Exhibit 10.2

Confidential Treatment Requested by Tesla Motors, Inc.

CONFIDENTIAL

GENERAL TERMS AND CONDITIONS

These General Terms and Conditions (“General Terms”) are entered into effective
as of October 1, 2014 (“Effective Date”) by and between Tesla Motors, Inc., a
Delaware corporation located at 3500 Deer Creek Road, Palo Alto, California,
94304 (“Tesla”), on the one hand, and Panasonic Corporation (“Seller”), on the
other hand. Each Tesla and Seller entity is referred to herein as a “Party” and
such entities are collectively referred to herein as the “Parties.”

PURPOSE

Tesla desires to engage Seller to develop, supply, and support products for use
in Tesla Products and, in connection with that purpose, Seller desires to lease
space within a manufacturing facility owned by Tesla (the “Factory”). These
General Terms shall govern the relationship of the Parties.

 

1. Production Planning and Order Process.

 

1.1 Production Planning.

 

  (a) Each month during the Term, Tesla will provide a rolling monthly forecast
of its anticipated requirements for Goods for the following periods of time: (i)
for the next [***] for each forecast provided until Seller has invested in
Seller’s Property required for Seller’s manufacture, supply and/or provision of
Goods at the Factory in volumes up to an annual aggregate energy capacity of
thirty-five gigawatt-hours (35 GWh); and (ii) for the next [***] for each
forecast provided thereafter. Tesla’s forecast is non-binding and provided for
planning purposes only. At a monthly meeting led by Tesla (“Production
Meeting”), the Parties shall review in good faith Tesla’s forecast, the supply
chain and other requirements to manufacture per Tesla’s forecast, any potential
or actual constraints on Seller’s ability to manufacture Goods in accordance
with Tesla’s forecast, and other business- and production-related issues. The
Parties may also mutually agree to invite sub-suppliers that are colocated at
the Factory to attend the Production Meeting. The Parties will then establish a
production plan and/or update the existing production plan for manufacture and
delivery of Goods based on the applicable Lead Time(s). Seller shall not
withhold, condition or delay its consent to Tesla’s proposed production plan if
Seller is capable of meeting Tesla’s forecast, based on such factors as supply
chain constraints, labor constraints, and the performance capability of the
Property. The agreed plan is the “Production Plan.” The Parties may agree in
writing to adjust the Production Plan at any time.

 

  (b) At the Production Meeting, the Parties shall also discuss in good faith
(i) Seller’s progress in achieving the operational targets set forth in the
Contract and the Production Plan, (ii) Seller’s proposed procurement,
transportation, installation, or configuration at the Factory of Seller’s
Property in connection with the Contract and the Production Plan, and (iii)
additional topics proposed by Tesla and/or Seller. Seller shall not invest in
Seller’s Property without Tesla’s prior written consent for each investment. For
clarification, each investment by or for Seller in Seller’s Property required
for Seller’s manufacture, supply and/or provision of Goods at the Factory for
Tesla will be subject to a separate written agreement between the Parties and
Seller will not be obliged to make any such investment without the separate
written agreement.

 

  (c) Except as otherwise agreed in writing by Tesla and Seller, the Parties
shall, for the purpose of exploring the cost effectiveness of the Goods,
simplifying logistics, reducing Lead Time, and other agreed reasons, use
Commercially Reasonable Efforts to cause Seller’s sub-suppliers required for
production of Goods at the Factory to establish operations at the Factory on or
around the mutually-agreed timing. For the avoidance of doubt, Tesla
acknowledges that Seller cannot guarantee that its sub-suppliers will agree to
establish operations at the Factory.

 

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1.2 Offer. The Authorized Purchasers will issue one or more Purchase Orders in
accordance with the approved Production Plan and (unless agreed otherwise) at
least [***], specifying quantities and delivery days for Goods as contemplated
therein (each such order is a “Production Order”). The Authorized Purchasers may
also issue Purchase Orders to Seller for Goods, including development parts
(each such order is a “Discrete Order”). Purchase Orders will be issued on a
rolling basis [***]. Purchase Orders accepted by Seller are binding to the
extent set forth in Section 1.5.

 

1.3 Acceptance. Seller shall accept or reject each Purchase Order as
follows: [***] after receipt of a Production Order which conforms to the
Production Plan; and [***] after receipt of either a Discrete Order or a
Production Order which does not conform to the Production Plan. If Seller cannot
meet the terms set forth in a Purchase Order, Seller will inform Tesla and
propose alternative terms. If Tesla accepts such alternative terms, Tesla shall
issue a revised Purchase Order that includes such alternative terms. Alternative
terms are expressly rejected unless incorporated into a Purchase
Order. Notwithstanding the foregoing, Seller may only reject a Production Order
to the extent it fails to conform to the terms of the Production Plan, and
Seller shall be deemed to have waived any objections and accepted the Production
Order if Seller fails to object in writing within the timeframe specified
above. Seller’s acceptance of a Purchase Order is referred to as the
“Acceptance”.

 

1.4 Terms of the Contract. Upon Seller’s Acceptance, the terms of the relevant
Purchase Order, together with the terms in the other relevant Contract
Documents, will become a binding contract between Tesla and Seller (each, a
“Contract”). Acceptance is expressly limited to the terms provided by the
Contract. Terms in any invoice and any other modifications, counterproposals, or
counteroffers proposed by Seller to a Purchase Order are expressly rejected and
shall not become part of the Contract.

 

1.5 Purchase Order Liability. Tesla may, at any time and without any liability
to Seller, adjust the volume(s) of Goods under any Contract, up or down, as
follows upon written notice: (a) by up to [***] for Goods to be delivered [***]
after the date of Tesla’s notice, provided that such timeframe is within the
applicable Lead Time and such timeframe shall be increased by the period of time
reasonably required for Seller to ship materials from its current offshore
suppliers (not to exceed a total of [***]) (for example, by giving notice on
January 15, Tesla may adjust the volume of Goods to be delivered between [***];
(b) [***] after the date of Tesla’s notice, provided that such timeframe is
within the applicable Lead Time and such timeframe shall be increased by the
period of time reasonably required for Seller to ship materials from its current
offshore suppliers (not to exceed a total of [***]) (for example, by giving
notice on January 15, Tesla may adjust the volume of Goods to be delivered
between [***]; and (c) [***], subject only to Seller’s actual capacity, labor
constraints and supply chain constraints, for Goods to be delivered after the
period of time following such notice that is equal to the applicable Lead
Time. Seller shall be deemed to automatically consent to any such adjustment
pursuant to this Section 1.5 without the need for a written consent.

 

1.6 Purchase Commitment. Tesla will commit to purchase all conforming and
non-defective Goods during the Term and pursuant to the Production Plan up to an
annual aggregate energy capacity of thirty-five gigawatt-hours (35 GWh);
provided, however, that: (a) [***]; (b) the Goods [***]; and (c) market
conditions support the purchase of Goods in volumes contemplated by the
Production Plan, but without limiting Tesla’s commitments in written agreements
between the Parties for investments in Seller’s Property as contemplated in
Section 1.1(b).

 

2. Goods.

 

2.1 Quantity. Quantities and delivery dates shall be as stated in the applicable
Purchase Order accepted by Seller, unless otherwise agreed to in writing by the
Parties. If Seller has reason to believe that its ability to deliver any Goods
is or may be constrained, Seller shall [***] notify Tesla setting forth the
cause for the anticipated delay. Any oral communication shall be [***] confirmed
in writing.

 

2.2 Changes.

 

  (a)

Seller shall not make any change to: (i) the Goods without Tesla’s prior written
consent, which Tesla may withhold in its sole but reasonable discretion; (ii)
its manufacturing process in a manner that could result in non-conforming or
defective Goods or that could impact operations at the Factory of one or more
other companies (i.e. Tesla and/or a colocated sub-supplier) without Tesla’s
prior written

 

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  consent, which Tesla will not unreasonably withhold; and (iii) its suppliers
in a manner that could result in non-conforming or defective Goods or that could
impact operations at the Factory of one or more other companies (i.e. Tesla
and/or a colocated sub-supplier) without prior written notice to Tesla, provided
that (A) Seller shall consider any objections by Tesla in good faith and discuss
the proposed change with Tesla in good faith, and (B) Seller shall not make any
such change that will, or is reasonably likely to, adversely affect any of the
following with respect to the Goods: [***].

 

  (b) [***]. If [***], Seller shall use Commercially Reasonable Efforts to
notify Tesla in writing within [***] after receipt of such request or proposal
and prior to making the change if such change will affect [***], and Seller
shall also provide the basis for such determination. If Seller proposes a change
hereunder, Tesla will use Commercially Reasonable Efforts to respond to Seller’s
proposal within [***]. Tesla and Seller will negotiate in good faith on [***] in
connection with [***], but the [***] shall not [***] due to [***] unless
[***]. For clarification, Seller is not obliged to make such change requested or
proposed by Tesla unless [***] or other appropriate [***] in connection with
such change is agreed between the Parties in writing.

 

2.3 [***]. Tesla may propose that Seller [***]. In such case, Seller will
discuss with Tesla and consider such proposal in good faith.

 

2.4 Tesla Responsibilities. 

 

  (a) In order to facilitate Seller’s performance of its obligations under the
Contract, Tesla will perform those tasks and fulfill those responsibilities of
Tesla (including, as applicable, provision of Tesla-Supplied Items) as expressly
set forth in these General Terms and/or the Contract (“Tesla
Responsibilities”). Seller’s performance of its obligations may be dependent in
some circumstances on Tesla’s timely and effective performance of the Tesla
Responsibilities and timely decisions and approvals by Tesla.

 

  (b) Tesla’s failure to perform any of the Tesla Responsibilities (or cause
them to be performed) will not constitute grounds for termination by Seller
except as provided in Section 13.3 (Termination); provided, however, that
Seller’s nonperformance of its obligations under these General Terms and/or the
Contract will be excused if and to the extent (i) such nonperformance results
from Tesla’s failure to perform any Tesla Responsibilities, and (ii) Seller
provides Tesla with reasonable notice of such nonperformance and, if requested
by Tesla, uses Commercially Reasonable Efforts to perform notwithstanding
Tesla’s failure to perform. If Seller’s use of Commercially Reasonable Efforts
to perform its obligations in such a circumstance would cause Seller to incur
significant uncompensated expenses, Seller may notify Tesla. In that case,
Seller’s obligation to continue its efforts to work around Tesla’s failure to
perform Tesla Responsibilities will be subject to Tesla agreeing to reimburse
Seller for its actual, reasonable and incremental uncompensated expenses. The
Parties shall also discuss in good faith Seller’s actual and reasonable
out-of-pocket costs and expenses caused by Tesla’s failure to perform any Tesla
Responsibility (e.g. loss of material, increased labor costs) and, subject to
Section 12 (Liability), Tesla will be responsible for reimbursing such costs and
expenses which Seller cannot mitigate or avoid using Commercially Reasonable
Efforts.

