Exhibit 10.47

CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

PHASE 1 CONTRACT SERVICES AGREEMENT

This PHASE 1 CONTRACT SERVICES AGREEMENT (“Agreement”) is made and entered into
as of this October 6, 2010 (“Effective Date”) by and between Toyota Motor
Corporation, a Japanese corporation, with offices at 1 Toyota-cho, Toyota, Aichi
471-8571, Japan (“TMC”), and Tesla Motors, Inc., a Delaware corporation, with
offices at 3500 Deer Creek Road, Palo Alto, CA 94304, U.S.A. (“Tesla”). TMC and
Tesla may be referred to herein each individually as a “Party” and collectively
as the “Parties”.

RECITALS

A. Tesla has pre-existing technology and intellectual property rights relating
to powertrain systems for Electric Vehicles (as defined below);

B. TMC has pre-existing technology and intellectual property rights relating to
the manufacturing, operating and selling of a variety of vehicles;

C. The Parties wish to work together to develop Electric Vehicles based on the
TMC RAV4 platform (“RAV4 Platform”) and the Tesla Powertrain System (as defined
below) (the “Project”);

D. The Parties have executed that certain Prototype Lease to Use and Services
Agreement, dated July 15, 2010, regarding Phase 0 pursuant to which Tesla will
(a) lease to TMC and its Affiliates (as defined below) for their use operational
prototype Phase-0 Electric Vehicles of the RAV4 Platform that Tesla will equip
with the existing Tesla Powertrain System, and (b) provide services to customize
RAV4 Platforms owned by TMC or one of its Affiliates to equip such RAV4
Platforms with the existing Tesla Powertrain System;

E. Phase 1 involves more comprehensive integration of the Tesla Powertrain
System into the RAV4 Platform which integration will involve developing certain
interfaces and technology between the Tesla Powertrain System and RAV4 Platform
and is likely to require certain modifications to the core Tesla Powertrain
System and the RAV4 Platform. The result from Phase 1 will be an Electric
Vehicle version of the RAV4 Platform (“RAV4 EV”) that can be manufactured at
scale; and

F. The Parties have agreed to negotiate a separate agreement regarding the
supply and manufacture of the RAV4 EV (the “Manufacturing and Supply
Agreement”).

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

NOW, THEREFORE, in consideration of the mutual promises contained herein, the
Parties agree as follows:

1. DEFINITIONS

(a) “Affiliate” shall mean, with respect to any Party, any other party directly
or indirectly controlling, controlled by, or under common control with such
Party. For purposes of this definition, “control” when used with respect to any
entity means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such entity, whether
through the ownership of at least fifty percent (50%) of voting securities, by
contract or otherwise; the terms “controlling” and “controlled” have meanings
correlative to the foregoing. An entity will cease to be an Affiliate if such
control relationship no longer exists. TMC’s Affiliate shall include TTC, TEMA,
TMS and TMMC, and the expression “TMC” in this Agreement may be interpreted to
refer also to any one of TMC’s Affiliates whenever circumstance requires, and
for avoidance of doubt, for purposes of receiving rights under Sections 3 and 4
references to “TMC” includes all of TMC’s Affiliates.

(b) “Background Technology” shall mean all Technology that: (i) was developed,
conceived or owned by a Party prior to the Effective Date; or (ii) is conceived
or reduced to practice by a Party outside its performance under this Agreement.

(c) “Business Day” shall mean any day, other than a Saturday or Sunday, on which
banks are open for business in San Francisco, California and Tokyo, Japan.

(d) “Confidential Information” shall mean any information disclosed pursuant to
this Agreement by one Party to the other Party during the term of this Agreement
which is in written, graphic, machine readable or other tangible form and is
marked “Confidential,” “Proprietary” or in some other manner to indicate its
confidential nature, or is otherwise disclosed under circumstances that
reasonably indicate that the information being disclosed is confidential to the
disclosing Party. Confidential Information may also include oral information
disclosed by one Party to the other Party in the course of the performance of
this Agreement or information observed during the course of the development and
technology sharing activities contemplated by this Agreement. To the extent
practicable, such information shall be designated as confidential at the time of
disclosure and reduced to a written summary, which is marked in a manner to
indicate its confidential nature and delivered to the receiving Party, within
thirty (30) calendar days after its oral disclosure. As used herein,
“Confidential Information” may include, without limitation, the Tesla
Technology, the TMC Technology, Qualified Disclosures, and documents relating to
the development, manufacturing, testing, and marketing of the Prototype
Powertrain Systems, RAV4 Platform, and RAV4 EV which were disclosed by either
Party to the other Party, orally, in writing or by drawings or which were
obtained through inspection of parts of, or equipment for, any of the foregoing.
For avoidance of doubt, all Restricted Disclosures are Confidential Information
of the Party that makes the disclosure.

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

(e) “Deliverables” shall mean the Prototype Powertrain Systems as well as any
tangible items to be delivered by Tesla or TMC, as the case may be, in the
performance of the work described in the Statement of Work and Deliverables
Schedule. The Deliverables include the Initial Deliverables set forth in the
Initial Statement of Work.

(f) “Deliverables Schedule” shall mean the schedule, including Delivery Dates,
for the Deliverables other than the Initial Deliverables and the payments and
Delivery Dates associated with such Initial Deliverables, to be mutually agreed
upon by the Parties and incorporated herein by reference.

(g) “Delivery Dates” shall mean the scheduled completion dates for particular
Deliverables as set forth in the Deliverables Schedule.

(h) “Electric Vehicles” shall mean vehicles that are powered by the Tesla
Powertrain System.

(i) “Errors” shall mean any material failures or deviations in a Deliverable as
measured against the Initial Statement of Work and Specification or Final
Specifications, as the case may be.

(j) “Final Specifications” shall mean the mutually agreed upon technical and
other specifications for the Prototype Powertrain Systems, RAV4 EV and Phase 1
of the Project, which shall include, without limitation, the TMC EV Spec Book as
such Final Specifications may be revised pursuant to Section 2(e) to be mutually
agreed upon by the Parties and incorporated herein by reference.

(k) “Final Statement of Work” shall mean the description of work to be performed
under this Agreement to be mutually agreed upon by the Parties which will be
incorporated into this Agreement by reference and may be revised pursuant to
Section 2(e).

(l) “Foreground Technology” shall mean any and all Technology first conceived,
developed or reduced to tangible form or practice under this Agreement.

(m) “Initial Deliverables” shall mean the tangible items to be delivered by
Tesla in connection with the performance of the work described in the Initial
Statement of Work and Specification as mutually agreed upon by the Parties in
writing.

(n) “Initial Statement of Work and Specification” shall mean the description of
the initial work to be performed under this Agreement and the technical and
other specifications for such work, all as mutually agreed by the Parties in
writing.

(o) “Intellectual Property Rights” shall mean all rights in or arising under
(i) any Patents; (ii) all copyrights in both published and unpublished works,
all registrations and applications therefor and all associated moral rights;
(iii) all know-how, Trade Secrets, inventions

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

(whether patented or not), confidential information, software, technical
information, data, process technology, plans, drawings and blueprints required
to be disclosed by either Party to the other Party; and (iv) databases, data
compilations and collections and technical data; and (v) any other similar
rights in or arising worldwide, in each case, whether arising under the laws of
the United States or any other state, country, or jurisdiction.

