantees the obligations of GTAT to Apple under this Agreement, the SOW and the MDSA and secured such guarantee with a security interest in its assets.

“SPE Loan Agreement” means the agreement pursuant to which GTAT loans the amount necessary to purchase the Furnace Components and related equipment to the SPE.

“Supplier Affiliate” means any entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, Supplier.

“Transaction Documents” means the MDSA, the SOW, this Agreement, the Apple Furnace Lease Agreement, the Conditional Assignment Agreement, the Pledge Agreement, SPE Loan Agreement, the GTAT Furnace Lease Agreement, the LLC Agreement, the Secured Guarantee Agreement, GTAT Security Agreement and the Mesa Facility Lease 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

EXHIBIT A

[***]

EXHIBIT B

[***]

13

EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:             ,               

To:Apple

Ladies and Gentlemen:

Reference is made to that certain Prepayment Agreement, dated as of October [    ], 2013 (“Prepayment Agreement”) between GTAT Corporation (“GTAT”) and Apple Inc. (“Apple”).  Capitalized terms not defined herein have the meanings given them in the Prepayment Agreement.

The undersigned officer hereby certifies as of the date hereof that he/she is the                                                                                 of GTAT, and that, as such, he/she is authorized to execute and deliver this Certificate to Apple, and that:

1.Attached hereto as Schedule 1 are the financial statements, including Projections, required by Section 4(g) of the Prepayment Agreement for the fiscal period of GTAT ended as of the above date.  Such financial statements fairly present the financial condition, results of operations and cash flows of GTAT and the Consolidated Entities (including the SPE) in accordance with Generally Accepted Accounting Principles as of such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

2.The undersigned has reviewed and is familiar with the terms of the Prepayment Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of GTAT during the accounting period covered by the attached financial statements.

3.As of the above date, Consolidated Cash Balance is [        ]; Consolidated DPO is [        ].

4.A review of the activities of GTAT and the SPE during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period GTAT performed and observed all their obligations under the Prepayment Agreement, and

select one:]

[to the best knowledge of the undersigned during such fiscal period, GTAT performed and observed each covenant and condition of the Prepayment Agreement, and no Trigger Event or event with the passing of time or giving of notice, or both, would constitute a Trigger Event has occurred and is continuing.]

14

—or—

[the following covenants or conditions have not been performed or observed and the following is a list of each such Trigger Event and its nature and status:]

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                                  ,                  .

SUPPLIER

By:

Name:

Title:

15

SCHEDULE 1 TO COMPLIANCE CERTIFICATE

FINANCIAL STATEMENTS

16

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Thomas Gutierrez, certify that:

1.I have reviewed this quarterly report on Form 10-Q of GT Advanced Technologies Inc.;

2.Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2013

/s/ THOMAS GUTIERREZ

Thomas Gutierrez

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Richard J. Gaynor, certify that:

1.I have reviewed this quarterly report on Form 10-Q of GT Advanced Technologies Inc.;

2.Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2013

/s/ RICHARD J. GAYNOR 

Richard J. Gaynor

Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of GT Advanced Technologies Inc. (the “Company”) on Form 10-Q for the three months ended September 28, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 7, 2013

/s/ THOMAS GUTIERREZ 

Thomas Gutierrez

President and Chief Executive Officer
(Principal Executive Officer)

Date: November 7, 2013

/s/ RICHARD J. GAYNOR

Richard J. Gaynor

Vice President and Chief Financial Officer
(Principal Financial Officer)

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Other Assets

9 Months Ended

Sep. 28, 2013

Other Assets

Other Assets

10. Other Assets

Other assets consisted of the following:

	September 28, 2013		December 31, 2012
Inventory	$	36,724	$	33,834
Vendor advances	18,524		20,664
Deferred financing fees	7,945		8,787
Deferred income taxes	21,222		15,424
Other	7,666		8,211
	$	92,081	$	86,920

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Customer Concentrations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended		9 Months Ended			3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended		9 Months Ended	12 Months Ended	9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012	Dec. 31, 2012	Sep. 28, 2013 Photovoltaic Business	Sep. 29, 2012 Photovoltaic Business	Sep. 28, 2013 Photovoltaic Business	Sep. 29, 2012 Photovoltaic Business	Sep. 28, 2013 Polysilicon Business	Sep. 29, 2012 Polysilicon Business	Sep. 28, 2013 Polysilicon Business	Sep. 29, 2012 Polysilicon Business	Sep. 28, 2013 Sapphire Business	Sep. 29, 2012 Sapphire Business	Sep. 28, 2013 Sapphire Business	Sep. 29, 2012 Sapphire Business	Sep. 29, 2012 Revenue Customer concentration Customer #6	Sep. 29, 2012 Revenue Customer concentration Customer #6	Sep. 28, 2013 Revenue Customer concentration Polysilicon Business Customer #2	Sep. 28, 2013 Revenue Customer concentration Polysilicon Business Customer #3	Sep. 28, 2013 Revenue Customer concentration Polysilicon Business Customer #3	Sep. 28, 2013 Revenue Customer concentration Polysilicon Business Customer #4	Sep. 28, 2013 Revenue Customer concentration Polysilicon Business Customer #5	Sep. 29, 2012 Revenue Customer concentration Polysilicon Business Customer #6	Sep. 29, 2012 Revenue Customer concentration Polysilicon Business Customer #6	Sep. 29, 2012 Revenue Customer concentration Polysilicon Business Customer #7	Sep. 29, 2012 Revenue Customer concentration Polysilicon Business Customer #8	Sep. 29, 2012 Revenue Customer concentration Polysilicon Business Customer #9	Sep. 29, 2012 Revenue Customer concentration Sapphire Business Customer #6	Sep. 29, 2012 Revenue Customer concentration Sapphire Business Customer #6	Sep. 29, 2012 Revenue Customer concentration Sapphire Business Customer #6 Maximum	Sep. 29, 2012 Revenue Customer concentration Sapphire Business Customer #11	Dec. 31, 2012 Accounts Receivable Credit concentration Photovoltaic Business Customer #1	Dec. 31, 2012 Accounts Receivable Credit concentration Polysilicon Business Customer #4	Sep. 28, 2013 Accounts Receivable Credit concentration Polysilicon Business Customer #7	Dec. 31, 2012 Accounts Receivable Credit concentration Polysilicon Business Customer #7	Sep. 28, 2013 Accounts Receivable Credit concentration Polysilicon Business Customer #10
Customer Concentrations
Revenue	$ 40,291	$ 110,061	$ 266,397	$ 631,203		$ 4,369	$ 1,556	$ 20,144	$ 42,357	$ 28,564	$ 95,856	$ 217,279	$ 371,320	$ 7,358	$ 12,649	$ 28,974	$ 217,526			$ 17,600	$ 7,919	$ 108,579	$ 45,268	$ 34,915	$ 43,459	$ 139,337	$ 39,142	$ 82,316	$ 77,870	$ 310	$ 34,790		$ 63,950
Accounts receivable, net	7,471		7,471		23,829																													2,478	9,085	1,200	3,248	1,450
% of Total																				44.00%	20.00%	41.00%	17.00%	13.00%	39.00%	22.00%	36.00%	13.00%	12.00%		6.00%	1.00%	10.00%	10.00%	38.00%	16.00%	14.00%	19.00%
Total accounts receivable secured by letters of credit	3,174		3,174		16,557
Total accounts receivable secured by letters of credit (as a percent)	42.00%		42.00%		69.00%
Percentage of total revenue from customer																		40.00%	28.00%
Total revenue from customer																		$ 43,769	$ 174,127

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Condensed Consolidated Statements of Operations
Revenue	$ 40,291	$ 110,061	$ 266,397	$ 631,203
Cost of revenue	22,514	75,033	176,389	383,641
Gross profit	17,777	35,028	90,008	247,562
Operating expenses:
Research and development	21,075	18,767	56,039	47,954
Selling and marketing	3,496	3,123	10,870	9,657
General and administrative	17,427	15,428	48,507	45,731
Contingent consideration expense (income)	4,971	(9,943)	997	(9,261)
Restructuring charges	4,010		6,868
Amortization of intangible assets	2,976	2,538	8,098	7,631
Total operating expenses	53,955	29,913	131,379	101,712
(Loss) income from operations	(36,178)	5,115	(41,371)	145,850
Other income (expense):
Interest income	122	27	286	50
Interest expense	(6,456)	(1,620)	(20,462)	(3,398)
Other, net	62	(431)	73	(968)
(Loss) income before income taxes	(42,450)	3,091	(61,474)	141,534
(Benefit) provision for income taxes	(4,304)	747	(16,594)	45,360
Net (loss) income	$ (38,146)	$ 2,344	$ (44,880)	$ 96,174
Net (loss) income per share:
Basic (in dollars per share)	$ (0.31)	$ 0.02	$ (0.37)	$ 0.81
Diluted (in dollars per share)	$ (0.31)	$ 0.02	$ (0.37)	$ 0.80
Weighted-average number of shares used in per share calculations:
Basic (in shares)	122,183	118,769	119,752	118,873
Diluted (in shares)	122,183	119,874	119,752	120,126

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Recent Accounting Pronouncements

9 Months Ended

Sep. 28, 2013

Recent Accounting Pronouncements

Recent Accounting Pronouncements

3. Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Income Taxes (Topic 740): Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance eliminates diversity in practice surrounding the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance requires entities to net an unrecognized tax benefit with a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if the carryforward would be used to settle additional tax due upon disallowance of a tax position. The amendment is effective for fiscal periods beginning after December 15, 2013 with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our financial statements.

Recently Adopted Accounting Pronouncements

Effective January 1, 2013, the Company adopted Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The guidance is intended to provide disclosure on items reclassified out of accumulated other comprehensive income either in the notes or parenthetically on the face of the income statement. The required disclosure is in Note 18 below.

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Stockholders' Equity

9 Months Ended

Sep. 28, 2013

Stockholders' Equity

Stockholders' Equity

17. Stockholders’ Equity

The following table presents the changes in stockholders’ equity for the nine months ended September 28, 2013:

	Common Stock					Additional Paid-in			Retained			Accumulated Other		Total Stockholders’
	Shares		Par Value			Capital			Earnings			Comprehensive Income		Equity
Balance as of January 1, 2013	119,293		$	1,193		$	183,565		$	56,687		$	806	$	242,251
Net loss	—		—			—			(44,880		)	—		(44,880		)
Other comprehensive income	—		—			—			—			260		260
Common stock issued for Thermal Tech acquisition (net of $46 of registration costs)	3,356		33			14,384			—			—		14,417
Option exercises and vesting of restricted stock units	1,448		14			101			—			—		115
Share-based compensation expense	—		—			13,490			—			—		13,490
Excess tax deficiency from share-based award activity	—		—			(1,396		)	—			—		(1,396		)
Minimum tax withholding payments for employee share-based awards	(339	)	(3		)	(1,513		)	—			—		(1,516		)
Balance as of September 28, 2013	123,758		$	1,237		$	208,631		$	11,807		$	1,066	$	222,741

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended			3 Months Ended	9 Months Ended
	Sep. 28, 2013	Sep. 28, 2013	Sep. 28, 2013 Unrealized Gains and Losses on Cash Flow Hedges	Jun. 29, 2013 Unrealized Gains and Losses on Cash Flow Hedges	Sep. 28, 2013 Foreign Currency Items	Sep. 28, 2013 Foreign Currency Items
Changes in accumulated balances of other comprehensive income
Balance at the beginning of the period	$ 1,000	$ 806	$ (537)	$ (591)	$ 1,591	$ 1,343
Other comprehensive income (loss) before reclassifications	66	311	(3)		66	314
Amounts reclassified from accumulated other comprehensive income		(51)	(51)
Net other comprehensive income	66	260	(54)		66	314
Balance at the end of the period	1,066	1,066	(591)	(591)	1,657	1,657
Amount of gain (loss) reclassified from AOCI to cost of revenue	$ 0	$ (51)

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Derivative and Hedging Activities (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended
	Sep. 28, 2013	Sep. 28, 2013	Sep. 29, 2012 Instruments designated as hedging instruments Forward foreign currency exchange contracts	Sep. 28, 2013 Instruments designated as hedging instruments Forward foreign currency exchange contracts	Sep. 29, 2012 Instruments designated as hedging instruments Forward foreign currency exchange contracts	Sep. 29, 2012 Derivatives Not Designated as Hedging Instruments Forward foreign currency exchange contracts	Sep. 29, 2012 Derivatives Not Designated as Hedging Instruments Forward foreign currency exchange contracts	Sep. 28, 2013 Cash Flow Hedges. Forward foreign currency exchange contracts
Derivative and Hedging Activities
Amount of (Gain) or Loss recognized in OCI on Derivative (Effective Portion)			$ 173	$ 4	$ 641
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	0	(51)	(498)	60	(2,775)
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)						(287)	(886)
Loss recognized in earnings due to discontinuation of cash flow hedging								0
Accumulated gain expected to be reclassified into earnings over the next twelve months								$ 0

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Warranty

9 Months Ended

Sep. 28, 2013

Warranty

Warranty

11. Warranty

The following table presents warranty activities:

	Nine Months Ended
	September 28, 2013			September 29, 2012
Product warranty liability, beginning of the period	$	10,711		$	4,764
Accruals for warranties issued	7,157			9,029
Payments under warranty	(5,500		)	(4,578		)
Product warranty liability, end of period	$	12,368		$	9,215

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Acquisitions (Details) (USD $) In Thousands, except Share data in Millions, unless otherwise specified	3 Months Ended		9 Months Ended		9 Months Ended	3 Months Ended	4 Months Ended	9 Months Ended
	Sep. 28, 2013 Twin Creeks Technologies, Inc.	Mar. 30, 2013 Twin Creeks Technologies, Inc.	Sep. 28, 2013 Twin Creeks Technologies, Inc.	Nov. 08, 2012 Twin Creeks Technologies, Inc.	Sep. 28, 2013 Twin Creeks Technologies, Inc. Maximum	Sep. 28, 2013 Thermal Technology, LLC	Sep. 28, 2013 Thermal Technology, LLC	Sep. 28, 2013 Thermal Technology, LLC	May 16, 2013 Thermal Technology, LLC	Sep. 28, 2013 Thermal Technology, LLC Minimum	Sep. 28, 2013 Thermal Technology, LLC Maximum
Acquisitions
Common stock purchase consideration (in shares)									3.4
Aggregate value of common stock						$ 14,463	$ 14,463	$ 14,463	$ 14,463
Revenue contribution of acquired business							3,545
Purchase consideration paid in cash	10,172		10,172	10,172
Potential additional contingent consideration				40,000					35,000
Fair value of the contingent consideration	5,200		5,200	5,200		6,211	6,211	6,211	6,211
Loss from acquired business							3,071
Fair value of consideration transferred:
Common stock						14,463	14,463	14,463	14,463
Cash	10,172		10,172	10,172
Contingent consideration obligations	5,200		5,200	5,200		6,211	6,211	6,211	6,211
Preliminary estimate of net working capital adjustment						(735)	(735)	(735)
Total fair value of consideration	15,372		15,372	15,372		19,939	19,939	19,939
Fair value of assets acquired and liabilities assumed:
Accounts receivable						1,008	1,008	1,008
Inventory						7,861	7,861	7,861
Property, plant and equipment	1,529		1,529			1,700	1,700	1,700
Deferred tax asset						411	411	411
Other assets	23		23			439	439	439
Intangible assets						14,500	14,500	14,500
In-process research and development	12,300		12,300
Goodwill	2,907		2,907			6,744	6,744	6,744	6,744
Accounts payable	(1,362)		(1,362)
Accounts payable and accrued expenses						(7,057)	(7,057)	(7,057)
Customer deposits						(2,509)	(2,509)	(2,509)
Deferred tax liability						(3,149)	(3,149)	(3,149)
Other current liabilities	(25)		(25)			(9)	(9)	(9)
Total net assets acquired	15,372		15,372			19,939	19,939	19,939
Increase to goodwill due to update of preliminary valuation of assets acquired		2,000
Decrease to deferred tax assets due to update of preliminary valuation of assets acquired		2,000
Set-off amount for infringement claims brought by third-parties related to the Intellectual property acquired					6,000
Term of license agreement			15 years
Undiscounted probable outcomes used to value contingent consideration	27,562		27,562							7,507	20,205
Transaction cost incurred in connection with acquisition								1,188
Contingent consideration (income) expense	$ 6,046		$ 6,747			$ (1,075)		$ (934)
Discount rate (as a percent)			(28.00%)