 

  (c) From time to time, Tesla may provide Seller with access to proprietary
computer systems and technologies owned and operated by Tesla and/or its
Affiliates (the “Systems”) to facilitate the performance of Seller’s obligations
under the Contract. Seller is not obliged to use the Systems unless agreed by
Seller in writing. Seller will only use the Systems for the business purposes of
Tesla. Tesla may periodically monitor all uses of the Systems as allowed by law
and review user access records maintained by Seller. To the maximum extent
permitted by applicable Law, Seller’s users will have no expectation of privacy
in connection with their use of the Systems. Seller shall be solely responsible
for obtaining and maintaining the hardware and software it uses which are
necessary to properly access the Systems and perform its obligations under the
Contract.

 

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3. Delivery.

 

3.1 Packing and Shipment. Tesla may specify the method of transportation and the
type and number of packing slips and other documents to be provided with each
shipment. The Parties shall discuss in good faith and agree on the manner in
which Seller will pack and ship Goods, including labeling and hazardous
materials instructions. If Tesla has not provided packing or shipping
instructions, Seller will pack and ship Goods in accordance with industry
standards (with reference to the lithium-ion battery cell industry). If Seller
is required to use Tesla’s returnable packaging, the Parties will discuss in
good faith the responsibility for cleaning and maintaining such returnable
packaging.

 

3.2 Delivery Terms. Seller will deliver Goods in strict accordance with the
Contract terms. Unless otherwise stated in the Contract, Goods will be delivered
[***] and title and risk of loss will transfer upon receipt of the Goods by
Tesla.

 

3.3 Time is of the Essence. TIME IS OF THE ESSENCE AS TO DELIVERY OF ALL
GOODS. If Seller does not deliver any Goods in accordance with the Production
Plan then, subject to Sections 2.4 (Tesla Responsibilities) and 12.2 (Force
Majeure) and except for any other cause attributable to Tesla, Seller shall be
in Default. In addition to any other obligations to which Seller shall be
subject to under the Contract, if Seller cannot meet the delivery dates and/or
quantities of Goods specified in the Contract, Seller will promptly notify Tesla
and the Authorized Purchaser and: (a) Seller shall provide substitute goods at
the agreed price in the Contract from its operations at the Factory or
elsewhere; and (b) if Seller cannot provide substitute goods within a reasonable
time, the Authorized Purchaser may cancel any remaining portion(s) of the
relevant Contract(s) without liability to Seller, in which case the required
volumes set forth in writing between the Parties (e.g. Production Plan) shall be
reduced.

 

3.4 Over-Shipments. If Seller delivers more Goods than specified in an Order,
the Parties shall discuss the over-shipment in good faith and Seller shall, at
its sole discretion, either: (a) accept the return of the Goods delivered in
excess of the Order [***] (the “Excess Goods”), or (b) allow the Authorized
Purchaser to retain the Excess Goods [***], in which case the Authorized
Purchaser may also in its sole discretion reduce the quantities for future
deliveries under the Production Plan and under its Order(s) by the quantity of
Excess Goods.

 

3.5 [***]. During the Term, Seller shall not [***] Goods which are manufactured
at the Factory, [***] unless: (a) Tesla gives prior written consent, which Tesla
may withhold in its sole but reasonable discretion; and (b) [***], as reasonably
determined by both Parties based on a good faith discussion, [***]. Prior to
[***] under this Section, Tesla shall, as reasonably requested by Seller,
provide to Seller the information reasonably required for Seller to comply with
sub-paragraph (b) above, including, the [***].

 

4. Invoicing and Payment.

 

4.1 [***]. Seller shall provide Tesla [***]. Such information shall be deemed to
be Seller’s Highly Confidential Information under the NDA.

 

4.2 Pricing. The pricing and pricing methodology applicable to the Goods shall
be set forth in the then-current Pricing Agreement.

 

4.3 Invoicing. Invoices will be in the currency specified in the Pricing
Agreement, unless otherwise agreed, and will be sent to Tesla’s Accounts Payable
Department as reasonably directed by Tesla. The invoice will detail the Goods
for which payment is being requested, and the applicable Purchase Order
number. Charges associated with shipping for which Tesla is responsible will be
invoiced separately.

 

4.4 Payment. Except as otherwise provided in the Contract, Tesla will pay
Seller’s charges [***] days after receipt of each invoice; provided, however,
that (i) Tesla may withhold payment of any invoiced charges that Tesla disputes
in good faith; (ii) payment of any charges shall not be deemed an approval of
such charges or acceptance of non-conforming Goods, and Tesla or the Authorized
Purchaser may later dispute such charges; and (iii) Tesla’s or the Authorized
Purchaser’s payment of charges shall not relieve Seller of any of its warranties
or other obligations under the Contract. If any Authorized Purchaser is
repeatedly late or early in making payment, the Parties shall discuss in good
faith whether to adjust the then-current payment terms and pricing methodology.

 

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4.5 [***]. If any Authorized Purchaser fails to pay undisputed amounts due in a
timely manner which are in a material amount, Seller may give notice to Tesla
and the Parties shall within a reasonable time discuss in good faith at a
meeting with senior representatives of both Parties. If the Authorized Purchaser
fails to pay promptly after the meeting, [***] until Tesla or the Authorized
Purchaser pays the undisputed amounts in full which are past due.

 

4.6 Credits; Customs. Credits or benefits related to taxes and export/import
duties resulting from the Contract, including trade credits, export credits or
the rights to the refund of duties, taxes, or fees, belong to Tesla unless
otherwise prohibited by applicable law. Seller shall retain all information
related to the Goods and/or materials therefor (as applicable) as required by
United States and any other applicable customs authorities, and shall provide
all such information and certificates related to the Goods and/or materials
therefor (as applicable) (including NAFTA Certificates of Origin) necessary to
permit Tesla to receive these benefits or credits. Seller will provide Tesla
with all information and records relating to the Goods necessary for Tesla to:
(a) receive these benefits, credits, and rights; (b) fulfill any customs
obligations, origin marking or labeling requirements, and certification or local
content reporting requirements; (c) claim preferential duty treatment under
applicable trade preference regimes; and (d) participate in any duty deferral or
free trade zone programs of the country of import. If and to the extent
applicable, Seller (or, if applicable, its supplier) will obtain export licenses
and authorizations and pay export taxes, duties, and fees related to the Goods
and/or materials therefor (as applicable) which are imposed, levied or otherwise
payable prior to delivery of such Goods and/or materials (as applicable) to the
Authorized Purchaser unless otherwise stated in the Contract, in which case
Seller will provide all information and records necessary to enable Tesla to
obtain those export licenses or authorizations.

 

4.7 Taxes. 

 

  (a) This Section 4.7 sets forth the allocation of responsibility between the
Parties for taxes arising out of or in relation to these General Terms and each
Contract.

 

  (b) Unless otherwise stated in the Contract, including the then-current
Pricing Agreement, the Contract price includes all applicable federal, state,
provincial, and local taxes other than sales, value added, or similar turnover
taxes or charges. The Goods purchased from Seller are for resale which is exempt
from all sales, use, value added or similar taxes, and Seller will not charge
sales, use, value added or similar taxes on its invoices to Tesla for Goods
provided that Tesla has provided Seller a valid resale certificate for Seller’s
records. If Seller is required by law to pay or collect from Tesla any taxes or
charges, Seller will separately invoice Tesla for such taxes or charges subject
to Section 4.6 (Credits).

 

  (c) Subject to Section 4.8(b) above, each Party will remain responsible for
and shall pay (without reimbursement) any and all taxes that are assessed on any
goods or services used or consumed by such Party (or its Affiliates) in
performing its obligations under the Contract where the tax is imposed on such
Party’s (or its Affiliates’) acquisition or use of the goods or services in the
performance of such obligations, and other personal property taxes on property
owned or leased by such Party (or its Affiliates) unless otherwise expressly
provided in the Contract.

 

  (d) Each Party shall be responsible for any: (i) taxes on its (or its
Affiliates’) revenue, net income or gross receipts; (ii) franchise, business and
occupational taxes (or similar in nature) on its business activities, and (iii)
employer-related taxes with respect to its personnel (e.g. employee taxes,
workers compensation and unemployment insurance).

 

  (e) The Parties agree to cooperate with each other to enable each to more
accurately determine its own tax liability and to minimize such liability to the
extent legally permissible.

 

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5. Product Warranties.

 

5.1 Product Warranties.

 

  (a) Seller represents and warrants to Tesla and the relevant Authorized
Purchaser(s) that: (i) during a period ending [***] from the date of Seller’s
[***] of the Goods, the Goods will be free from defects in design, workmanship
and material and will comply with the Specifications, and (ii) during the period
ending [***] after the date of Seller’s [***] of the Goods, the Goods shall
[***] (which may include [***] under the agreed conditions) (the foregoing
timeframes are, as applicable, the “Warranty Period”). Tesla hereby acknowledges
and agrees that if Goods are not defective and/or comply with the applicable
Specifications, it does not mean that a Tesla battery pack, Module and/or Tesla
Product cannot be defective for some other reason, including, without
limitation, improper design or manufacturing by Tesla or a third party.

 

  (b) Exclusions. Notwithstanding anything herein to the contrary, the
warranties in Section 5.1(a) will not apply to damage or Non-Conformities in
Goods to the extent caused by any of the following:

 

  (i) the design, manufacture and/or function of the overall system, equipment
and/or goods of which the Goods are part (e.g. Module, Tesla Product);

 

  (ii) accident or act of God;

 

  (iii) [***];

 

  (iv) misuse, neglect, abuse, mishandling, misapplication, modification,
alteration by Tesla, the relevant Authorized Purchaser or any third party, or
improper installation, service, operation, storage, shipment, testing, checkout
or maintenance by Tesla, the relevant Authorized Purchaser or any third party;

 

  (v) failure by Tesla, the relevant Authorized Purchaser or any third party to
follow (A) the reasonable instructions, cautions, warnings, and notes set forth
in the Specifications, and/or (B) any other reasonable direction from Seller;

 

  (vi) [***] in a Good due to any cause other than [***]; or

 

  (vii) [***] in a Good due to any cause other than [***].

 

5.2 New Items; Title. Seller further represents and warrants to Tesla and the
Authorized Purchasers that, upon delivery to the Authorized Purchaser, the Goods
will: (i) be new (and not refurbished), unless expressly approved otherwise in
writing by Tesla in each case; and (ii) be free and clear of any and all liens,
security interests, and encumbrances of any nature, with title vesting solely in
the Authorized Purchaser.

 

5.3 Inspection. The Authorized Purchaser will inspect each shipment of Goods
within [***] after receipt, using Commercially Reasonable Efforts to evaluate
whether the Goods conform to the warranties set forth herein (including [***])
within [***] after receipt.

