Tesla 2011 Annual Report Download - page 99

Table of Contents
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 customary financial covenants. We are currently in compliance with these covenants.
The DOE Loan Facility documents also contain customary events of default, subject in some cases to customary cure periods for certain
defaults. In addition, events of default include a failure of Elon Musk, our Chief Executive Officer, Product Architect and Chairman, and certain
of his affiliates, at any time prior to one year after we complete the project relating to the Model S Facility, to own at least 65% of capital stock
held by Mr. Musk and such affiliates as of the date of the DOE Loan Facility.
In addition to our obligation to fund a portion of the project costs as described above, we have agreed to set aside 50% of the net proceeds
from our IPO and the concurrent Toyota private placement and any subsequent offerings of stock occurring before the completion of the
projects, up to an aggregate of $100 million, to fund a separate, dedicated account under our DOE Loan Facility. This dedicated account can be
used by us to fund any cost overruns for our powertrain and Model S manufacturing facility projects and will also be used as a mechanism to
defer advances under the DOE Loan Facility. This will not affect our ability to draw down the full amount of the DOE loans, but will require us
to use the dedicated account to fund certain project costs up front, which costs may then be reimbursed by loans under the DOE Loan Facility
once the dedicated account is depleted, or as part of the final advance for the applicable project. We will be required to deposit a portion of these
reimbursements into the dedicated account, in an amount equal to up to 30% of the remaining project costs for the applicable project and these
amounts may similarly be used by us to fund project costs and cost overruns and will similarly be eligible for reimbursement by the draw-down
of additional loans under our DOE Loan Facility once used in full, or as part of the final advance for the applicable project. Upon the completion
of our IPO and concurrent private placement on July 2, 2010, we transferred $100.0 million of the net proceeds from the IPO and the concurrent
private placement to fund the dedicated account. During third and fourth quarters of 2010, we transferred $26.4 million from the dedicated
account to our operating cash accounts in accordance with the provisions of the DOE Loan Facility. As of December 31, 2010, $73.6 million
remained in the dedicated account. As we expect to transfer the remainder of this balance within one year, we have recorded such cash as current
restricted cash. In February 2011, we transferred an additional $15.6 million from the dedicated account.
For additional information related to our DOE Loan Facility, please see Note 8 of our consolidated financial statements included elsewhere
in this Annual Report on Form 10-K.
Initial Public Offering and Toyota Concurrent Private Placement
On June 28, 2010, our registration statement on Form S-
1 relating to our IPO was declared effective by the SEC. The IPO closed on July 2,
2010, at which time we sold 11,880,600 shares of our common stock and received cash proceeds of $188.8 million from this transaction, net of
underwriting discounts and commissions. Additionally, we incurred offering costs of $4.4 million related to the IPO.
Concurrent with the closing of our IPO, we sold 2,941,176 shares of our common stock to Toyota in a private placement transaction for
aggregate proceeds of $50.0 million.
Panasonic Private Placement
In November 2010, we entered into a common stock purchase agreement with an entity affiliated with Panasonic Corporation (Panasonic)
pursuant to which we issued and sold an aggregate of 1,418,573 shares of our common stock for aggregate proceeds of $30.0 million.
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