Case: HJB Doc #: 992 Filed: 01/09/15 Desc: Main Document Page 1 of 4 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE.

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1 Case: HJB Doc #: 992 Filed: 01/09/15 Desc: Main Document Page 1 of 4 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE In re GT ADVANCED TECHNOLOGIES, INC., et al., Debtors. 1 Case No HJB Chapter 11 Jointly Administered OBJECTION TO NOTICE OF REJECTION OF CONTRACTS AND LEASES Twin Creek Technologies, Inc. ( TCTI ), as the assignee of that Royalty Payment Agreement, dated November 8, 2012, by and between GTAT Corporation and Silicon Valley Bank ( Royalty Agreement ), submits this objection to Debtors Notice and Rejection of Contract and Leases filed December 30, 2014 [Docket No, 893] ( Notice of Rejection ), respectfully showing the Court as follows: INTRODUCTION By its Notice of Rejection, Debtors seek to isolate and jettison its obligations to pay for the use of certain Hydrogen Ion Implanter equipment and related technology under the Royalty Agreement. However, the Royalty Agreement is part and parcel of a larger transaction and does not exist on its own. The Royalty Agreement was given as consideration for the transfer of the Hydrogen Ion Implanter equipment and related technology under the terms of an Asset Purchase Agreement. Therefore, the Royalty Agreement is not severable from the Asset Purchase 1 The Debtors, along with the last four digits of each debtor s tax identification number, as applicable, are: GT Advanced Technologies, Inc. (6749), GTAT Corporation (1760), GT Advanced Equipment Holding LLC (8329), GT Equipment Holdings, Inc. (0040), Lindbergh Acquisition Corp. (5073), GT Sapphire Systems Holding, LLC (4417), GT Advanced Cz LLC (9815), GT Sapphire Systems Group LLC (5126), GT Advanced Technologies Limited (1721). The Debtors corporate headquarters are located at 243 Daniel Webster Highway, Merrimack, NH /

2 Case: HJB Doc #: 992 Filed: 01/09/15 Desc: Main Document Page 2 of 4 Agreement and must be considered in the larger context of the asset sale. TCTI maintains that if the Royalty Agreement is rejected, the Asset Purchase Agreement must be rejected as well. Alternatively, TCTI maintains that if the Royalty Agreement is rejected, the Asset Purchase Agreement fails for lack of consideration and must be unwound. RELEVANT FACTS On or about November 8, 2012, GTAT Corporation purchased certain TCTI assets including a Hydrogen Ion Implanter and related technology, pursuant to the terms of a Secured Party Asset Sale Agreement ( Asset Sale Agreement ). As consideration for the asset purchase, GTAT Corporation agreed to pay royalties on the sale or lease of Equipment 2 or the sale, license or transfer of certain Intellectual Property 3 for a period of 15 years or upon payment of the royalty maximum of $40,000,000, which ever occurred first, under the terms of the Royalty Agreement. On or about November 8, 2012, the Royalty Agreement was assigned to TCTI. No royalties have come due or have been paid as GTAT Corporation has yet to sell or lease any Equipment. However, TCTI is informed and believes that GTAT Corporation and/or the reorganized Debtors plan to sell and lease Equipment in the future. OBJECTION The Bankruptcy Code furnishes no express definition of executory contract. 11 U.S.C. 365(a). However, in the First Circuit, consistent with the legislative history to 365, an executory contract is an agreement on which performance is due to some extent on both sides. 2 Under the terms of the Royalty Agreement, Equipment is defined as: (i) a hydrogen ion implantation system used in the manufacture of thin wafers that absent GTAT s ownership or license of the Intellectual Property would infringe the Intellectual Property; (ii) related equipment, apparatuses, tools, ancillary equipment, components, parts, accessories, operating and control systems and processes associated with such ion implantation system, namely, equipment for cleaving, bonding, annealing, adhering or handling material generated by such implantation system, including all spare parts; and (iii) any materials or wafers or adhesives made from the items referred to in (i) and (ii) above, but only to the extent sold directly by GTAT (or an affiliate of GTAT). 3 Under the terms of the Royalty Agreement, Intellectual Property is defined as: any intellectual property, technology or know-how that is transferred to GTAT pursuant to the Asset Purchase Agreement /