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Sep. 28, 2013	Dec. 31, 2012
Inventories
Raw materials	$ 109,137	$ 97,957
Work-in-process	8,563	5,100
Finished goods	5,489	30,229
Inventories	$ 123,189	$ 133,286

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Restructuring Charges and Asset Impairments (Tables)

9 Months Ended

Sep. 28, 2013

Restructuring Charges and Asset Impairments

Schedule of restructuring charges and remaining accrued expenses

	Employee Related Benefits			Lease Exit and Contract Termination Costs			Asset Impairments			Total
Balance as of December 31, 2012	$	2,076		$	133		$	—		$	2,209
Charges	362			2,496			4,010			6,868
Cash payments	(2,044		)	(1,065		)	—			(3,109		)
Asset impairments	—			—			(4,010		)	(4,010		)
Balance as of September 28, 2013	$	394		$	1,564		$	—		$	1,958

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Segment and Geographical Information

9 Months Ended

Sep. 28, 2013

Segment and Geographical Information

Segment and Geographical Information

20. Segment and Geographical Information

Segment Information

The Company reports its results in three segments: the PV business, the polysilicon business and the sapphire business. The Company evaluates performance and allocates resources based on revenues and gross margin of each segment. The Company defines segment gross margin as the cost of goods sold associated with segment revenues. Operating expenses are reviewed and evaluated at the consolidated level and are not allocated to the respective operating segments for purposes of allocating resources or evaluating performance of the business segment.

The PV business manufactures and sells directional solidification, or DSS, crystallization furnaces and ancillary equipment used to cast crystalline silicon ingots by melting and cooling polysilicon in a precisely controlled process. These ingots are used to make photovoltaic wafers which are, in turn, used to make solar cells.

The polysilicon business manufactures and sells Silicon Deposition Reactors (SDR™) and related equipment used to produce polysilicon, the key raw material used in silicon-based solar wafers and cells, while also providing engineering services and related equipment.

The sapphire business manufactures and sells advanced sapphire crystal growth systems, as well as sapphire materials used in LED applications, and sapphire components used in other specialty markets. On May 16, 2013, the Company acquired substantially all of the business of Thermal Technology which are included in the sapphire segment. Thermal Technology is a developer and seller of a wide range of high temperature thermal and vacuum products used in the fabrication of advanced materials that have been deployed across multiple industries including LED, medical devices, oil and gas and automotive. The acquisition of Thermal Technology provides the Company with key technologies, in particular a sapphire annealing furnace product, that we believe will allow us to address potential new markets with production equipment options that can be optimized around customer’s specific needs.

Financial information for the Company’s reportable segments is as follows:

	Three Months Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Revenue:
PV	$	4,369		$	1,556		$	20,144		$	42,357
Polysilicon	28,564			95,856			217,279			371,320
Sapphire	7,358			12,649			28,974			217,526
Total revenue	40,291			110,061			266,397			631,203
Gross Profit:
PV	$	2,893		$	(3,312	)	$	2,290		$	14,473
Polysilicon	20,032			35,095			95,119			148,412
Sapphire	(5,148		)	3,245			(7,401		)	84,677
Total gross profit	17,777			35,028			90,008			247,562
Research and development	21,075			18,767			56,039			47,954
Sales and marketing	3,496			3,123			10,870			9,657
General and administrative	17,427			15,428			48,507			45,731
Contingent consideration expense (income)	4,971			(9,943		)	997			(9,261		)
Restructuring charges	4,010			—			6,868			—
Amortization of intangible assets	2,976			2,538			8,098			7,631
Income (loss) from operations	(36,178		)	5,115			(41,371		)	145,850
Interest income	122			27			286			50
Interest expense	(6,456		)	(1,620		)	(20,462		)	(3,398		)
Other, net	62			(431		)	73			(968		)
Income (loss) before taxes	$	(42,450	)	$	3,091		$	(61,474	)	$	141,534

Geographic Information

The following table presents revenue by geographic region, which is based on the destination of the shipments:

	Three Months Ended				Nine Months Ended
	September 28, 2013		September 29, 2012		September 28, 2013		September 29, 2012
China	$	8,969	$	14,038	$	39,652	$	267,001
Korea	17,796		83,001		54,343		216,431
Other Asia	9,334		9,191		161,349		134,829
Europe	848		397		1,767		1,604
United States	3,298		2,285		9,158		7,623
Other	46		1,149		128		3,715
Total	$	40,291	$	110,061	$	266,397	$	631,203

A summary of long-lived assets by geographical region is as follows:

	September 28, 2013(1)		December 31, 2012(1)
United States	$	158,202	$	150,738
Luxembourg	59,646		63,024
China	664		1,382
Taiwan	84		121
Hong Kong	842		1,252
Total	$	219,438	$	216,517

(1) Long-lived assets at September 28, 2013 and December 31, 2012, include intangible assets and goodwill of $153,683 and $138,537, respectively, all located in the United States, with the exception of $1,711 and $61,313 of goodwill and intangibles, respectively, at December 31, 2012, which are located in Luxembourg.  At September 28, 2013 the amounts of goodwill and intangibles that were not located in the United States, but in Luxembourg were $1,711 and $57,935, respectively.

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Earnings Per Share

9 Months Ended

Sep. 28, 2013

Earnings Per Share

Earnings Per Share

19. Earnings Per Share

Basic earnings (loss) per share is computed by dividing the Company’s earnings (loss) by only the weighted average number of common shares outstanding during the period. For a period in which the Company reports net income, diluted earnings per share is computed by dividing the Company’s earnings by the weighted average number of common shares and, when dilutive, the weighted average number of potential common shares outstanding during the period, as determined using the treasury stock method. Potential common shares consist of common stock issuable upon the exercise of outstanding stock options and the vesting of restricted stock units.

The following table sets forth the computation of the weighted average shares used in computing basic and diluted earnings per share:

	Three Months Ended		Nine Months Ended
	September 28, 2013	September 29, 2012	September 28, 2013	September 29, 2012
Weighted average common shares—basic	122,183	118,769	119,752	118,873
Dilutive common stock options and restricted stock unit awards (1) (2) (3)	—	1,105	—	1,253
Weighted average common and common equivalent shares—diluted	122,183	119,874	119,752	120,126

(1) Holders of the Notes may convert the Notes into shares of the Company’s common stock, at the applicable conversion rate, subject to certain conditions. Since it is the Company’s stated intent to settle the principal amount of the Notes in cash, the Company has used the treasury stock method for determining the potential dilution in the diluted earnings per share computation. Since the average price of the Company’s common stock was less than the effective conversion price for such Notes during the reporting periods, the Notes were not dilutive for such periods.

(2) Upon exercise of outstanding Warrants, holders of the Warrants may acquire up to 28,500 shares of the Company’s common stock at an exercise price of $9.9328. If the market price per share of the Company’s common stock for the period exceeds the established strike price, the Warrants will have a dilutive effect on its diluted net income per share using the treasury-stock-type method.  Since the average price of the Company’s common stock was less than the strike price of the warrants for the reporting periods, such Warrants were also not dilutive.

(3) As the Company was in a loss position for the three and nine months ended September 28, 2013, certain shares have not been included in the calculation of earnings per share, as their impact would be anti-dilutive. The total number of shares excluded from the calculation of earnings per share because they would be anti-dilutive was 11,584 and 11,463 for the three and nine months ended September 28, 2013, respectively. In addition, for the three and nine months ended September 29, 2012, the total number of shares excluded from the calculation of earnings per share because they would be anti-dilutive was 3,739 and 2,961 shares, respectively.

As shares have been placed in escrow for any indemnifications and liabilities in connection with the acquisition of substantially all of the business of Thermal Technology, LLC, these shares have not been included in the calculation of basic earnings per share. Upon the resolution of any contingencies and indemnifications, which will be with the associated release of the shares from escrow, such shares will be included in basic earnings per share as calculated in the period the contingencies are resolved.

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Basis of Presentation (Details 2) (2012 Term Facility and Incremental Term Loans, Bank of America, USD $) In Thousands, unless otherwise specified	0 Months Ended	3 Months Ended
	Oct. 30, 2013	Dec. 31, 2013	Sep. 28, 2013
2012 Term Facility and Incremental Term Loans | Bank of America
Debt Instrument [Line Items]
Outstanding borrowings under the term loan component of the Credit Agreement paid	$ 96,000
Stand-by letters of credit principal amount outstanding	0
Deferred loan costs expected to be recognized		3,639
Debt balance outstanding	$ 0		$ 96,000

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Derivative and Hedging Activities (Tables)

9 Months Ended

Sep. 28, 2013

Derivative and Hedging Activities

Schedule of balance sheet locations and fair value of the Company's forward foreign currency exchange contracts

	Balance Sheet Location	December 31, 2012
Forward foreign currency exchange contracts—assets	Prepaid expenses and other current assets	$	230

Schedule of effect of the Company's forward foreign currency exchange contracts designated as hedging instruments on the condensed consolidated statement of operations

Instruments Designated as Cash Flow Hedges

	Amount of		Location of Gain or	Amount of Gain or			Location of
	(Gain) or Loss		(Loss) Reclassified	(Loss) Reclassified			Gain or (Loss)	Amount of Gain or
	Recognized in OCI		from AOCI	from AOCI			Recognized in	(Loss) Recognized in
	on Derivative		into Income	into Income			Income on Derivative	Income on Derivative
	(Effective Portion)		(Effective Portion)	(Effective Portion)			(Ineffective Portion)	(Ineffective Portion)
Three Months Ended
September 28, 2013	$	—	Cost of revenue	$	—		Other, net	$	—
September 29, 2012	173		Cost of revenue	(498		)	Other, net	—
Nine Months Ended
September 28, 2013	4		Cost of revenue	60			Other, net	—
September 29, 2012	641		Cost of revenue	(2,775		)	Other, net	—

Derivatives Not Designated as Hedging Instruments

	Location of
	Gain or (Loss)	Amount of Gain or
	Recognized in	(Loss) Recognized in
	Income on Derivative	Income on Derivative
Three Months Ended
September 28, 2013	Other, net	$	—
September 29, 2012	Other, net	(287		)
Nine Months Ended
September 28, 2013	Other, net	$	—
September 29, 2012	Other, net	(886		)

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Long-Term Debt and Convertible Notes (Tables)

9 Months Ended

Sep. 28, 2013

Long-Term Debt and Convertible Notes

Schedule of interest expense

	Three Months Ended		Nine Months Ended
	September 28, 2013		September 28, 2013
Contractual coupon rate of interest	$	1,659	$	4,969
Discount amortization	3,158		8,633
Interest expense - Convertible Notes	$	4,817	$	13,602

Schedule of carrying value of the notes

	September 28, 2013
Principal balance	$	220,000
Discount, net of accumulated amortization of $10,506	(54,610		)
Carrying amount	$	165,390

Schedule of repayment of principal amounts under the Term Facility

	Principal
Fiscal Year Ending	Payments
2013 (remaining 3 months)	$	3,625
2014	12,688
2015	14,500
2016	65,125
2017	220,000
Total	$	315,938

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 28, 2013 item	Sep. 28, 2013 Recurring basis Level 1	Dec. 31, 2012 Recurring basis Level 1	Sep. 28, 2013 Recurring basis Level 2	Dec. 31, 2012 Recurring basis Level 2	Sep. 28, 2013 Recurring basis Level 2 3.00% Senior Convertible Notes	Dec. 31, 2012 Recurring basis Level 2 3.00% Senior Convertible Notes	Sep. 28, 2013 Recurring basis Level 3	Dec. 31, 2012 Recurring basis Level 3	Sep. 28, 2013 Recurring basis Fair Value	Dec. 31, 2012 Recurring basis Fair Value	Sep. 28, 2013 Recurring basis Fair Value 3.00% Senior Convertible Notes	Dec. 31, 2012 Recurring basis Fair Value 3.00% Senior Convertible Notes	Sep. 28, 2013 Recurring basis Total Carrying Value	Dec. 31, 2012 Recurring basis Total Carrying Value	Sep. 28, 2013 Recurring basis Total Carrying Value 3.00% Senior Convertible Notes	Dec. 31, 2012 Recurring basis Total Carrying Value 3.00% Senior Convertible Notes
Fair Value Measurements
Asset transfers between levels	$ 0
Liability transfers between levels	0
Assets:
Money market mutual funds		179,144	200,041											179,144	200,041
Forward foreign exchange contracts					230										230
Liabilities:
Contingent consideration								17,523	10,315					17,523	10,315
Long-term debt obligations				$ 96,138	$ 139,563	$ 282,659	$ 157,300			$ 96,138	$ 139,563	$ 282,659	$ 157,300	$ 95,938	$ 139,563	$ 165,390	$ 157,440
Number of changes in the valuation techniques used to measure the fair value of forward foreign exchange contracts	0

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 28, 2013

Fair Value Measurements

Schedule of assets and liabilities measured and reported at fair value on a recurring basis

	September 28, 2013
	Total Carrying		Fair Value Measurements Using
	Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market mutual funds	$	179,144	$	179,144	$	—	$	—
Liabilities:
Contingent consideration	$	17,523	$	—	$	—	$	17,523

	December 31, 2012
	Total Carrying		Fair Value Measurements Using
	Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market mutual funds	$	200,041	$	200,041	$	—	$	—
Forward foreign exchange contracts	230		—		230		—
Liabilities:
Contingent consideration	$	10,315	$	—	$	—	$	10,315

Schedule of changes in the fair value of the Company's Level 3 contingent consideration obligations

	Three Months Ended					Nine Months Ended
	September 28, 2013		September 29, 2012			September 28, 2013		September 29, 2012
Fair value as of the beginning of the period	$	12,552	$	14,762		$	10,315	$	23,713
Acquisition date fair value of contingent consideration obligations related to acquisitions	—		—			6,211		—
Changes in the fair value of contingent consideration obligations	4,971		(9,943		)	997		(9,261		)
Payments of contingent consideration obligations	—		—			—		(9,633		)
Fair value at the end of the period	$	17,523	$	4,819		$	17,523	$	4,819

