Exhibit 10.1

Opening Transaction

 

To:

  

Tesla, Inc.

3500 Deer Creek Road

Palo Alto, CA 94304

A/C:

  

[Insert Account Number]

From:

  

[Dealer]

Re:

  

[Base][Additional] Convertible Bond Hedge Transaction

Ref. No:

  

[Insert Reference Number]

Date:

   March [    ], 2017

 

 

Dear Ladies and Gentlemen:

The purpose of this communication (this “Confirmation”) is to set forth the
terms and conditions of the above-referenced transaction entered into on the
Trade Date specified below (the “Transaction”) between [                    ]
(“Dealer”) and Tesla, Inc. (“Counterparty”). This communication constitutes a
“Confirmation” as referred to in the ISDA Master Agreement specified below.

1.    This Confirmation is subject to, and incorporates, the definitions and
provisions of the 2006 ISDA Definitions (the “2006 Definitions”) and the
definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”, and together with the 2006 Definitions, the
“Definitions”), in each case as published by the International Swaps and
Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency
between the 2006 Definitions and the Equity Definitions, the Equity Definitions
will govern. Certain defined terms used herein have the meanings assigned to
them in the Prospectus Supplement dated March [    ], 2017 to the Prospectus
dated May 18, 2016 (the “Prospectus Supplement”) and the Base Indenture dated as
of May 22, 2013 between Counterparty and U.S. Bank National Association, as
trustee (the “Base Indenture”), as amended and supplemented by a Supplemental
Indenture to be dated as of March [    ], 2017 (the “Supplemental Indenture”
and, together with the Base Indenture, the “Indenture”), relating to the USD
[                    ] principal amount of [    ]% Convertible Senior Notes due
2022 [(]1[and the additional USD [                    ] principal amount of
[    ]% Convertible Senior Notes due 2022 issued pursuant to the option to
purchase additional convertible securities exercised on the date hereof
(collectively, the ]2“Convertible Securities”, and each USD1,000 principal
amount of Convertible Securities, a “Convertible Security”). In the event of any
inconsistency between the terms defined in the Indenture or defined in the
Prospectus Supplement and this Confirmation, this Confirmation shall govern. For
the avoidance of doubt, references herein to sections of the Indenture are based
on the description of the Convertible Securities set forth in the Prospectus
Supplement. If any relevant provisions of the Indenture differ in any material
respect from those described in the Prospectus Supplement, the parties will
amend this Confirmation in good faith to preserve the economic intent of the
parties, based on the draft of the Indenture. The parties further acknowledge
that references to the Indenture herein are references to the Indenture as in
effect on the date of its execution and if the Indenture is amended, modified or
supplemented following its execution, any such amendment, modification or
supplement will be disregarded for purposes of this Confirmation (other than
Section 8(b)(ii) below) unless the parties agree otherwise in writing. The
Transaction is subject to early unwind if the closing of the Convertible
Securities is not consummated for any reason, as set forth below in Section
8(k).

 

 

1  Insert for Base Convertible Bond Hedge Transaction Confirmation.

2  Insert for Additional Convertible Bond Hedge Transaction Confirmation.

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Each party is hereby advised, and each such party acknowledges, that the other
party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties’
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.

This Confirmation evidences a complete and binding agreement between Dealer and
Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall be subject to an agreement (the “Agreement”) in
the form of the 2002 ISDA Master Agreement as if Dealer and Counterparty had
executed an agreement in such form on the date hereof (but without any Schedule
except for (i) the election of US Dollars (“USD”) as the Termination Currency[,
(ii) the election of an executed guarantee of [☐] (“Guarantor”) dated as of the
Trade Date in substantially the form attached hereto as Annex A as a Credit
Support Document, (iii) the designation of Guarantor as Credit Support Provider
in relation to Dealer]3 and [(iv)] the election that the “Cross Default”
provisions of Section 5(a)(vi) of the Agreement shall apply to Counterparty and
to Dealer (a) with (I) a “Threshold Amount” applicable to Counterparty of USD
150 million and (II) a “Threshold Amount” applicable to Dealer of three percent
of the shareholders’ equity of [Dealer]/[Dealer Parent] on the Trade Date, [(b)
“Specified Indebtedness” having the meaning set forth in Section 14 of the
Agreement, except that with respect to Dealer it shall not include any
obligation in respect of deposits received in the ordinary course of Dealer’s
banking business,] [(c)] the phrase “or becoming capable at such time of being
declared” shall be deleted from clause (1) of such Section 5(a)(vi), and [(d)]
the following language shall be added to the end thereof: “Notwithstanding the
foregoing, a default under subsection (2) hereof shall not constitute an Event
of Default if (x) the default was caused solely by error or omission of an
administrative or operational nature; (y) funds were available to enable the
party to make the payment when due; and (z) the payment is made within two Local
Business Days of such party’s receipt of written notice of its failure to
pay.”).

All provisions contained in, or incorporated by reference to, the Agreement will
govern this Confirmation except as expressly modified herein. In the event of
any inconsistency between this Confirmation and either the Definitions or the
Agreement, this Confirmation shall govern.

The Transaction hereunder shall be the sole Transaction under the Agreement. If
there exists any ISDA Master Agreement between Dealer and Counterparty or any
confirmation or other agreement between Dealer and Counterparty pursuant to
which an ISDA Master Agreement is deemed to exist between Dealer and
Counterparty, then notwithstanding anything to the contrary in such ISDA Master
Agreement, such confirmation or agreement or any other agreement to which Dealer
and Counterparty are parties, the Transaction shall not be considered a
Transaction under, or otherwise governed by, such existing or deemed ISDA Master
Agreement.

2.    The Transaction constitutes a Share Option Transaction for purposes of the
Equity Definitions. The terms of the particular Transaction to which this
Confirmation relates are as follows:

General Terms:

 

Trade Date:

   March [    ], 2017

Effective Date:

   The closing date of the [initial]4 issuance of the Convertible Securities
[issued pursuant to the option to purchase additional Convertible Securities
exercised on the date hereof]5.

Option Style:

   Modified American, as described under “Procedures for Exercise” below.

 

 

3  Requested if Dealer is not the highest rated entity in group, typically from
the Parent.

4  Insert for Additional Convertible Bond Hedge Transaction Confirmation.

5  Insert for Additional Convertible Bond Hedge Transaction Confirmation.

 

2

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Option Type:

   Call

Seller:

   Dealer

Buyer:

   Counterparty

Shares:

   The Common Stock of Counterparty, par value USD0.001 (Ticker Symbol: “TSLA”).

Number of Options:

   [                    ]. For the avoidance of doubt, the Number of Options
outstanding shall be reduced by each exercise of Options hereunder. In no event
will the Number of Options be less than zero.

