Tesla 2011 Annual Report Download - page 22

Table of Contents
build-out of our manufacturing facility for the Model S, is budgeted to be an aggregate of $33 million, plus any cost overruns for the projects.
We have paid for the full 20% of the budgeted costs related to our Powertrain Facility, but will continue to be responsible for cost overruns.
Our ability to draw down funds under the DOE Loan Facility is conditioned upon several draw conditions. For the Powertrain Facility, the
draw conditions include our achievement of progress milestones relating to the development of the powertrain manufacturing facility and the
successful development of commercial arrangements with third parties for the supply of powertrain components. For the Model S Facility, the
draw conditions include our achievement of progress milestones relating to the design and development of the Model S and the planned Model S
manufacturing facility. We will be required to maintain, at all times, available cash and cash equivalents of at least 105% of the amounts
required to fund such commitment, after taking into account current cash flows and cash on hand, and reasonable projections of future generation
of net cash from operations, losses and expenditures.
Loans may be requested under the facilities until January 22, 2013, and we have committed to complete the projects being financed prior to
such date. On the closing date, we paid a facility fee to the DOE in the amount of $0.5 million. Through December 31, 2010, we have received
draw downs under the DOE Loan Facility for an aggregate of $71.8 million, with interest rates ranging from 1.7% to 3.4%, for eligible project
costs under both projects that we have incurred from December 15, 2008 through October 31, 2010.
Advances under the DOE Loan Facility accrue interest at a per annum rate determined by the Secretary of the Treasury as of the date of the
advance, and will be based on the Treasury yield curve and the scheduled principal installments for such advance. Interest on advances under the
DOE Loan Facility is payable quarterly in arrears. Advances under the Powertrain Facility are repayable in 28 equal quarterly installments
commencing on December 15, 2012 (or, for advances made after such date, in 26 equal quarterly installments commencing on June 15, 2013).
All outstanding amounts under the Powertrain Facility will be due and payable on the maturity date of September 15, 2019. Advances under the
Model S Facility are repayable in 40 equal quarterly installments commencing on December 15, 2012 (or, for advances made after such date, in
38 equal quarterly installments commencing on June 15, 2013). All outstanding amounts under the Model S Facility will be due and payable on
the maturity date of September 15, 2022. Advances under the loan facilities may be voluntarily prepaid at any time at a price determined based
on interest rates at the time of prepayment for loans made from the Secretary of the Treasury to FFB for obligations with an identical payment
schedule to the advance being prepaid, which could result in the advance being prepaid at a discount, at par or at a premium. The loan facilities
are subject to mandatory prepayment with net cash proceeds received from certain dispositions, loss events with respect to property and other
extraordinary receipts.
All obligations under the DOE Loan Facility are secured by substantially all of our property. All of our existing and future domestic
subsidiaries will also be required to guaranty our obligations under the DOE Loan Facility. Our existing and future foreign subsidiaries may,
under certain circumstances, be required to guaranty our obligations under the loan facility. Any such guarantees by existing and future
subsidiaries will be secured by substantially all of the property of such subsidiaries.
The DOE Loan Facility documents contain customary covenants that include, among others, a requirement that the projects be conducted
in accordance with the business plan for such project; compliance with all requirements of the ATVM Program; and limitations on our and our
subsidiaries’ ability to incur indebtedness, incur liens, make investments or loans, enter into mergers or acquisitions, dispose of assets, pay
dividends or make distributions on capital stock, pay indebtedness, pay management, advisory or similar fees to affiliates, enter into certain
affiliate transactions, enter into new lines of business, and enter into certain restrictive agreements, in each case subject to customary exceptions.
The DOE Loan Facility documents also contain financial covenants requiring us to maintain a minimum ratio of current assets to current
liabilities, and (i) through December 15, 2012, a minimum cash balance, and
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