 

5.4 Procedure. If an Authorized Purchaser gives written notice during the
Warranty Period in good faith that Goods fail to conform to any of the
warranties in Section 5.1 (as applicable, a “Non-Conformity”):

 

  (a) The Authorized Purchaser will, if requested by Seller, provide all
available information regarding the alleged Non-Conformity in the Goods,
including: [***] of the Tesla battery pack and/or Module;

 

  (b) Seller may require return of the Goods and/or inspect the Goods to verify
the existence of a Non-Conformity [***];

 

  (c) Tesla shall use Commercially Reasonable Efforts to support Seller’s
verification of the existence of a Non-Conformity, and the Parties shall discuss
the alleged Non-Conformity in good faith;

 

  (d) In the event of a disagreement or dispute as to the existence of a
Non-Conformity, the Parties will [***] and whether such Non-Conformity resulted
from a breach of Seller’s warranties as set forth in Section 5.1(a);

 

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  (e) Seller shall, within [***], provide replacement conforming Goods which are
new (and not refurbished) for each Good which has a Non-Conformity as follows
unless otherwise agreed in writing between the Parties: (i) for each such Good
[***]; and (ii) for each such Good [***]. If Tesla and Seller agree based on a
good-faith discussion that the affected Good has a Non-Conformity, Panasonic
shall replace the Good in accordance with the foregoing. If Tesla and Seller do
not agree based on a good-faith discussion whether the affected Good has a
Non-Conformity and Seller does not establish that the Good is free of any
Non-Conformity either within [***] after the Authorized Purchaser’s notice or a
longer time approved in writing by the Authorized Purchaser in its sole but
reasonable discretion, [***]. If Seller establishes that the affected Good does
not have a Non-Conformity within the timeframe referenced above (i.e. [***] or
an approved longer period), Seller will not be obligated to replace the Good
under this Section 5.

 

  (f) Any replacement pursuant to this Section 5 shall be [***] and, subject to
Section 5.9 [***] below, (A) the replacement shall be [***], and (B) [***]; and

 

  (g) If Seller instructs Tesla in writing to destroy and/or recycle any Goods
with an actual or alleged Non-Conformity, Seller shall [***].

 

5.5 Future Performance. All representations and warranties of Seller extend to
future performance of the Goods during the Warranty Period and are not modified,
waived or discharged by delivery, inspection, tests, acceptance or
payment. Tesla’s approval of any design, drawing, material, process or
specifications in good faith will not relieve Seller of these representations
and warranties. The warranties set forth in this Section 5 shall survive
acceptance and payment by Tesla and the termination or expiration of the
Contract.

 

5.6 Application of Warranties. Seller agrees that the warranties set forth in
this Section 5 extend to all Goods, notwithstanding the fact that such Goods
delivered to Authorized Purchasers under the Contract may be produced, in whole
or in part, by any of Seller’s divisions, parent, subsidiaries, Affiliates, or
suppliers and, therefore, such warranties shall not be disclaimed or otherwise
limited in any way merely due to the fact that any Goods have been produced by
any such entity.

 

5.7 Disclaimer. THE WARRANTIES SET FORTH IN THESE GENERAL TERMS ARE EXCLUSIVE
AND ARE IN LIEU OF ALL OTHER WARRANTIES WITH RESPECT TO THE GOODS, WHETHER
ARISING FROM A COURSE OF DEALING, COURSE OF PERFORMANCE OR TRADE USAGE, OR
WHETHER ORAL, WRITTEN, EXPRESS, IMPLIED OR STATUTORY, ALL OF WHICH ARE HEREBY
WAIVED BY TESLA, AUTHORIZED PURCHASERS AND SELLER. THE EMPLOYEES AND AGENTS OF
EACH PARTY ARE NOT AUTHORIZED TO MAKE MODIFICATIONS TO SUCH WARRANTIES, OR
ADDITIONAL WARRANTIES BINDING ON SUCH PARTY; ACCORDINGLY, ADDITIONAL STATEMENTS,
WHETHER ORAL OR WRITTEN, DO NOT CONSTITUTE WARRANTIES AND SHOULD NOT BE RELIED
UPON BY THE OTHER PARTY. FOR THE AVOIDANCE OF DOUBT, TESLA UNDERSTANDS THAT THE
GOODS [***] (I) [***], (II) [***], OR (III) ANY OTHER CONDITIONS DIFFERENT FROM
THOSE FOR WHICH THE GOODS WERE ORIGINALLY DESIGNED, AND THAT TESLA SHOULD TAKE
PROPER STEPS TO [***]. NO ACTION, SUIT OR ARBITRATION SHALL BE BROUGHT ON AN
ALLEGED BREACH OF THE WARRANTIES SET FORTH IN THESE GENERAL TERMS MORE THAN
[***] MONTHS FOLLOWING THE EXPIRATION OF THE APPLICABLE WARRANTY PERIOD.

 

5.8 Quality Plan Requirements and Approval.

 

  (a) Seller will supply Goods in accordance with a mutually-agreed quality plan
(“Quality Plan”) which is developed during the design development process,
during the Production Part Approval Process (PPAP), and/or as listed in the
applicable Specifications. Only after the Quality Plan for the Goods is approved
by Tesla shall the Goods be allowed to be shipped for use in Tesla
Products. Seller shall submit a mutually-agreed quantity of samples of a
standard production run of Goods to Tesla per a mutually-agreed Quality
Plan. The responsibility for the cost and expense of such samples will be
determined by the mutual agreement between the Parties.

 

  (b) As part of the Quality Plan and during PPAP, (i) the Parties shall include
[***] in the Specification for each Good as related to [***], and (ii) [***].

 

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  (c) Seller shall also provide Tesla with the following: for any process change
subsequent to the initial PPAP, Seller shall submit a Process Change Request
(“PCR”) explaining the requested change and providing a report summarizing
Seller’s testing and validation processes for the requested change. Seller shall
also submit to Tesla for evaluation a mutually-agreed quantity of samples of the
Goods incorporating the PCR features, produced on mass production equipment. The
responsibility for the cost and expense of such samples will be determined by
the mutual agreement between the Parties. Only after the PCR is submitted and
approved by Tesla shall the Goods be allowed to be shipped for use in Tesla
Products.

 

  (d) Seller agrees that the Goods shall conform to the Quality Requirements
attached hereto as Exhibit 1.

 

5.9 [***]. If, with respect to Goods, Modules and/or Tesla Products, [***],
Seller shall be liable for the [***]. Notwithstanding the foregoing, Seller
shall not be liable under this paragraph to the extent that [***]. Seller’s
liability set forth in [***] and in no event shall Seller be liable for any lost
goodwill, profit, revenue or savings in connection with [***]. To the extent
permitted by applicable law, Tesla shall (a) notify Seller promptly after
becoming aware of [***] in connection with the [***], to the extent related to
the Goods, (b) consult with Seller in good faith regarding such [***], and
(c) provide such information as reasonably requested by Seller from time to time
with respect to the [***]. Seller shall not be responsible or liable for [***]
if (A) the affected Goods were [***], as determined by the Agreed Tests; or (B)
[***] was caused by [***]; or (C) [***] occurred more than [***] after the
delivery of such affected Goods to the Authorized Purchaser.

 

5.10 Corrective Action. Seller will promptly notify Tesla in writing if Seller
becomes aware of any ingredient, component, design or defect in the Goods that
is or may become harmful to persons or property or fails to meet the
Specifications or other requirements of the Contract. Seller will promptly
develop, document and implement corrective actions in accordance with all
mutually-agreed quality control policies and standards, including by:
(a) promptly investigating and reporting on the root cause of the problem;
(b) remedying the cause of the problem for future production and resuming
performance in accordance with the Contract; (c) implementing and notifying
Tesla of measures taken by Seller to prevent recurrences if the problem is
otherwise likely to recur; and (d) making written recommendations to Tesla for
improvements in procedures.

 

6. Representations and Warranties.

 

6.1 General. Each Party represents and warrants that it (and its Affiliates to
the extent applicable): (a) will perform all of its obligations under these
General Terms and the Contract in a professional and workmanlike manner,
consistent with industry standards and in accordance with all of the terms of
these General Terms and the Contract; and (b) has the right and ability to enter
into, perform the obligations under and agree to the covenants contained in
these General Terms and each Contract. Seller further represents that: (c)
[***]. Tesla further represents that: (d) each obligation of any Tesla entity
under a Contract is binding on all Tesla entities which are Parties to these
General Terms as if each such Tesla entity had agreed to the obligation. 

 

6.2 Operations. Seller will: (a) if and to the extent relevant to the Contract
and applicable to Seller, comply with all of the following: industry-standard
and/or mutually-agreed supplier quality and development process program
requirements, quality control and safety standards, and procedures and
inspection systems, including Exhibit 1, the Global Automotive Declarable
Substance List (“GADSL”), and as applicable EU Directives 2002/95/EC
(Restriction on Hazardous Substances or “RoHS”) and 2006/66/EC (re: batteries
and accumulators and waste batteries and accumulators), as each may be amended
from time to time; (b) provide an accurate and complete International Material
Data System (“IMDS”) submission for each non-prototype Good; and (c) provide all
information reasonably required for Tesla to comply with its legal obligations,
such as the California Transparency in Supply Chains Act of 2010 and (if and to
the extent applicable to the Goods) Section 1502 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (commonly referred to as the conflict
minerals provision), as each may be amended from time to time. Upon request by
Tesla, Seller shall provide evidence of its compliance with each of the
foregoing and as reasonably requested by Tesla for purposes of Tesla’s
compliance with its legal obligations.

 

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6.3 Compliance with Laws and Tesla Policies.

 

  (a) Each Party will, at its cost and expense, obtain all necessary regulatory
approvals, licenses, and permits (collectively, “Permits”) applicable to its
business and comply with all Laws applicable to its business or the performance
of its obligations under these General Terms and each Contract, as such Laws may
be revised from time to time. Seller will provide Tesla with accurate material
safety data sheets regarding the Goods and, if requested by Tesla, submit to
Tesla evidence of such compliance. Each Party will also provide the other Party
with all information reasonably required in order for the other Party to comply
with Laws applicable to it.

 

  (b) To the extent not prohibited by Law, each Party will promptly notify the
other Party in writing of any investigation or inquiry into whether such Party
(or any of its subcontractors) is charged with failing to comply with any Laws
that may or will impact, or are otherwise applicable to, such Party’s
performance under these General Terms and/or the Contract.

 

  (c) Seller will comply with any Tesla policies, standards, rules, and
procedures (collectively, “Tesla Policies”) applicable to performance of
Seller’s obligations under the Contract and/or to the Factory which are
disclosed to Seller in writing and approved by Seller, as such Tesla Policies
may be revised from time to time subject to Seller’s approval, and Seller shall
not unreasonably withhold, condition, or delay its approval for any such Tesla
Policy or any changes thereto.

 

6.4 Debarment. During the Term, Seller represents and warrants that it shall not
be: (i) debarred, suspended, excluded or disqualified from doing business with
the United States Government; (ii) listed on the Excluded Parties List System
maintained by the General Services Administration of the United States
Government (found at www.epls.gov); or (iii) a Person with which U.S. Persons
are prohibited from transacting business of the type contemplated by the
Contract or with which U.S. Persons must limit their interactions to types
approved by the US Department of Treasury, Office of Foreign Assets Control
(“OFAC”), such as by Law, executive order, trade embargo or restriction,
economic sanction, or lists published by OFAC. Seller agrees to immediately
notify Tesla in writing in the event Seller breaches any of the preceding
representations and warranties or has reason to believe that it will become in
breach of any of the preceding representations and warranties. Such breach of
any representation or warranty under this Section 6.4 shall be deemed a Default
under the Contract for which Tesla may immediately terminate the Contract
without being required to provide notice or permit Seller to cure such Default.