Schedule of carrying and fair values of long-term debt obligations

			Fair Value Measurements Using
Description	Total Carrying Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
2012 Term Facility, including current portion
September 28, 2013	$	95,938	$	—	$	96,138	$	—	$	96,138
December 31, 2012	$	139,563	$	—	$	139,563	$	—	$	139,563
3.00% Senior Convertible Notes
September 28, 2013	$	165,390	$	—	$	282,659	$	—	$	282,659
December 31, 2012	$	157,440	$	—	$	157,300	$	—	$	157,300

Schedule of fair value of certain assets on a nonrecurring basis using significant unobservable inputs (Level 3)

	September 28, 2013				December 31, 2012
	Fair Value		Total Losses		Fair Value		Total Losses
Long-lived asset group at our Hazelwood facility	$	1,155	$	4,010	$	5,165	$	29,261

Schedule of fair value of assets as of the measurements date, valuation techniques and related unobservable inputs

	Fair Value		Valuation Technique(s)	Unobservable Input	Range, Median or Average
Long-lived asset group at our Hazelwood facility	$	1,155	Cost Approach and Market Approach	Depreciation factors	Average of 75%

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Long-Term Debt and Convertible Notes (Details 2) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	9 Months Ended					0 Months Ended	3 Months Ended	9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Dec. 31, 2012	Sep. 28, 2012 Call options purchased	Sep. 28, 2013 2012 Term Facility and Incremental Term Loans Bank of America	Sep. 28, 2012 3.00% Convertible Senior Notes due 2017	Sep. 28, 2013 3.00% Convertible Senior Notes due 2017	Sep. 28, 2013 3.00% Convertible Senior Notes due 2017
Long-Term Debt and Revolving Credit Facility
Aggregate increase in principal amount of debt						$ 220,000,000
Net proceeds from notes issued after deducting fees paid to the initial purchasers and other offering costs						212,592,000
Stated interest rate of notes issued (as a percent)						3.00%	3.00%	3.00%
Debt instrument, initial conversion rate (as a percent)								0.1297185
Conversion ratio, principal amount								1,000
Debt instrument, number of shares issued on conversion								28.5
Debt Instrument, Convertible, Effective Conversion Price (in dollars per share)				$ 7.71
Effective interest rate on the liability component (as a percent)								10.70%
Principal balance							220,000,000	220,000,000
Discount, net of accumulated amortization of $10,506							(54,610,000)	(54,610,000)
Carrying amount							165,390,000	165,390,000
Accumulated Amortization	34,682,000		26,584,000				10,506,000	10,506,000
Principal amount required to be paid over the next four fiscal years
2013 (remaining 3 months)					3,625,000
2014					12,688,000
2015					14,500,000
2016					65,125,000
2017					220,000,000
Total					315,938,000
Contractual coupon rate of interest							1,659,000	4,969,000
Convertible notes discount amortization	7,950,000	62,000					3,158,000	8,633,000
Interest expense - Convertible Notes							$ 4,817,000	$ 13,602,000

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Subsequent Event (Details) (USD $)	0 Months Ended			0 Months Ended
	Oct. 30, 2013 Bank of America Credit Agreement	Sep. 28, 2013 Bank of America Credit Agreement	Oct. 31, 2013 Subsequent event item	Oct. 30, 2013 Subsequent event Bank of America Credit Agreement	Sep. 28, 2013 Subsequent event Bank of America Credit Agreement
Subsequent event
Prepayment agreement amount			$ 578,000,000
Number of installments			4
Period of prepayment agreement			5 years
Outstanding borrowings under the term loan component of the Credit Agreement paid	96,000,000			96,000,000
Debt balance outstanding	0	96,000,000		0	96,000,000
Stand-by letters of credit principal amount outstanding	$ 0			$ 0

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Long-Term Debt and Convertible Notes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended	3 Months Ended		9 Months Ended		0 Months Ended		3 Months Ended			0 Months Ended
	Sep. 28, 2013	Sep. 28, 2013	Sep. 28, 2013 2012 Credit Agreement U.S.	Sep. 29, 2012 2012 Credit Agreement U.S.	Sep. 28, 2013 2012 Credit Agreement U.S.	Sep. 29, 2012 2012 Credit Agreement U.S.	Oct. 30, 2013 2012 Term Facility and Incremental Term Loans Bank of America	Feb. 27, 2013 2012 Term Facility and Incremental Term Loans Bank of America	Dec. 31, 2013 2012 Term Facility and Incremental Term Loans Bank of America	Sep. 28, 2013 2012 Term Facility and Incremental Term Loans Bank of America	Jan. 31, 2012 2012 Term Facility and Incremental Term Loans Bank of America	Jun. 25, 2012 Incremental term loan U.S.	Sep. 28, 2013 Hong Kong Revolving Credit Facility Bank of America	Jan. 31, 2012 Hong Kong Revolving Credit Facility U.S. Bank of America	Feb. 27, 2013 Hong Kong Revolving Credit Facility Hong Kong Bank of America	Jan. 31, 2012 Hong Kong Revolving Credit Facility Hong Kong Bank of America
Long-Term Debt and Revolving Credit Facility
Aggregate maximum principal amount										$ 145,000	$ 75,000			$ 25,000	$ 125,000
Aggregate principal amount of debt before amendment																150,000
Aggregate increase in principal amount of debt												70,000
Interest expense which includes amortization of debt fees			1,859	1,470	6,839	3,185
Weighted average interest rate (as a percent)			4.69%		4.25%
Interest capitalized on construction-in-process contracts	0	0
Deferred financing costs			3,639		3,639
Outstanding letters of credit													539
Available credit													124,461
Stand-by letters of credit principal amount outstanding							0
Pre-payment of term facility pursuant to amendment								40,000
Outstanding borrowings under the term loan component of the Credit Agreement paid							96,000
Deferred loan costs expected to be recognized									3,639
Debt balance outstanding							$ 0			$ 96,000

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Earnings Per Share (Tables)

9 Months Ended

Sep. 28, 2013

Earnings Per Share

Schedule of computation of the weighted average shares used in computing basic and diluted earnings per share

	Three Months Ended		Nine Months Ended
	September 28, 2013	September 29, 2012	September 28, 2013	September 29, 2012
Weighted average common shares—basic	122,183	118,769	119,752	118,873
Dilutive common stock options and restricted stock unit awards (1) (2) (3)	—	1,105	—	1,253
Weighted average common and common equivalent shares—diluted	122,183	119,874	119,752	120,126

(1) Holders of the Notes may convert the Notes into shares of the Company’s common stock, at the applicable conversion rate, subject to certain conditions. Since it is the Company’s stated intent to settle the principal amount of the Notes in cash, the Company has used the treasury stock method for determining the potential dilution in the diluted earnings per share computation. Since the average price of the Company’s common stock was less than the effective conversion price for such Notes during the reporting periods, the Notes were not dilutive for such periods.

(2) Upon exercise of outstanding Warrants, holders of the Warrants may acquire up to 28,500 shares of the Company’s common stock at an exercise price of $9.9328. If the market price per share of the Company’s common stock for the period exceeds the established strike price, the Warrants will have a dilutive effect on its diluted net income per share using the treasury-stock-type method.  Since the average price of the Company’s common stock was less than the strike price of the warrants for the reporting periods, such Warrants were also not dilutive.

(3) As the Company was in a loss position for the three and nine months ended September 28, 2013, certain shares have not been included in the calculation of earnings per share, as their impact would be anti-dilutive. The total number of shares excluded from the calculation of earnings per share because they would be anti-dilutive was 11,584 and 11,463 for the three and nine months ended September 28, 2013, respectively. In addition, for the three and nine months ended September 29, 2012, the total number of shares excluded from the calculation of earnings per share because they would be anti-dilutive was 3,739 and 2,961 shares, respectively.

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Earnings Per Share (Details 2) (USD $)	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Stock options and restricted stock units
Long-Term Debt and Revolving Credit Facility
Anti-dilutive securities excluded from computation of earnings per share	11,584,000	3,739,000	11,463,000	2,961,000
Warrant transactions
Long-Term Debt and Revolving Credit Facility
Number of shares of common stock that can be acquired upon exercise of warrants or rights	28,500,000		28,500,000
Exercise price of shares of common stock that can be acquired upon exercise of warrants (in dollars per share)	$ 9.9328		$ 9.9328

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Accumulated Other Comprehensive Income

9 Months Ended

Sep. 28, 2013

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

18. Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income by component, net of tax, for the three and nine months ended September 28, 2013 are as follows:

	Unrealized Gains and Losses on Cash Flow Hedges			Foreign Currency Items		Total
Beginning balance as of June 29, 2013	$	(591	)	$	1,591	$	1,000
Other comprehensive income (loss) before reclassifications				66		66
Amounts reclassified from accumulated other comprehensive income	—			—		—
Net other comprehensive income	$	—		$	66	66
Balance as of September 28, 2013	$	(591	)	$	1,657	$	1,066

	Unrealized Gains and Losses on Cash Flow Hedges			Foreign Currency Items		Total
Beginning balance as of January 1, 2013	$	(537	)	$	1,343	$	806
Other comprehensive income (loss) before reclassifications	(3		)	314		311
Amounts reclassified from accumulated other comprehensive income	(51		)	—		(51		)
Net other comprehensive income	$	(54	)	$	314	260
Balance as of September 28, 2013	$	(591	)	$	1,657	$	1,066

There were no amounts reclassified out of accumulated other comprehensive income for the three months ended September 28, 2013. The reclassification out of accumulated other comprehensive income for the nine months ended September 28, 2013 was ($51). Such reclassifications impacted cost of revenue within the Company’s condensed consolidated statement of operations.

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Condensed Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Condensed Consolidated Statements of Comprehensive (Loss) Income
Change in fair value of cash flow hedging instruments, tax effect	$ 0	$ (274)	$ 11	$ (1,268)

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Basis of Presentation

9 Months Ended

Sep. 28, 2013

Basis of Presentation

Basis of Presentation

1. Basis of Presentation

These accompanying unaudited condensed consolidated financial statements of GT Advanced Technologies Inc. and subsidiaries (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the Securities and Exchange Commission’s (“SEC”) instructions for interim financial information. In the opinion of management, the accompanying financial statements contain all adjustments consisting of normal recurring adjustments necessary to present fairly in all material respects the financial position, results of operations and cash flows for the periods presented. The results for the three and nine months ended September 28, 2013 are not necessarily indicative of the results to be expected for any other interim period or for any future year. The accompanying financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Transition Report on Form 10-K (“Transition Report”) for the nine-month period ended December 31, 2012, filed with the SEC on March 1, 2013.

The condensed consolidated balance sheet as of December 31, 2012 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

Reclassifications

Certain reclassifications have been made to prior year financial statements to conform to the current year presentation. Specifically, contingent consideration income of $9,943 and $9,261 for the three and nine-month periods ended September 29, 2012, respectively, was previously included in general and administrative expense, but is now stated separately in the Company’s condensed consolidated statements of operations.

Recent Developments

The polysilicon, photovoltaic (“PV”) and sapphire (including LED) industries continue to face the significant challenges described in the Company’s Transition Report, including, among others, (i) oversupply of, or limited demand for, end products that are manufactured with equipment sold by the Company; (ii) ongoing trade disputes between the U.S., European Union and South Korea, on the one hand, and China on the other, which have adversely impacted the businesses of the Company’s customers in China (where a majority of the Company’s customers are located) continues to create uncertainty among the Company’s customers and the industries the Company serves; (iii) liquidity challenges being faced by companies in the polysilicon, PV and sapphire industries, due in part to changes in the global capital markets which have resulted in a more stringent lending environment which in turn has caused decreased spending within the industries the Company serves, as customers try to preserve their liquidity; (iv) deterioration of the financial health of the Company’s customers and (v) structural changes in the PV industry which, the Company believes, will require that any recovery in the PV market will be driven by changes in monocrystalline technology and development of other materials for higher efficiency solar cells. As a result, demand for existing multicrystalline products (DSS) will be very limited.

Taking these factors into account, during December 2012, the Company took a number of strategic actions, including, (i) intending to discontinue any significant future investments in the DSS product line and (ii) determining that the vast majority of the amounts in the Company’s backlog attributable to DSS equipment is at risk of not converting into revenue and, accordingly, future sales of DSS will be limited. The Company has taken a number of strategic actions, including idling the Company’s continuously-fed Czochralski (HiCz) Hazelwood facility in St. Louis and shifting the related research and development to Merrimack, New Hampshire. HiCz is a growth technology designed to enable the production of high efficiency monocrystalline solar cells. The factors above triggered impairment assessments that resulted in impairment charges in December 2012 of $60,192 related to PV inventory, $8,352 related to all remaining PV vendor advances, $57,037 related to PV goodwill, and $29,261 related to certain long-lived, intangible and other assets located at the Company’s HiCz Hazelwood facility.

For the three month period ended September 28, 2013, the Company incurred a loss from operations of $36,178 and a net loss of $38,146. For the nine month period ended September 28, 2013, the Company incurred a loss from operations of $41,371, a net loss of $44,880, and used $109,163 in cash for operating activities.

On October 30, 2013, the Company terminated the 2012 Credit Agreement (the “Credit Agreement”).  As of September 28, 2013, there was approximately $96,000 outstanding borrowings under the 2012 Term Facility which was paid in full on October 30, 2013 by using available cash.  As of October 30, 2013, there are no amounts outstanding under the 2012 Revolving Credit Facility and no outstanding stand-by letters of credit under the 2012 Revolving Credit Facility.  In connection with the termination of the 2012 Credit Agreement, the Company expects to recognize a charge in the fourth quarter of approximately $3,639 relating to deferred issuance costs that will be written off upon the termination of the agreement.  For additional information, refer to Note 21, Subsequent Events.

Management believes that the Company has sufficient cash resources to fund operations for at least the next twelve months.

SDR-400™

During the nine months ended September 28, 2013, the Company determined that it had obtained sufficient evidence that the SDR-400™, a product within the Polysilicon business unit, is an established product in accordance with the Company’s revenue recognition policy and accordingly, there is no longer uncertainty around meeting the requirements of customer acceptance conditions in agreements that contain the standard or demonstrated objective specifications of the SDR-400™. In concluding that the SDR-400™ is now an established product, the Company considered the stability of the product’s technology, the ability to test the product prior to shipment, and the historical performance results of over 30 product installations at one of our customers’ facilities.  As a result of classifying the SDR-400™ as an established product, the Company recognized revenue and gross profit of $3,080 and $681, and $148,740 and $59,501, in the three and nine months ended September 28, 2013, respectively, from two customer arrangements that included SDR-400™’s prior to formal customer acceptance of the products.  Non-refundable payments received under these customer arrangements exceed the recognized revenue and were previously recorded as deferred revenue. The Company continues to report deferred revenue related to these arrangements for advance payments on other deliverables included in the arrangements.  Revenue recognized in the nine months ended September 28, 2013 related to the SDR-400™ was material to both the Polysilicon reporting segment and the consolidated results within the Company’s condensed consolidated statement of operations.