(p) “Inventions” shall mean any discovery, invention or improvement first
developed, conceived or reduced to practice or to tangible form pursuant to this
Agreement.

(q) “Jointly-Developed Technology” shall mean Foreground Technology that is
created, conceived, authored or invented jointly by at least one Person from
each of the Parties who is Personnel within the definition in this Agreement.

(r) “Non-Powertrain Technology” shall mean all Technology other than Powertrain
Technology, including without limitation, the Technology set forth on Exhibit C.

(s) “Non-Qualified Jointly-Developed Technology” shall mean all
Jointly-Developed Technology that is not Qualified Jointly-Developed Technology.

(t) “Patents” shall mean all classes or types of patents, utility models and
design patents including, without limitation, originals, divisions,
continuations, continuations-in-part, extensions or reissues and patent
applications for these classes or types of patent rights, in all countries of
the world.

(u) “Person” shall mean any natural person, general partnership, limited
partnership, corporation, joint venture, trust, business trust, limited
liability company, cooperative, association or other form of organization.

(v) “Personnel” when used with reference to either Party, shall mean such
Party’s employees, agents or other third parties acting under the authority from
such Party working on matters relating to performance under this Agreement.

(w) “Powertrain Technology” shall mean all Technology set forth on Exhibit B and
other Technology mutually agreed by the Parties in writing.

(x) “Project” shall have the meaning set forth in the Recitals.

(y) “Project Manager” shall have the meaning set forth in Section 2(h).

(z) “Prototype Powertrain Systems” shall mean the Prototype Powertrain Systems
identified in the Deliverables Schedule.

(aa) “Qualified Disclosure” shall mean (i) all oral disclosures by one Party to
the other Party, and (ii) all disclosures that are not Restricted Disclosures.

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

(bb) “Qualified Jointly-Developed Technology” shall have the meaning set forth
in Section 3(b)(i).

(cc) “RAV4 EV” shall mean the Electric Vehicle version of the RAV4 Platform.

(dd) “RAV4 EV Powertrain System” shall mean the Tesla Powertrain System as
customized for use in the RAV4 EV in accordance with the Final Statement of
Work.

(ee) “Restricted Disclosure” shall mean (i) any information that is not
disclosed pursuant to this Agreement, (ii) a Restricted Written Disclosure, and
(iii) the specific Toyota vehicles or components that TMC provides to Tesla
under this Agreement. For avoidance of doubt, inclusion of subsection (iii) as
Restricted Disclosure in no way limits Tesla’s rights vis a vis any Toyota
vehicles that are not specifically provided to it under this Agreement which
Tesla acquires from the market.

(ff) “Restricted Written Disclosure” shall mean any written information that is
expressly and clearly marked “RESTRICTED” by the disclosing Party.

(gg) “Services” shall mean the services provided by Tesla under the terms of
this Agreement.

(hh) “Technology” shall mean inventions, technology, discoveries, improvements,
processes, designs, ideas, know-how, notes, memoranda and documentation.

(ii) “TEMA” shall mean Toyota Engineering and Manufacturing North America, Inc.

(jj) “Tesla Background Technology” shall mean Background Technology that is
Tesla’s including, without limitation, all of the Tesla Background Technology
related to Tesla Vehicles and Tesla Background Technology related to the Tesla
Powertrain System as described on Exhibit A.

(kk) “Tesla Foreground Technology” shall mean (i) all Foreground Technology
created, conceived, authored or invented solely by Tesla and its Personnel in
connection with performance under this Agreement; and (ii) all Non-Qualified
Jointly-Developed Technology that is Powertrain Technology.

(ll) “Tesla Powertrain System” shall mean the Tesla electric powertrain system
which is comprised of the following components: (i) drive inverter; (ii) AC
induction motor; (iii) single speed gearbox; (iv) charger; (v) lithium-ion
battery pack; (vi) thermal management system; and (vii) powertrain system
communication and controls.

(mm) “Tesla Subsidiary” shall mean a subsidiary wholly owned by Tesla; provided,
however, that local minority ownership is permitted to the extent necessary to
comply with local law, and provided further that such local minority interest
shall not involve a competitor of TMC without TMC’s prior written approval.

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

(nn) “Tesla Technology” shall mean all Tesla Background Technology and Tesla
Foreground Technology.

(oo) “Tesla Vehicles” shall mean the Tesla Roadster, Tesla Model S and all other
Tesla-branded vehicles.

(pp) “TMC Background Technology” shall mean TMC’s or its Affiliate’s Background
Technology.

(qq) “TMC Foreground Technology” shall mean (i) all Foreground Technology
created, conceived, authored or invented solely by TMC and/or a TMC Affiliate
and their respective Personnel in connection with performance under this
Agreement; and (ii) all Non-Qualified Jointly-Developed Technology that is
Non-Powertrain Technology.

(rr) “TMC EV Spec Book” shall have the meaning set forth in Section 2(a).

(ss) “TMC Technology” shall mean all TMC Background Technology and TMC
Foreground Technology.

(tt) “TMMC” shall mean Toyota Motor Manufacturing Canada Inc.

(uu) “TMS” shall mean Toyota Motor Sales, U.S.A., Inc.

(vv) “TTC” shall mean Toyota Technical Center, a division of TEMA.

(ww) “Trade Secrets” shall mean any Technology or other information that
(i) derives independent economic value, actual or potential, from not being
generally known to the public or to other persons who could obtain economic
value from its disclosure or use; and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Without limiting the
generality of the foregoing, Trade Secrets include business information such as
information set out in, or relating to, cost data, pricing practices and
policies, marketing practices and policies, licensing practices and policies,
and the identity and location of past, present, and prospective suppliers and
customers.

2. SERVICES

(a) Finalizing the Final Specifications. The Parties agree that the Final
Specifications, Deliverables and payment schedule for the Deliverables have not
been definitively agreed to as of the Effective Date. The Parties will finalize
and mutually agree upon the Final Specifications, Deliverables and payment
schedule for the Deliverables within sixty (60) calendar days of the Effective
Date. The Final Specifications as mutually agreed to by the Parties shall
reference TMC’s EV Spec Book to be separately provided to Tesla hereunder for
use in developing the RAV4 EV Powertrain System (“TMC EV Spec Book”).

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

(b) Development. Each of the Parties shall use its commercially reasonable
efforts to perform the Services and deliver the Deliverables in accordance with
the Initial Statement of Work and Specification or Final Specifications, as the
case may be. For avoidance of doubt, the Initial Statement of Work and
Specification and the Final Specifications shall contain the full and complete
statements of the requirements for the Deliverables and no additional
requirements shall alter the requirements for the Deliverables unless mutually
agreed to by the Parties pursuant to the process set forth in Section 2(e).
Unless otherwise designated in the Initial Statement of Work and Specification
or Final Statement of Work, each Party shall have the right to sub-contract all
or part of its development obligations under this Agreement; provided that said
subcontractors are bound to observe the provisions of this Agreement, and that
the delegating Party is liable in the event that subcontractors violate the
provisions of this Agreement (whether or not such person or entity is a Party).