 

7. Indemnification.

 

7.1 Indemnification by Seller. Seller agrees to indemnify, defend and hold
harmless Tesla, its Affiliates, and their respective directors, officers,
employers and agents (collectively “Tesla Indemnitees”) from and against any and
all costs, fees, penalties, expenses, third-party damages, attorneys’ fees and
all other liabilities to any third party whatsoever (“Losses”), arising out of
any Claim against any Tesla Indemnitee which arises from or relates to any
actual or alleged:

 

  (a) except to the extent that the Claim pertains to Tesla Products and/or
Modules, infringement of any Intellectual Property Right relating to Goods or
any portion thereof, on its own or in combination with other goods or services;

 

  (b) challenge to Tesla’s sole right, title and interest in the Factory, Goods
or the Tesla Property, or right to possession of Tesla Property, in each case
brought by any third party supplier to Seller or agent to Seller, including
toolmakers, subcontractors, and lending institutions; or

 

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  (c) Personal injury (including death) or property damage to the extent caused
by a defect in design, workmanship and material (during or after the Warranty
Period) and/or non-conformity (with reference to the applicable Specifications
within the Warranty Period) in one or more Goods; provided, however, that:

 

  (i) the foregoing obligation shall not apply to the extent that: (A) Tesla was
aware of or, in the exercise of reasonable care, should have been aware of the
existence of such defect and/or non-conformity; (B) the Losses were caused by
the Tesla Products, including but not limited to Tesla’s battery packs, Modules
(including circuit and equipment matching issues), and their respective
assembly, manufacture or placement, sale, use, operation, storage, and/or
transportation; and/or (C) the Losses were caused by [***] if (x) the affected
Goods were part of [***]; or (y) such [***] was caused by [***]; or (z) such
[***] occurred more than [***] years after the delivery of such affected Goods
to the Authorized Purchaser; and

 

  (ii) to the extent permitted by Law, the liabilities of Seller pursuant to
this Section 7.1(c) will not [***] (the [***]), and the Tesla Indemnitees shall
not be indemnified or held harmless in connection with such Losses [***].

 

7.2 Indemnification by Tesla. Tesla agrees to indemnify, defend and hold
harmless Seller, its Affiliates, and their respective directors, officers,
employers and agents (collectively “Seller Indemnitees”) from and against any
and all Losses arising out of any Claim against any Seller Indemnitee which
arises from or relates to any actual or alleged:

 

  (a) infringement of any Intellectual Property Right to the extent caused by
Tesla Products and/or Modules in which the Goods are used;

 

  (b) challenge to Seller’s sole right, title and interest in materials,
work-in-process, Goods or Seller Property, or right to possession of Seller
Property, in each case brought by any third party supplier to Tesla or agent to
Tesla, including toolmakers, subcontractors, and lending institutions; or

 

  (c) Either (i) defects or quality issues with respect to Tesla Products,
including but not limited to Tesla’s battery packs and Modules, (including
circuit and equipment matching issues) and their respective assembly,
manufacture or placement, sale, use, operation, storage, and/or transportation,
or (ii) [***] if (A) the affected Goods were [***]; or (B) such [***] is caused
by [***]; or (C) such [***] occurred more than [***] years after the delivery of
such affected Goods to the Authorized Purchaser; provided, however, that:
(A) the foregoing obligation shall not apply to the extent that the Losses were
caused by [***]; and (B) to the maximum extent permitted by Law, the liabilities
of Tesla pursuant to this Section 7.2(c) will not [***] (the [***]), and the
Seller Indemnitees shall not be indemnified or held harmless in connection with
such Losses [***].

 

7.3 Procedure. The Party seeking indemnification by the other Party under this
Section 7 (the “Indemnified Party”) will give prompt written notice of the Claim
for which indemnification is sought. Failure to give notice will not diminish
the indemnifying Party’s obligation under this Section if it has or receives
knowledge of the existence of the Claim by any other means or if the failure
does not materially prejudice its ability to defend the Claim. The indemnifying
Party may select legal counsel to represent the indemnified Party (said counsel
to be reasonably satisfactory to the indemnified Party) and otherwise control
the defense and, subject to the other terms of this Section 7.3, resolution of
the Claim. If the indemnifying Party elects to control the defense of such
Claim, the indemnified Party may at its option participate in the defense of any
Claim with its own counsel at its own expense; provided that such indemnified
Party shall not resolve the Claim without the prior written consent of the
indemnifying Party. If the Claim is one that cannot by its nature be defended
solely by the indemnifying Party, then the indemnified Party will make available
information and assistance as the indemnifying Party may reasonably request, at
the indemnifying Party’s expense. The indemnifying Party may not, without the
prior written consent of the indemnified Party, (i) consent to the entry of any
judgment or enter into any settlement that provides for injunctive or other
non-monetary relief affecting any indemnified Party, or (ii) consent to the
entry of any judgment or enter into any settlement unless such judgment or
settlement provides for an unconditional and full release of the indemnified
Party and does not diminish any of such Party’s rights under these General Terms
and/or the Contract or result in additional fees or charges to the indemnified
Party. The indemnified Party may not make any party admissions in respect of a
Claim if the indemnifying Party elects to control the defense of the Claim. For
avoidance of doubt, the indemnifying Party may invoke any applicable statutes of
limitations in conducting the defense of any such Claim. 

 

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7.4 Limitations. To the maximum extent permitted by applicable law and subject
to [***] (as applicable), the Parties’ respective obligations under this Section
7 will apply even if an Indemnified Party’s conduct has contributed to the
Losses, but the obligation to indemnify will not apply to the extent that Losses
were caused by such Indemnified Party. Each Party’s obligation to defend and
indemnify under this Section 7 will also apply regardless of whether the Claim
arises in tort, negligence, contract, warranty, strict liability or otherwise.

 

7.5 Infringement Claims. If any Goods become, or in Seller’s reasonable opinion
is likely to become, the subject of an infringement or misappropriation Claim,
Seller will promptly notify Tesla (the “Infringement Notice”) and, at Seller’s
expense and in addition to indemnifying Tesla Indemnitees as provided in this
Section 7 (Indemnification) and to the other rights Tesla may have under these
General Terms: (a) promptly secure the right to continue manufacturing and
selling the Goods; or (b) if this cannot be accomplished with Commercially
Reasonable Efforts, then replace or modify the Goods to make it non-infringing
or without misappropriation; provided, however, that any such replacement or
modification may not degrade the performance or quality of the Goods or disrupt
Tesla’s business operations; or (c) if neither of the foregoing can be
accomplished by Seller with Commercially Reasonable Efforts, then, no earlier
than [***] after the date of Seller’s Infringement Notice, [***]. During the
foregoing [***] period of time and unless prohibited by Law, Seller shall not
suspend delivery of Goods in accordance with the Production Plan and Seller
shall not [***] as the direct result of such infringement or misappropriation
Claim. If Seller chooses to stop selling Goods to Tesla pursuant to this Section
(but not if Seller is prohibited by Law from selling such Goods), Seller will be
deemed to be in Default and Tesla may exercise its termination and other rights
and remedies.

 

8. Confidentiality. Tesla’s mutual non-disclosure agreement as of the Effective
Date or, if applicable, the signed non-disclosure agreement then in effect
between the Parties (“NDA”) sets forth the Parties’ respective confidentiality
obligations hereunder. The NDA is hereby incorporated by reference in these
General Terms and the Contract, and the terms and conditions of the NDA will
continue in force throughout the Term and thereafter during the Confidentiality
Period (as defined in the NDA).

 

9. Property.

 

9.1 Property. The tooling, jigs, dies, gauges, fixtures, molds, patterns, other
equipment (collectively, the “Tooling”), as well as the supplies, materials, and
other tangible property that are or will be used by Seller to manufacture,
store, and transport Goods, or used to develop or make Goods for Tesla (such
Tooling, supplies, materials and other tangible property shall collectively be
referred to as the “Property”) will be owned by Tesla if Tesla has [***] (“Tesla
Property”); provided, however, that Property will not be deemed to be Tesla
Property if Tesla has [***]. “Seller’s Property” means all Property which (a) is
owned and/or used by Seller in connection with these General Terms and/or the
Contract(s) and (b) is not Tesla Property. Seller will not purchase on the
account of or charge Tesla for any Tesla Property except as authorized in a
Purchase Order. Title to Tesla Property shall transfer to Tesla upon Tesla’s
payment in full for such Property.

 

  (a) Seller will assign to Tesla contract rights or claims in which Seller has
an interest with respect to Tesla Property and execute bills of sale, financing
statements, or other documents requested by Tesla or required to evidence
Tesla’s ownership of Tesla Property.

 

  (b) Seller will have no interest in Tesla Property paid for by Tesla except as
an at-will bailee. To the extent permitted by law, Seller waives any lien or
similar right it may have with respect to Tesla Property. Tesla is responsible
for personal property taxes assessed against Tesla Property.

 

9.2

Operations and Maintenance. Seller will: (a) subject to Section 1.1(b) above,
[***] procure, transport, install and configure at the Factory the Seller’s
Property by the Parties’ agreed target date (e.g., as required for [***]);
(b) subject to Section 1.1(b) above and [***], procure, transport, install and
configure at the Factory additional Seller’s Property as reasonably required to
deliver Goods in accordance with the

 

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  Contract and the Production Plan; (c) [***] maintain all Seller’s Property
used by Seller in good condition and repair, normal wear and tear excepted;
(d) furnish, maintain in good condition, replace and improve all Seller’s
Property reasonably required to deliver Goods in accordance with the Contract
and the Production Plan; (e) use Tesla Property only for the manufacture,
storage, and transport of Goods for Tesla unless Tesla otherwise approves in
writing; and (f) at Tesla’s request and expense, mark Tesla Property as
belonging to Tesla. Further, (g) Seller will not remove, sell, or dispose of any
Seller’s Property from the Factory without Tesla’s prior written consent if and
to the extent that such Property is reasonably required to manufacture and
deliver Goods in accordance with the Contract and/or Production Plan and Tesla
shall not unreasonably withhold, condition or delay such consent if and to the
extent that such Property is not reasonably required for such purposes; (h) all
replacement parts, additions, improvements, and accessories to Tesla Tooling
will become part of Tesla Tooling; and (i) Tesla will, at its expense, be
responsible for procuring, maintaining in good condition, replacing and
improving all Tesla Property which Tesla is expressly required to provide
hereunder as a Tesla Responsibility, if any, in order to enable Seller to
perform its obligations under the Contract and the Production Plan.

 

9.3 Tesla’s Rights of Possession, Equitable Relief. Tesla has the right to the
sole, unencumbered, unqualified, and absolute possession of Tesla Property at
any time, as elected by Tesla and Seller will immediately release to Tesla upon
request, and Tesla may retake immediate possession of Tesla Property at any time
with or without cause and without payment of any kind unless otherwise provided
in the Contract. Tesla will be responsible for transportation costs with respect
to Tesla Property.