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Acquisitions

9 Months Ended

Sep. 28, 2013

Acquisitions

Acquisitions

4. Acquisitions

Acquisition of Certain Assets of Thermal Technology, LLC

On May 16, 2013, the Company acquired substantially all of the business of Thermal Technology, LLC, (“Thermal Technology”), a developer and seller of a wide range of high temperature thermal and vacuum products used in the fabrication of advanced materials that are deployed across multiple industries including LED, medical devices, oil and gas and automotive.  This acquisition was achieved by the Company acquiring an entity to which certain assets and trade payables of Thermal Technology had been transferred immediately prior to the acquisition.  The acquisition of Thermal Technology provides the Company with key technologies that will allow the Company, it believes, to address new markets with production equipment options that can be optimized around customers’ specific needs. The purchase consideration consisted of 3.4 million shares of the Company’s common stock valued at an aggregate of $14,463 (as of the date of acquisition) and potential contingent consideration of $35,000 based upon meeting certain financial metrics. The final purchase price is subject to a net working capital adjustment, dependent upon the level of working capital at the acquisition date, that has not yet been finalized.  The fair value of the contingent consideration was $6,211 at the date of acquisition.

The transaction has been accounted for as a business combination and the results are included in the Company’s results of operations from May 16, 2013, the date of acquisition. The acquired business contributed revenues of $3,545 and a loss of $3,071 to the consolidated results of the Company for the period from acquisition to September 28, 2013. The results of the acquired business are included in the Company’s sapphire business reporting segment.

Significant judgment is required in estimating the fair value of intangible assets acquired in a business combination and in assigning their respective useful lives. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management.

The Company employs the income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants, and include the amount and timing of future cash flows (including expected growth rates and profitability), the underlying product life cycles, economic barriers to entry, a brand’s relative market position and the discount rate applied to the cash flows, among others.

Each period the Company will revalue the contingent consideration obligations associated with the acquisition to fair value and record changes in the fair value as contingent consideration expense or income. Increases or decreases in the fair value of the contingent consideration obligations can result from changes in assumed discount periods and rates, changes in the assumed timing and amount of revenue and expense estimates and changes in assumed probability with respect to the attainment of certain financial and operational metrics. Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the amount of contingent consideration expense (income) recorded in any given period.

As of September 28, 2013, the purchase price (including the estimated contingent consideration) and related allocations for the acquisition are preliminary. The Company is currently in the process of investigating the facts and circumstances existing as of the acquisition date in order to finalize its valuation and establish the related tax basis. As a result of the preliminary purchase price allocation, the Company recognized $6,744 of goodwill, which is primarily due to the expected future cash flows from synergies with the operations of the Company and assembled workforce. The goodwill created by the transaction is nondeductible for tax purposes. A summary of the preliminary purchase price allocation for the acquisition of Thermal Technology business is as follows:

Fair value of consideration transferred:

Common stock	$	14,463
Contingent consideration obligations	6,211
Preliminary estimate of net working capital adjustment	(735		)
Total fair value of consideration	$	19,939

Fair value of assets acquired and liabilities assumed:

Accounts receivable	$	1,008
Inventory	7,861
Property, plant and equipment	1,700
Deferred tax asset	411
Other assets	439
Intangible assets	14,500
Goodwill	6,744
Accounts payable and accrued expenses	(7,057		)
Customer deposits	(2,509		)
Deferred tax liability	(3,149		)
Other current liabilities	(9		)
Total net assets acquired	$	19,939

The purchase consideration includes contingent consideration payable by the Company upon the attainment of certain financial targets through the period ending December 31, 2018. Specifically, the contingent consideration is based upon a portion of revenue achieved for the remainder of 2013 to 2018, subject to certain thresholds and a cap on total payments. The Company determined the fair value of the contingent consideration obligations based on a probability-weighted income approach derived from future revenue estimates. The undiscounted range of outcomes that the Company used to value the contingent consideration arrangement was between $7,507 and $20,205. During the three and nine months ended September 28, 2013, the Company recorded contingent consideration income of $1,075 and $934, respectively, related to change in the fair value of the liability at September 28, 2013.

The Company incurred transaction costs of $1,188, which consisted primarily of legal and accounting fees. These costs have been recorded as general and administrative expense for the nine months ended September 28, 2013. The acquisition of Thermal Technology’s business did not have a material effect on the Company’s results of operations. Pro forma results of operations have not been presented due to the immaterial impact the amounts would have had on the Company’s historical results of operations.

Acquisition of Certain Assets of Twin Creeks Technologies, Inc.

On November 8, 2012, the Company acquired certain assets and intellectual property of Twin Creeks Technologies, Inc. (“Twin Creeks”), a privately owned company involved in the development of an ion implanter technology, which the Company refers to as the Hyperion ion implanter. The assets were purchased from Twin Creeks’ lenders in a private sale for total consideration with a fair value of $15,372. The purchase consideration consisted of $10,172 in cash and a potential additional $40,000 of contingent consideration. The fair value of the contingent consideration was estimated at $5,200 at the date of acquisition.

The acquisition of these select assets, including the associated in-process research and development, is intended to have a broad application in the production of engineered substrates for power semiconductors, uses within the sapphire and LED industries and thin wafers for solar applications and certain other potential applications. In addition, the Company expects to pursue the development of thin sapphire laminates for use in applications such as cover and touch screen devices.

The transaction has been accounted for as a business combination and is included in the Company’s results of operations from the acquisition date of November 8, 2012. The acquired assets did not contribute revenues from the acquisition date to September 28, 2013.  The goodwill created by the transaction is expected to be deductible for tax purposes.  The results of the acquired assets, including goodwill, are included in the Company’s PV and sapphire segments.

As of September 28, 2013, the valuation of acquired assets, and assumed liabilities is preliminary. The Company is in the process of investigating the facts and circumstances existing as of the acquisition date in order to finalize its valuation. Based on new information gathered about facts and circumstances that existed as of the acquisition date related to the valuation of certain acquired assets and assumed liabilities, the Company updated the preliminary valuations of assets acquired during the three months ended March 30, 2013 which resulted in an increase to goodwill of $2,000 and a decrease to deferred tax assets of $2,000 as reflected in the table below. The adjustments have been retrospectively applied to the December 31, 2012 balance sheet. These adjustments had no impact on the statement of operations or statement of cash flows. A summary of the preliminary purchase price allocation for the acquisition of certain assets and assumed liabilities of Twin Creeks is as follows:

Fair value of consideration transferred:

Cash	$	10,172
Contingent consideration obligations	5,200
Total fair value of consideration	$	15,372

Fair value of assets acquired and liabilities assumed:

Property, plant and equipment	$	1,529
Other assets	23
In-process research and development	12,300
Goodwill	2,907
Accounts payable	(1,362		)
Other current liabilities	(25		)
Total net assets acquired	$	15,372

The purchase consideration includes contingent consideration payable by the Company in the form of a royalty on net sales of hydrogen ion implantation systems, related equipment, parts and accessories and materials made from hydrogen ion implantation systems and of royalties from any sub-licenses granted by the Company of the underlying intellectual property acquired. These payments are subject to the Company’s right to set-off up to $6,000 for infringement claims brought by third-parties related to the intellectual property acquired. The royalty amount payable is capped at the earlier of payment of $40,000 of royalties or the end of the 15-year term of the license agreement. The Company determined the fair value of the contingent consideration obligations based on a probability-weighted income approach derived from assessments of future revenue. The weighted-average undiscounted probable outcome that the Company initially used to value the contingent consideration arrangement was $27,562. During the three and nine months ended September 28, 2013, the Company recorded contingent consideration expense of $6,046 and $6,747, respectively, related to change in the fair value of the liability at September 28, 2013.

Intangible assets are composed of the estimated fair value of acquired in-process research and development (“IPR&D”) related to the Hyperion™ ion implanter technology. At the date of acquisition and through September 28, 2013, the Hyperion™ ion implanter technology had not reached commercial technological feasibility nor had an alternative future use and is therefore considered to be IPR&D. The estimated fair value was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flows from the Hyperion™ tool were based on certain key assumptions, including estimates of future revenue and expenses and taking into account the stage of development of the technology at the acquisition date and the time and resources needed to complete development. The Company used a discount rate of 28% and cash flows that have been probability-adjusted to reflect the risks of product commercialization. This discount rate used is comparable to the estimated internal rate of return on Twin Creeks operations and represents the rate that market participants would use to value the intangible assets.

The major risks and uncertainties associated with the timely and successful completion of development of the IPR&D include the Company’s ability to demonstrate technological feasibility of the product and to successfully complete this task within budgeted costs. Consequently, the eventual realized value of the acquired IPR&D may vary from its estimated fair value at the date of acquisition.

The acquisition of certain select assets of Twin Creeks did not have a material effect on the Company’s results of operations for the three and nine months ended September 28, 2013. Pro forma results of operations have not been presented due to the immaterial impact the amounts would have had on the Company’s historical results of operations.

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Significant Accounting Policies

9 Months Ended

Sep. 28, 2013

Significant Accounting Policies

Significant Accounting Policies

2. Significant Accounting Policies

The Company’s significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements included in the Transition Report. There were no significant changes to the significant accounting policies during the nine months ended September 28, 2013.

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 28, 2013

Stockholders' Equity

Schedule of changes in stockholders' equity

	Common Stock					Additional Paid-in			Retained			Accumulated Other		Total Stockholders’
	Shares		Par Value			Capital			Earnings			Comprehensive Income		Equity
Balance as of January 1, 2013	119,293		$	1,193		$	183,565		$	56,687		$	806	$	242,251
Net loss	—		—			—			(44,880		)	—		(44,880		)
Other comprehensive income	—		—			—			—			260		260
Common stock issued for Thermal Tech acquisition (net of $46 of registration costs)	3,356		33			14,384			—			—		14,417
Option exercises and vesting of restricted stock units	1,448		14			101			—			—		115
Share-based compensation expense	—		—			13,490			—			—		13,490
Excess tax deficiency from share-based award activity	—		—			(1,396		)	—			—		(1,396		)
Minimum tax withholding payments for employee share-based awards	(339	)	(3		)	(1,513		)	—			—		(1,516		)
Balance as of September 28, 2013	123,758		$	1,237		$	208,631		$	11,807		$	1,066	$	222,741

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Subsequent Event

9 Months Ended

Sep. 28, 2013

Subsequent Event

Subsequent Event

21. Subsequent Event

Agreements with Apple Inc.

On October 31, 2013, GTAT Corporation (“GTAT”), a wholly-owned subsidiary of GT Advanced Technologies Inc, and Apple Inc. (“Apple”) entered into a Master Development and Supply Agreement and related Statement of Work (the “MDSA”), pursuant to which GTAT will supply sapphire material exclusively to Apple for consumer electronics.  GTAT has granted Apple certain intellectual property rights in connection with its sapphire growth technologies.

On October 31, 2013, GTAT also entered into a Prepayment Agreement with Apple pursuant to which GTAT will receive approximately $578 million (the “Prepayment Amount”), in four separate installments, as payment in advance for the purchase of sapphire goods.  GTAT is required to repay this amount ratably over a five year period ending in January 2020, either as a credit against Apple purchases of sapphire goods under the MDSA or as a direct cash payment.  GTAT’s obligation to repay the Prepayment Amount may be accelerated under certain circumstances.  GTAT’s obligations under the Prepayment Agreement are secured by certain of its assets.  While the MDSA specifies GTAT’s minimum and maximum supply commitments, there are no minimum purchase requirements under the terms of the MDSA.

Finally, on October 31, 2013, GTAT entered into a lease agreement (the “Lease Agreement”) with an affiliate of Apple in order to lease a facility in Mesa, Arizona that GTAT will use for the purpose of manufacturing the sapphire goods under the MDSA.

The foregoing does not purport to be a complete description of the MDSA, the Prepayment Agreement or the Lease Agreement, which are filed with this Quarterly Report on Form 10-Q.

Termination of Credit Agreement with Bank of America N.A.

On October 30, 2013, GT Advanced Technologies Inc. terminated its credit agreement (the “Credit Agreement”), with Bank of America, N.A., (“Bank of America”) and the other lenders from time to time party thereto.  As of September 28, 2013, there was approximately $96 million outstanding under the term loan component of the Credit Agreement, which was paid in full on October 30, 2013 by the Company using its available cash.  As of October 30, 2013, there were no amounts outstanding under the revolving loan component of the Credit Agreement and no outstanding stand-by letters of credit under the Credit Agreement.

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 28, 2013

Goodwill and Other Intangible Assets

Schedule of changes in the Company's goodwill

	Photovoltaic			Sapphire
	Business			Business		Total
Balance as of December 31, 2012
Goodwill	$	61,399		$	43,659	$	105,058
Accumulated impairment losses	(57,037		)	—		(57,037		)
	$	4,362		$	43,659	$	48,021
Acquisition of Thermal Technology, LLC	—			6,744		6,744
Balance as of September 28, 2013
Goodwill	$	61,399		$	50,403	$	111,802
Accumulated impairment losses	(57,037		)	—		(57,037		)
	$	4,362		$	50,403	$	54,765

Schedule of acquired intangible assets subject to amortization

	Weighted
	Average	September 28, 2013						December 31, 2012
	Amortization	Gross		Accumulated				Gross		Accumulated
	Period	Amount		Amortization		Net		Amount		Amortization		Net
Finite-lived intangible assets
Photovoltaic:
Technology	9.5 years	$	74,200	$	19,977	$	54,223	$	72,200	$	14,951	$	57,249
Trade names / Trademarks	8.6 years	7,100		3,388		3,712		7,100		3,036		4,064
Subtotal:		81,300		23,365		57,935		79,300		17,987		61,313
Polysilicon:
Technology	2.6 years	1,500		1,500		—		1,500		1,500		—
Subtotal:		1,500		1,500		—		1,500		1,500		—
Sapphire:
Customer relationships	6.4 years	7,300		2,331		4,969		4,100		1,651		2,449
Technology	9.3 years	28,600		5,983		22,617		17,300		4,181		13,119
Order backlog	1.2 years	500		500		—		500		500		—
Trade names	8.0 years	1,100		435		665		1,100		332		768
Non-compete agreements	5.8 years	1,000		568		432		1,000		433		567
Subtotal:		38,500		9,817		28,683		24,000		7,097		16,903
Total finite-lived intangible assets		121,300		34,682		86,618		104,800		26,584		78,216
Indefinite-lived intangible assets
In-process research and development		12,300		—		12,300		12,300		—		12,300
Total intangible assets		$	133,600	$	34,682	$	98,918	$	117,100	$	26,584	$	90,516

Schedule of estimated future amortization expense for the Company's intangible assets

Year Ending December 31,	Amortization Expense
2013 (remaining three months)	$	2,975
2014	11,881
2015	11,852
2016	11,519
2017	11,052
2018	10,990
Thereafter	38,649

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Segment and Geographical Information (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012	Dec. 31, 2012
Revenues and long-lived assets information
Revenue	$ 40,291	$ 110,061	$ 266,397	$ 631,203
Long-lived assets	219,438		219,438		216,517
Goodwill	54,765		54,765		48,021
Intangibles	98,918		98,918		90,516
China
Revenues and long-lived assets information
Revenue	8,969	14,038	39,652	267,001
Long-lived assets	664		664		1,382
Korea
Revenues and long-lived assets information
Revenue	17,796	83,001	54,343	216,431
Other Asia
Revenues and long-lived assets information
Revenue	9,334	9,191	161,349	134,829
Europe
Revenues and long-lived assets information
Revenue	848	397	1,767	1,604
United States
Revenues and long-lived assets information
Revenue	3,298	2,285	9,158	7,623
Long-lived assets	158,202		158,202		150,738
Intangible assets and goodwill	153,683		153,683		138,537
Other
Revenues and long-lived assets information
Revenue	46	1,149	128	3,715
Luxembourg
Revenues and long-lived assets information
Long-lived assets	59,646		59,646		63,024
Goodwill	1,711		1,711		1,711
Intangibles	57,935		57,935		61,313
Taiwan
Revenues and long-lived assets information
Long-lived assets	84		84		121
Hong Kong
Revenues and long-lived assets information
Long-lived assets	$ 842		$ 842		$ 1,252