(c) Delivery Dates. Each Party (the “Performing Party”) shall use commercially
reasonable efforts to complete and deliver its Deliverables by the Delivery Date
set forth in the Deliverables Schedule. The Performing Party agrees to notify
the other Party (the “Receiving Party”) of any circumstances when and as they
arise, that may lead to a deviation from such Delivery Date. If Performing Party
is not be able to complete performance according to the Initial Statement of
Work and Specification or Final Statement of Work, as the case may be, due to
the Receiving Party’s inability to deliver information necessary for the
Performing Party to meet its obligations under the Initial Statement of Work and
Specification or the Final Statement of Work, as the case may be, the scheduled
date on which a Deliverable was due will be extended for the time of the delay
to meet a Delivery Date for a Deliverable or other required performance which is
delayed on account of failure of the Receiving Party to complete a prerequisite
performance or deliver prerequisite material in timely fashion. Deliverables
shall be delivered in such format and on such media as set forth in the Initial
Statement of Work and Specification or Final Statement of Work, as the case may
be, or as the Parties may mutually agree upon in writing. The Performing Party
will notify the Receiving Party in writing as soon as reasonably possible, if it
will not be able to deliver a Deliverable within the timeframe set forth in the
Deliverables Schedule together with the reason for its inability to do so.

(d) Acceptance Process.

(i) Acceptance of Non-Prototype Powertrain Systems Deliverables. Upon delivery
of a Deliverable (including, without limitation, the Initial Deliverables) by
the Performing Party to the Receiving Party, to the extent that the Deliverable
is subject to acceptance, the Receiving Party will test whether the Deliverable
conforms in all material respects to the applicable part of the Initial
Statement of Work and Specification or Final Specifications, as the case may be.
Excluding Deliverables which are Prototype Powertrain Systems, the Receiving
Party will accept or reject each Deliverable within fifteen (15) Business Days
after delivery and will give the Performing Party written notice of acceptance
or rejection thereof, provided however, in the event that a notice of rejection
is not received by the Performing Party within the fifteenth (15 th) Business
Day period, the

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

Deliverable shall be deemed to have been accepted by the Receiving Party at the
close of business on the fifteenth (15th) Business Day of the period. In the
event that a Deliverable contains an Error, the Receiving Party shall have the
right to reject the Deliverable and provide written notice to the Performing
Party describing the Error in sufficient detail to allow the Performing Party to
reproduce the Error. The Performing Party will use commercially reasonable
efforts to correct the Errors so that the Deliverable conforms to the applicable
part of the Initial Statement of Work and Specification or Final Specifications,
as the case may be, and shall use commercially reasonable efforts to do so
within fifteen (15) Business Days of receiving each of the Receiving Party’s
written notices regarding the Errors. At the Receiving Party’s request, the
procedure in this Section 2(d)(i) will be repeated with respect to a revised
Deliverable to determine whether it is acceptable to the Receiving Party, unless
and until the Receiving Party issues to the Performing Party a final rejection
of the revised Deliverable after rejecting the Deliverable on at least three
(3) prior occasions.

(ii) Acceptance of Prototype Powertrain Systems Deliverables. Upon delivery of a
Deliverable, which is a Prototype Powertrain System, by Tesla to TMC, TMC will
test whether the Deliverable conforms in all material respects to the applicable
part of the Initial Statement of Work and Specification or Final Specifications,
as the case may be. TMC will accept or reject each Deliverable within thirty
(30) calendar days after delivery and will give Tesla written notice of
acceptance or rejection thereof, provided however, in the event that a notice of
rejection is not received by Tesla within the thirtieth (30 th) calendar day
period, the Deliverable shall be deemed to have been accepted by TMC at the
close of business on the thirtieth (30th) day of the period. In the event that a
Deliverable contains an Error, TMC shall have the right to reject the
Deliverable and provide written notice to Tesla describing the Error in
sufficient detail to allow Tesla to reproduce the Error. Tesla will use
commercially reasonable efforts to correct the Errors so that the Deliverable
conforms to the applicable part of the Initial Statement of Work and
Specification or Final Specifications, as the case may be, and shall use
commercially reasonable efforts to do so within thirty (30) calendar days of
receiving each of TMC’s written notices regarding the Errors. At TMC’s request,
the procedure in this Section 2(d)(ii) will be repeated with respect to a
revised Deliverable to determine whether it is acceptable to TMC, unless and
until TMC issues to Tesla a final rejection of the revised Deliverable after
rejecting the Deliverable on at least three (3) prior occasions. If a Party
issues a final rejection of the revised Deliverable pursuant to Sections 2(d)(i)
or 2(d)(ii), the Receiving Party’s sole remedy and the Performing Party’s sole
liability under this Agreement shall be (1) in the case of TMC as the Receiving
Party, to withhold payment for the rejected Deliverable only and/or terminate
this Agreement by providing written notice to Tesla, such notice to be effective
upon Tesla’s receipt, and (2) in the case of Tesla as the Receiving Party, to
terminate this Agreement by providing written notice to TMC, such notice to be
effective upon TMC’s receipt. For avoidance of doubt, Tesla’s right to payments
under Section 5 that accrued as of the date of termination of this Agreement,
shall survive in all cases.

(e) Change Order Process. The Parties recognize and acknowledge that the Final
Specifications and Final Statement of Work may need to be revised as the work
described therein continues. The Parties shall cooperate and work in good faith
to adapt any such revisions as needed

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

in accordance with the procedure set forth in this Section 2(e). Either Party
may submit to the other Party proposed changes, modifications, alternations or
other adjustments to the Final Specifications or Final Statement of Work with
the effect of the proposal on dates in the Final Statement of Work and/or
estimated costs (“Change Request”). Upon the receipt of any Change Request, the
receiving Party will provide written comments to requesting Party within
fourteen (14) calendar days including comments on whether the changes to the
Final Specifications, Final Statement of Work (including dates therein) and
costs will be acceptable. The Parties will negotiate in good faith regarding the
proposed changes. Once the Parties agree in writing on the terms of the Change
Request, the Change Request shall be effective. Each Party agrees to be
reasonable in implementing the Change Order process described in this
Section 2(e).

(f) Designation of Line Items as Powertrain or Non-Powertrain. For each of the
line items of work listed in the Initial Statement of Work and Specification and
for each of the line items of work listed in the Final Specifications and Final
Statement of Work, the Parties shall mutually agree in writing on whether each
such line item is comprised of Powertrain Technology or Non-Powertrain
Technology. The Parties shall work together in good faith to make such
designations and shall use the lists of Powertrain Technology and Non-Powertrain
Technology set forth in the Exhibits B and C hereto as a guide when making such
assignments. The Parties shall also designate the line items in any Change Order
as Powertrain or Non-Powertrain and no Change Order shall be approved unless
such designation has been made.

(g) Process for Provision and Receipt of Restricted Written Disclosures.

(i) Each Party shall designate a minimum of two (2) individuals in their
respective organizations (each a “Restricted Written Disclosure Managers” or
“RDMs”) who will be responsible for managing the acceptance or return of
Restricted Written Disclosures that the other Party wishes to supply. The
initial RDMs for Tesla shall be Mateo Jaramillo and Mike Taylor. The initial
RDMs for TMC shall be Edward Mantey and Seiya Nakao. Each Party may change its
RDMs at any time by providing written notice to the other Party.