Applicable Percentage:

   [    ]%

Option Entitlement:

   As of any date, a number of Shares per Option equal to (i) the “Conversion
Rate” (as defined in the Indenture and as described in the Prospectus Supplement
under “Description of Notes—Conversion Rights—General”, but without regard to
any Fundamental Change Adjustment or a Discretionary Adjustment) multiplied by
(ii) the Applicable Percentage.

Fundamental Change Adjustment:

   Any adjustment to the Conversion Rate pursuant to the sections of the
Supplemental Indenture containing the provisions described in the Prospectus
Supplement under “Description of Notes — Conversion Rights — Adjustment to
Conversion Rate upon Conversion In Connection With a Make-Whole Fundamental
Change”.

Discretionary Adjustment:

   Any adjustment to the Conversion Rate as set forth in the section of the
Supplemental Indenture containing the provisions described in the second to last
paragraph in the Prospectus Supplement under “Description of Notes — Conversion
Rate Adjustments” (i.e., the paragraph commencing with “We are permitted to
increase...”).

Strike Price:

   As of any date, an amount in USD equal to USD1,000 divided by the “Conversion
Rate” (as defined in the section of the Supplemental Indenture containing the
provisions described in the Prospectus Supplement under “Description of
Notes—Conversion Rights —General”, but without regard to any adjustments to the
Conversion Rate pursuant to a Fundamental Change Adjustment or a Discretionary
Adjustment). The Strike Price shall be rounded by the Calculation Agent in
accordance with the applicable provisions of the Supplemental Indenture.

Number of Shares:

   As of any date, a number of Shares equal to the product of (i) the Number of
Options and (ii) the Option Entitlement.

Premium:

   USD[                    ]

Premium Payment Date:

   The Effective Date

 

3

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Exchange:

   The NASDAQ Global Select Market

Related Exchange:

   All Exchanges; provided that Section 1.26 of the Equity Definitions shall be
amended to add the words “United States” before the word “exchange” in the tenth
line of such Section.

Procedures for Exercise:

  

Conversion Date:

   With respect to any conversion of a Convertible Security, the date on which
the Holder (as such term is defined in the Indenture containing the provisions
described in the Prospectus Supplement) of such Convertible Security satisfies
all of the requirements for conversion thereof as set forth in the section of
the Supplemental Indenture described in the Prospectus Supplement under
“Description of Notes — Conversion Rights — General”; provided that if
Counterparty has not delivered to Dealer a related Notice of Exercise, then in
no event shall a Conversion Date be deemed to occur hereunder (and no Option
shall be exercised or deemed to be exercised hereunder) with respect to any
surrender of a Convertible Securities for conversion in respect of which
Counterparty has elected to designate a financial institution for exchange in
lieu of conversion of such Convertible Securities pursuant to the section of the
Supplemental Indenture containing the provisions described in the Prospectus
Supplement under “Description of Notes — Exchange in Lieu of Conversion”.

Free Convertibility Date:

   December 15, 2021

Expiration Time:

   The Valuation Time

Expiration Date:

   March 15, 2022, subject to earlier exercise.

Multiple Exercise:

   Applicable, as described under “Automatic Exercise” below.

Automatic Exercise:

   Notwithstanding Section 3.4 of the Equity Definitions, on each Conversion
Date in respect of which a notice of conversion effecting a conversion that is
effective as to Counterparty has been delivered by the relevant converting
Holder, a number of Options equal to [(i) ]the number of Convertible Securities
in denominations of USD 1,000 as to which such Conversion Date has occurred[
minus (ii) the number of Options that are or are deemed to be automatically
exercised on such Conversion Date under the Base Convertible Bond Hedge
Transaction Confirmation letter dated [                    ] between Dealer and
Counterparty (the “Base Bond Hedge

 

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   Confirmation”)]6 shall be deemed to be automatically exercised; provided that
such Options shall be exercised or deemed exercised only to the extent
Counterparty has provided a Notice of Exercise to Dealer in accordance with
“Notice of Exercise” below.    Notwithstanding the foregoing, in no event shall
the number of Options that are exercised or deemed exercised hereunder exceed
the Number of Options.

Notice of Exercise:

   Notwithstanding anything to the contrary in the Equity Definitions or under
“Automatic Exercise” above, in order to exercise any Options, Counterparty, or
the trustee on behalf of the Counterparty, must notify Dealer in writing before
12:00 p.m. (New York City time) on the Scheduled Valid Day immediately preceding
the scheduled first day of the Settlement Averaging Period for the Options being
exercised (the “Exercise Notice Deadline”) of (i) the number of such Options,
(ii) the scheduled first day of the Settlement Averaging Period and the
scheduled Settlement Date, (iii) the Relevant Settlement Method for such
Options, and (iv) if the settlement method for the related Convertible
Securities is not Settlement in Shares or Settlement in Cash (each as defined
below), the fixed amount of cash per Convertible Security that Counterparty has
elected to deliver to Holders (as such term is defined in the Indenture
containing the provisions described in the Prospectus Supplement) of the related
Convertible Securities (the “Specified Cash Amount”); provided that in respect
of any Options relating to Convertible Securities with a Conversion Date
occurring on or after the Free Convertibility Date, (A) such notice may be given
on or prior to the second Scheduled Valid Day immediately preceding the
Expiration Date and need only specify the information required in clause
(i) above, and (B) if the Relevant Settlement Method for such Options is (x) Net
Share Settlement and the Specified Cash Amount is not USD 1,000, (y) Cash
Settlement or (z) Combination Settlement, Dealer shall have received a separate
notice (the “Notice of Final Settlement Method”) in respect of all such
Convertible Securities before 12:00 p.m. (New York City time) on the Free
Convertibility Date specifying the information required in clauses (iii) and
(iv) above. Counterparty acknowledges its responsibilities under applicable
securities laws, and in particular Section 9 and Section 10(b) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and
regulations

 

6  Insert for Additional Convertible Bond Hedge Transaction Confirmation.

 

5

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   thereunder, in respect of any election of a settlement method with respect to
the Convertible Securities. For the avoidance of doubt, if Counterparty fails to
give notice as required above when due in respect of any exercise of Options
hereunder, Dealer’s obligation to make any payment or delivery in respect of
such exercise (but not in respect of any subsequent exercise) shall be
permanently extinguished, and late notice shall not cure such failure; provided
that notwithstanding the foregoing, such notice (and the related exercise of
Options) shall be effective if given after the Exercise Notice Deadline, but
prior to 4:00 P.M. New York City time, on the fifth Exchange Business Day
following the Exercise Notice Deadline, in which event Dealer’s Delivery
Obligation shall not be extinguished but may instead be adjusted by the
Calculation Agent to reflect the additional costs (including, but not limited
to, hedging mismatches and market losses) and expenses incurred by Dealer in
connection with its hedging activities (including the unwinding of any hedge
position) as a result of Dealer not having received such notice on or prior to
the Exercise Notice Deadline.