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Warranty (Tables)

9 Months Ended

Sep. 28, 2013

Warranty

Schedule of warranty activities

	Nine Months Ended
	September 28, 2013			September 29, 2012
Product warranty liability, beginning of the period	$	10,711		$	4,764
Accruals for warranties issued	7,157			9,029
Payments under warranty	(5,500		)	(4,578		)
Product warranty liability, end of period	$	12,368		$	9,215

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Segment and Geographical Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013 segment	Sep. 29, 2012
Segment and Geographical Information
Number of reportable segments			3
Financial information for the Company's business segments
Revenue	$ 40,291	$ 110,061	$ 266,397	$ 631,203
Gross profit	17,777	35,028	90,008	247,562
Research and development	21,075	18,767	56,039	47,954
Sales and marketing	3,496	3,123	10,870	9,657
General and administrative	17,427	15,428	48,507	45,731
Contingent consideration expense (income)	4,971	(9,943)	997	(9,261)
Restructuring charges	4,010		6,868
Amortization of intangible assets	2,976	2,538	8,098	7,631
(Loss) income from operations	(36,178)	5,115	(41,371)	145,850
Interest income	122	27	286	50
Interest expense	(6,456)	(1,620)	(20,462)	(3,398)
Other, net	62	(431)	73	(968)
(Loss) income before income taxes	(42,450)	3,091	(61,474)	141,534
PV
Financial information for the Company's business segments
Revenue	4,369	1,556	20,144	42,357
Gross profit	2,893	(3,312)	2,290	14,473
Polysilicon Business
Financial information for the Company's business segments
Revenue	28,564	95,856	217,279	371,320
Gross profit	20,032	35,095	95,119	148,412
Sapphire Business
Financial information for the Company's business segments
Revenue	7,358	12,649	28,974	217,526
Gross profit	$ (5,148)	$ 3,245	$ (7,401)	$ 84,677

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Derivative and Hedging Activities (Details 2) (Instruments designated as hedging instruments, Forward foreign currency exchange contracts, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Instruments designated as hedging instruments | Forward foreign currency exchange contracts
Derivative and Hedging Activities
Assets	$ 230

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Fair Value Measurements (Details 2) (USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended	9 Months Ended		9 Months Ended			3 Months Ended			9 Months Ended
	Dec. 31, 2012	Sep. 29, 2012	Sep. 29, 2012	Sep. 28, 2013 Hazelwood facility	Sep. 28, 2013 Non - recurring basis Level 3 Hazelwood facility	Dec. 31, 2012 Non - recurring basis Level 3 Hazelwood facility	Sep. 28, 2013 Weighted average Non - recurring basis Level 3 Hazelwood facility	Jun. 29, 2013 Confluence Solar, Inc.	Sep. 28, 2013 Contingent consideration obligations	Sep. 29, 2012 Contingent consideration obligations	Sep. 28, 2013 Contingent consideration obligations	Sep. 29, 2012 Contingent consideration obligations	Sep. 28, 2013 Contingent consideration obligations Twin Creeks Minimum	Sep. 28, 2013 Contingent consideration obligations Twin Creeks Weighted average	Sep. 28, 2013 Contingent consideration obligations Thermal Technology, LLC
Changes in the fair value of the Company's Level 3 liabilities
Fair value as of the beginning of the period									$ 12,552	$ 14,762	$ 10,315	$ 23,713
Acquisition date fair value of contingent consideration obligations related to acquisitions											6,211
Changes in the fair value of contingent consideration obligations									4,971	(9,943)	997	(9,261)
Payments of contingent consideration obligations												(9,633)
Fair value at the end of the period									17,523	4,819	17,523	4,819
Revised probability factor associated with the technical target (as a percent)													28.00%	28.00%	20.40%
Probability adjusted discount rate for revenue target (as a percent)													25.00%	75.00%
Reversal of the contingent consideration liability								4,816
Contingent consideration expense (income)		(9,943)	(9,261)						4,971	(9,943)	997	(9,261)
Assets:
Long-lived asset group				1,155	1,155	5,165
Long-lived asset group, Total Losses	29,261				4,010	29,261
Long-lived asset group of the Hazelwood facility							$ 1,155
Percentage of projected option cost as an input to measure fair value							75.00%

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Basis of Presentation (Details) (USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Reclassifications
Contingent consideration income			$ 9,943		$ 9,261
Impairment charges on PV inventory	60,192
Impairment charges on PV vendor advances	8,352
Impairment of goodwill	57,037			0
Impairment charges on PV long-lived, intangible and other assets	29,261
Income (loss) from operations		(36,178)	5,115	(41,371)	145,850
Net (Loss) income		(38,146)	2,344	(44,880)	96,174
Cash for operating activities				109,163	22,704
Impairment charge related to certain intangible assets in PV business		$ 0

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 28, 2013	Dec. 31, 2012
Condensed Consolidated Balance Sheets
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	500,000	500,000
Common stock, shares issued	123,758	119,293
Common stock, shares outstanding	123,758	119,293

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Customer Concentrations

9 Months Ended

Sep. 28, 2013

Customer Concentrations

Customer Concentrations

7. Customer Concentrations

The following customers comprised 10% or more of the Company’s total revenue or accounts receivable for the, or as of, the periods indicated:

Three Months Ended

Nine Months Ended

As of

September 28, 2013

September 29, 2012

September 28, 2013

September 29, 2012

September 28, 2013

December 31, 2012

% of

% of

% of

% of

Accounts

% of

Accounts

% of

Revenue

Total

Revenue

Total

Revenue

Total

Revenue

Total

Receivable

Total

Receivable

Total

Photovoltaic Customers

Customer #1

*

*

*

*

*

*

*

*

*

*

$

2,478

10

%

Polysilicon Customers

Customer #2

$

17,600

44

%

*

*

*

*

*

*

*

*

*

*

Customer #3

7,919

20

%

*

*

$

108,579

41

%

*

*

*

*

*

*

Customer #4

*

*

*

*

45,268

17

%

*

*

*

*

9,085

38

%

Customer #5

*

*

*

*

34,915

13

%

*

*

*

*

*

*

Customer #6 (1)

*

*

$

43,459

39

%

*

*

$

139,337

22

%

*

*

*

*

Customer #7

*

*

39,142

36

%

*

*

*

*

$

1,200

16

%

3,248

14

%

Customer #8

*

*

*

*

*

*

82,316

13

%

*

*

*

*

Customer #9

*

*

*

*

*

*

77,870

12

%

*

*

*

*

Customer #10

*

*

*

*

*

*

*

*

1,450

19

%

*

*

Sapphire Customers

Customer #11

*

*

*

*

*

*

63,950

10

%

*

*

*

*

*                      Amounts from these customers were less than 10% of the total as of, or for, the respective period.

(1)                   Presented in the table are revenues from a significant customer in the Polysilicon segment.  Total revenue recognized from this customer for the three months ended September 29, 2012 was $43,769 or 40% of total revenue.  Total revenue recognized from this customer for the nine months ended September 29, 2012 was $174,127 or 28% of total revenue. Not included in the table above for the three and nine months ended September 29, 2012 are $310 or less than 1% and $34,790 or 6% of total revenue for these periods for sales to this customer that have been included in the Sapphire segment.

The Company requires most of its customers to either post letters of credit and/or make advance payments of a portion of the selling price prior to delivery. Approximately $3,174 (or 42%) and $16,557 (or 69%) of total accounts receivable as of September 28, 2013 and December 31, 2012, respectively, were secured by letters of credit.

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Condensed Consolidated Statements of Comprehensive (Loss) Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Condensed Consolidated Statements of Comprehensive (Loss) Income
Net (loss) income	$ (38,146)	$ 2,344	$ (44,880)	$ 96,174
Other comprehensive (loss) income, net of tax:
Change in fair value of cash flow hedging instruments, net of tax effect of $0, ($274), $11 and ($1,268), respectively		338	(54)	1,752
Foreign currency translation adjustments	66	192	314	(62)
Other comprehensive income	66	530	260	1,690
Comprehensive (loss) income	$ (38,080)	$ 2,874	$ (44,620)	$ 97,864

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Other Assets (Details) (USD $) In Thousands, unless otherwise specified	Sep. 28, 2013	Dec. 31, 2012
Other Assets
Inventory	$ 36,724	$ 33,834
Vendor advances	18,524	20,664
Deferred financing fees	7,945	8,787
Deferred income taxes	21,222	15,424
Other	7,666	8,211
Total other assets	$ 92,081	$ 86,920

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 28, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 258,472	$ 418,095
Accounts receivable, net	7,471	23,829
Inventories	123,189	133,286
Deferred costs	2,274	30,248
Vendor advances	12,630	32,440
Deferred income taxes	22,937	28,226
Refundable income taxes		1,516
Prepaid expenses and other current assets	6,340	9,168
Total current assets	433,313	676,808
Property, plant and equipment, net	65,755	77,980
Other assets	92,081	86,920
Intangible assets, net	98,918	90,516
Deferred cost	26,344	24,423
Goodwill	54,765	48,021
Total assets	771,176	1,004,668
Current liabilities:
Current portion of long-term debt	9,063	7,250
Accounts payable	20,326	44,848
Accrued expenses	46,947	30,928
Contingent consideration	1,294	4,901
Customer deposits	36,218	111,777
Deferred revenue	13,700	86,098
Accrued income taxes	11,982	21,716
Total current liabilities	139,530	307,518
Long-term debt	86,875	132,313
Convertible notes	165,390	157,440
Deferred income taxes	6,034	24,459
Customer deposits	55,598	71,340
Deferred revenue	48,613	35,848
Contingent consideration	16,229	5,414
Other non-current liabilities	2,418	2,323
Accrued income taxes	27,748	25,762
Total liabilities	548,435	762,417
Commitments and contingencies (Note 14)
Stockholders' equity:
Preferred stock, 10,000 shares authorized, none issued and outstanding
Common stock, $0.01 par value; 500,000 shares authorized, 123,758 and 119,293 shares issued and outstanding as of September 28, 2013 and December 31, 2012, respectively	1,237	1,193
Additional paid-in capital	208,631	183,565
Accumulated other comprehensive income	1,066	806
Retained earnings	11,807	56,687
Total stockholders' equity	222,741	242,251
Total liabilities and stockholders' equity	$ 771,176	$ 1,004,668

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Goodwill and Other Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	1 Months Ended	9 Months Ended		3 Months Ended					9 Months Ended
	Dec. 31, 2012	Sep. 28, 2013	Sep. 28, 2013 Thermal Technology, LLC	Mar. 30, 2013 Twin Creeks	Sep. 28, 2013 Photovoltaic Business	Dec. 31, 2012 Photovoltaic Business	Sep. 28, 2013 Sapphire Business	Dec. 31, 2012 Sapphire Business	Sep. 28, 2013 Sapphire Business Thermal Technology, LLC
Change in the Company's goodwill
Goodwill, gross at the beginning of the period		$ 105,058			$ 61,399	$ 61,399	$ 50,403	$ 43,659
Accumulated impairment losses at the beginning of the period		(57,037)			(57,037)	(57,037)
Goodwill, net at the beginning of the period		48,021			4,362	4,362	50,403	43,659
Acquisitions			6,744						6,744
Goodwill, gross at the end of the period	105,058	111,802			61,399	61,399	50,403	43,659
Accumulated impairment losses at the end of the period	(57,037)	(57,037)			(57,037)	(57,037)
Goodwill, net at the end of the period	48,021	54,765			4,362	4,362	50,403	43,659
Goodwill impairment loss	57,037	0
Increase to goodwill due to update of preliminary valuation of assets acquired				2,000
Decrease to deferred tax assets due to update of preliminary valuation of assets acquired				$ 2,000

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Basis of Presentation (Policies)

9 Months Ended

Sep. 28, 2013

Basis of Presentation

Reclassifications

Reclassifications

Certain reclassifications have been made to prior year financial statements to conform to the current year presentation. Specifically, contingent consideration income of $9,943 and $9,261 for the three and nine-month periods ended September 29, 2012, respectively, was previously included in general and administrative expense, but is now stated separately in the Company’s condensed consolidated statements of operations.

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Share-Based Compensation

9 Months Ended

Sep. 28, 2013

Share-Based Compensation

Share-Based Compensation

16. Share-Based Compensation

The Company recorded $4,555, $13,883, $4,818, and $13,091 of expense related to share-based compensation during the three and nine months ended September 28, 2013 and September 29, 2012, respectively. Share-based compensation cost capitalized as part of inventory was not material for all periods presented.

During the nine months ended September 28, 2013, no option awards were granted.

During the nine months ended September 28, 2013, the Company granted restricted stock units to certain executives, employees and directors of the Company for 3,158 shares of the Company’s common stock. Restricted stock units provide for the holder to receive shares of the Company’s common stock at the time such units vest or restrictions on such units lapse in accordance with the terms of the restricted stock unit agreement. The total fair value of the restricted stock units, which was based on the fair value of the Company’s common stock on the date of grant, was $10,771 or $3.41 per share on a weighted average basis.

During the nine months ended September 28, 2013, the Company granted certain executives 890 market based restricted stock units which are earned based upon achievement of certain stock price thresholds (and if these price thresholds are satisfied, the units vest upon meeting certain continued service requirements).  The total fair value of these market-based restricted stock units was determined through the use of a Monte Carlo simulation model, which utilizes multiple input variables that determine the probability of satisfying the market condition requirements applicable to each award; these inputs include the expected volatility factor, risk free interest rate, expected term (in years) and expected dividend yield. The total fair value of these restricted stock units was $2,688, or $3.02 per share on a weighted average basis.

As of September 28, 2013, the Company had unamortized share-based compensation expense related to stock options, restricted stock unit awards, market-based restricted stock unit awards and performance-based restricted stock unit awards of approximately $23,516 after estimated forfeitures. The remaining unamortized share-based compensation expense related to stock options, restricted stock unit awards and performance and market-based restricted stock unit awards will be recognized over an estimated weighted average remaining requisite service period of 1.69 years.