 

9.4 Waiver of Liens. As a continuing condition of Seller’s possession or use of
Tesla Property, Seller shall ensure that no third party obtains any lien or
other right in Tesla Property and hereby waives and relinquishes, and agrees to
obtain from any third parties who might claim any such lien (including without
limitation mechanic’s liens) or right, their written waiver and relinquishment
of all rights, if any, to any lien or other right of retention whatsoever with
respect to Tesla Property.

 

10. Intellectual Property.

 

10.1 Covenant Not to Sue. Seller and its Affiliates covenant not to bring,
assist others in bringing, or otherwise assert against Tesla and/or its
Affiliates, and their respective successors and assigns, any claim for
infringement of any of Seller’s and/or any of its Affiliates’ Intellectual
Property Right incorporated in the Goods arising from any of the
following: [***]. For the avoidance of doubt, the foregoing covenant extends to
any application of one or more Goods if, at the time of sale of one or more
Good(s) to Tesla, (a) Seller knows that Tesla and/or its Affiliates plans to use
such Good(s) in such application or (b) the application by Tesla and/or its
Affiliates is publicly available and/or disclosed.

 

10.2 Independent Efforts and Similar Goods. Provided there is no infringement of
the other Party’s Intellectual Property Rights, nothing in these General Terms
or the Contract will impair either Party’s right to develop, manufacture,
purchase, use, sell or market, directly or indirectly, alone or with others,
products or services competitive with those offered by the other Party.

 

10.3 No Implied Rights. Except for the rights expressly transferred in these
General Terms or the Contract, nothing therein will operate to transfer any
interest in Intellectual Property Rights by implication, estoppel or otherwise.

 

11. Factory Colocation.

 

11.1 Factory Lease.

 

  (a)

Tesla shall, at its cost and expense and as a Tesla Responsibility, procure the
land and construct buildings thereon to be used as the Factory. Upon completion
of construction of the Factory, the Parties shall negotiate in good faith,
finalize and sign a lease setting forth the terms and conditions of Seller’s
lease rights at the Factory (the “Factory Lease”). The Factory Lease shall:
(i) provide that Tesla will provide Seller with the sufficient space and
utilities for Seller to enable to perform its obligations under these General
Terms and the Contract(s); (ii) specify [***] pursuant to the Pricing Agreement;
(iii) [***]; (iv) specify that [***], unless otherwise provided in this General
Terms; and

 

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  (v) describe the area(s) leased to Seller to be used for Seller’s
manufacturing of Goods at the Factory; (vi) define each Party’s financial and
other responsibilities for utilities (e.g. gas, electric, water and treatment of
waste water); (vii) specify that the Factory Lease will be subject to any
restrictions generally applicable to the Factory and/or Tesla’s real property;
and (viii) allocate responsibility between the Parties for environmental aspects
of the Utilities (defined below); and (ix) include terms and conditions
consistent with those set forth in this Section 11 and in the Pricing
Agreement. The Parties shall negotiate the Factory Lease in good faith and,
should no Factory Lease be entered into between the Parties by [***] (the “Lease
Target Date”), Seller may terminate these General Terms and the remaining
portion(s) of any Contract without any liability whatsoever to Tesla. The
Parties may extend the Lease Target Date by mutual written agreement. The
Factory Lease shall, upon execution by the Parties, be incorporated into these
General Terms and immediately supersede and replace this Section 11.1 in its
entirety without any further action of the Parties.

 

  (b) Tesla will, at its cost and expense and as a Tesla Responsibility,
install, configure, maintain in good working order, and furnish the utilities
required for Seller to perform its obligations under these General Terms and the
Contract(s) and as agreed between the Parties (collectively, the “Utilities”),
including gas, electric, water, and treatment of waste water.

 

  (c) The Parties shall discuss in good faith and sign a mutually-agreed matrix
to describe each Party’s responsibility for various construction and/or
operational activities at the Factory. The Parties shall also discuss in good
faith the general configuration of Seller’s leased area(s) at the Factory to
enable its performance under the Contract and Production Plan. Tesla must
approve permanent fixtures and improvements in advance. Tesla and Sanyo will
work together to obtain necessary permits relating to Seller’s leased area(s) at
the Factory.

 

  (d) Tesla will provide to Seller Personnel assigned to work at the Factory the
reasonable use thereof. Seller will use the Factory for the sole purpose of
performing its obligations under these General Terms or the Contract. Seller
will be responsible for any damage to the Factory caused by Seller Personnel
normal wear and tear excepted.

 

  (e) Seller will permit Tesla and its agents and representatives to enter the
area(s) leased to Seller if reasonably required for: (A) an emergency at any
time; (B) a law enforcement or government inspection at any time; (C) Tesla
personnel upon an agreed amount of notice, if and to the extent related to
employee health & safety (EHS), security, audit (e.g., PPAP) or as separately
approved by Seller in good faith; or (D) maintenance or repair of Tesla Property
used by or for Seller.

 

  (f) If Tesla sells, transfers, assigns or otherwise disposes of the land and
buildings covered by the Factory Lease and/or the Utilities to its Affiliates or
a third party, any such sale, transfer, assignment or disposal shall be subject
to any and all of Seller’s rights under the Factory Lease. Tesla shall not,
during the term of Factory Lease, lease the Seller space covered by the Factory
Lease to Tesla’s Affiliates or any other third party without Seller’s prior
written consent.

 

11.2 Seller Personnel. 

 

  (a) Responsibility for Seller Personnel. Seller will manage, supervise and
provide direction to Seller Personnel and cause them to comply with the
obligations and restrictions applicable to Seller under these General Terms
and/or Contract. Each Party is responsible for the acts and omissions of its own
personnel under or relating to these General Terms and/or the Contract. Seller
is responsible for validating the identity of and ensuring that Seller Personnel
assigned to perform work hereunder (i) have the legal right to work in the
country(ies) in which they are assigned to work, and (ii) conform to all
reasonable and applicable Tesla Policies disclosed to Seller and approved by
Seller (such approval not to be unreasonably withheld, conditioned or delayed)
with respect to personal and professional conduct at the Factory (including
adherence to general safety, behavior, and security practices). From time to
time, the Parties may also, in conjunction with the Production Meeting, consult
in good faith regarding staffing requirements for Seller Personnel at the
Factory.

 

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  (b) Background Checks. Prior to assigning any Seller Personnel to work at the
Factory, Seller shall perform a background check of each person or, in the case
of employees or agents of a subcontractor, Seller shall cause the subcontractor
to conduct such a background check. Such background checks may have been
performed as part of Seller’s standard pre-employment screening process and will
include the following, at a minimum but only to the extent permitted by
applicable Law: (i) social security verification (for US employees); and
(ii) felony and misdemeanor criminal checks. To the extent permitted by
applicable Law, Tesla may require Seller to provide written evidence of the
background checks on Seller Personnel at any time. Unless prohibited by Law,
neither Party may assign any person to perform work at the Factory who was
convicted of any criminal offense involving dishonesty, a breach of trust, money
laundering, or who has been convicted of a felony crime within the last seven
years without the other Party’s prior written consent.

 

11.3 Extension of Lease. Following expiration or termination of these General
Terms, Seller shall be entitled to extend the duration of the Factory Lease as
follows:

 

  (a) If Tesla terminates for Seller’s Default, Seller may continue its lease
rights for [***]. Seller shall [***] and Seller shall [***].

 

  (b) If these General Terms expire or in the event of a termination for force
majeure by either Party or termination for a Change of Control Event affecting
the other Party, Seller may continue its lease rights for [***]. Seller shall
[***] and the Parties shall negotiate in good faith a potential extension of the
Factory Lease. In case of termination for force majeure or Change of Control by
either Party, Tesla shall be responsible for [***]; provided, however, that
Tesla will have sole financial responsibility with respect to any Tesla-Supplied
Items and/or Utilities which were installed by Tesla (including the construction
activities for which Tesla is solely responsible pursuant to the mutually-agreed
matrix described in Section 11.1(c)). The Parties shall also, in connection with
any such expiration or termination, discuss in good faith [***]. In the case of
expiration (but not termination for force majeure or for Change of Control),
Tesla acknowledges that it will be responsible for [***] provided that (i)
Seller has used best efforts to [***], (ii) the [***] are mutually agreed in
writing and in advance; provided, however, that such Tesla’s approval shall not
be unreasonably withheld, delayed or conditioned, and (iii) Tesla shall not be
responsible for any such [***]. Tesla will provide an estimated cost or profit
for [***], and Seller will determine whether to [***]. Seller shall have
financial responsibility for [***] if it chooses to [***]; provided, however,
that Tesla shall pay Seller [***]. If Seller chooses to [***], Seller shall not
be obligated to [***]. If Seller chooses to [***], Tesla shall bear [***], and
if [***], Tesla will [***]. If Seller fails to [***], Seller will be deemed to
have [***] and Tesla will [***] in its sole discretion and at Tesla’s sole
expense or profit. For avoidance of doubt, Seller shall have no liability for
Tesla’s failure to [***] in connection with any such [***]. In no event shall
Tesla sell, lease, assign or otherwise transfer such Seller’s Property to any
third party other than for [***]. Except as set forth in this paragraph, each
Party shall be responsible for its own costs and expenses related to such
expiration or termination.

 

  (c) If Seller terminates for Tesla’s Default, Seller may: (i) elect to
continue its lease rights for [***] without [***] and Seller may [***] and, if
applicable, [***]; and (ii) [***] the following [***], which will be considered
[***] for purposes of Section 12.1(f) to these General Terms: [***].

 

  (d) If Seller terminates these General Terms and the Contract(s) due to a
Change of Control Event with respect to Tesla, Seller may, in its sole
discretion and in addition to the remedies contemplated in Section 11.3(b),
choose to continue its lease rights for [***].

 

12. Liability.

 

12.1 Limitations of Liability and Exclusions.

 

  (a) Except as provided in Section 12.1(e), Tesla’s liability to Seller under
these General Terms and all Contracts (including termination, expiration or
cancellation) shall not exceed the following:

 

  (i) with respect to each investment by or for Seller in Seller’s Property as
contemplated in Section 1.1(b) above and in the then-current Pricing Agreement,
the agreed amount(s) due and payable therefor pursuant to these General Terms
and the then-current Pricing Agreement;

 

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  (ii) with respect to Goods or other items delivered by Seller pursuant to a
Contract, [***] in accordance with the applicable Contract;

 

  (iii) with respect to amounts for which Tesla is expressly responsible
pursuant to these General Terms – including Sections 2.4 (Tesla
Responsibilities), 11.3 (Extension of Lease), and 13.4 (Obligations Upon
Termination) if and to the extent applicable – and/or other relevant agreements
between the Parties in connection with these General Terms (e.g., Factory Lease)
if and to the extent applicable, the amounts due and payable therefor;

 

  (iv) with respect to Claims which are [***],[***]; and

 

  (v) for other damages which are recoverable pursuant to these General Terms
and/or a Contract due to one or more events giving rise to liability in a
rolling period of [***],[***].