Valuation Time:

   At the close of trading of the regular trading session on the Exchange;
provided that if the principal trading session is extended, the Calculation
Agent shall determine the Valuation Time in its reasonable discretion.

Market Disruption Event:

   Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety
by the following:    “‘Market Disruption Event’ means, in respect of a Share,
(i) a failure by the Relevant Stock Exchange to open for trading during its
regular trading session or (ii) the occurrence or existence prior to 1:00 p.m.
(New York City time) on any Scheduled Valid Day for the Shares for more than one
half-hour period in the aggregate during regular trading hours of any suspension
or limitation imposed on trading (by reason of movements in price exceeding
limits permitted by the Relevant Stock Exchange or otherwise) in the Shares or
in any options contracts or future contracts relating to the Shares.”

Relevant Stock Exchange:

   The NASDAQ Global Select Market or, if the Shares are not then listed on the
NASDAQ Global Select Market, the principal other U.S. national or regional
securities exchange on which the Shares are then listed or, if the Shares are
not then listed on a U.S. national or regional securities exchange, the
over-the-counter market, as reported by the OTC Markets Group Inc. or similar
organization or, if the Shares are not then quoted by the OTC Markets Group Inc.
or similar organization, the principal other market on which the Shares are then
traded.

 

6

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Dealer’s Telephone Number and Telex and/or Facsimile Number and Contact Details
for purpose of Giving Notice:

          As specified in Section 6(b) below.

Settlement Terms:

    

Settlement Method:

    

For any Option, Net Share Settlement; provided that if the
Relevant Settlement Method set forth below for such Option is not
Net Share Settlement, then the Settlement Method for such Option
shall be such Relevant Settlement Method, but only if
(x) Counterparty shall have notified Dealer of the Relevant
Settlement Method in the Notice of Exercise or Notice of Final
Settlement Method, as applicable, for such Option and (y) the
Notice of Exercise or Notice of Final Settlement Method, as the
case may be, contains in writing the following representations and
warranties from Counterparty to Dealer as of such notice delivery
date:      (i)     none of Counterparty and its officers or directors, or any
person that controls, potentially controls, or otherwise exercises influence
over, Counterparty’s decision to elect the settlement method for the relevant
Convertible Securities is aware of any material nonpublic information regarding
Counterparty or the Shares;      (ii)     Counterparty is electing the
settlement method for the relevant Convertible Securities in good faith and not
as part of a plan or scheme to evade compliance with the U.S. federal securities
laws; Counterparty is not electing the settlement method for the relevant
Convertible Securities or the Relevant Settlement Method to create actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for
Shares) or otherwise in violation of the Exchange Act; and Counterparty has not
entered into or altered any hedging transaction relating to the Shares
corresponding to or offsetting the Transaction;      (iii)     Counterparty has
the power to make such election and to execute and deliver any

 

7

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     documentation relating to such election that it is required by this
Confirmation to deliver and to perform its obligations under this Confirmation
and has taken all necessary action to authorize such election, execution,
delivery and performance;    (iv)   such election and performance of its
obligations under this Confirmation do not violate or conflict with any law
applicable to it, any provision of its constitutional documents, any order or
judgment of any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it or any of
its assets; and    (v)   any transaction that Dealer makes with respect to the
Shares during the period beginning at the time that Counterparty delivers such
notice and ending at the close of business on the final day of the Settlement
Averaging Period shall be made by Dealer at Dealer’s sole discretion for
Dealer’s own account and Counterparty shall not have, and shall not attempt to
exercise, any influence over how, when, whether or at what price Dealer effects
such transactions, including, without limitation, the prices paid or received by
Dealer per Share pursuant to such transactions, or whether such transactions are
made on any securities exchange or privately.

Relevant Settlement Method:

   In respect of any Option:    (i)   if Counterparty has elected to settle its
conversion obligations in respect of the related Convertible Security
(A) entirely in Shares pursuant to the section of the Supplemental Indenture
containing the provisions described in the Prospectus Supplement under
“Description of Notes — Conversion Rights — Settlement Upon Conversion”
(together with cash in lieu of fractional Shares) (such settlement method,
“Settlement in Shares”), (B) in a combination of cash and Shares pursuant to the
section of the Supplemental Indenture containing the provisions described in the
Prospectus Supplement under “Description of Notes — Conversion Rights —
Settlement Upon Conversion” with a Specified Cash Amount less than USD 1,000 or
(C) in a combination of cash and Shares pursuant to the section of the

 

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     Supplemental Indenture containing the provisions described in the
Prospectus Supplement under “Description of Notes — Conversion Rights —
Settlement Upon Conversion” with a Specified Cash Amount equal to USD 1,000,
then the Relevant Settlement Method for such Option shall be Net Share
Settlement; and    (ii)   if Counterparty has elected to settle its conversion
obligations in respect of the related Convertible Security in a combination of
cash and Shares pursuant to the section of the Supplemental Indenture containing
the provisions described in the Prospectus Supplement under “Description of
Notes — Conversion Rights — Settlement Upon Conversion” with a Specified Cash
Amount greater than USD 1,000, then the Relevant Settlement Method for such
Option shall be Combination Settlement; and    (iii)   if Counterparty has
elected to settle its conversion obligations in respect of the related
Convertible Security entirely in cash pursuant to the section of the
Supplemental Indenture containing the provisions described in the Prospectus
Supplement under “Description of Notes — Conversion Rights — Settlement Upon
Conversion” (such settlement method, “Settlement in Cash”), then the Relevant
Settlement Method for such Option shall be Cash Settlement.

Net Share Settlement:

   If Net Share Settlement is applicable to any Option exercised or deemed
exercised hereunder, Dealer will deliver to Counterparty, on the relevant
Settlement Date for each such Option, a number of Shares (the “Net Share
Settlement Amount”) equal to the sum, for each Valid Day during the Settlement
Averaging Period for each such Option, of (i) (a) the Daily Option Value for
such Valid Day, divided by (b) the Relevant Price on such Valid Day, divided by
(ii) the number of Valid Days in the Settlement Averaging Period; provided that
if such exercise relates to the conversion of Convertible Securities in
connection with which Holders thereof are entitled to receive additional Shares
pursuant to a Fundamental Change Adjustment, then the Net Share Settlement
Amount shall be a number of Shares equal to the lesser of (i) the Net Share
Settlement Amount determined as if the Option Entitlement referenced in “Daily
Option Value” were adjusted pursuant to such Fundamental Change Adjustment and
(ii) a number of Shares with

 

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   a value equal to the Relevant Termination Amount for such Option, as
determined by the Calculation Agent (and the value of any such Shares determined
by the Calculation Agent using the open trading price on the last day of the
relevant Settlement Averaging Period); provided further that notwithstanding the
immediately preceding proviso, in no event shall the Net Share Settlement Amount
for any Option exceed a number of Shares equal to the Applicable Limit for such
Option divided by the Applicable Limit Price on the Settlement Date for such
Option.    Dealer will deliver cash in lieu of any fractional Shares to be
delivered with respect to any Net Share Settlement Share Amount valued at the
Relevant Price for the last Valid Day of the Settlement Averaging Period.