(ii) If a Party (for the purpose of this Section the “Disclosing Party”) wishes
to provide the other Party (“Receiving Party”) with a written document that the
Disclosing Party deems to be in part or in full a Restricted Written Disclosure
one representative of the Disclosing Party shall send the Restricted Written
Disclosure to the RDMs for the other Party via the Bulletin Board Service
(“BBS”) or other mechanism mutually agreed to by the Parties. Each Restricted
Written Disclosure transmitted shall prominently display the legend “RESTRICTED
DISCLOSURE” at the top of each page of the document if the document as a whole
is restricted or next to those sections of the document that are restricted if
only portions of the document are restricted. The email in which the Restricted
Written Disclosure is appended shall include “RESTRICTED DISCLOSURE” in the
subject line for the email. The RDM for the Receiving Party shall review the
Restricted Written Disclosure and, within three (3) Business Days of receiving
the document, shall in a written response to the Disclosing Party sent via the
BBS or other agreed upon mechanism, either (i) accept the document or portions
thereof which were marked as such as a

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

Restricted Written Disclosure, or (ii) notify the Disclosing Party that it does
not agree that the document qualifies as a Restricted Written Disclosure and is
challenging the designation. The RDMs for the Parties will discuss their
respective positions regarding the matter and attempt to resolve the
disagreement in good faith. If the RDMs for the Parties are unable to agree on
the treatment of the document or portion thereof, the Receiving Party shall have
the right to return the Restricted Written Disclosure to the Disclosing Party
via the BBS or the other agreed upon mechanism along with a written note
indicating that the Restricted Written Disclosure is being returned. Any
Restricted Written Disclosure that is returned to the Disclosing Party shall
only have been reviewed by the Receiving Party’s RDMs and shall not have been
copied, distributed or otherwise disseminated to any other Receiving Party
personnel or third parties. All documents provided to the Receiving Party’s RDMs
via the BBS (or other mechanism mutually agreement to by the Parties) with the
markings described above shall be deemed “Restricted Written Disclosures”.

(iii) For avoidance of doubt, unless otherwise mutually agreed to by the Parties
in writing:

(1) If a Disclosing Party provides a written disclosure to the other Party
outside the process described in this Section 2(g) that written disclosure can
never be deemed a Restricted Written Disclosure. Any document that is provided
by a Disclosing Party to the other Party which document includes a Restricted
Written Disclosure legend but is not provided through the above-described
process will be deemed to be a Qualified Disclosure. Moreover, a Disclosing
Party may not go through the process in this Section 2(g) after it has already
provided a Qualified Disclosure to the other side outside of this process and
ask for the disclosure to be retroactively designated a Restricted Written
Disclosure.

(2) If a Disclosing Party first provides information to the other Party orally
and later documents put the same oral information in a written document, that
document cannot become a Restricted Written Disclosure.

(h) Project Managers. Each Party agrees to appoint a project manager (“Project
Manager”) who shall be the principal point of contact to whom all communications
between the Parties with respect to the collaboration and development activities
under this Agreement shall be directed. The initial Project Manager for Tesla
shall be Mr. Diarmuid O’Connell, and the initial Project Manager for TMC shall
be Mr. Shinya Kotera. Each Party may change its Project Manager at any time by
providing written notice to the other Party. Each Project Manager may appoint a
designee to act on the Project Manager’s behalf for certain tasks by providing
written notice to the other Party, provided such designee shall not have the
authority to act on its Project Manager’s behalf until such written notice has
been provided to the other Party. The Project Managers shall hold periodic
meetings to discuss the progress of the Project.

(i) NHTSA Testing / FMVSS Compliance. TMC will be responsible for NHTSA testing
and FMVSS compliance testing for the RAV4 EV and Tesla will provide all
commercially reasonable assistance in connection with such testing.

 

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***Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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CONFIDENTIAL TREATMENT REQUESTED BY TESLA MOTORS, INC.

TESLA AND TMC CONFIDENTIAL INFORMATION

EXECUTION VERSION

 

3. OWNERSHIP

(a) General Principles. Each Party shall continue to own all of its Technology
and Intellectual Property Rights and nothing set forth in this Agreement is
intended to, or will transfer ownership of any Technology or Intellectual
Property Rights of one Party to the other Party. Except as expressly set forth
in Section 4 (License Grants) nothing in this Agreement is intended to grant or
will grant one Party any licenses to the Technology or Intellectual Property
Rights of the other Party. The delivery or transfer of title to any tangible
Deliverable by one Party to the other Party shall not imply any grant of any
rights or licenses to the Technology or Intellectual Property Rights embodied
therein. Without limiting the foregoing:

(i) Tesla Ownership. Tesla and/or Tesla Subsidiaries own all right, title and
interest in the Tesla Technology and all Intellectual Property Rights in Tesla
Technology.

(ii) TMC Ownership. TMC and/or its Affiliates own and shall own all right, title
and interest in all Deliverables accepted pursuant to Section 2(d) and paid for
pursuant to Section 5, the TMC Technology, and all Intellectual Property Rights
in the TMC Technology.

(b) Jointly-Developed Technology.

(i) Ownership of Qualified Jointly-Developed Technology. During the term of this
Agreement either Party may provide the other Party with written notice that it
desires to develop Jointly-Developed Technology with the other Party. If the
Parties agree in writing to develop such Jointly-Developed Technology, each
Party will have an equal and undivided one-half (1/2) joint ownership interest
in all such Jointly-Developed Technology created, conceived, authored or
invented jointly by the Parties (“Qualified Jointly-Developed Technology”). For
avoidance of doubt, neither Party is obligated to agree to any such joint
development proposal. Neither Party shall have any duty of accounting to the
other Party with respect to its joint ownership interest in any Qualified
Jointly-Developed Technology.

(ii) Non-Qualified Jointly-Developed Technology. If the Parties do not agree
pursuant to Section 3(b)(i) to jointly develop Qualified Jointly-Developed
Technology, such Technology shall be deemed “Non-Qualified Jointly-Developed
Technology” to which the following shall apply:

(1) TMC shall own all right, title and interests in all Non-Qualified
Jointly-Developed Technology that is Non-Powertrain Technology; and

(2) Tesla and/or Tesla Subsidiaries shall own all right, title and interests in
all Non-Qualified Jointly-Developed Technology that is Powertrain Technology.

(iii) Patent Rights. Any Patents resulting from Inventions that are embodied in
any of the following shall be jointly owned: (1) the Qualified Jointly-Developed
Technology and which

 

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Inventions were made by two or more Personnel jointly with at least one of the
inventors having a duty to assign rights in an Invention to Tesla and/or Tesla
Subsidiaries, and at least one of the inventors having a duty to assign rights
in an Invention to TMC or a TMC Affiliate, or (2) the Payment Technology
(subsections (1) and (2), collectively, the “Joint Patents”). Each Party shall
own a one-half (1/2) undivided interest in each such Joint Patent without
accounting to the other Party.

(iv) Payment for Foreground Technology that is Non-Powertrain Technology.
Notwithstanding anything to the contrary in this Agreement, if a Party pays for
the development of any Foreground Technology that is Non-Powertrain Technology
(and such Foreground Technology that is Non-Powertrain Technology is created,
conceived, authored or invented solely by the Party receiving such payment),
then each Party will have an equal and undivided one-half (1/2) joint ownership
interest in all such Foreground Technology that is Non-Powertrain Technology
(“Payment Technology”). The Party receiving such payment hereby irrevocably
transfers, conveys and assigns to such paying Party a one-half (1/2) joint
ownership interest in and to the Payment Technology, including a one-half
(1/2) interest in all Intellectual Property Rights therein. Neither Party shall
have any duty of accounting to the other Party with respect to its joint
ownership interest in any Payment Technology.