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Segment and Geographical Information (Tables)

9 Months Ended

Sep. 28, 2013

Segment and Geographical Information

Schedule of financial information for the Company's reportable segments

	Three Months Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Revenue:
PV	$	4,369		$	1,556		$	20,144		$	42,357
Polysilicon	28,564			95,856			217,279			371,320
Sapphire	7,358			12,649			28,974			217,526
Total revenue	40,291			110,061			266,397			631,203
Gross Profit:
PV	$	2,893		$	(3,312	)	$	2,290		$	14,473
Polysilicon	20,032			35,095			95,119			148,412
Sapphire	(5,148		)	3,245			(7,401		)	84,677
Total gross profit	17,777			35,028			90,008			247,562
Research and development	21,075			18,767			56,039			47,954
Sales and marketing	3,496			3,123			10,870			9,657
General and administrative	17,427			15,428			48,507			45,731
Contingent consideration expense (income)	4,971			(9,943		)	997			(9,261		)
Restructuring charges	4,010			—			6,868			—
Amortization of intangible assets	2,976			2,538			8,098			7,631
Income (loss) from operations	(36,178		)	5,115			(41,371		)	145,850
Interest income	122			27			286			50
Interest expense	(6,456		)	(1,620		)	(20,462		)	(3,398		)
Other, net	62			(431		)	73			(968		)
Income (loss) before taxes	$	(42,450	)	$	3,091		$	(61,474	)	$	141,534

Schedule of revenue by geographic region based on the destination of the shipments

	Three Months Ended				Nine Months Ended
	September 28, 2013		September 29, 2012		September 28, 2013		September 29, 2012
China	$	8,969	$	14,038	$	39,652	$	267,001
Korea	17,796		83,001		54,343		216,431
Other Asia	9,334		9,191		161,349		134,829
Europe	848		397		1,767		1,604
United States	3,298		2,285		9,158		7,623
Other	46		1,149		128		3,715
Total	$	40,291	$	110,061	$	266,397	$	631,203

Summary of long-lived assets by geographical region

	September 28, 2013(1)		December 31, 2012(1)
United States	$	158,202	$	150,738
Luxembourg	59,646		63,024
China	664		1,382
Taiwan	84		121
Hong Kong	842		1,252
Total	$	219,438	$	216,517

(1) Long-lived assets at September 28, 2013 and December 31, 2012, include intangible assets and goodwill of $153,683 and $138,537, respectively, all located in the United States, with the exception of $1,711 and $61,313 of goodwill and intangibles, respectively, at December 31, 2012, which are located in Luxembourg.  At September 28, 2013 the amounts of goodwill and intangibles that were not located in the United States, but in Luxembourg were $1,711 and $57,935, respectively.

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Derivative and Hedging Activities (Details) (Instruments Designated as Cash Flow Hedges, Forward foreign currency exchange contracts, USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 28, 2013
Instruments Designated as Cash Flow Hedges | Forward foreign currency exchange contracts
Derivative and Hedging Activities
Derivative contracts expiration period	12 months
Amount of forward foreign currency exchange purchase contracts	$ 0

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Share-Based Compensation (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Share-Based Compensation
Stock-based compensation expense	$ 4,555	$ 4,818	$ 13,883	$ 13,091
Unamortized share-based compensation expense	23,516		23,516
Weighted average remaining requisite service period			1 year 8 months 8 days
Restricted Stock Units
Share-Based Compensation
Granted (in shares)			3,158
Total fair value of awards granted			10,771
Granted (in dollars per share)			$ 3.41
Market-based restricted stock units
Share-Based Compensation
Granted (in shares)			890
Total fair value of awards granted			$ 2,688
Granted (in dollars per share)			$ 3.02
Stock options
Share-Based Compensation
Awards granted (in shares)			0

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Income Taxes (Tables)

9 Months Ended

Sep. 28, 2013

Income Taxes

Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits

Unrecognized tax benefits at December 31, 2012	$	26,322
Increases related to current year tax positions	272
Increases related to prior year tax positions	372
Settlements with tax authorities	(1,464		)
Unrecognized tax benefits at September 28, 2013	$	25,502

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Inventories (Tables)

9 Months Ended

Sep. 28, 2013

Inventories

Schedule of inventories

	September 28, 2013		December 31, 2012
Raw materials	$	109,137	$	97,957
Work-in-process	8,563		5,100
Finished goods	5,489		30,229
	$	123,189	$	133,286

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Other Assets (Tables)

9 Months Ended

Sep. 28, 2013

Other Assets

Schedule of other assets

	September 28, 2013		December 31, 2012
Inventory	$	36,724	$	33,834
Vendor advances	18,524		20,664
Deferred financing fees	7,945		8,787
Deferred income taxes	21,222		15,424
Other	7,666		8,211
	$	92,081	$	86,920

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 28, 2013

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

6. Goodwill and Other Intangible Assets

The following table contains the change in the Company’s goodwill during the nine months ended September 28, 2013:

	Photovoltaic			Sapphire
	Business			Business		Total
Balance as of December 31, 2012
Goodwill	$	61,399		$	43,659	$	105,058
Accumulated impairment losses	(57,037		)	—		(57,037		)
	$	4,362		$	43,659	$	48,021
Acquisition of Thermal Technology, LLC	—			6,744		6,744
Balance as of September 28, 2013
Goodwill	$	61,399		$	50,403	$	111,802
Accumulated impairment losses	(57,037		)	—		(57,037		)
	$	4,362		$	50,403	$	54,765

As noted in Note 4, during the three months ended March 30, 2013, the Company updated the preliminary valuation of assets acquired of Twin Creeks, which resulted in an increase to goodwill of $2,000 and a decrease to deferred tax assets of $2,000.  This adjustment was retrospectively recorded as of December 31, 2012 in the balance sheet and table above.

No impairment losses have been recorded on the Company’s goodwill during the nine months ended September 28, 2013.

Acquired intangible assets subject to amortization at September 28, 2013 and December 31, 2012 consisted of the following:

	Weighted
	Average	September 28, 2013						December 31, 2012
	Amortization	Gross		Accumulated				Gross		Accumulated
	Period	Amount		Amortization		Net		Amount		Amortization		Net
Finite-lived intangible assets
Photovoltaic:
Technology	9.5 years	$	74,200	$	19,977	$	54,223	$	72,200	$	14,951	$	57,249
Trade names / Trademarks	8.6 years	7,100		3,388		3,712		7,100		3,036		4,064
Subtotal:		81,300		23,365		57,935		79,300		17,987		61,313
Polysilicon:
Technology	2.6 years	1,500		1,500		—		1,500		1,500		—
Subtotal:		1,500		1,500		—		1,500		1,500		—
Sapphire:
Customer relationships	6.4 years	7,300		2,331		4,969		4,100		1,651		2,449
Technology	9.3 years	28,600		5,983		22,617		17,300		4,181		13,119
Order backlog	1.2 years	500		500		—		500		500		—
Trade names	8.0 years	1,100		435		665		1,100		332		768
Non-compete agreements	5.8 years	1,000		568		432		1,000		433		567
Subtotal:		38,500		9,817		28,683		24,000		7,097		16,903
Total finite-lived intangible assets		121,300		34,682		86,618		104,800		26,584		78,216
Indefinite-lived intangible assets
In-process research and development		12,300		—		12,300		12,300		—		12,300
Total intangible assets		$	133,600	$	34,682	$	98,918	$	117,100	$	26,584	$	90,516

The weighted average remaining amortization periods for the (i) photovoltaic, (ii) polysilicon and (iii) sapphire intangibles were 7.09 years, 0 years and 6.44 years, respectively, as of September 28, 2013. As of September 28, 2013, the estimated future amortization expense for the Company’s intangible assets is as follows:

Year Ending December 31,	Amortization Expense
2013 (remaining three months)	$	2,975
2014	11,881
2015	11,852
2016	11,519
2017	11,052
2018	10,990
Thereafter	38,649

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Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 28, 2013	Dec. 31, 2012
Purchase commitments
Amount accrued under purchase orders	$ 0
Gross amount outstanding under purchase orders	14,284
Purchase Commitments
Purchase commitments
Estimated commitments to purchase raw materials, research and development and other services	329,147	214,611
Period within which majority of commitments are due	12 months
Vendor contract dispute
Purchase commitments
Settlement payable	$ 3,250

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Acquisitions (Tables)

9 Months Ended

Sep. 28, 2013

Thermal Technology, LLC

Acquisitions

Summary of the purchase price allocation for the acquisition of privately-held company

Fair value of consideration transferred:

Common stock	$	14,463
Contingent consideration obligations	6,211
Preliminary estimate of net working capital adjustment	(735		)
Total fair value of consideration	$	19,939

Fair value of assets acquired and liabilities assumed:

Accounts receivable	$	1,008
Inventory	7,861
Property, plant and equipment	1,700
Deferred tax asset	411
Other assets	439
Intangible assets	14,500
Goodwill	6,744
Accounts payable and accrued expenses	(7,057		)
Customer deposits	(2,509		)
Deferred tax liability	(3,149		)
Other current liabilities	(9		)
Total net assets acquired	$	19,939

Twin Creeks Technologies, Inc.

Acquisitions

Summary of the purchase price allocation for the acquisition of privately-held company

Fair value of consideration transferred:

Cash	$	10,172
Contingent consideration obligations	5,200
Total fair value of consideration	$	15,372

Fair value of assets acquired and liabilities assumed:

Property, plant and equipment	$	1,529
Other assets	23
In-process research and development	12,300
Goodwill	2,907
Accounts payable	(1,362		)
Other current liabilities	(25		)
Total net assets acquired	$	15,372

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 28, 2013

Accumulated Other Comprehensive Income

Schedule of changes in accumulated other comprehensive income (loss) by component

	Unrealized Gains and Losses on Cash Flow Hedges			Foreign Currency Items		Total
Beginning balance as of June 29, 2013	$	(591	)	$	1,591	$	1,000
Other comprehensive income (loss) before reclassifications				66		66
Amounts reclassified from accumulated other comprehensive income	—			—		—
Net other comprehensive income	$	—		$	66	66
Balance as of September 28, 2013	$	(591	)	$	1,657	$	1,066

	Unrealized Gains and Losses on Cash Flow Hedges			Foreign Currency Items		Total
Beginning balance as of January 1, 2013	$	(537	)	$	1,343	$	806
Other comprehensive income (loss) before reclassifications	(3		)	314		311
Amounts reclassified from accumulated other comprehensive income	(51		)	—		(51		)
Net other comprehensive income	$	(54	)	$	314	260
Balance as of September 28, 2013	$	(591	)	$	1,657	$	1,066

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Inventories

9 Months Ended

Sep. 28, 2013

Inventories

Inventories

9. Inventories

Inventories consisted of the following:

	September 28, 2013		December 31, 2012
Raw materials	$	109,137	$	97,957
Work-in-process	8,563		5,100
Finished goods	5,489		30,229
	$	123,189	$	133,286

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Fair Value Measurements

9 Months Ended

Sep. 28, 2013

Fair Value Measurements

Fair Value Measurements

5. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability. As a basis for classifying the assumptions used, a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, is applied as follows: (Level 1) observable inputs such as quoted prices in active markets for identical assets or liabilities; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. There were no transfers between such levels in the nine month period ended September 28, 2013.

The following table provides the assets and liabilities measured and reported at fair value on a recurring basis at September 28, 2013 and December 31, 2012:

	September 28, 2013
	Total Carrying		Fair Value Measurements Using
	Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market mutual funds	$	179,144	$	179,144	$	—	$	—
Liabilities:
Contingent consideration	$	17,523	$	—	$	—	$	17,523

	December 31, 2012
	Total Carrying		Fair Value Measurements Using
	Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market mutual funds	$	200,041	$	200,041	$	—	$	—
Forward foreign exchange contracts	230		—		230		—
Liabilities:
Contingent consideration	$	10,315	$	—	$	—	$	10,315

The Company’s money market mutual funds are valued using readily available quoted market prices for identical assets.

The Company’s counterparties to its forward foreign exchange contracts are financial institutions. These forward foreign exchange contracts are measured at fair value using a valuation which represents a good faith estimate of the midmarket value of the position, based on estimated bids and offers for the positions, which are updated each reporting period. The Company considers the effect of credit standings in these fair value measurements (level 2). There have been no changes in the valuation techniques used to measure the fair value of the Company’s forward foreign exchange contracts (see Note 8 below for additional information about the Company’s derivatives and hedging activities).

The Company has classified contingent consideration related to its acquisitions within Level 3 of the fair value hierarchy because the fair value is derived using significant unobservable inputs, which include discount rates and probability-weighted cash flows. The Company determined the fair value of its contingent consideration obligations based on a probability-weighted income approach derived from financial performance estimates and probability assessments of the attainment of certain targets. The Company establishes discount rates to be utilized in its valuation models based on the cost to borrow that would be required by a market participant for similar instruments. In determining the probability of attaining certain technical, financial and operation targets, the Company utilizes data regarding similar milestone events from its own experience, while considering the inherent difficulties and uncertainties in developing a product. On a quarterly basis, the Company reassesses the probability factors associated with the financial, operational and technical targets for its contingent consideration obligations. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period.

The key assumptions as of September 28, 2013 related to the contingent consideration from the acquisition of certain assets of Twin Creeks used in the model include: (i) discount rate of 28% for purposes of discounting the low and base case scenarios associated with achievement of the revenue based earn-out. The probabilities assigned to these scenarios were 25%, and 75% for the low and base case scenarios, respectively. An increase or decrease in the probability of achievement of any scenario could result in a significant increase or decrease to the estimated fair value of the contingent consideration liability.

The key assumptions as of September 28, 2013 related to the contingent consideration from the acquisition of substantially all of the business of Thermal Technology used in the model include: (i) discount rate of 20.4% for purposes of discounting the most likely scenario associated with achievement of the revenue based earn-out. An increase or decrease in the probability of achievement of the projected revenues could result in a significant increase or decrease to the estimated fair value of the contingent consideration liability.

During the three months ended June 29, 2013, the Company reversed the contingent consideration liability related to the Confluence Solar acquisition with a corresponding reduction to contingent consideration expense.  This reversal of approximately $4,816 was the result of failing to achieve the required operational and technical targets required to earn such consideration.

The Company recorded contingent consideration expense (income) in the condensed consolidated statements of operations of $4,971 and $997 for the three and nine months ended September 28, 2013 and ($9,943) and ($9,261) for the three and nine months ended September 29, 2012, and all of which was allocated to the corporate services reporting segment.  Changes in the fair value of the Company’s Level 3 contingent consideration obligations during the three and nine months ended September 28, 2013 and three and nine months ended September 29, 2012 were as follows:

	Three Months Ended					Nine Months Ended
	September 28, 2013		September 29, 2012			September 28, 2013		September 29, 2012
Fair value as of the beginning of the period	$	12,552	$	14,762		$	10,315	$	23,713
Acquisition date fair value of contingent consideration obligations related to acquisitions	—		—			6,211		—
Changes in the fair value of contingent consideration obligations	4,971		(9,943		)	997		(9,261		)
Payments of contingent consideration obligations	—		—			—		(9,633		)
Fair value at the end of the period	$	17,523	$	4,819		$	17,523	$	4,819

The carrying amounts reflected in the Company’s condensed consolidated balance sheets for cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and customer deposits approximate fair value due to their short-term maturities. The Company did not hold any short-term investments at September 28, 2013 or December 31, 2012. The following table provides the carrying and fair values of the Company’s long-term debt obligations and convertible notes as of September 28, 2013 and December 31, 2012:

			Fair Value Measurements Using
Description	Total Carrying Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
2012 Term Facility, including current portion
September 28, 2013	$	95,938	$	—	$	96,138	$	—	$	96,138
December 31, 2012	$	139,563	$	—	$	139,563	$	—	$	139,563
3.00% Senior Convertible Notes
September 28, 2013	$	165,390	$	—	$	282,659	$	—	$	282,659
December 31, 2012	$	157,440	$	—	$	157,300	$	—	$	157,300

Certain assets have been measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3). The following table presents nonrecurring fair value measurements recognized for the nine-month period ended September 28, 2013 and for the nine-month period ended December 31, 2012

	September 28, 2013				December 31, 2012
	Fair Value		Total Losses		Fair Value		Total Losses
Long-lived asset group at our Hazelwood facility	$	1,155	$	4,010	$	5,165	$	29,261

For Level 3 assets that were measured at fair value on a non-recurring basis during the nine-month period ended September 28, 2013, the following table presents the fair value of those assets as of the measurement date, valuation techniques and related unobservable inputs of those assets:

	Fair Value		Valuation Technique(s)	Unobservable Input	Range, Median or Average
Long-lived asset group at our Hazelwood facility	$	1,155	Cost Approach and Market Approach	Depreciation factors	Average of 75%

The fair value of the long-lived asset group of the Hazelwood facility at December 31, 2012 was calculated based on a probability assessment of potential outcomes. An estimation of fair value, assuming the assets would be used by a market participant as is, was determined using a cost approach which was based on current replacement and/or reproduction costs of the asset as new, less depreciation factors attributable to physical, functional and economic obsolescence and utilizing data from various indexes. A separate estimate of fair value was determined using a market approach assuming an orderly liquidation. At December 31, 2012, equal weighting was applied to the cost and market approaches, however, due to a lack of interest by market participants, the Company’s fair value as of September 28, 2013 of $1,155 is primarily based on expected value upon liquidation.