Combination Settlement:

   If Combination Settlement is applicable to any Option exercised or deemed
exercised hereunder, Dealer will deliver to Counterparty, on the relevant
Settlement Date for each such Option:    (i)   cash (the “Combination Settlement
Cash Amount”) equal to the sum, for each Valid Day during the Settlement
Averaging Period for such Option, of (A) an amount (the “Daily Combination
Settlement Cash Amount”) equal to the lesser of (1) the product of (x) the
Applicable Percentage and (y) the Specified Cash Amount minus USD1,000 and
(2) the Daily Option Value, divided by (B) the number of Valid Days in the
Settlement Averaging Period; provided that if the calculation in clause
(A) above results in zero or a negative number for any Valid Day, the Daily
Combination Settlement Cash Amount for such Valid Day shall be deemed to be
zero; and    (ii)   Shares (the “Combination Settlement Share Amount”) equal to
the sum, for each Valid Day during the Settlement Averaging Period for such
Option, of a number of Shares for such Valid Day (the “Daily Combination
Settlement Share Amount”) equal to (A) (1) the Daily Option Value on such Valid
Day minus the Daily Combination Settlement Cash Amount for such Valid Day,
divided by (2) the Relevant Price on such Valid Day, divided by (B) the number
of Valid Days in the Settlement Averaging Period; provided that if the
calculation in sub-clause (A)(1) above results in zero or a negative number for
any Valid Day, the Daily Combination Settlement Share Amount for such Valid Day
shall be deemed to be zero;

 

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   provided that, if such exercise relates to the conversion of Convertible
Securities in connection with which Holders thereof are entitled to receive
additional Shares pursuant to a Fundamental Change Adjustment, then the
aggregate value of the sum of the Combination Settlement Cash Amount and the
Combination Settlement Share Amount shall be equal to the lesser of (i) the
aggregate value of the sum of the Combination Settlement Cash Amount and the
Combination Settlement Share Amount determined as if the Option Entitlement
referenced in “Daily Option Value” were adjusted pursuant to such Fundamental
Change Adjustment and (ii) cash and Shares with an aggregate value equal to the
Relevant Termination Amount for such Option, as determined by the Calculation
Agent (and the value of any such Shares determined by the Calculation Agent
using the open trading price on the last day of the relevant Settlement
Averaging Period); provided further that notwithstanding the immediately
preceding proviso, (1) in no event shall the sum of (x) the Combination
Settlement Cash Amount for any Option and (y) the Combination Settlement Share
Amount for such Option multiplied by the Applicable Limit Price on the
Settlement Date for such Option, exceed the Applicable Limit for such Option and
(2) in the event the Applicable Limit would be exceeded, the Combination
Settlement Cash Amount for such Option shall be reduced such that the sum
referred to in clause (1) does not exceed the Applicable Limit.    Dealer will
deliver cash in lieu of any fractional Shares to be delivered with respect to
any Combination Settlement Share Amount valued at the Relevant Price for the
last Valid Day of the Settlement Averaging Period.

Cash Settlement:

   If Cash Settlement is applicable to any Option exercised or deemed exercised
hereunder, in lieu of Section 8.1 of the Equity Definitions, Dealer will pay to
Counterparty, on the relevant Settlement Date for each such Option, an amount of
cash (the “Cash Settlement Amount”) equal to the sum, for each Valid Day during
the Settlement Averaging Period for such Option, of (i) the Daily Option Value
for such Valid Day, divided by (ii) the number of Valid Days in the Settlement
Averaging Period; provided that, if such exercise relates to the conversion of
Convertible Securities in connection with which Holders thereof are entitled to
receive additional Shares pursuant to a Fundamental Change Adjustment, then the
Cash Settlement Amount shall be equal to the lesser of (i) the Cash Settlement

 

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   Amount determined as if the Option Entitlement referenced in “Daily Option
Value” were adjusted pursuant to such Fundamental Change Adjustment and (ii) the
Relevant Termination Amount for such Option, as determined by the Calculation
Agent (and the value of any such Shares determined by the Calculation Agent
using the open trading price on the last day of the relevant Settlement
Averaging Period); provided further that, notwithstanding the immediately
preceding proviso, in no event shall the Cash Settlement Amount for any Option
exceed the Applicable Limit for such Option.

Delivery Obligation:

   For any Settlement Date, the Net Share Settlement Amount, the Cash Settlement
Amount, the Combination Settlement Cash Amount or the Combination Settlement
Share Amount payable or deliverable on such Settlement Date.

Daily Option Value:

   For any Valid Day, an amount equal to (i) the Option Entitlement on such
Valid Day, multiplied by (ii) the Relevant Price on such Valid Day less the
Strike Price on such Valid Day; provided that if the calculation contained in
clause (ii) above results in a negative number, the Daily Option Value for such
Valid Day shall be deemed to be zero. In no event will the Daily Option Value be
less than zero.

Relevant Termination Amount:

   For any Option, the amount determined by the Calculation Agent that would be
payable by Dealer pursuant to Section 6 of the Agreement if the relevant
Conversion Date were an Early Termination Date resulting from an Additional
Termination Event with respect to which the Transaction was the sole Affected
Transaction and Counterparty was the sole Affected Party (determined without
regard to Section 8(c) of this Confirmation), provided that such amount will be
determined as if the Fundamental Change Adjustment provisions were deleted from
the Supplemental Indenture.

Applicable Limit:

   For any Option, an amount of cash equal to the Applicable Percentage
multiplied by the excess of (i) the aggregate of (A) the amount of cash, if any,
delivered to the Holder of the related Convertible Security upon conversion of
such Convertible Security and (B) the number of Shares, if any, delivered to the
Holder of the related Convertible Security upon conversion of such Convertible
Security multiplied by the Applicable Limit Price on the Settlement Date for
such Option, over (ii) USD1,000.

Applicable Limit Price:

   On any day, the opening price as displayed under the heading “Op” on
Bloomberg page TSLA <equity> (or any successor thereto).

 

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Valid Day:

   A day on which (i) there is no Market Disruption Event and (ii) trading in
the Shares generally occurs on the Relevant Stock Exchange. If the Shares are
not listed, quoted or traded on any U.S. securities exchange or any other
market, “Valid Day” means a Business Day.

Scheduled Valid Day:

   A day that is scheduled to be a Valid Day on the Relevant Stock Exchange. If
the Shares are not listed, quoted or traded on any U.S. securities exchange or
any other market, “Scheduled Valid Day” means a Business Day.