(v) Limitations on Use of Qualified Jointly-Developed Technology and Payment
Technology. Each Party’s right to use and exploit the Qualified
Jointly-Developed Technology and Payment Technology shall be subject to its
obligations to keep the Qualified Jointly-Developed Technology and Payment
Technology confidential according to the terms of Section 6. Notwithstanding
anything to the contrary in this Agreement:

(1) each Party shall have the right to freely use and exploit the Qualified
Jointly-Developed Technology that is Powertrain Technology and all Intellectual
Property Rights therein;

(2) TMC shall have the right to freely use and exploit the Qualified
Jointly-Developed Technology that is Non-Powertrain Technology, Payment
Technology, and all Intellectual Property Rights in the foregoing; and

(3) Tesla shall have the right to freely use and exploit the Qualified
Jointly-Developed Technology that is Non-Powertrain Technology, Payment
Technology, and all Intellectual Property Rights in the foregoing for any
purpose related to Tesla’s development, manufacture and sale of Tesla Vehicles.

(vi) No Implied Rights or Licenses. Joint ownership of the Qualified
Jointly-Developed Technology and Payment Technology does not confer any other
rights or licenses in either Party’s Technology or Intellectual Property Rights
even if such additional rights or licenses are required in order for the other
Party to practice or use the Qualified Jointly-Developed Technology, Payment
Technology and/or the Intellectual Property Rights therein.

 

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4. LICENSE GRANTS

(a) Licenses to Perform Under this Agreement.

(i) License to TMC. Subject to the terms and conditions of this Agreement, Tesla
hereby grants TMC a limited, worldwide, non-exclusive, royalty-free, fully
paid-up, non-transferable, non sub-licensable right and license to use the Tesla
Technology and all Intellectual Property Rights therein for the purposes of
evaluating, operating and using the Deliverables, performing its obligations
under this Agreement, and exercising its rights under this Agreement.

(ii) License to Tesla. Subject to the terms and conditions of this Agreement,
TMC hereby grants Tesla and Tesla Subsidiaries a limited, worldwide,
non-exclusive, royalty-free, fully paid-up, non-transferable, non sub-licensable
right and license to use the TMC Technology and all Intellectual Property Rights
therein for the purposes of evaluating, operating and using the Deliverables,
performing its obligations under this Agreement, and exercising its rights under
this Agreement.

(b) Licenses to Powertrain Technology.

(i) License to TMC Foreground Technology that is Powertrain Technology. Subject
to the terms and conditions of this Agreement, TMC hereby grants Tesla and Tesla
Subsidiaries a limited, worldwide, non-exclusive, royalty-free, fully paid-up
right and license to all TMC Foreground Technology that is Powertrain Technology
and is a Qualified Disclosure and all Intellectual Property Rights therein
(except Patents) to use, perform, display, reproduce, create derivative works,
make, have made, use, sell (directly or indirectly), offer for sale or
disposition, import, dispose and otherwise exploit such TMC Foreground
Technology that is Powertrain Technology and is a Qualified Disclosure for any
purpose including, without limitation, in its electric vehicle business and in
performing services for its customers. The foregoing license shall be fully
transferable and sublicenseable.

(ii) License to TMC Background Technology that is Powertrain Technology. Subject
to the terms and conditions of this Agreement, TMC hereby grants Tesla and Tesla
Subsidiaries a limited, worldwide, non-exclusive, royalty-free, fully paid-up
right and license to all TMC Background Technology that is Powertrain Technology
and is a Qualified Disclosure and all Intellectual Property Rights therein
(except Patents) to use, perform, display, reproduce, create derivative works,
make, have made, use, sell (directly or indirectly), offer for sale or
disposition, import, dispose and otherwise exploit such TMC Background
Technology that is Powertrain Technology and is a Qualified Disclosure for any
purpose including, without limitation, in its electric vehicle business and in
performing services for its customers. The foregoing license shall be fully
transferable and sublicenseable.

 

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(c) Licenses to Non-Powertrain Technology.

(i) License to Tesla Foreground Technology that is Non-Powertrain Technology.
Subject to the terms and conditions of this Agreement, Tesla hereby grants TMC a
limited, worldwide, non-exclusive, royalty-free, fully paid-up right and license
to all Tesla Foreground Technology that is Non-Powertrain Technology and is a
Qualified Disclosure and all Intellectual Property Rights therein (except
Patents) to use, perform, display, reproduce, create derivative works, make,
have made, use, sell (directly or indirectly), offer for sale or disposition,
import, dispose and otherwise exploit such Tesla Foreground Technology that is
Non-Powertrain Technology and is a Qualified Disclosure for any purpose. The
foregoing license shall be fully transferable and sublicenseable.

(ii) License to Tesla Background Technology that is Non-Powertrain Technology.
Subject to the terms and conditions of this Agreement, Tesla hereby grants TMC a
limited, worldwide, non-exclusive, royalty-free, fully paid-up right and license
to all Tesla Background Technology that is Non-Powertrain Technology and is a
Qualified Disclosure and all Intellectual Property Rights therein (except
Patents) to use, perform, display, reproduce, create derivative works, make,
have made, use, sell (directly or indirectly), offer for sale or disposition,
import, dispose and otherwise exploit such Tesla Background Technology that is
Non-Powertrain Technology and is a Qualified Disclosure for any purpose. The
foregoing license shall be fully transferable and sublicenseable.

(d) No Other Rights. Except as may be explicitly provided in this Agreement, no
licenses or rights to (i) any Technology or Intellectual Property Rights that
are owned or licensable by Tesla; and (ii) any Technology or Intellectual
Property Rights that are owned or licensable by TMC are granted, licensed, or
otherwise transferred under this Agreement by implication or otherwise.
Notwithstanding the foregoing, nothing herein restricts either of the Party’s
rights with respect to Residuals as set forth in Section 6(f) (except for
Patents). For the avoidance of doubt, except with respect to the licenses in
Section 4(a) no licenses or other rights are granted by either Party to the
other Party with respect to such Party’s Patents.

5. COMPENSATION

(a) Initial Quote. TMC acknowledges and understands that the Sixty Million
Dollars ($60,000,000) quote for development services pursuant to this Agreement
is based on Tesla’s preliminary estimate of the development services, schedule
and [***] Prototype Powertrain Systems to be delivered, and the validation
services of those Prototype Powertrain Systems that might be required by TMC
(the “Initial Quote”). To the extent that the Services required by the Final
Specifications and Final Statement of Work or the number of Prototype Powertrain
Systems are in excess of [***] units, the Parties will negotiate in good faith
to mutually agree on the payments for such additional Services.

(b) Initial Statement of Work and Payment. Promptly after the Effective Date,
Tesla shall provide TMC with the Deliverables set forth in the Initial Statement
of Work and Specification along with an invoice for the non-refundable amount of
[***] (“Initial Payment”) which sum will

 

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be applied towards the Initial Quote indicated above. Notwithstanding the
provisions of Section 2(d), TMC shall complete the acceptance evaluation set
forth in Section 2(d), for the Deliverables set forth in the Initial Statement
of Work and Specification in no more than five (5) calendar days and shall pay
the invoice for such Initial Deliverables within twenty-five (25) calendar days
of such acceptance. Tesla shall be entitled to an additional payment of [***]
(“Second Payment”) which sum will be applied towards the Initial Quote indicated
above upon the date when Tesla and TMC agree to the Final Specification. After
the date of such agreement, Tesla will issue an invoice to TMC for the Second
Payment and that sum shall be due and payable upon TMC’s receipt of the invoice.
The remaining balance of the Initial Quote will be paid according to the
schedule and Deliverables set forth in the Final Specifications. To the extent
that the Parties take more than sixty (60) calendar days to finalize the Final
Specifications, Final Statement of Work, Deliverables and Payment Schedule, an
additional progress payment will be made by TMC for Services to be provided, as
agreed mutually by the two Parties.