Significant changes in any of the significant unobservable inputs used could result in significantly higher or lower fair value measurements.

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Cash flows from operating activities:
Net (loss) income	$ (44,880)	$ 96,174
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Amortization expense	8,098	7,631
Depreciation expense	11,881	10,256
Convertible notes discount amortization	7,950	62
Contingent consideration expense (income)	997	(13,991)
Impairment on longed lived assets	4,010
Deferred income tax expense (benefit)	(23,057)	(6,275)
Provision for excess and obsolete inventory	1,848	4,106
Share-based compensation expense	13,883	13,091
Excess tax benefits from share-based awards	(242)	(285)
Amortization of deferred financing costs	2,914	697
Loss on disposal of assets	966	2,038
Other adjustments, net	500	864
Changes in operating assets and liabilities (excluding impact of acquired assets and assumed liabilities):
Restricted cash		96,202
Accounts receivable	17,510	39,185
Inventories	13,246	(22,435)
Deferred costs	26,069	189,172
Vendor advances	21,747	(23,204)
Prepaid expenses and other assets	1,542	2,086
Accounts payable and accrued expenses	(14,738)	(25,495)
Customer deposits	(93,812)	(56,283)
Deferred revenue	(59,633)	(337,900)
Income taxes	(6,216)	896
Other, net	254	704
Net cash used in operating activities	(109,163)	(22,704)
Cash flows from investing activities:
Purchases and deposits on property, plant and equipment	(3,710)	(35,541)
Other investing activities	52	293
Net cash used in investing activities	(3,658)	(35,248)
Cash flows from financing activities:
Borrowings under credit facility		145,000
Principal payments under credit facility	(43,625)	(1,813)
Proceeds from issuance of convertible notes		220,000
Cash paid for bond hedges		(57,923)
Proceeds from issuance of warrants		41,623
Proceeds and related excess tax benefits from exercise of share-based awards	358	1,507
Payments of contingent consideration from business combinations		(4,903)
Payments related to share repurchases to satisfy statutory minimum tax withholdings	(1,516)	(1,153)
Deferred financing costs	(2,266)	(11,471)
Other financing activities	(35)	(498)
Net cash (used in) provided by financing activities	(47,084)	330,369
Effect of foreign exchange rates on cash	282	(76)
(Decrease) increase in cash and cash equivalents	(159,623)	272,341
Cash and cash equivalents at beginning of period	418,095	206,878
Cash and cash equivalents at end of period	258,472	479,219
Supplemental cash flow information:
Cash paid for interest	8,254	2,470
Non-cash investing and financing activities:
Decrease in accounts payable and accrued expenses for property, plant and equipment	(683)	(3,469)
Fair value of shares issued for acquisition	14,463
Contingent consideration issued for acquisition	6,211
Unpaid deferred financing costs		$ 635

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Goodwill and Other Intangible Assets (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended
	Sep. 28, 2013	Dec. 31, 2012	Sep. 28, 2013 Photovoltaic Business	Dec. 31, 2012 Photovoltaic Business	Sep. 28, 2013 Photovoltaic Business Technology	Dec. 31, 2012 Photovoltaic Business Technology	Sep. 28, 2013 Photovoltaic Business Trade names / Trademarks	Dec. 31, 2012 Photovoltaic Business Trade names / Trademarks	Sep. 28, 2013 Polysilicon Business	Dec. 31, 2012 Polysilicon Business	Sep. 28, 2013 Polysilicon Business Technology	Dec. 31, 2012 Polysilicon Business Technology	Sep. 28, 2013 Sapphire Business	Dec. 31, 2012 Sapphire Business	Sep. 28, 2013 Sapphire Business Customer relationships	Dec. 31, 2012 Sapphire Business Customer relationships	Sep. 28, 2013 Sapphire Business Technology	Dec. 31, 2012 Sapphire Business Technology	Sep. 28, 2013 Sapphire Business Order backlog	Dec. 31, 2012 Sapphire Business Order backlog	Sep. 28, 2013 Sapphire Business Trade names	Dec. 31, 2012 Sapphire Business Trade names	Sep. 28, 2013 Sapphire Business Non-compete agreements	Dec. 31, 2012 Sapphire Business Non-compete agreements
Acquired intangible assets subject to amortization
Weighted Average Amortization Period					9 years 6 months		8 years 7 months 6 days				2 years 7 months 6 days				6 years 4 months 24 days		9 years 3 months 18 days		1 year 2 months 12 days		8 years		5 years 9 months 18 days
Gross Amount	$ 121,300	$ 104,800	$ 81,300	$ 79,300	$ 74,200	$ 72,200	$ 7,100	$ 7,100	$ 1,500	$ 1,500	$ 1,500	$ 1,500	$ 38,500	$ 24,000	$ 7,300	$ 4,100	$ 28,600	$ 17,300	$ 500	$ 500	$ 1,100	$ 1,100	$ 1,000	$ 1,000
Accumulated Amortization	34,682	26,584	23,365	17,987	19,977	14,951	3,388	3,036	1,500	1,500	1,500	1,500	9,817	7,097	2,331	1,651	5,983	4,181	500	500	435	332	568	433
Net	86,618	78,216	57,935	61,313	54,223	57,249	3,712	4,064					28,683	16,903	4,969	2,449	22,617	13,119			665	768	432	567
Indefinite-lived intangible assets
In-process research and development	12,300	12,300
Total intangible assets
Gross Amount	133,600	117,100
Net	98,918	90,516
Impairment charge related to certain intangible assets	0
Weighted average remaining amortization period			7 years 1 month 2 days						0 years				6 years 5 months 8 days
Estimated future amortization expense for the Company's intangible assets
2013 (remaining three months)	2,975
2014	11,881
2015	11,852
2016	11,519
2017	11,052
2018	10,990
Thereafter	$ 38,649

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Basis of Presentation (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Basis of presentation
Revenue	$ 40,291	$ 110,061	$ 266,397	$ 631,203
Gross profit	17,777	35,028	90,008	247,562
SDR-400
Basis of presentation
Number of product installations			30
Number of customers' facilities at which product installations are done			1
Revenue	3,080		148,740
Gross profit	$ 681		$ 59,501
Number of customer arrangements from which revenue is generated			2

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Customer Concentrations (Tables)

9 Months Ended

Sep. 28, 2013

Customer Concentrations

Schedule of customers comprising 10% or more of the Company's total revenue or accounts receivable

Three Months Ended

Nine Months Ended

As of

September 28, 2013

September 29, 2012

September 28, 2013

September 29, 2012

September 28, 2013

December 31, 2012

% of

% of

% of

% of

Accounts

% of

Accounts

% of

Revenue

Total

Revenue

Total

Revenue

Total

Revenue

Total

Receivable

Total

Receivable

Total

Photovoltaic Customers

Customer #1

*

*

*

*

*

*

*

*

*

*

$

2,478

10

%

Polysilicon Customers

Customer #2

$

17,600

44

%

*

*

*

*

*

*

*

*

*

*

Customer #3

7,919

20

%

*

*

$

108,579

41

%

*

*

*

*

*

*

Customer #4

*

*

*

*

45,268

17

%

*

*

*

*

9,085

38

%

Customer #5

*

*

*

*

34,915

13

%

*

*

*

*

*

*

Customer #6 (1)

*

*

$

43,459

39

%

*

*

$

139,337

22

%

*

*

*

*

Customer #7

*

*

39,142

36

%

*

*

*

*

$

1,200

16

%

3,248

14

%

Customer #8

*

*

*

*

*

*

82,316

13

%

*

*

*

*

Customer #9

*

*

*

*

*

*

77,870

12

%

*

*

*

*

Customer #10

*

*

*

*

*

*

*

*

1,450

19

%

*

*

Sapphire Customers

Customer #11

*

*

*

*

*

*

63,950

10

%

*

*

*

*

*                      Amounts from these customers were less than 10% of the total as of, or for, the respective period.

(1)                   Presented in the table are revenues from a significant customer in the Polysilicon segment.  Total revenue recognized from this customer for the three months ended September 29, 2012 was $43,769 or 40% of total revenue.  Total revenue recognized from this customer for the nine months ended September 29, 2012 was $174,127 or 28% of total revenue. Not included in the table above for the three and nine months ended September 29, 2012 are $310 or less than 1% and $34,790 or 6% of total revenue for these periods for sales to this customer that have been included in the Sapphire segment.

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Stockholders' Equity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Increase (Decrease) in Stockholders' Equity
Balance			$ 242,251
Balance (in shares)			119,293
Net (loss) income	(38,146)	2,344	(44,880)	96,174
Other comprehensive income	66	530	260	1,690
Common stock issued for Thermal Tech acquisition (net of $46 of registration costs)			14,417
Registration costs related to acquisition			33
Option exercises and vesting of restricted stock units			115
Share-based compensation expense			13,490
Excess tax deficiency from share-based award activity			(1,396)
Minimum tax withholding payments for employee share-based awards			(1,516)
Balance	222,741		222,741
Balance (in shares)	123,758		123,758
Common Stock
Increase (Decrease) in Stockholders' Equity
Balance			1,193
Balance (in shares)			119,293
Common stock issued for Thermal Tech acquisition (net of $46 of registration costs)			46
Common stock issued for Thermal Tech acquisition (net of $46 of registration costs) (in shares)			3,356
Option exercises and vesting of restricted stock units			14
Option exercises and vesting of restricted stock units (in shares)			1,448
Minimum tax withholding payments for employee share-based awards			(3)
Minimum tax withholding payments for employee share-based awards (in shares)			(339)
Balance	1,237		1,237
Balance (in shares)	123,758		123,758
Additional Paid-in Capital
Increase (Decrease) in Stockholders' Equity
Balance			183,565
Common stock issued for Thermal Tech acquisition (net of $46 of registration costs)			14,384
Option exercises and vesting of restricted stock units			101
Share-based compensation expense			13,490
Excess tax deficiency from share-based award activity			(1,396)
Minimum tax withholding payments for employee share-based awards			(1,513)
Balance	208,631		208,631
Retained Earnings
Increase (Decrease) in Stockholders' Equity
Balance			56,687
Net (loss) income			(44,880)
Balance	11,807		11,807
Accumulated Other Comprehensive Income
Increase (Decrease) in Stockholders' Equity
Balance			806
Other comprehensive income			260
Balance	$ 1,066		$ 1,066

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Warranty (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012
Warranty activities
Product warranty liability, beginning of the period	$ 10,711	$ 4,764
Accruals for warranties issued	7,157	9,029
Payments under warranty	(5,500)	(4,578)
Product warranty liability, end of the period	$ 12,368	$ 9,215

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Restructuring Charges and Asset Impairments

9 Months Ended

Sep. 28, 2013

Restructuring Charges and Asset Impairments

Restructuring Charges and Asset Impairments

12. Restructuring Charges and Asset Impairments

October 2012 Restructuring

As part of a program to reduce costs and increase operational efficiencies, the Company announced, on October 31, 2012, a plan to streamline worldwide operations to better align its cost structure with market conditions by reducing its global workforce and closing or consolidating certain facilities. In the nine months ended September 28, 2013 the Company recorded $362 of severance related expense, of which $145, $159, $14 and $44 related to the corporate, PV, polysilicon and sapphire segments, respectively.

Hazelwood Facility Idling

On January 10, 2013, the Company announced its plan to idle operations at its Hazelwood, Missouri facility (“Hazelwood facility”). The idling of the Hazelwood facility is part of the Company’s effort to reduce costs and optimize its research and development activities and the idling of the facility was completed by March 30, 2013. In connection with this action, the Company terminated the employment of 37 of the Hazelwood facility employees at various dates in the first quarter of fiscal 2013. The Company determined that as of December 31, 2012 it was probable that employees would be entitled to receive severance and related benefits and that these amounts were estimable and accordingly recorded the expense during the three months ended December 31, 2012. In connection with the idling of the Hazelwood facility, the Company recorded $29,782 of restructuring and asset impairment expense during the three months ended December 31, 2012 to the PV segment, comprised of $521 of severance and related benefits and $29,261 for the write-down to fair value of certain long-lived, intangible assets and other assets associated with the Hazelwood facility. During the three months ended September 28, 2013, the Company recorded $4,010 of additional asset impairment expense related to the certain long-lived intangible assets and other assets noted above. At December 31, 2012, equal weighting was applied to the cost and market approaches, however, due to a lack of interest by market participants, the Company’s fair value as of September 28, 2013 of $1,155 is primarily based on expected value upon liquidation. During the nine months ended September 28, 2013, the Company recorded $1,854 of additional charges related to the Hazelwood facility’s lease exit costs, $642 of other contract termination costs related to this facility and $4,010 of impairment charges related to the fair value of the HiCz fixed assets, respectively. The Company has determined the long-lived asset group of the Hazelwood facility, which has a carrying value of $1,155, does not meet the held-for-sale criteria at September 28, 2013.

The Company reports expense for its restructuring charges and asset impairments separately in the condensed consolidated statements of operations. The restructuring charges and remaining accrued expenses, which are included in accrued expenses on the Company’s condensed consolidated balance sheet as of September 28, 2013 are as follows:

	Employee Related Benefits			Lease Exit and Contract Termination Costs			Asset Impairments			Total
Balance as of December 31, 2012	$	2,076		$	133		$	—		$	2,209
Charges	362			2,496			4,010			6,868
Cash payments	(2,044		)	(1,065		)	—			(3,109		)
Asset impairments	—			—			(4,010		)	(4,010		)
Balance as of September 28, 2013	$	394		$	1,564		$	—		$	1,958

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Derivative and Hedging Activities

9 Months Ended

Sep. 28, 2013

Derivative and Hedging Activities

Derivative and Hedging Activities

8. Derivative and Hedging Activities

The Company enters into forward foreign currency exchange contracts to hedge portions of foreign currency denominated inventory purchases. These contracts typically expire within 12 months of entering into the contract. As of September 28, 2013, the Company had no open forward foreign currency exchange contracts.