Business Day:

   Any day other than a Saturday, a Sunday or other day on which banking
institutions are authorized or required by law, regulation or executive order to
close or be closed in the State of New York.

Relevant Price:

   On any Valid Day, the per Share volume-weighted average price as displayed
under the heading “Bloomberg VWAP” on Bloomberg page “TSLA.Q <equity> AQR” (or
its equivalent successor if such page is not available) (the “Nasdaq VWAP”) in
respect of the period from the scheduled open of trading until the scheduled
close of trading of the primary trading session on such Valid Day (or if such
volume-weighted average price is unavailable at such time, the market value of
one Share on such Valid Day, as determined by the Calculation Agent using, if
practicable, a volume-weighted average method substantially similar to the
method for determining the Nasdaq VWAP). The Relevant Price will be determined
without regard to after-hours trading or any other trading outside of the
regular trading session trading hours.

Settlement Averaging Period:

   For any Option and regardless of the Settlement Method applicable to such
Option:    (i)    if the related Conversion Date occurs prior to the Free
Convertibility Date, the 20 consecutive Valid Days commencing on, and including,
the third Valid Day following such Conversion Date; or    (ii)    if the related
Conversion Date occurs on or following the Free Convertibility Date, the 20
consecutive Valid Days commencing on, and including, the 22nd Scheduled Valid
Day immediately prior to the Expiration Date.

Settlement Date:

   For any Option, the third Business Day immediately following the final Valid
Day of the Settlement Averaging Period for such Option.

Settlement Currency:

   USD

 

13

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Other Applicable Provisions:

   The provisions of Sections 9.1(c), 9.8, 9.9, 9.11 and 9.12 of the Equity
Definitions will be applicable, except that all references in such provisions to
“Physically-settled” shall be read as references to “Share Settled”. “Share
Settled” in relation to any Option means that Net Share Settlement or
Combination Settlement is applicable to that Option. The last sentence of
Section 9.12 of the Equity Definitions is hereby amended and restated to read
“Notwithstanding the foregoing, a party shall not be responsible for any
special, indirect or consequential damages (including, without limitation,
delayed or lost ‘earnings per share’ benefits and delayed or loss tax benefits),
even if informed of the possibility thereof.”

Representation and Agreement:

   Notwithstanding anything to the contrary in Equity Definitions (including,
but not limited to, Section 9.11 thereof), the parties acknowledge that (i) any
Shares delivered to Counterparty shall be, upon delivery, subject to
restrictions and limitations arising from Counterparty’s status as issuer of the
Shares under applicable securities laws, (ii) Dealer may deliver any Shares
required to be delivered hereunder in certificated form in lieu of delivery
through the Clearance System and (iii) any Shares delivered to Counterparty may
be “restricted securities” (as defined in Rule 144 under the Securities Act of
1933, as amended (the “Securities Act”)). With respect to any such certificated
Shares (as described in clause (ii) above), the Representation and Agreement
contained in Section 9.11 of the Equity Definitions shall be modified by
deleting the remainder of the provision after the word “encumbrance” in the
fourth line thereof.

Adjustments:

  

Method of Adjustment:

   Notwithstanding Section 11.2 of the Equity Definitions, upon the occurrence
of any event or condition set forth in the section of the Supplemental Indenture
containing the provisions described in the Prospectus Supplement under
“Description of Notes—Conversion Rights—Conversion Rate
Adjustments”,“—Recapitalizations, Reclassifications and Changes of Our Common
Stock” and “—Adjustments of Prices” (each, a “Potential Adjustment Event”), the
Calculation Agent shall make a corresponding adjustment in respect of any one or
more of the Strike Price, the Number of Options, the Option Entitlement and any
other term relevant to the exercise, settlement or payment of the Transaction;
provided that, notwithstanding the foregoing, if the Calculation Agent acting in
good faith and a commercially reasonable manner disagrees with any adjustment to
the Convertible Securities that involves an exercise of discretion by

 

14

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   Counterparty or its board of directors (including, without limitation,
pursuant to the Section of the Supplemental Indenture containing the provisions
described in the Prospectus Supplement under “Description of Notes—Conversion
Rights—Conversion Rate Adjustments—Adjustments of Prices”, or in connection with
any proportional adjustment or the determination of the fair value of any
securities, property, rights or other assets) and determines that such
adjustment was materially inaccurate or based on materially inaccurate inputs,
then in each such case, the Calculation Agent will determine the adjustment to
be made to any one or more of the Strike Price, Number of Options, Option
Entitlement and any other variable relevant to the exercise, settlement or
payment for the Transaction in a commercially reasonable manner; provided,
further, that, notwithstanding the foregoing, if any Potential Adjustment Event
occurs during the Settlement Averaging Period but no adjustment was made to any
Convertible Security under the Indenture because the relevant Holder was deemed
to be a record owner of the underlying Shares on the related Conversion Date,
then the Calculation Agent shall make an adjustment, as reasonably determined by
it, to the terms hereof in order to account for such Potential Adjustment Event.
   Promptly upon the occurrence of any Potential Adjustment Event, Counterparty
shall notify the Calculation Agent of such Potential Adjustment Event.    For
the avoidance of doubt, Dealer shall not have any delivery obligation hereunder
in respect of any distributed property delivered by Counterparty pursuant to the
section of the Supplemental Indenture containing the provisions described in the
Prospectus Supplement under clause (3) of the section titled “Description of
Notes — Conversion Rights — Conversion Rate Adjustments” (the paragraph starting
with “Notwithstanding...”) or any payment obligation in respect of any cash paid
by Counterparty the section of the Supplemental Indenture containing the
provisions described in the Prospectus Supplement under clause (4) of the
section titled “Description of Notes — Conversion Rights — Conversion Rate
Adjustments” (the paragraph starting with “Notwithstanding...”) (collectively,
the “Conversion Rate Adjustment Fallback Provisions”), and no adjustment shall
be made to the terms of the Transaction on account of any event or condition
described in the Conversion Rate Adjustment Fallback Provisions.

 

15

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Extraordinary Events:

  

Merger Events:

   Applicable; provided that notwithstanding Section 12.1(b) of the Equity
Definitions, a “Merger Event” means the occurrence of any event or condition set
forth in the section of the Supplemental Indenture containing the provisions
described in the Prospectus Supplement under “Description of Notes — Conversion
Rights — Recapitalizations, Reclassifications and Changes of Our Common Stock”.

Tender Offer:

   Applicable; provided that notwithstanding Section 12.1(d) of the Equity
Definitions, a “Tender Offer” means the occurrence of any event or condition set
forth in the section of the Supplemental Indenture containing the provisions
described in the Prospectus Supplement under clause (5) of the section titled
“Description of Notes — Conversion Rights — Conversion Rate Adjustments”.