(c) Fees. In consideration for provision of the Services under this Agreement,
subject to TMC’s acceptance of the applicable Deliverable pursuant to
Section 2(d) and Tesla’s delivery of the applicable Deliverable on the
applicable Delivery Date, TMC (or TTC or another entity designated by TMC) shall
pay Tesla the amounts (“Fees”) and pursuant to the payment schedule to be
mutually agreed upon by the Parties and incorporated herein by reference.

(d) Invoicing; Payment. Except as set forth in Section 5(a)-(c), all payments
from TMC are due within thirty (30) calendar days of the date of Tesla’s invoice
and will be paid in full without set off or other deduction in U.S. Dollars.
Payment will be made by wire transfer of immediately available funds to such
bank and account as Tesla will direct. In the event that payment is not received
within thirty (30) calendar days of the date of Tesla’s invoice, Tesla will be
entitled in its sole discretion to (a) charge interest on any undisputed
outstanding amount from day to day at the rate of one percent (1%) per annum
over the prime lending rate of Bank of America applying from time to time, both
before and after judgment in respect of all invoices outstanding from their due
date until payment is actually received; (b) suspend performance hereunder
without liability until the outstanding amount is paid in full and the timetable
and any other times agreed for the provision of the Services or Deliverables
will be amended accordingly; and/or (c) terminate this Agreement pursuant to
Section 10(b)(ii).

(e) Sales Taxes. In the event any sales tax is required to be paid or levied by
any governmental authority in connection with any payments made under this
Agreement, TMC shall be responsible for paying all such taxes which payment
shall be in addition to any Fees payable under this Agreement.

(f) Manufacturing and Supply Agreement. The Parties acknowledge and agree that
TMC will not pay any additional fees for use of Tesla Technology under the
Manufacturing and Supply Agreement. Nothing in this Agreement places any
obligation on (a) Tesla to supply any powertrains to TMC for commercial use, or
(b) TMC to purchase any powertrains from Tesla for commercial use.

 

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6. CONFIDENTIALITY

(a) Duty to Hold in Confidence. Each Party (“Recipient”) will preserve in strict
confidence and secure against accidental loss any Confidential Information
disclosed to it by the other Party (“Disclosing Party”). In preserving
Disclosing Party’s Confidential Information, Recipient will use the same
standard of care it would use to secure and safeguard its own confidential
information of similar importance, but in no event less than reasonable care.
Any permitted reproduction of Disclosing Party’s Confidential Information shall
contain all confidential or proprietary legends which appear on the original.
Recipient shall immediately notify Disclosing Party in writing in the event of
any loss or unauthorized disclosure or use of Disclosing Party’s Confidential
Information. Recipient shall only use Disclosing Party’s Confidential
Information for the sole purpose of evaluating, operating and using the
Deliverables, performing its obligations and exercising its rights under this
Agreement.

(b) Exceptions. Confidential Information shall not include information Recipient
can document, which: (i) is or becomes (through no improper action or inaction
by Recipient or any Affiliate or Personnel of Recipient) generally known to the
public (and is readily available without substantial effort), (ii) was
rightfully in its possession or known by Recipient prior to receipt from
Disclosing Party (as evidenced in writing), (iii) was rightfully disclosed to
Recipient by another person without restriction, or (iv) was independently
developed by or for Recipient without access to or use of any Confidential
Information of Disclosing Party.

(c) Permitted Disclosures. Recipient shall permit access to Disclosing Party’s
Confidential Information solely to its Affiliates and Personnel of Recipient and
its Affiliates who (i) have a need to know such Confidential Information; and
(ii) have agreed to comply with confidentiality terms at least as restrictive as
those contained herein. Except as permitted in the exercise of the licenses and
rights granted under this Agreement, Recipient shall not disclose or transfer
any Disclosing Party’s Confidential Information to any third party, without the
specific prior written approval of Disclosing Party, except to the extent
required by law or governmental or court order to be disclosed by Recipient,
provided that Recipient gives Disclosing Party prompt written notice of such
requirement prior to such disclosure and cooperates with Disclosing Party in the
latter’s attempt, if any, to prevent such disclosure or in obtaining a
protective or similar order with respect to such Confidential Information to be
disclosed.

(d) Obligation to Return Confidential Information. Recipient acknowledges that
Disclosing Party retains ownership of all Confidential Information disclosed or
made available to Recipient. Accordingly, upon any termination, cancellation or
expiration of this Agreement, or upon Disclosing Party’s request for any reason
(other than in violation of this Agreement), Recipient shall, within thirty
(30) calendar days after such termination, cancellation or expiration or
request, return promptly to Disclosing Party the originals and all copies
(without retention of any copy) of any written documents, tools, materials or
other tangible items containing or embodying Confidential Information of
Disclosing Party; provided, however, that Recipient shall be entitled to retain
such originals and copies of Confidential Information of Disclosing Party as
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conclude are necessary to Recipient’s use and exploitation, as permitted by this
Agreement, of any rights or licenses retained by Recipient following such
termination, cancellation, expiration or request.

(e) No Representations or Warranties. EXCEPT AS EXPRESSLY SET FORTH IN SECTION
7, DISCLOSING PARTY MAKES NO REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS,
STATUTORY OR IMPLIED, RELATING TO THE SUFFICIENCY OR ACCURACY OF ITS
CONFIDENTIAL INFORMATION DISCLOSED FOR ANY PURPOSE, NOR REGARDING INFRINGEMENT
OF OTHERS’ INTELLECTUAL PROPERTY RIGHTS WHICH MAY ARISE FROM THE USE OF SUCH
CONFIDENTIAL INFORMATION.

(f) No Grant of Property Rights; Residual Information. Recipient recognizes and
agrees that, except as expressly set forth in this Agreement, nothing herein
shall be construed as granting any property rights, by license or otherwise, to
any of Disclosing Party’s Confidential Information, or to any invention or any
patent right that has issued or that may issued on such Confidential Information
or to decompile or reverse engineer any of the Disclosing Party’s Confidential
Information. Any rights to such Intellectual Property Rights are set forth in
Sections 3 and 4. Notwithstanding the foregoing, Recipient shall have the right
to use and exploit Residuals for any purpose. As used herein, “Residuals” shall
mean ideas, information and understandings retained in the unaided memory of
Recipient’s employees as a result of their review, evaluation and testing of the
Confidential Information of Disclosing Party. For the avoidance of doubt, no
patent or copyright license to Residuals is granted to either Party under this
Section 6(f). Each Party acknowledges that the other Party’s receipt of its
Confidential Information under this Agreement shall not create any obligation in
any way limiting or restricting the assignment of employees within such Party.