3 Case: HJB Doc #: 992 Filed: 01/09/15 Desc: Main Document Page 3 of 4 NLRB v. Bildisco & Bildisco, 465 U.S. 513, 522, 104 S.Ct. 1188, 79 L.Ed.2d 482 (1984); In re FBI Distribution Corp., 330 F.3d 36, 40 (1st Cir. 2003). Under 11 U.S.C. 365(a), a debtor-in-possession may reject an executory contract if it is burdensome to the estate. N.L.R.B. v. Bildisco and Bildisco, 465 U.S. 513, 104 S.Ct. 1188, 79 L.Ed.2d 482 (1984); In re BankVest Capital Corp., 360 F.3d 291, 296 (1st Cir. 2004). In determining whether a contract is burdensome, courts have utilized a business judgment test. Group of Institutional Investors v. Chicago, M., St.P. & P.R. Co., 318 U.S. 523, 63 S.Ct. 727, 87 L.Ed. 959 (1943); In re Chi Feng Huang (Robertson v. Pierce), 23 B.R. 798 (9th Cir. BAP 1982); Matter of JRT, Inc., 121 B.R. 314, (Bankr. W.D. Mich. 1990); In re Cutters, Inc., 104 B.R. 886 (Bankr. M.D. Tenn. 1989); In the Matter of McLouth Steel Corp. (Edwin C. Levy Co., Inc. v. McLouth Steel Corp.), 20 B.R. 688 (Bankr. E.D. Mich. 1982). If the debtor decides to assume a lease, however, it must generally assume all the terms of the lease and may not pick and choose only favorable terms to be assumed. The [debtor] may not blow hot and cold. If he accepts the contract he accepts it cum onere. If he receives the benefits he must adopt the burdens. He cannot accept one and reject the other. In re Italian Cook Oil Corp., 190 F.2d 994, 997 (3rd Cir. 1951). See also In re Fleming Cos., Inc., 499 F.3d 300, 308 (3rd Cir. 2007) (holding that debtor could not assume and assign store lease because an essential term of it required service from a warehouse whose lease had already been rejected); In re Buffets Holdings, Inc., 387 B.R. 115, 119 (Bankr. D. Del. 2008) (master leases into which restaurant operators entered as part of sales-and-lease-back transactions were, by their plain terms, non-severable agreements, which restaurant operators, after commencement of their Chapter 11 cases, had to assume or reject in their entirety); In re ANC Rental Corp., Inc., 277 B.R. 226, (Bankr. D. Del. 2002) (holding that debtor must assume the entire agreement and may not assume only part of the contract). In the instant matter, the Royalty Agreement cannot be severed from the Asset Purchase Agreement. The Debtors are attempting to enjoy the benefits of the Asset Purchase Agreement by retaining and utilizing the assets purchased while rejecting the royalty payment obligations /

4 Case: HJB Doc #: 992 Filed: 01/09/15 Desc: Main Document Page 4 of 4 under the Royalty Agreement. This is inequitable and should not be countenanced by the Court. In re Trans World Airlines, Inc., 275 B.R. 712, 721 (Bankr. D. Del. 2002). Alternatively, if the Royalty Agreement is rejected, the consideration supporting the Asset Purchase Agreement fails. The result being that the sale of assets under the terms of the Asset Purchase Agreement must be unwound. CONCLUSION Based upon the foregoing, TCTI requests that a hearing be set on its objection to Debtors Notice of Rejection and that the Court sustain TCTI s objection. DATED: January 9, 2015 /s/ Paul F. O Donnell Daniel M. Deschenes (BNH #06367) Paul F. O Donnell (Admitted Pro Hac Vice) HINCKLEY, ALLEN & SNYDER LLP 11 South Main Street, Suite 400 Concord, NH Telephone: (603) Facsimile: (603) podonnell@hinckleyallen.com ddeschenes@hinckleyallen.com -and- /s/ Donald H. Cram Donald H. Cram (Pro Hac Vice To Be Filed) SEVERSON & WERSON A Professional Corporation One Embarcadero Center, Suite 2600 San Francisco, CA Telephone: (415) Facsimile: (415) dhc@severson.com Attorneys for Twin Creek Technologies, Inc /

5 Case: HJB Doc #: Filed: 01/09/15 Desc: Certificate of Service Page 1 of 2 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE In re GT ADVANCED TECHNOLOGIES, INC., et al., Debtors. 1 Case No HJB Chapter 11 Jointly Administered CERTIFICATE OF SERVICE I, Paul F. O'Donnell, III hereby certify that on this 9 th day of January, 2015 I caused to be served a copy of an Objection to Notice of Rejection of Contracts and Leases by Federal Express, on the parties listed below: Counsel to GTAT Paul Hastings LLP 600 Travis Street, 58 th Floor Houston, TX Attn: James T. Grogan Counsel to GTAT Nixon Peabody 900 Elm Street Manchester, NH Attn: Daniel W. Sklar Holly J. Bancroft Counsel to GTAT Paul Hastings LLP 75 East 55 th St. New York, NY Attn: Christopher J. Fong Counsel to the Committee Kelley Drye & Warren LLP 101 Park Avenue New York, NY Attn: James S. Carr Jason R. Adams 1 The Debtors, along with the last four digits of each debtor s tax identification number, as applicable, are: GT Advanced Technologies, Inc. (6749), GTAT Corporation (1760), GT Advanced Equipment Holding LLC (8329), GT Equipment Holdings, Inc. (0040), Lindbergh Acquisition Corp. (5073), GT Sapphire Systems Holding, LLC (4417), GT Advanced Cz LLC (9815), GT Sapphire Systems Group LLC (5126), GT Advanced Technologies Limited (1721). The Debtors corporate headquarters are located at 243 Daniel Webster Highway, Merrimack, NH # v1

6 Case: HJB Doc #: Filed: 01/09/15 Desc: Certificate of Service Page 2 of 2 The Office of the United States Trustee for Region Elm Street, Suite 605 Manchester, NH Attn: Geraldine L. Karonis DATED: January 9, 2015 /s/ Paul F. O Donnell Paul F. O Donnell (Admitted Pro Hac Vice) HINCKLEY, ALLEN & SNYDER LLP 11 South Main Street, Suite 400 Concord, NH Telephone: (603) Facsimile: (603) podonnell@hinckleyallen.com v1 2