Consequences of Merger Events /

  

Tender Offers:

   Notwithstanding Section 12.2 and 12.3 of the Equity Definitions, upon the
occurrence of a Merger Event that results in an adjustment under the Indenture
containing the provisions described in the Prospectus Supplement, the
Calculation Agent shall make a corresponding adjustment in respect of any one or
more of the Strike Price, the Number of Options, the Option Entitlement and any
other term relevant to the exercise, settlement or payment of the Transaction;
provided that such adjustment shall be made without regard to any adjustment to
the Conversion Rate pursuant to a Fundamental Change Adjustment or a
Discretionary Adjustment; and provided further that the Calculation Agent may
limit or alter any such adjustment referenced in this paragraph so that the fair
value of the Transaction is not reduced as a result of such adjustment; and
provided further that if, with respect to a Merger Event, the consideration for
the Shares includes (or, at the option of a holder of Shares, may include)
shares of an entity or person not organized under the laws of the United States,
any state thereof or the District of Columbia, Cancellation and Payment
(Calculation Agent Determination) shall apply.

Notice of Merger Consideration and

  

Consequences:

   Upon the occurrence of a Merger Event that causes the Shares to be converted
into the right to receive more than a single type of consideration (determined
based in part upon any form of stockholder election), Counterparty shall
reasonably promptly (but in any event prior to the relevant merger date) notify
the Calculation Agent of (i) the type and amount of consideration that a holder
of Shares would have

 

16

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   been entitled to in the case of reclassifications, consolidations, mergers,
sales or transfers of assets or other transactions that cause Shares to be
converted into the right to receive more than a single type of consideration,
(ii) the weighted average of the types and amounts of consideration to be
received by the holders of Shares that affirmatively make such an election, and
(iii) the details of the adjustment to be made under the Indenture containing
the provisions described in the Prospectus Supplement in respect of such Merger
Event.

Nationalization, Insolvency or Delisting:

   Cancellation and Payment (Calculation Agent Determination); provided that in
addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it
will also constitute a Delisting if the Shares are not immediately re-listed,
re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global
Select Market or The NASDAQ Global Market (or their respective successors); if
the Shares are immediately re-listed, re-traded or re-quoted on any such
exchange or quotation system, such exchange or quotation system shall thereafter
be deemed to be the Exchange.

Additional Disruption Events:

  

(a) Change in Law:

   Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is
hereby amended by (i) replacing the phrase “the interpretation” in the third
line thereof with the phrase “, or public announcement of, the formal or
informal interpretation”, (ii) by adding the phrase “and/or Hedge Position”
after the word “Shares” in clause (X) thereof and (iii) by immediately following
the word “Transaction” in clause (X) thereof, adding the phrase “in the manner
contemplated by the Hedging Party on the Trade Date”; provided, further that any
determination as to whether (A) the adoption of or any change in any applicable
law or regulation (including, for the avoidance of doubt and without limitation,
(x) any tax law or (y) adoption or promulgation of new regulations authorized or
mandated by existing statute) or (B) the promulgation of or any change in the
interpretation by any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law or regulation (including any action taken by
a taxing authority), in each case, constitutes a “Change in Law” shall be made
without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 or any similar legal certainty provision in any
legislation enacted, or rule or regulation promulgated, on or after the Trade
Date.

(b) Failure to Deliver:

   Applicable

 

17

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(c) Insolvency Filing:

  

Applicable

(d) Hedging Disruption:

  

Not Applicable

(e) Increased Cost of Hedging:

  

Not Applicable

Hedging Party:

  

Dealer

Determining Party:

  

Dealer

Non-Reliance:

  

Applicable

Agreements and Acknowledgments

  

Regarding Hedging Activities:

  

Applicable

Additional Acknowledgments:

   Applicable

3.    Calculation Agent: Dealer; provided that all determinations made by the
Calculation Agent shall be made in good faith and in a commercially reasonable
manner; provided further that, upon receipt of written request from
Counterparty, the Calculation Agent shall promptly provide Counterparty with a
written explanation describing in reasonable detail any calculation, adjustment
or determination made by it (including any quotations, market data or
information from internal or external sources used in making such calculation,
adjustment or determination, as the case may be, but without disclosing Dealer’s
proprietary models or other information that may be proprietary or subject to
contractual, legal or regulatory obligations to not disclose such information),
and shall use commercially reasonable efforts to provide such written
explanation within five (5) Exchange Business Days from the receipt of such
request.

 

4.    Account Details:    Dealer Payment Instructions:   
        [                    ]    Counterparty Payment Instructions:   
        To be provided by Counterparty. 5.    Offices:    The Office of Dealer
for the Transaction is:            [                    ]    The Office of
Counterparty for the Transaction is:    3500 Deer Creek Road, Palo Alto, CA
94304 6.    Notices: For purposes of this Confirmation: (a)            Address
for notices or communications to Counterparty:            To:    Tesla, Inc.   
        Attn:    [                    ]       [                    ]   
        Telephone:    [                    ]            Facsimile:   
[                    ]            With a copy to:               Attn:   
[                    ]       [                    ]

 

18

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Telephone:

  

[                     ]

  

Facsimile:

  

[                     ]

(b)

  

Address for notices or communications to Dealer:

  

To:

  

[                     ]

  

Attn:

  

[                     ]

     

[                     ]

  

Telephone:

  

[                     ]

  

Facsimile:

  

[                     ]

  

With a copy to:

     

Attn:

  

[                     ]

     

[                     ]

  

Telephone:

  

[                     ]

  

Facsimile:

  

[                     ]

  

Email:

  

[                     ]

7.    Representations, Warranties and Agreements:

(a)    In addition to the representations and warranties in the Agreement and
those contained elsewhere herein, Counterparty represents and warrants to and
for the benefit of, and agrees with, Dealer as follows:

(i)    On the Trade Date and as of the date of any election by Counterparty of
the Share Termination Alternative under (and as defined in) Section 8(c) below,
(A) none of Counterparty and its officers and directors is aware of any material
nonpublic information regarding Counterparty or the Shares and (B) all reports
and other documents filed by Counterparty with the Securities and Exchange
Commission pursuant to the Exchange Act when considered as a whole (with the
more recent such reports and documents deemed to amend inconsistent statements
contained in any earlier such reports and documents), do not contain any untrue
statement of a material fact or any omission of a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.

(ii)    (A) On the Trade Date, Counterparty is not engaged in any
“distribution,” as such term is defined in Regulation M under the Exchange Act
(“Regulation M”), other than (A) a distribution meeting the requirements of the
exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M and
(B) the distribution of the Convertible Securities and the concurrent
distribution of the Shares described in the prospectus supplement relating to
the Convertible Securities.