 

  (b) Except as provided in Section 12.1(e), Seller’s total liability to Tesla
under these General Terms and/or any Contract shall not exceed the following:
(i) for Claims which are [***],[***]; and (ii) for one or more events giving
rise to liability in a rolling period of [***],[***] the following (“Seller’s
General Cap”): (A) [***], or (B) [***].

 

  (c) Except as provided in Section 12.1(e) and notwithstanding anything to the
contrary in Sections 12.1(a) or 12.1(b) above, each Party shall be liable if it
[***]; provided, however, that such liability shall not exceed [***].

 

  (d) Except as provided in Section 12.1(e) and to the extent permitted by
applicable law, neither Party will be liable to the other Party for any
anticipated profits, loss of revenue or savings, loss of goodwill, depreciation
cost due to reduced production capacity, cost of capital, production downtime
costs, interest, penalties or incidental, special, indirect, consequential,
punitive, multiple, or exemplary damages or liabilities in connection with these
General Terms and/or any Contract, whether for breach of contract, late payment,
property damage, personal injury, illness, or death or otherwise, even if such
Party was advised or was aware of the possibility of such damages or
liabilities.

 

  (e) The limitations and exclusions of liability set forth in Sections 12.1(a),
12.1(b), 12.1(c) and 12.1(d) will not apply with respect to damages attributable
to: (i) a Party’s intentional torts, unlawful conduct, willful misconduct, or
gross negligence; or (ii) Losses related to Claims that are [***]. Further, the
exclusions of liability set forth in Section 12.1(d) will not apply with respect
to damages attributable to: (iii) Losses related to Claims that are [***].

 

  (f) The Parties acknowledge and agree that the following will be considered
direct damages and that neither Party will assert that they are types of damages
that are excluded under Section 12.1(d) to the extent they result from the
failure of a Party (or entities or persons for whom a Party is responsible) to
perform in accordance with these General Terms and/or the Contract:

 

  (i) costs and expenses for which a Party is expressly responsible under these
General Terms or a Contract, including costs and expenses related to [***] and
Tesla’s obligations to pay [***] paid by Seller [***];

 

  (ii) the actual and reasonable damages, losses, costs and expenses incurred by
Tesla as a direct result of Seller’s Default pursuant to Section 3.3 (Time is of
the Essence);

 

  (iii) actual and reasonable damages, losses, costs and expenses incurred by
Tesla as contemplated in Section 5.9 [***];

 

  (iv) payments, fines, penalties or interest imposed by a governmental body or
regulatory entity, to the extent caused by the other Party, the other Party’s
Affiliates, or their respective agents and subcontractors;

 

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  (v) actual and reasonable damages, losses, costs and expenses as a direct
result of Seller’s failure to comply with its obligations under [***], but only
to the extent that [***];

 

  (vi) amounts for which a Party is expressly responsible pursuant to these
General Terms (including Sections 2.4 (Tesla Responsibilities), 11.3 (Extension
of Lease), and 13.4 (Obligations Upon Termination)), the then-current Pricing
Agreement, and/or each Contract;

 

  (vii) damages in tort attributable to the “simple” or “ordinary” negligence of
a Party, its employees and/or agents in a manner related to these General Terms,
a Contract and/or the Factory;

 

  (viii) actual and reasonable costs and expenses to [***], to the extent caused
by the other Party, its employees and/or agents or, if [***] using Commercially
Reasonable Efforts, damages in an amount equal to [***];

 

  (ix) actual and reasonable damages for personal injury, illness and/or death
with respect to a Party’s employees or agents to the extent caused by the other
Party’s failure to maintain adequate health and safety conditions at the
Factory; and

 

  (x) actual and reasonable damages and liability incurred by a Party with
respect to environmental conditions or issues (including actual and reasonable
costs of remediation, if applicable), either (A) to the extent caused by the
other Party and/or (B) to the extent such conditions or issues are the legal
responsibility of the other Party.

 

  (g) Each Party shall use Commercially Reasonable Efforts to mitigate the
damages incurred in connection with any breach by the other Party.

 

  (h) Subject to Sections 5.4(f) and 5.9 and subject to the limitations and
exclusions set forth in this Section 12.1, all remedies provided in these
General Terms and/or the Contract are cumulative and in addition to and not in
lieu of any other remedies available to a Party under these General Terms and/or
the Contract, at law, or in equity.

 

12.2 Force Majeure. “Force Majeure Event” means an event beyond the reasonable
control of a Party that delays or prevents the Party from performing its
obligations under these General Terms and/or the Contract, provided that (a) the
non-performing Party is without fault in causing or failing to prevent the
event, and (b) the event cannot be circumvented through the use of commercially
reasonable alternative sources, workaround plans or other means. The affected
Party will promptly notify the other Party of any Force Majeure Event and of its
plans and efforts to implement a work-around, in which case the affected Party
will be excused from further performance of the affected obligations as long as
the Force Majeure Event continues. The affected Party will continue to use
Commercially Reasonable Efforts to perform to the extent possible and will
comply with any applicable and agreed disaster recovery obligations. The
affected Party will notify the other Party promptly when the Force Majeure Event
has abated. If a Force Majeure Event prevents performance for more than [***],
then the unaffected Party may terminate these General Terms and the Contract(s)
as of a date specified by such Party in a written notice of termination to the
affected Party, in which case (i) Tesla will pay Seller’s charges for Goods
delivered in accordance with [***], but (ii) Tesla will not be liable for any
costs pertaining to [***] and (iii) neither Party will be liable to the other
Party for payment of [***], except as may be expressly permitted under Section
11.3(b). If a Force Majeure Event prevents performance by Seller and results in
a backlog of unfulfilled orders for Goods, Seller shall, as directed by Tesla,
[***] within the [***] period.

 

13. Term and Termination.

 

13.1 Initial Term and Renewal. These General Terms will be effective as of the
Effective Date and continue through the date that occurs ten (10) years after
Seller achieves Start of Production at the Factory (the “Term”). Beginning five
(5) years after the Start of Production and at least once per year during the
Term, the Parties will discuss in good faith the possibility of extending the
Term. The “Start of Production” will be deemed to occur on the first day of the
month following the month in which Seller delivers battery cells manufactured at
the Factory [***].

 

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13.2 Termination, Generally. These General Terms and the Contract may only be
terminated as provided in this Section 13 (Term and Termination). Termination by
a Party will be without prejudice to any other rights and remedies available to
a Party. Neither Party will be obliged to pay any termination charges or
demobilization fees to the other Party in connection with any termination,
except as may be expressly set forth in these General Terms and/or the
applicable Contract.

 

13.3 Termination. Subject to Sections 2.4 (Tesla Responsibilities) of these
General Terms, the Party who is not in Default may terminate these General Terms
and/or the Contract as follows: (a) if the other Party breaches a material
obligation under these General Terms and/or the Contract and fails to cure the
breach within [***] days after receipt of notice of such breach expressly
stating the non-breaching Party’s intent to terminate (“Notice of Termination”)
or, if the breach cannot reasonably be cured within such [***] period, [***]
days after receipt of Notice of Termination; (b) if the other Party becomes a
debtor in a bankruptcy, insolvency, receivership, or similar proceeding
commenced by a third party that is not dismissed within a reasonable time after
commencement; or (c) immediately upon Notice of Termination in the event of an
incurable material breach, including (i) a Party’s repudiation of these General
Terms and/or the Contract, (ii) in case of Section 6.4 (Debarment), or (iii) if
the other Party makes an assignment for the benefit of creditors in violation of
these General Terms and/or the Contract or voluntarily institutes proceedings in
bankruptcy or insolvency. Each of the foregoing types of breach shall be deemed
to be a “Default.” The Parties may also terminate: (d) as provided in Section
12.2 (Force Majeure); or (e) for convenience (i.e. without cause) upon prior
written notice to the other Party if such other Party experiences a Change of
Control Event, but only if both: (i) the Change of Control Event will, or is
reasonably likely to, materially and adversely affect the terminating Party’s
interests pertinent to these General Terms and the Contract(s), and (ii) the
terminating Party terminates within [***] after such Change of Control
Event. The Party that issues the Notice of Termination may approve a longer cure
period in its sole discretion.

 

13.4 Obligations Upon Termination. Following any termination pursuant to Section
13.3 above and in addition to any actions or payments expressly required by
these General Terms and/or the applicable Contract:

 

  (a) Seller shall:

 

  (i) immediately cease all work under the Contract, unless and to the extent
that Tesla requests that Seller complete the manufacture of Goods using
materials and components which were previously acquired by Seller within the
applicable Lead Time to meet its obligations under the affected Contract(s) and
which Seller cannot, using Commercially Reasonable Efforts, [***] in a manner
that results in [***] with respect to such materials and components;

 

  (ii) transfer title and deliver to Tesla all finished Goods completed prior to
the termination date, provided that Seller may in its sole but reasonable
discretion change the payment terms for such Goods if Seller has terminated for
Tesla’s Default;

 

  (iii) without limiting Seller’s right to damages for Tesla’s Default, [***];

 

  (iv) cooperate with Tesla in minimizing costs and losses related to the
termination (including, without limitation, by returning the materials for a
refund or credit or otherwise using or selling to any of Seller’s other
customers);

 

  (v) upon termination of the Factory Lease, comply with the obligations
described in the Factory Lease and in Section 11.3 above with respect to [***];
and

 

  (vi) in case of Tesla’s termination for Seller’s Default and if requested by
Tesla, but subject to Seller’s actual capacity, labor constraints and supply
chain constraints, issue a final Purchase Order for a quantity of Goods at
volumes not in excess of [***] of purchases by Tesla over the [***] preceding
termination and on the [***], and Seller shall not reject such Purchase Order.

 

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  (b) Tesla will, after exercising any setoff rights permitted by Law, pay to
Seller the following amounts, without duplication and in accordance with the
then-current payment terms between Tesla and Seller:

 

  (i) The purchase price for all conforming Goods received by Tesla prior to the
termination date or delivered following the termination date pursuant to this
Section 13.4;

 

  (ii) [***], unless Tesla has terminated for either (A) Seller’s Default or (B)
a Change of Control Event with respect to Seller; and

 

  (iii) [***] paid by Seller for [***] at the Factory for which [***]; provided,
however, that Tesla shall not have any obligation to [***] such amounts if Tesla
terminates (A) for Seller’s Default, (B) as permitted under Section 12.2 (Force
Majeure), or (C) for a Change of Control Event with respect to Seller; and

 

  (iv) Any costs and/or expenses that Tesla is obligated to pay pursuant to
Section 11.3 (Extension of Lease).

 

  (c) Notwithstanding any other provisions herein to the contrary but subject to
Section 12 (Liability), in case of a Party’s termination due to Change of
Control with respect to the other Party, the Party exercising such termination
right shall be entitled to recover a termination charge equal to the following:
(i) in [***] of the Term, one billion, five hundred million dollars ($1.5
billion USD); (ii) in [***] of the Term, one billion dollars ($1.0 billion USD);
and (iii) thereafter during the Term, five hundred million dollars ($500 million
USD).

 

14. Insurance. During the Term of these General Terms, Seller shall obtain and
maintain at its own cost and expense (and shall cause each subcontractor to
maintain) policies for the types and amounts of insurance that are required
under applicable Law.