(g) Confidentiality of Agreement. Each Party agrees that the terms and
conditions of this Agreement shall be treated as confidential information and
that no reference to the terms and conditions of this Agreement can be made
without the prior written consent of the other Party (such consent not to be
unreasonably withheld, conditioned or delayed); provided, however, that each
Party may disclose the mere existence of this Agreement without restriction and
may disclose the terms and conditions of this Agreement: (i) as required by any
court, administrative agency or other governmental body, including without
limitation any filing or public disclosure that may be required under any
national, federal or state securities law or regulation; (ii) as otherwise
required by law; (iii) in confidence, to legal counsel of the Parties and other
professional advisors; (iv) in confidence, to accountants, banks, potential
investors, financing sources and their respective advisors who would not
reasonably be deemed to be potential customers or competitors of the other
Party; (v) in confidence, in connection with the enforcement of this Agreement
or rights under this Agreement; or (vi) in confidence, in connection with a
merger or acquisition or proposed merger or acquisition, or the like.

 

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7. LIMITED REPRESENTATIONS AND WARRANTIES; DISCLAIMER

(a) Mutual Representations and Warranties. Each Party represents and warrants to
the other Party that it: (i) has the right to enter this Agreement, is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation, (ii) has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, (iii) has by all necessary corporate action duly and validly
authorized the execution and delivery of this Agreement and the performance of
its obligations hereunder, (iv) will perform the Services in accordance with
applicable laws and regulations, and (v) this Agreement is the valid and legally
binding obligation of each Party in accordance with its terms.

(b) Tesla Representations and Warranties. Tesla represents and warrants that it
will perform the Services in a professional nature, conforming to generally
accepted industry-standards.

(c) Disclaimer. EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, NEITHER
PARTY MAKES ANY REPRESENTATION, WARRANTY, OR CONDITION, EXPRESS OR IMPLIED. EACH
PARTY SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE, NONINFRINGEMENT, AND MERCHANTABILITY.

8. INDEMNIFICATION

(a) Mutual Indemnification. Subject to Sections 8(c) and 8(d), each Party (the
“Indemnifying Party”) will defend, indemnify and hold the other Party and its
Affiliates (the “Indemnified Party”) harmless from and against all third party
claims, liabilities, damages and costs (including legal fees and costs), arising
from or related to (i) any allegation that the Tesla Technology (when Tesla is
the Indemnifying Party) or the TMC Technology (when TMC is the Indemnifying
Party) infringes or misappropriates a third party’s Intellectual Property Right,
(ii) any parts (including third party parts) supplied by the Indemnifying Party
under this Agreement, or (iii) the Indemnifying Party’s gross negligence or
willful misconduct.

(b) TMC Indemnification. Subject to Sections 8(c) and 8(d), TMC will defend,
indemnify and hold Tesla and its Affiliates (the “Indemnified Parties”) harmless
from and against all third party claims, liabilities, damages and costs
(including legal fees and costs), arising from or related to TMC’s failure to
comply with Section 2(i).

(c) Exceptions. The obligations set forth in Section 8(a)(i) shall not apply to
the extent such infringement or misappropriation claim arises out of or is
related to: (i) compliance with the Indemnified Party’s specifications, (ii) use
of the Tesla Technology (when Tesla is the Indemnifying Party) or the TMC
Technology (when TMC is the Indemnifying Party) in combination with any
software, hardware, network, system, or other technology that was not supplied
by the Indemnifying Party or, in the case of the Tesla Technology, which was not
a part of the Prototype Powertrain Systems as delivered to TMC by Tesla and
accepted by TMC, (iii) any modifications of the Tesla

 

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Technology (when Tesla is the Indemnifying Party) or the TMC Technology (when
TMC is the Indemnifying Party) by anyone other than the Indemnifying Party,
(iv) the Indemnified Party continuing the allegedly infringing or
misappropriating activity after being informed by the Indemnifying Party of
modifications that would have avoided the alleged infringement or
misappropriation, or (v) use of the Tesla Technology or Prototype Powertrain
Systems (when Tesla is the Indemnifying Party), or the TMC Technology (when TMC
is the Indemnifying Party) in a manner that is in breach of the terms and
conditions of this Agreement.

(d) Conditions. The Parties’ indemnification obligations under this Section 8
are contingent upon: (i) the Indemnified Party giving prompt written notice to
the Indemnifying Party of any claim under Section 8(a) and 8(b) (provided,
however, that failure to give such notification shall not affect the
indemnification provided thereunder except to the extent, and only to the
extent, that the Indemnifying Party shall have been actually prejudiced as a
result of such failure), and (ii) at the Indemnifying Party’s request and
expense, the Indemnified Party cooperating in the investigation and defense of
such claim(s). The Indemnified Party shall be entitled to participate in (but
not control) such investigation and/or defense and to retain its own counsel, at
its own expense. The Indemnifying Party shall not settle or consent to an
adverse judgment in any such claim that adversely affects the rights or
interests of the Indemnified Party or imposes additional obligations on the
Indemnified Party, without the prior express written consent of the Indemnified
Party which consent shall not be unreasonably withheld.

9. LIMITATION OF LIABILITY

EXCEPT FOR BREACHES OF SECTION 6 (CONFIDENTIALITY), UNDER NO CIRCUMSTANCES WILL
EITHER PARTY BE LIABLE TO THE OTHER PARTY, UNDER ANY CONTRACT, STRICT LIABILITY,
NEGLIGENCE OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOST PROFITS OR COST OF PROCUREMENT OF
SUBSTITUTE GOODS OR SERVICES IN CONNECTION WITH THE SUBJECT MATTER OF THIS
AGREEMENT HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, INCLUDING BUT NOT
LIMITED TO CONTRACT OR TORT AND WHETHER OR NOT SUCH PARTY WAS OR SHOULD HAVE
BEEN AWARE OR ADVISED OF THE POSSIBILITY OF SUCH DAMAGE AND NOTWITHSTANDING THE
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY STATED HEREIN. EXCEPT FOR
BREACHES OF SECTION 6 (CONFIDENTIALITY), IN NO EVENT SHALL EACH PARTY’S
LIABILITY ARISING OUT OF THIS AGREEMENT EXCEED [***]. THE PARTIES AGREE THAT
THIS SECTION 9 REPRESENTS A REASONABLE ALLOCATION OF RISK.

10. TERM AND TERMINATION

(a) Term of Agreement. Unless otherwise terminated as provided herein, this
Agreement shall be effective upon the Effective Date and shall remain in force
until March 31, 2012 (“Term”) unless earlier terminated pursuant to the
provisions of Section 10(b) or (c).

 

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(b) Termination for Cause. This Agreement may be terminated by a Party for cause
immediately upon the occurrence of and in accordance with the following:

(i) Insolvency Event. Either Party may terminate this Agreement by delivering
written notice to the other Party upon the occurrence of any of the following
events: (1) a receiver is appointed for the other Party or its property; (2) the
other Party makes a general assignment for the benefit of its creditors; (3) the
other Party commences, or has commenced against it, proceedings under any
bankruptcy, insolvency or debtor’s relief law, which proceedings are not
dismissed within sixty (60) calendar days; or (4) the other Party is liquidated
or dissolved.

(ii) Default. Either Party may terminate this Agreement effective upon written
notice to the other Party if the other Party violates any covenant, agreement,
representation or warranty contained herein in any material respect or defaults
or fails to perform any of its obligations or agreements hereunder in any
material respect, which violation, default or failure is not cured within thirty
(30) calendar days after written notice thereof from the non-defaulting Party
stating its intention to terminate this Agreement by reason thereof.