(iii)    Without limiting the generality of Section 13.1 of the Equity
Definitions, Counterparty acknowledges that neither Dealer nor any of its
affiliates is making any representations or warranties or taking any position or
expressing any view with respect to the treatment of the Transaction under any
accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815,
Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from
Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own
Equity (or any successor issue statements).

(iv)    Without limiting the generality of Section 3(a)(iii) of the Agreement,
the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange
Act.

(v)    Prior to the Trade Date, Counterparty shall deliver to Dealer a
resolution of Counterparty’s board of directors authorizing the Transaction and
such other certificate or certificates as Dealer shall reasonably request.

(vi)    Counterparty is not entering into this Confirmation to create actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for
Shares) or otherwise in violation of the Exchange Act.

 

19

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(vii)    Counterparty is not, and after giving effect to the transactions
contemplated hereby will not be, required to register as, an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.

(viii)    On each of the Trade Date and the Premium Payment Date, Counterparty
is not “insolvent” (as such term is defined under Section 101(32) of the U.S.
Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”))
and Counterparty would be able to purchase the Number of Shares[ and the number
of Shares underlying the Base Bond Hedge Confirmation]7 in compliance with the
laws of the jurisdiction of Counterparty’s incorporation.

(ix)    The representations and warranties of Counterparty set forth in
Section 3 of the Agreement and Section 1 of the Underwriting Agreement, dated as
of March 16, 2017, among Goldman, Sachs & Co., Deutsche Bank Securities Inc.,
Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC as representatives of
the several Underwriters named therein and Counterparty (the “Underwriting
Agreement”) are true and correct as of the Trade Date and the Effective Date and
are hereby deemed to be repeated to Dealer as if set forth herein.

(x)    No state or local law, rule, regulation or regulatory order in the State
of Delaware or California applicable to the Shares would give rise to any
reporting, consent, registration or other requirement (including without
limitation a requirement to obtain prior approval from any person or entity) as
a result of Dealer or its affiliates owning or holding (however defined) Shares.

(xi)    Counterparty (i) is an “institutional account” as defined in FINRA Rule
4512(c), (ii) is capable of evaluating investment risks independently, both in
general and with regard to all transactions and investment strategies involving
a security or securities, and will exercise independent judgment in evaluating
the recommendations of Dealer or its associated persons, and (iii) will notify
Dealer if any of the statements contained in clause (i) or (ii) of this
Section 7(a)(xi) ceases to be true.

(b)    Each of Dealer and Counterparty agrees and represents that it is an
“eligible contract participant” as defined in Section 1a(18) of the U.S.
Commodity Exchange Act, as amended, and is entering into the Transaction as
principal (and not as agent or in any other capacity, fiduciary or otherwise)
and not for the benefit of any third party.

(c)    Each of Dealer and Counterparty acknowledges that the offer and sale of
the Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section
4(a)(2) thereof. Accordingly, Counterparty represents and warrants to Dealer
that (i) it has the financial ability to bear the economic risk of its
investment in the Transaction and is able to bear a total loss of its investment
and its investments in and liabilities in respect of the Transaction, which it
understands are not readily marketable, are not disproportionate to its net
worth, and it is able to bear any loss in connection with the Transaction,
including the loss of its entire investment in the Transaction, (ii) it is an
“accredited investor” as that term is defined in Regulation D as promulgated
under the Securities Act, (iii) it is entering into the Transaction for its own
account and without a view to the distribution or resale thereof, (iv) the
assignment, transfer or other disposition of the Transaction has not been and
will not be registered under the Securities Act and is restricted under this
Confirmation, the Securities Act and state securities laws, and (v) its
financial condition is such that it has no need for liquidity with respect to
its investment in the Transaction and no need to dispose of any portion thereof
to satisfy any existing or contemplated undertaking or indebtedness and is
capable of assessing the merits of and understanding (on its own behalf or
through independent professional advice), and understands and accepts, the
terms, conditions and risks of the Transaction.

 

 

7  Insert for Additional Convertible Bond Hedge Confirmation.

 

20

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(d)    Each of Dealer and Counterparty agrees and acknowledges that Dealer is a
“financial institution,” “swap participant” and “financial participant” within
the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code.
The parties hereto further agree and acknowledge (A) that this Confirmation is
(i) a “securities contract,” as such term is defined in Section 741(7) of the
Bankruptcy Code, with respect to which each payment and delivery hereunder or in
connection herewith is a “termination value,” “payment amount” or “other
transfer obligation” within the meaning of Section 362 of the Bankruptcy Code
and a “settlement payment” within the meaning of Section 546 of the Bankruptcy
Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B)
of the Bankruptcy Code, with respect to which each payment and delivery
hereunder or in connection herewith is a “termination value,” “payment amount”
or “other transfer obligation” within the meaning of Section 362 of the
Bankruptcy Code and a “transfer” within the meaning of Section 546 of the
Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by,
among other sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 362(o),
546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

(e)    As a condition to the effectiveness of the Transaction, Counterparty
shall deliver to Dealer (i) an incumbency certificate, dated as of the Trade
Date, of Counterparty in customary form and (ii) an opinion of counsel, dated as
of the Trade Date and reasonably acceptable to Dealer in form and substance, as
to the due incorporation, existence and good standing of Issuer in Delaware, its
qualifications as a foreign corporation and good standing in California, the due
authorization, execution and delivery of this Confirmation, and the absence of
conflict of the execution, delivery and performance of this Confirmation with
any material agreement required to be filed as an exhibit to Issuer’s Annual
Report on Form 10-K and Issuer’s charter documents.

(f)    Counterparty understands that notwithstanding any other relationship
between Counterparty and Dealer and its affiliates, in connection with the
Transaction and any other over-the-counter derivative transactions between
Counterparty and Dealer or its affiliates, Dealer or its affiliates is acting as
principal and is not a fiduciary or advisor in respect of any such transaction,
including any entry, exercise, amendment, unwind or termination thereof.

(g)    Counterparty represents and warrants that it has received, read and
understands the OTC Options Risk Disclosure Statement and a copy of the most
recent disclosure pamphlet prepared by The Options Clearing Corporation entitled
“Characteristics and Risks of Standardized Options”.

(h)    Each party acknowledges and agrees to be bound by the Conduct Rules of
the Financial Industry Regulatory Authority, Inc. applicable to transactions in
options, and further agrees not to violate the position and exercise limits set
forth therein.

(i)    Counterparty acknowledges that the board of directors of Counterparty has
granted the approval necessary to cause the restrictions set forth in
Section 203 of the Delaware General Corporation Law (the “Business Combinations
Statute”) to be inapplicable to the Transaction, including, without limitation,
transactions in, or linked to, Counterparty’s securities to be effected by
Dealer in connection with hedging the Transaction, and as a result neither
Dealer nor any of its affiliates or associates shall be subject to the
restrictions in the Business Combinations Statute as an “interested stockholder”
of Counterparty by virtue of (i) its entry into the Transaction or (ii) any act
that Dealer may take in furtherance of the Transaction (including without
limitation the hedging transactions to be effected by Dealer or its affiliates
in connection with the Transaction, whether in Shares or transactions that
references the Shares) or (iii) its underwriting of, as the case may be, and/or
market-making in, the Convertible Securities.

