Tesla 2012 Annual Report Download - page 66

Table of Contents
in the June 2011 private placement. Interest on the loans will accrue at market rates. Goldman Sachs Bank USA will receive customary fees and
expense reimbursements in connection with these loans. As a regulated entity, Goldman Sachs Bank USA makes decisions regarding making
and managing its loans independent of Goldman, Sachs & Co. Mr. Musk and Goldman have a long-
standing relationship of almost a decade. We
are not a party to these loans, which are full recourse against Mr. Musk and the Trust and are secured by a pledge of a portion of the Tesla
common stock currently owned by Mr. Musk and the Trust and other shares of capital stock of unrelated entities owned by Mr. Musk and the
Trust. The terms of these loans were negotiated directly between Mr. Musk and Goldman Sachs Bank USA.
If the price of our common stock declines, Mr. Musk may be forced by Goldman Sachs Bank USA to provide additional collateral for the
loans or to sell shares of Tesla common stock in order to remain within the margin limitations imposed under the terms of his loans. The loans
between Goldman Sachs Bank USA and Mr. Musk and the Trust prohibit the non-pledged shares currently owned by Mr. Musk and the Trust
from being pledged to secure other loans. In addition, our DOE Loan Facility requires Mr. Musk and certain of his affiliates, until one year after
we complete the project relating to the Model S Facility, to own at least 65% of the Tesla capital stock held by them as of the date of the DOE
Loan Facility, and a failure to comply would be an event of default that could result in an acceleration of all obligations under the DOE Loan
Facility documents and the exercise of other remedies by the DOE. These factors may limit Mr. Musk’s ability to either pledge additional shares
of Tesla common stock or sell shares of Tesla common stock as a means to avoid or satisfy a margin call with respect to his pledged Tesla
common stock in the event of a decline in our stock price that is large enough to trigger a margin call. Any sales of common stock following a
margin call that is not satisfied may cause the price of our common stock to decline further.
Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a
takeover attempt.
Our certificate of incorporation, bylaws and Delaware law contain provisions which could have the effect of rendering more difficult,
delaying or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation
law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business
combinations without approval of the holders of substantially all of our outstanding common stock.
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•
creating a classified board of directors whose members serve staggered three
-
year terms;
• authorizing “blank check” preferred stock, which could be issued by the board without stockholder approval and may contain voting,
liquidation, dividend and other rights superior to our common stock;
•
limiting the liability of, and providing indemnification to, our directors and officers;
•
limiting the ability of our stockholders to call and bring business before special meetings;
• requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations
of candidates for election to our board of directors;
•
controlling the procedures for the conduct and scheduling of board and stockholder meetings; and
• providing the board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously
scheduled special meetings.