(c) Termination for Convenience. Any time beginning on May 1, 2011, TMC may
terminate this Agreement effective upon written notice to Tesla at any time by
bearing all reasonable, actual and documented development costs incurred by
Tesla up to such point less Fees already paid by TMC pursuant to Section 5, and
upon such termination, Tesla shall deliver all in-development products to TMC.

(d) Survival of Rights and Obligations Upon Termination. Sections 1, 2(i), 3,
4(b), 4(c), 4(d), 5 (but solely for payments accrued as of the date of
termination), 6, 7, 8, 9, 10(d), and 11 shall survive termination or expiration
of this Agreement.

11. MISCELLANEOUS

(a) Force Majeure. Except with regard to the payment of money, neither Party
shall be responsible for any delays caused by acts of God or any other cause
beyond its reasonable control, including but not limited to such things as
strikes, riots, acts of war, material shortages, restricting legislation,
embargo, blockage, work stoppage, major outage of a public communications
carrier, etc. Any delay caused by one Party which affects the other Party’s
ability to perform its obligations according to the terms of this Agreement
shall extend the non-delaying Party’s obligation to perform by the same number
of calendar days by which the delaying Party delayed in performing its
obligations.

(b) Further Assurances. Each Party agrees to cooperate fully with the other
Party and to execute such further instruments, documents and agreements and to
give such further written assurances, as may be reasonably requested by the
other Party, to better evidence and reflect the transactions described in and
contemplated by this Agreement, and to carry into effect the intents and
purposes of this Agreement.

 

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(c) No Exclusivity. The relationship contemplated in this Agreement is
non-exclusive and each Party reserves the right to enter into arrangements with
third parties

(d) Compliance with Laws. Each Party warrants that in performance of work under
this Agreement it has complied with or shall comply with all applicable
national, federal, state, local laws and ordinances now or hereafter enacted
including, but not limited to export laws and regulations.

(e) Relationship of Parties. The Parties are independent contractors under this
Agreement and no other relationship is intended, including a partnership,
franchise, joint venture, agency, employer/employee, fiduciary, master/servant
relationship, or other special relationship. Neither Party shall act in a manner
that expresses or implies a relationship other than that of independent
contractor, nor bind the other Party.

(f) No Third Party Beneficiaries. Unless otherwise expressly provided for, no
provisions of this Agreement are intended or shall be construed to confer upon
or give to any person or entity other than TMC and Tesla (and their authorized
assignees under Section 11(j)) any rights, remedies or other benefits under or
by reason of this Agreement.

(g) Announcement; No Trademark Licenses. The Parties agree that no initial
announcement or other public disclosure of the existence or terms of this
Agreement, unless required by law, shall be made until the Parties have agreed
upon the text of and issued an appropriate joint press release announcing this
Agreement. Moreover, neither Party shall have any right or license to use the
trademarks, service marks or logos of the other Party for any purpose without
first obtaining written consent of the other Party from an authorized
representative thereof.

(h) Equitable Relief. Each Party acknowledges that a breach by the other Party
of any confidentiality or proprietary rights provision of this Agreement may
cause the non-breaching Party irreparable damage, for which the award of damages
would not be adequate compensation. Consequently, the non-breaching Party may
institute an action to enjoin the breaching Party from any and all acts in
violation of those provisions, which remedy shall be cumulative and not
exclusive, and the non-breaching Party may seek the entry of an injunction
enjoining the breaching Party from any breach or threatened breach of those
provisions, in addition to any other relief to which the non-breaching Party may
be entitled at law or in equity.

(i) Notices. Any notice required or permitted to be given by either Party under
this Agreement shall be in writing and shall be personally delivered or sent by
a reputable overnight mail service (e.g., Federal Express), or by first class
mail (certified or registered), or by facsimile confirmed by first class mail
(registered or certified), to the Project Manager of the other Party. Notices
will be deemed effective (i) three (3) Business Days after deposit, postage
prepaid, if mailed, (ii) the next day if sent by overnight mail, or (iii) the
same day if sent by facsimile and confirmed as set forth above. A copy of any
notice shall be sent to the following:

 

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TMC

  Tesla Toyota Motor Corporation Tesla Motors, Inc.   Tesla Motors, Inc. 1,
Toyota-cho, Toyota City   3500 Deer Creek Road Aichi Prefecture 471-8571   Palo
Alto, CA 94304 Japan   U.S.A

Attn: General Manager,

 

BR-Electric Drive Vehicles Project Dept

  Attn: Legal Department

Fax: +81-565-23-5714

  Fax: +1 (650) 701-2613

(j) Assignment. A Party may not assign its rights or delegate its obligations
hereunder, either in whole or in part, whether by operation of law or otherwise,
without the prior written consent of the other Party, provided however that no
such consent shall be required for an assignment of this Agreement in the case
of a merger, reorganization or in whole or part in connection with the sale or
transfer of all or substantially all of the relevant assets of the assigning
Party’s assets or equity. Any attempted assignment or delegation without the
other Party’s written consent will be void. The rights and liabilities of the
Parties under this Agreement will bind and inure to the benefit of the Parties’
respective successors and permitted assigns.

(k) Waiver and Modification. Failure by either Party to enforce any provision of
this Agreement will not be deemed a waiver of future enforcement of that or any
other provision. Any waiver, amendment or other modification of any provision of
this Agreement will be effective only if in writing and signed by the Parties.

(l) Severability. If for any reason a court of competent jurisdiction finds any
provision of this Agreement to be unenforceable, that provision of this
Agreement will be enforced to the maximum extent permissible so as to implement
the intent of the Parties, and the remainder of this Agreement will continue in
full force and effect.

(m) Governing Law and Jurisdiction. This Agreement and any action related hereto
shall be governed, controlled, interpreted and defined by and under the laws of
the State of California and the United States, without regard to the conflicts
of laws provisions thereof. The exclusive jurisdiction and venue of any action
with respect to the subject matter of this Agreement shall be the state courts
of the State of California for the County of Santa Clara or the United States
District Court for the Northern District of California and each of the Parties
submits itself to the exclusive jurisdiction and venue of such courts for the
purpose of any such action. The Parties specifically disclaim the UN Convention
on Contracts for the International Sale of Goods.

(n) Headings. Headings used in this Agreement are for ease of reference only and
shall not be used to interpret any aspect of this Agreement.

(o) Entire Agreement. This Agreement, including all exhibits which are
incorporated herein by reference, constitutes the entire agreement between the
Parties with respect to the subject matter

 

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hereof, and supersedes and replaces all prior and contemporaneous understandings
or agreements, written or oral, regarding such subject matter.

(p) Counterparts. This Agreement may be executed in two (2) counterparts, each
of which shall be an original and together which shall constitute one and the
same instrument.

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IN WITNESS WHEREOF, the Parties have executed this Agreement by persons duly
authorized as of the date and year first above written.

 

By:  

/s/ S. Terashi

    By  

/s/ JB Straubel

Name:   Shigeki Terashi     Name:   JB Straubel Title:   Managing Officer    
Title:   Chief Technical Officer Date:  

Oct. 6, 2010

    Date:  

Oct. 6th, 2010

 

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Exhibit A

Tesla Background Technology

Tesla Background Technology includes, without limitation, all of the Tesla
Background Technology related to the following Tesla developed Technologies:

[***]

 

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Exhibit B

Powertrain Technology

[***]

 

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Exhibit C

Non-Powertrain Technology

[***]

 

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