 

15. Dispute Resolution.

 

15.1 Governing Law. These General Terms and each Contract will be interpreted
and construed in accordance with the substantive Laws of California and the
United States generally applicable therein, without regard to any provisions of
its choice of law rules that would result in a different outcome. The UN
Convention on Contracts for the International Sale of Goods will not apply to
the Contract.

 

15.2 Informal Dispute Resolution. In the event any disputes, differences or
controversies arise between the Parties, out of or in relation to or in
connection with the provisions of these General Terms and/or the Contract, the
Parties shall thoroughly explore all possibilities for an amicable settlement.

 

15.3

Arbitration. Any dispute arising out of or relating to these General Terms
and/or a Contract that is not resolved through negotiation shall be settled
exclusively by final and binding arbitration conducted in accordance with the
then-current Commercial Arbitration Rules of the Judicial Arbitration and
Mediation Services/Endispute (“JAMS”). The existence, content and result of the
arbitration shall be held in confidence by the Parties, their representatives,
any other participants, and the arbitrator. The arbitration will be conducted by
a single arbitrator selected by agreement of the Parties or, failing such
agreement, appointed in accordance with the JAMS rules. The arbitrator shall be
experienced in agreements for capital equipment. Any demand for arbitration and
any counterclaim will specify in reasonable detail the facts and legal grounds
forming the basis for the claimant’s request for relief and will include a
statement of the total amount of damages claimed, if any, and any other remedy
sought by the claimant. The arbitration will be conducted in the English
language in San Francisco, California. Each Party will bear its own expenses in
the arbitration and will share equally the costs of the arbitration; provided,
however, that the arbitrator may, in their discretion, award reasonable costs
and fees to the prevailing Party. The arbitrator will have full power and
authority to determine issues of arbitrability and to interpret or construe the
applicable provisions of the Contract and/or these General Terms and to fashion
appropriate remedies for breaches of the Contract and/or these General Terms
(including interim or permanent injunctive relief); provided that the arbitrator
will not have any right or authority: (i) in excess of the authority of a court
having jurisdiction over the Parties and the dispute would have absent this
arbitration agreement; (ii) to

 

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  award damages in excess of the types and limitation of damages found in the
Contract and/or these General Terms; or (iii) to modify the terms of either the
Contract or these General Terms. The award of the arbitrator will be issued
within thirty (30) days of the completion of the hearing, shall be in writing,
and shall state the reasoning on which the award is based. Judgment upon the
award rendered in the arbitration may be entered in any court of competent
jurisdiction. Each Party will have the right to apply at any time to a judicial
authority for appropriate injunctive relief (or other interim or conservatory
measures), and by doing so will not be deemed to have breached its agreement to
arbitrate or to have impaired the powers reserved to the arbitrator. The Parties
further consent to the jurisdiction of any state or federal court with subject
matter jurisdiction located within a district that encompasses assets of a Party
against whom a judgment (or award) has been rendered for the enforcement of the
judgment (or award) against the assets of such Party.

 

15.4 Continued Performance. Each Party agrees to continue performing its
obligations under these General Terms and each Contract while a dispute is being
resolved unless and until such obligations are terminated by the termination or
expiration thereof.

 

16. Miscellaneous.

 

16.1 Notices. All formal notices, requests, demands, approvals and
communications under these General Terms and/or the Contract (other than routine
operational communications) (collectively, “Notices”) will be in writing and may
be served either (a) in person or (b) by registered or certified mail with proof
of delivery, addressed to the Party at the addresses set forth below. Notices
given as described in the preceding sentence will be considered received on the
day of actual delivery. A Party may change its address or designee for
notification purposes by giving the other Party prior written notice of the new
address or designee in the manner provided above. The Parties may mutually agree
that certain types of routine approvals and notices of a non-legal nature may be
given by electronic mail.

 

In the case of Tesla:   With a copy to: Tesla Motors, Inc.   Tesla Motors, Inc.
3500 Deer Creek Road, Palo Alto, CA 94304   3500 Deer Creek Road, Palo Alto, CA
94304 Attn: Director, Battery Technology   Attn: Legal Department In the case of
Seller:   With a copy to: SANYO Electric Co., Ltd.   Panasonic Corporation
Portable Rechargeable Battery Business Division   Automotive & Industrial
Systems Company 222-1, Kaminaizen, Sumoto City, Hyogo   1006 Kadoma, Kadoma
City, Osaka 656-8555, Japan   571-8506, Japan Attn: Associate Director, Global
Sales & Marketing   Attn: Legal Center, Business Promotion Group

 

16.2 Audit and Inspection. Tesla and its authorized representatives shall have
the right with reasonable prior written notice from time to time to access
Seller’s leased areas approved by Seller (such approval will not be unreasonably
withheld by Seller) and, subject to the NDA, verify Seller’s compliance with the
terms of these General Terms and the Contract. Seller will maintain records as
reasonably necessary to demonstrate Seller’s compliance with the terms of these
General Terms, the Production Pricing Agreement, and the Contract, including
showing that amounts charged to Tesla are true and correct. Such audit will be
made at the agreed date and the normal business hour of Seller at the
Factory. Tesla and its representatives may audit Seller’s records made within
[***] prior to the audit date, to the extent needed to verify compliance with
these General Terms, the Production Pricing Agreement, and the Contract, and
Seller will make such records available to Tesla and its auditors for
examination and copying upon their reasonable request; provided that Seller is
not obliged to make available any technical or engineering confidential records,
data and/or information owned or controlled by Seller without the prior written
agreement between the Parties. Any audit will be conducted at Tesla’s
expense. Notwithstanding the foregoing and unless approved otherwise by Seller,
any audit of Seller’s compliance with [***] shall be conducted solely by an
authorized third-party representative of Tesla which is bound not to disclose to
Tesla the specific [***].

 

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16.3 Entire Agreement. These General Terms and each Contract constitute the
entire agreement between the Parties with respect to its subject matter, and
supersedes all prior oral or written representations or agreements by the
Parties with respect to the subject matter of these General Terms and the
Contract. Except as authorized in Section 2.2, no subsequent terms, conditions,
understandings, or agreements purporting to modify the terms of these General
Terms or the Contract will be binding unless in writing and signed by Tesla and
Seller.

 

16.4 Assignment and Subcontracting.

 

  (a) Without prior written consent of the other Party, neither Party may assign
these General Terms or any Contract or subcontract or delegate the performance
of its duties thereunder, and any attempt to do so shall be void; provided,
however, that (i) each Party may, without requiring the other Party’s consent or
meeting any other condition, add an Affiliate which operates in the Factory as a
co-party to these General Terms and/or any Contract, and (ii) Tesla may, upon
the written notice to Seller, assign any or all of its rights, benefits or
remedies under any Contract to an Affiliate which assumes all of Tesla’s
obligations under the Contract, provided that Tesla remains responsible for (1)
payment if the Affiliate fails to pay in accordance with the Contract, (2)
performance of Tesla Responsibilities applicable to the Contract, if any, if the
Affiliate fails to perform such Tesla Responsibilities and (3) Tesla’s
indemnification obligations provided in Section 7.2.

 

  (b) If Seller intends that all or part of the manufacture of Goods will be
subcontracted to a third-party subcontractor, Seller will: (i) be solely
responsible for payments to the subcontractor; (ii) include in its purchase
order or any other contract with the subcontractor a waiver of subcontractor
liens to the maximum extent permitted by applicable law; (iii) before permitting
any subcontractor to use Tesla Property and/or access the Facility, obtain
Tesla’s prior written consent; (iv) provide notice to Tesla at each Production
Meeting of [***]; and (v) [***] in connection with these General Terms and/or a
Contract as reasonably requested by Tesla within a reasonable time after receipt
of Tesla’s notice and following a good faith discussion. Tesla has no obligation
with respect to Seller’s subcontractor other than payment to Seller of the
agreed price of the conforming Goods delivered to Authorized Purchasers pursuant
to their Purchase Order(s) accepted by Seller except as provided in [***].

 

  (c) Any subcontracting, assignment or delegation by Seller does not relieve
Seller of any responsibility under the Contract, and Seller remains responsible
to the same extent as if the subcontracted, assigned or delegated
responsibilities were retained by Seller.

 

  (d) In the event of a Change of Control Event affecting a Party, the person or
entity which acquires Control of the Party shall be subject to the terms and
conditions of, and shall assume all of the acquired Party’s obligations under,
these General Terms and the affected Contract(s).

 

  (e) These General Terms and all Contract(s) shall be binding upon the
respective successors and permitted assigns of the Parties.

 

16.5 Relationship of Parties. The Parties are independent contractors under
these General Terms and the Contract and no other relationship is intended,
including, without limitation, 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.

 

16.6 No Waiver. The failure of either Party to enforce on a particular occasion
any right or remedy provided in these General Terms and/or the Contract or by
law or in equity will not be deemed a waiver of that right or remedy on a
subsequent occasion or a waiver of any other right or remedy.

 

16.7

Rules of Interpretation. Section references are to sections of the document in
which the reference is contained and will be deemed to refer to and include all
subsections of the referenced section. The section headings in these General
Terms are for reference purposes only and may not be construed to modify or

 

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  restrict any of the terms of these General Terms and/or the Contract. These
General Terms and each Contract will be deemed to have been written by both
Tesla and Seller. Unless the context requires otherwise, (a) “including” (and
any of its derivative forms) means including but not limited to, (b) “may” means
has the right, but not the obligation to do something and “may not” means does
not have the right to do something, (c) the words “will” and “shall” are shall
be understood to apply to a mandatory obligation, not a permissive statement,
and (d) terms defined in the singular include the plural and vice versa. These
General Terms and the Contract Documents are written in the English language,
and the English text of these General Terms and of each Contract shall prevail
over any translation hereof.

 

16.8 Conflicts. In the event of a conflict between or among the documents
comprising these General Terms and/or a Contract, the following order of
precedence will apply (documents listed in descending order of priority):
(a) any written agreement signed by authorized representatives of the Parties
expressly amending these General Terms and/or a Contract Document; (b) the
applicable Purchase Order accepted by Seller; (c) the Production Plan; (d) a
Pricing Agreement signed by the Parties; (e) any Product-specific exhibits or
attachments to these General Terms; (f) these General Terms and any exhibits,
attachments, schedules and documents included or referenced in these General
Terms that are not Product-specific attachments or schedules; and (g) any other
Contract Document. These General Terms shall supersede any standard terms and
conditions that are automatically attached to purchase orders issued by Tesla.

 

16.9 Severability. If for any reason a court of competent jurisdiction finds any
provision of these General Terms and/or the Contract to be unenforceable, that
provision of these General Terms and/or the Contract will be enforced to the
maximum extent permissible so as to implement the intent of the Parties, and the
remainder of these General Terms and/or the Contract will continue in full force
and effect.

 

16.10 Survival. Any provision of these General Terms and/or of a Contract that
contemplates or governs performance or observance subsequent to termination or
expiration thereof will survive the expiration or termination thereof for any
reason, including without limitation Seller’s obligations, representations and
warranties and Tesla’s rights under the Contract with respect to Goods delivered
or ordered thereunder.