The following table sets forth the balance sheet locations and fair value of the Company’s forward foreign currency exchange contracts at December 31, 2012:

Instruments Designated as Cash Flow Hedges

	Balance Sheet Location	December 31, 2012
Forward foreign currency exchange contracts—assets	Prepaid expenses and other current assets	$	230

The following table sets forth the effect of the Company’s forward foreign currency exchange contracts designated as hedging instruments on the condensed consolidated statements of operations for the three and nine months ended September 28, 2013 and September 29, 2012:

Instruments Designated as Cash Flow Hedges

	Amount of		Location of Gain or	Amount of Gain or			Location of
	(Gain) or Loss		(Loss) Reclassified	(Loss) Reclassified			Gain or (Loss)	Amount of Gain or
	Recognized in OCI		from AOCI	from AOCI			Recognized in	(Loss) Recognized in
	on Derivative		into Income	into Income			Income on Derivative	Income on Derivative
	(Effective Portion)		(Effective Portion)	(Effective Portion)			(Ineffective Portion)	(Ineffective Portion)
Three Months Ended
September 28, 2013	$	—	Cost of revenue	$	—		Other, net	$	—
September 29, 2012	173		Cost of revenue	(498		)	Other, net	—
Nine Months Ended
September 28, 2013	4		Cost of revenue	60			Other, net	—
September 29, 2012	641		Cost of revenue	(2,775		)	Other, net	—

Derivatives Not Designated as Hedging Instruments

	Location of
	Gain or (Loss)	Amount of Gain or
	Recognized in	(Loss) Recognized in
	Income on Derivative	Income on Derivative
Three Months Ended
September 28, 2013	Other, net	$	—
September 29, 2012	Other, net	(287		)
Nine Months Ended
September 28, 2013	Other, net	$	—
September 29, 2012	Other, net	(886		)

During the nine months ended September 28, 2013, there were no losses reclassified into earnings as a result of the Company discontinuing cash flow hedging. No amount of accumulated gain included in other comprehensive income as of September 28, 2013 is expected to be reclassified into earnings over the next twelve months.

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Earnings Per Share (Details) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Weighted-average number of shares used in per share calculations:
Weighted average common shares-basic	122,183	118,769	119,752	118,873
Dilutive common stock options and restricted stock unit awards (in shares)		1,105		1,253
Weighted average common and common equivalent shares-diluted	122,183	119,874	119,752	120,126

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Long-Term Debt and Convertible Notes

9 Months Ended

Sep. 28, 2013

Long-Term Debt and Convertible Notes

Long-Term Debt and Convertible Notes

15. Long-Term Debt and Convertible Notes

Bank of America Credit Agreement

On January 31, 2012, the Company, its principal U.S. operating subsidiary (the “U.S. Borrower”) and its Hong Kong subsidiary (the “Hong Kong Borrower”) entered into a credit agreement (the “2012 Credit Agreement”), with Bank of America, N.A., as administrative agent, Swing Line Lender and L/C Issuer (or “Bank of America”) and the lenders from time to time party thereto. The 2012 Credit Agreement consists of a term loan facility (the “2012 Term Facility”) provided to the U.S. Borrower in an aggregate principal amount of $75,000 with a final maturity date of January 31, 2016, a revolving credit facility (the “U.S. Revolving Credit Facility”) available to the U.S. Borrower in an aggregate principal amount of $25,000 with a final maturity date of January 31, 2016 (this revolving facility is no longer available pursuant to the 2013 Amendment) and a revolving credit facility (the “Hong Kong Revolving Credit Facility”; together with the U.S. Revolving Credit Facility, the “2012 Revolving Credit Facility”; and together with the 2012 Term Facility, the “2012 Credit Facilities”) available to the Hong Kong Borrower in an aggregate principal amount of $150,000 (which was reduced to $125,000 pursuant to the 2013 Amendment) with a final maturity date of January 31, 2016.

On various dates between June 15, 2012 and June 25, 2012, the Company, the U.S. Borrower and the Hong Kong Borrower requested and received approval for increases in the 2012 Term Facility for the U.S. Borrower in an aggregate amount equal to $70,000 (the “Incremental Term Loans”) pursuant to the 2012 Credit Agreement.

As a result of the Incremental Term Loans, the aggregate term loan under the 2012 Credit Agreement was increased from $75,000 to $145,000, all of which was borrowed by the U.S. Borrower. The Company pre-paid $40,000 of the 2012 Term Facility pursuant to the 2013 Amendment which payment did not reduce the amortization of the Term Loan.

All of the material terms and conditions related to the Incremental Term Loans were identical to the terms and conditions that apply to the 2012 Term Facility, including the final maturity date of January 31, 2016 and the interest rate. The Incremental Term Loans amortize over the same period, and in proportional amounts, as the 2012 Term Facility, commencing with the first amortization payment under both term facilities in June 2012.

On October 30, 2013, the Company terminated the 2012 Credit Agreement (the “Credit Agreement”).  As of September 28, 2013, there was approximately $96,000 outstanding borrowings under the 2012 Term Facility, which was paid in full on October 30, 2013 by using available cash.  As of October 30, 2013, there are no amounts outstanding under the 2012 Revolving Credit Facility and no outstanding stand-by letters of credit under the 2012 Revolving Credit Facility.  In connection with the termination of the 2012 Credit Agreement, the Company expects to recognize a charge in the fourth quarter of approximately $3,639 relating to deferred issuance costs that will be written off upon the termination of the agreement.  For additional information, refer to Note 21, Subsequent Events.

Interest expense related to 2012 Term Facility and 2012 Revolving Credit Facility was $1,859 and $6,839 for the three and nine month periods ended September 28, 2013, respectively, and $1,470 and $3,185 for the three and nine month periods ended September 29, 2012, respectively, which includes amortization of debt fees related to both facilities, as well as the associated commitment fees. The weighted average interest rates for the three and nine month periods ended September 28, 2013 was 4.69% and 4.25%, respectively. There was no interest capitalized on construction-in-process contracts for the three or nine-months ended September 28, 2013. The balance of deferred financing costs at September 28, 2013 was $3,639 and is included in other assets on the condensed consolidated balance sheet.

The Company used amounts available under the Hong Kong Revolving Credit Facility in connection with standby letters of credit related to customer deposits. As of September 28, 2013, the Company had $539 of outstanding letters of credit pursuant to the Hong Kong Revolving Credit Facility resulting in $124,461 of available credit under the Hong Kong Revolving Credit Facility.

3.00% Convertible Senior Notes due 2017

On September 28, 2012, the Company issued $220,000 aggregate principal amount of 3.00% Convertible Senior Notes due 2017 (the “Notes”). The net proceeds from the issuance of the Notes were approximately $212,592, after deducting fees paid to the initial purchasers and other offering costs. The Notes are senior unsecured obligations of the Company, which pay interest in cash semi-annually (on April 1 and October 1 of each year) at a rate of 3.00% per annum beginning on April 1, 2013. The Notes are governed by an Indenture dated September 28, 2012 with U.S. Bank National Association, as trustee (the “Indenture”). The Notes are not redeemable by the Company.

The Notes will mature on October 1, 2017, unless earlier repurchased or converted in accordance with their terms prior to such date. The Notes may be converted, under certain conditions, based on an initial conversion rate of 129.7185 shares of common stock per $1,000 principal amount of Notes (approximately 28.5 million shares) (which represents an initial effective conversion price of the Notes of $7.71 per share), subject to adjustment as described in the Indenture.

The effective interest rate on the liability component of the Notes was 10.7% as of September 28, 2013. Interest expense incurred in connection with the Notes consisted of the following:

	Three Months Ended		Nine Months Ended
	September 28, 2013		September 28, 2013
Contractual coupon rate of interest	$	1,659	$	4,969
Discount amortization	3,158		8,633
Interest expense - Convertible Notes	$	4,817	$	13,602

The carrying value of our Notes consisted of the following:

	September 28, 2013
Principal balance	$	220,000
Discount, net of accumulated amortization of $10,506	(54,610		)
Carrying amount	$	165,390

The Company will be required to repay the following principal amounts under the 2012 Term Facility, Incremental Term Loans and Notes:

	Principal
Fiscal Year Ending	Payments
2013 (remaining 3 months)	$	3,625
2014	12,688
2015	14,500
2016	65,125
2017	220,000
Total	$	315,938

On October 30, 2013, the principal amounts due in the fiscal years ending 2013, 2014, 2015 and 2016 were paid in full using available cash. For additional information, refer to Note 21, Subsequent Events.

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Income Taxes

9 Months Ended

Sep. 28, 2013

Income Taxes

Income Taxes

13. Income Taxes

The Company has concluded that the effective tax rate for the year is no longer sensitive to the projected ordinary income for the year given that small fluctuations in profits do have a material impact on the effective tax rate. As a result and in accordance with authoritative guidance for accounting for income taxes in interim periods, the Company has computed its provision using its estimated annual effective tax rate which takes into account operations in the U.S. and in other tax jurisdictions. Changes in the mix of income recognized between the U.S. and foreign tax jurisdictions impacts the Company’s effective tax rate. Any discrete tax adjustments are recorded in the specific quarter they arise.

The Company’s effective tax rate for the three and nine months ended September 28, 2013 and September 29, 2012, was 10.1% and 26.9%, and 24.2% and 32%, respectively. The effective rate differs from the U.S. federal statutory rate due to a favorable permanent adjustment related to contingent consideration which is non-includable for tax purposes and the jurisdictional mix of income/loss. The Company incurred proportionally larger losses in the U.S., a higher tax jurisdiction than in lower tax jurisdictions, namely Hong Kong.

A reconciliation of the change in unrecognized tax benefits for the nine months ended September 28, 2013 is as follows:

Unrecognized tax benefits at December 31, 2012	$	26,322
Increases related to current year tax positions	272
Increases related to prior year tax positions	372
Settlements with tax authorities	(1,464		)
Unrecognized tax benefits at September 28, 2013	$	25,502

The Company also recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. During the three and nine month period ending September 28, 2013, the Company recorded an income tax provision of $277 and $355, respectively, related to interest and penalty accruals.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is subject to examination by federal, state, and foreign tax authorities. The Company’s U.S. tax returns have been settled through fiscal years ending March 31, 2008. The Company continues to be under examination by the Internal Revenue Service, or IRS for its fiscal years ending March 28, 2009 and April 3, 2010. In addition, the statute of limitations is open for all state and foreign jurisdictions.  During the nine months ended September 28, 2013 and September 29, 2012, the Company paid $16,109 and $51,079 for estimated taxes, respectively.

In September 2013, the U.S. Department of the Treasury and the Internal Revenue Service released final regulations relating to guidance on applying tax rules to amounts paid to acquire, produce or improve tangible personal property as well as rules for materials and supplies. These regulations are effective for tax years beginning on or after January 1, 2014, with early adoption permitted. Transition guidance providing the procedural rules to comply with such regulations is expected to be released in the near term. The Company is currently assessing these rules, but does not believe there will be a material impact on the condensed consolidated financial statements when they are adopted.

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Document and Entity Information	9 Months Ended
	Sep. 28, 2013	Nov. 01, 2013
Document and Entity Information
Entity Registrant Name	GT Advanced Technologies Inc.
Entity Central Index Key	0001394954
Document Type	10-Q
Document Period End Date	Sep. 28, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		123,830,191
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

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Commitments and Contingencies

9 Months Ended

Sep. 28, 2013

Commitments and Contingencies

Commitments and Contingencies

14. Commitments and Contingencies

Purchase Commitments

The Company’s commitments to purchase raw materials, research and development and other services from various suppliers and vendors are estimated to be $329,147 and $214,611 as of September 28, 2013 and December 31, 2012, respectively. The majority of these commitments as of September 28, 2013 are due within the next twelve months.

As a result of the factors outlined under the “Recent Developments” in Note 1 above, the Company expects to terminate purchase commitments with vendors for DSS inventory components in fiscal 2013 and beyond. These purchase contracts generally require a payment to the vendors to reimburse them for costs incurred, if any, through the termination date. No amount has been accrued as of September 28, 2013, as these purchase orders have not been terminated at September 28, 2013. The gross amount of remaining purchases under these purchase orders was $14,284 as of September 28, 2013, and the Company may negotiate with the vendors to determine the amount payable upon termination of these purchase orders.

Litigation Contingencies

The Company is subject to various routine legal proceedings and claims incidental to its business which management believes will not have a material effect on the Company’s financial position, results of operations or cash flows.

In October 2013, the Company settled a vendor contract dispute. The terms of the settlement, which includes no admission of liability or wrongdoing by the Company or by any other defendants, provides for a full and complete release of all claims that were or could have been brought against the Company. The Company paid $3,250 in the fourth quarter to settle this matter. The Company has recorded this expense in general and administrative expense during the three months ended September 28, 2013.

Customer Indemnifications

In certain cases, the Company indemnifies, under pre-determined conditions and limitations, its customers for infringement of third-party intellectual property rights by the Company’s products or services (and, in limited instances, the Company also indemnifies other third parties for certain potential damages). The Company generally seeks to limit its liability for such indemnity to an amount not to exceed the sales price of the products or services (or the price paid for products or services) subject to its indemnification obligations, but not all agreements contain such limitations on liability. The Company does not believe, based on information available, that it is probable that any material amounts will be paid under these indemnification provisions.

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2013	Sep. 29, 2012	Sep. 28, 2013	Sep. 29, 2012
Income Taxes
Effective tax rate (as a percent)	10.10%	24.20%	26.90%	32.00%
Reconciliation of the beginning and ending amount of the consolidated liability for unrecognized tax benefits
Unrecognized tax benefits, balance at the beginning of the period			$ 26,322
Increases related to current year tax positions			272
Increases related to prior year tax positions			372
Settlements with tax authorities			(1,464)
Unrecognized tax benefits, balance at the end of the period	25,502		25,502
Income tax provision recorded on reversing certain interest and penalty accruals	277		355
Estimated income taxes paid			$ 16,109	$ 51,079

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Restructuring Charges and Asset Impairments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended		3 Months Ended				9 Months Ended
	Sep. 28, 2013	Sep. 28, 2013	Sep. 28, 2013 October 2012 Restructuring	Mar. 30, 2013 Hazelwood Facility item	Dec. 31, 2012 Hazelwood Facility	Sep. 28, 2013 Hazelwood Facility	Sep. 28, 2013 Hazelwood facility	Sep. 28, 2013 Employee related benefits	Sep. 28, 2013 Lease Exit and Contract Termination Costs	Sep. 28, 2013 Lease Exit and Contract Termination Costs Hazelwood Facility	Sep. 28, 2013 Asset impairments	Sep. 28, 2013 Photovoltaic Business October 2012 Restructuring	Sep. 28, 2013 Photovoltaic Business Lease Exit and Contract Termination Costs Hazelwood Facility	Sep. 28, 2013 Polysilicon Business October 2012 Restructuring	Sep. 28, 2013 Sapphire Business October 2012 Restructuring	Sep. 28, 2013 Corporate Services October 2012 Restructuring
Restructuring Charges and Asset Impairments
Restructuring and asset impairment expense					$ 29,782
Severance and related benefits			362		521							159		14	44	145
Write-down of assets associated with personnel reductions and facility consolidations					29,261
Number of employees terminated				37
Additional charges related to the facilities lease exit costs										1,854
Other costs related to facility										642
Impairment charge related to certain intangible assets	0												4,010
Restructuring reserves
Restructuring charges as of the beginning of the period		2,209						2,076	133
Restructuring charges		6,868						362	2,496		4,010
Cash payments		(3,109)						(2,044)	(1,065)
Asset impairments		(4,010)									(4,010)
Restructuring charges at the end of the period	1,958	1,958						394	1,564
Fair value of assets							1,155
Long-lived asset group that does not meet the criteria of held-for-sale						$ 1,155