 

16.11 No Third Party Beneficiaries. These General Terms and each Contract are
entered into solely between Tesla and Seller and, except for the Parties’
indemnification obligations under Section 7 (Indemnification) and the Authorized
Purchasers, will not be deemed to create any rights in any third parties or to
create any obligations of either Tesla or Seller to any third parties.

 

16.12 Counterparts. These General Terms may be executed in counterparts, each of
which shall be an original and together which shall constitute one and the same
instrument.

 

16.13 Non-Solicitation. During the term of these General Terms, neither Party
shall knowingly solicit for employment or induce to resign from the other Party
any of the other Party’s then current employees, directors or officers who are
directly involved in the performance of these General Terms and/or the Contract
without the prior written consent of the other Party. The foregoing shall not
apply to advertisements or general solicitations that do not specifically target
the other Party’s employees.

 

16.14 Covenant of Good Faith. Except where an obligation is specifically
identified as being in a party’s sole discretion, each Party, in its respective
dealings with the other Party under or in connection with these General Terms
and each Contract, shall act in good faith and with fair dealing.

 

16.15 Electronic Communication. Subject to Section 2.4(c), Seller will comply
with the method of electronic communication reasonable specified by Tesla from
time to time, including requirements for electronic funds transfer, purchase
order transmission, electronic signature, and communication.

 

16.16 Environmentally Friendly Practices. In addition to complying with all
environmental and safety requirements, to the maximum extent practicable, each
Party will use environmentally conscious materials and practices in the
development, manufacturing, packaging and delivery of all Goods and/or in
connection with the Factory.

 

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16.17 Defined Terms. Terms used in these General Terms with initial
capitalization have the meanings specified where used or in this Section 16.17.

 

  (a) “Affiliate” means with respect to an entity, any other entity or person
Controlling, Controlled by, or under common Control with, such entity.

 

  (b) “Anti-Bribery Laws” means the United States Foreign Corrupt Practices Act
of 1977, the United Kingdom Bribery Act of 2010, the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions (in each case, as amended from time to time) and all other
applicable national, regional, provincial, state, municipal or local laws and
regulations that prohibit the bribery of, or the providing of unlawful
gratuities, facilitation payments or other benefits to, any government official
or any other person.

 

  (c) “Authorized Purchaser” means Tesla or any Affiliate of Tesla that is
authorized by Tesla to purchase Goods on behalf of Tesla and that Tesla notifies
in writing to Seller.

 

  (d) [***].

 

  (e) [***].

 

  (f) “Change of Control Event” means a transaction or event involving a Party
whereby (i) any other entity, person or “group” (as such term is used in Section
13(d) of the Securities Exchange Act of 1934, as amended) has acquired Control
of all or substantially all of the assets, of such Party (or any parent company
of such Party), whether directly or indirectly, in a single transaction or
series of related transactions, or (ii) such Party (or any parent company of
such Party) has consolidated with, or merged with or into, another entity, or
sold, assigned, conveyed, transferred, leased or otherwise disposed of all or
substantially all of its assets to another person(s) or entity(ies).

 

  (g) “Claim” means any demand, or any civil, criminal, administrative or
investigative claim, action or proceeding (including arbitration) asserted,
commenced or threatened against an entity or person by an unaffiliated third
party. For the purposes of this definition, an employee of either Party is
considered an unaffiliated third party.

 

  (h) “Commercially Reasonable Efforts” means taking all such steps and
performing in such a manner as a well-managed company would undertake where it
was acting in a determined, prudent and reasonable manner to achieve a
particular desired result for its own benefit.

 

  (i) “Contract Documents” means the Purchase Order accepted by Seller, the
applicable Pricing Agreement (if any), the provisions of these General Terms
relevant to the obligations under the accepted Purchase Order (e.g., production
and delivery of Goods), documents and attachments which are both referenced in
any of the foregoing (including Specifications) relevant to the obligations
under the accepted Purchase Order (e.g., production and delivery of Goods), and
any other additional written agreements which are signed by authorized
representatives of the Parties and pertain to the obligations under the accepted
Purchase Order (e.g., production and delivery of Goods).

 

  (j) “Control” means possessing, directly or indirectly, the power to direct or
cause the direction of the management, policies or operations of an entity,
whether through ownership of voting securities, by contract or otherwise.

 

  (k) “Effective Date” has the meaning set forth in introduction.

 

  (l) “Goods” means all products specifically identified in a statement of work
or product specific attachment or amendment to these General Terms, and all
products that are not so identified, but which are made by or on behalf of
Seller at the Factory and offered or sold by Seller to Tesla or any of its
Authorized Purchasers. Goods shall include goods made by or on behalf of Seller
at the Factory and sold by Seller to any Authorized Purchaser, directly or
indirectly including through resellers, distributors, value-added distributors
and subassembly manufacturers. “Goods” includes prototype and development parts,
pre-production versions of Goods. To the extent that the Goods are Software,
references to “sale” or words of similar meaning shall be deemed to refer to a
“license” of such Goods consistent with the terms in the Contract.

 

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  (m) “Intellectual Property Rights” means all intellectual and industrial
property rights recognized in any jurisdiction, including copyrights, mask work
rights, moral rights, trade secrets, patent rights, rights in inventions,
trademarks, trade names, and service marks (including applications for, and
registrations, extensions, renewals, and re-issuances of, the foregoing).

 

  (n) “Law(s)” means any statute, regulation, ordinance, rule, order, decree or
governmental requirement enacted, promulgated or imposed by any governmental
authority at any level (e.g., municipal, county, province, state or
national). For the avoidance of doubt, the term “Laws” includes any and all
applicable Anti-Bribery Laws and any and all applicable Laws with respect
to: (i) occupational safety and health; (ii) protection of persons and property
from death, injury or damage; (iii) the environment and the use, handling,
storage, labeling and disposal of toxic or hazardous materials; and/or
(iv) labor and employment.

 

  (o) “Lead Time” means the time expressly agreed upon in a written agreement
signed by the Parties that an order should be placed so that the supplier of the
good or service may deliver by the desired delivery date, or if not so agreed,
the reasonable amount of time required by a typical supplier in the relevant
industry, to manufacture the goods or complete the services that are the subject
of the order.

 

  (p) “Module” means smallest replaceable unit in a Tesla battery pack. In the
case of the Tesla Roadster, the Module consists of 621 battery cells connected
in a series/parallel arrangement.

 

  (q) “Person” means an individual, corporation, partnership, limited
partnership, joint venture, association, joint stock company, trust, trustee,
estate, limited liability company, unincorporated organization, real estate
investment trust, government or any agency or political subdivision thereof, or
any other form of entity.

 

  (r) “Purchase Order” means a purchase order for Goods issued by Tesla or
another Authorized Purchaser (e.g., a Production Order or a Discrete Order).

 

  (s) “Seller Personnel” means any personnel furnished by Seller or any of its
Affiliates and working at the Factory in connection with the Contract, including
employees and independent contractors of Seller, its Affiliates and
subcontractors.

 

  (t) “Seller’s Property” has the meaning given in Section 9.1 of these General
Terms.

 

  (u) “Specifications” means the most current version of all applicable
specifications and requirements that are: (i) provided by Tesla (including other
documents or requirements specifically incorporated or referenced in these
General Terms, Purchase Orders, bills of materials, statements of work, project
schedules, drawings, and CAD data) and approved in writing by Seller; and/or
(ii) provided by Seller (including any samples, drawing, CAD data, spec sheets,
or other descriptions or specifications or representations) and either (a)
approved of by Tesla in writing or (b) relied upon by Tesla. Notwithstanding
anything to the contrary in these General Terms, the Parties intend to describe
all aspects of the design of the Goods in the applicable Specifications to the
extent feasible.

 

  (v) “Tesla” means Tesla Motors, Inc. and/or an Affiliate(s) of Tesla.

 

  (w) “Tesla Motors Supplier Handbook” means the most current version of the
written set of guidelines, standards and requirements provided by Tesla
regarding development and production of Goods under these General Terms. The
Tesla Motors Supplier Handbook may be provided by Tesla electronically or via a
web-based portal.

 

  (x) “Tesla Product” means any product that is manufactured by or on behalf of
Tesla (excluding Goods). Tesla Products may include vehicles, chargers,
subassemblies, systems and components.

 

  (y) “Tesla-Supplied Items” means, collectively, the raw materials, components,
supplies, and/or services to be provided by Tesla in connection with these
General Terms (e.g. Utilities) and/or the Contract as a Tesla Responsibility.

 

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  (z) “US Person” means a United States citizen, entity organized under the Laws
of the United States or its territories or entity having its principal place of
business within the United States or any of its territories.

 

  (aa) “Warranty Period” has the meaning given in Section 5.1(a).

 

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IN WITNESS WHEREOF, the Parties have executed these General Terms by persons
duly authorized below:

 

  Tesla Motors, Inc.       Panasonic Corporation By:  

/s/ JB Straubel

    By:  

/s/ Yoshio Ito

Printed:   JB Straubel     Printed:   Yoshio Ito Title:   Chief Technology
Officer     Title:  

Senior Managing Director, Member of the Board

President, Automotive & Industrial Systems Company

Panasonic Corporation

Date:   October 1, 2014     Date:   September 30, 2014

 

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Exhibit 1 – Quality Requirements

1. Quality Requirements. All Goods sold to Tesla under the Contract shall be
manufactured and provided in accordance with agreed Tesla’s quality control
procedures and requirements, including, without limitation, all Tesla quality
standards (collectively, the “Quality Requirements”). The Parties shall
determine upon the mutual consultation whether the Goods meet the Quality
Requirements. Seller shall, in accordance with the Quality Requirements,
provide, maintain and enforce all measures necessary to secure the quality of
Goods and the manufacturing processes thereof, including without limitation,
quality control standards, inspection standards and specifications.

2. PPAP. All cells shall go through a formal Production Part Approval Process
(“PPAP”) process prior to use in a Tesla product. The PPAP process requires a
review of product and process documents (FMEA, Control Plans, Inspection
Standard, IEEE, etc.) and a process audit (as deemed necessary by Tesla Quality
Personnel). Seller shall inform Tesla of any process and product changes that
occur after completion of the PPAP process.

3. Evidence of Seller’s Quality Assurance; Testing. Upon Tesla’s request and
within the scope that the Parties agree, Seller shall deliver to Tesla [***] as
will validate compliance with all Quality Requirements. If quality problems
based upon the Quality Requirements arise from the Goods, Tesla may, upon prior
notice and during normal business hours: [***].

4. Pre-delivery Inspection. Seller shall be responsible for the quality control
of the Goods it supplies to Tesla pursuant to the Contract, including, without
limitation, adequate inspection and testing of Goods prior to delivery.

5. Tesla Testing. If quality problems based upon the Quality Requirements arise
from the Goods, upon receipt of a reasonable request by Tesla, Seller shall
promptly conduct required engineering and quality control tests of Goods
manufactured pursuant to the Contract, and shall provide Tesla with the results
of those tests.

6. This Exhibit 1 does not limit the Parties’ respective rights and obligations
under the Contract.

 

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