8. Other Provisions:

(a)    Right to Extend. Dealer may postpone any Exercise Date or Settlement Date
or any other date of valuation or delivery by Dealer, with respect to some or
all of the relevant Options (in which event the Calculation Agent shall make
appropriate adjustments to the Delivery Obligation), if Dealer determines, in
its reasonable discretion, that such extension is reasonably necessary or
appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in
light of existing liquidity conditions in the cash market, the stock borrow
market or other relevant market or to enable Dealer to effect purchases of
Shares or Share Termination Delivery Units in connection with its hedging, hedge
unwind or settlement activity hereunder in a manner that would, if Dealer were
Counterparty or an affiliated purchaser of Counterparty, be in

 

21

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compliance with applicable legal, regulatory or self-regulatory requirements, or
with related policies and procedures applicable to Dealer; provided that any
such extension pursuant to this clause shall not exceed 30 Exchange Business
Days.

(b)    Additional Termination Events. The occurrence of (i) an event of default
with respect to Counterparty under the terms of the Convertible Securities as
set forth in the Section of the Supplemental Indenture containing the provisions
described in the Prospectus Supplement under “Description of Notes—Events of
Default”, or (ii) an Amendment Event, in each case, shall constitute an
Additional Termination Event with respect to which the Transaction is the sole
Affected Transaction and Counterparty is the sole Affected Party, and Dealer
shall be the party entitled to designate an Early Termination Date pursuant to
Section 6(b) of the Agreement and to determine the amount payable pursuant to
Section 6(e) of the Agreement.

“Amendment Event” means that Counterparty amends, modifies, supplements, waives
or obtains a waiver in respect of any term of the Indenture or the Convertible
Securities governing the principal amount, coupon, maturity, repurchase
obligation of Counterparty, any term relating to conversion of the Convertible
Securities (including changes to the conversion price, conversion settlement
dates or conversion conditions), or any term that would require consent of the
holders of not less than 100% of the principal amount of the Convertible
Securities to amend, in each case without the prior consent of Dealer.

(c)    Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If at any time an Early Termination Date occurs and Dealer
would be required to make a payment pursuant to Section 6 of the Agreement or an
Extraordinary Event occurs and Dealer would be required to make a payment
pursuant to Article 12 of the Equity Definitions (a “Payment Obligation”),
Counterparty shall have the right, in its sole discretion, to require Dealer to
satisfy any such Payment Obligation by the Share Termination Alternative (as
defined below) by giving irrevocable telephonic notice to Dealer, confirmed in
writing within two Scheduled Trading Days, no later than 9:30 a.m. New York City
time on the relevant merger date, Announcement Date, Early Termination Date or
date of cancellation or termination in respect of an Extraordinary Event, as
applicable (“Notice of Share Termination”); provided that if Counterparty does
not elect to require Dealer to satisfy its Payment Obligation by the Share
Termination Alternative, Dealer shall have the right, in its reasonable
discretion, to elect to satisfy its Payment Obligation by the Share Termination
Alternative, notwithstanding Counterparty’s failure to elect or election to the
contrary; and provided further that Counterparty shall not have the right to so
elect (but, for the avoidance of doubt, Dealer shall have the right to so elect)
in the event of (i) an Insolvency, a Nationalization or a Merger Event, in each
case, in which the consideration or proceeds to be paid to holders of Shares
consists solely of cash or (ii) an Event of Default in which Counterparty is the
Defaulting Party or a Termination Event in which Counterparty is the Affected
Party, which Event of Default or Termination Event resulted from an event or
events within Counterparty’s control. Upon such Notice of Share Termination, the
following provisions shall apply on the Scheduled Trading Day immediately
following the relevant merger date, Announcement Date, Early Termination Date or
date of cancellation or termination in respect of an Extraordinary Event, as
applicable:

 

Share Termination Alternative:    Applicable and means that Dealer shall deliver
to Counterparty the Share Termination Delivery Property on the date on which the
Payment Obligation would otherwise be due pursuant to “Consequences of Merger
Events” above or Section 12.2, 12.6, 12.7 or 12.9 of the Equity Definitions or
Section 6(d)(ii) of the Agreement, as applicable, or such later date as the
Calculation Agent may reasonably determine (the “Share Termination Payment
Date”), in satisfaction of the Payment Obligation. Share Termination Delivery
Property:    A number of Share Termination Delivery Units, as calculated by the
Calculation Agent, equal to the Payment Obligation divided by the Share
Termination Unit Price. The Calculation Agent shall adjust the Share Termination
Delivery Property by replacing any fractional portion of the aggregate amount of
a security therein with an amount of cash equal to the value of such fractional
security based on the values used to calculate the Share Termination Unit Price.

 

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Share Termination Unit Price:    The value of property contained in one Share
Termination Delivery Unit on the date such Share Termination Delivery Units are
to be delivered as Share Termination Delivery Property, as determined by the
Calculation Agent in its discretion by commercially reasonable means and
notified by the Calculation Agent to Dealer at the time of notification of the
Payment Obligation. Share Termination Delivery Unit:    In the case of a
Termination Event, Event of Default, Delisting or Additional Disruption Event,
one Share or, in the case of an Insolvency, Nationalization or Merger Event, one
Share or a unit consisting of the number or amount of each type of property
received by a holder of one Share (without consideration of any requirement to
pay cash or other consideration in lieu of fractional amounts of any securities)
in such Insolvency, Nationalization or Merger Event, as applicable. If such
Insolvency, Nationalization or Merger Event involves a choice of consideration
to be received by holders, such holder shall be deemed to have elected to
receive the maximum possible amount of cash. Failure to Deliver:    Applicable
Other Applicable Provisions:    If Share Termination Alternative is applicable,
the provisions of Sections 9.8, 9.9, 9.10 and 9.11 of the Equity Definitions
will be applicable as if “Physical Settlement” applied to the Transaction,
except that all references to “Shares” shall be read as references to “Share
Termination Delivery Units”; provided that the Representation and Agreement
contained in Section 9.11 of the Equity Definitions shall be modified by
excluding any representations therein relating to restrictions, obligations,
limitations or requirements under applicable securities laws as a result of the
fact that Counterparty is the issuer of any Share Termination Delivery Units (or
any part thereof).

(d)    Disposition of Hedge Shares. Counterparty hereby agrees that if, in the
good faith reasonable judgment of Dealer, based on the advice of counsel, the
Shares (the “Hedge Shares”) acquired by Dealer for the purpose of hedging its
obligations pursuant to the Transaction cannot be sold in the U.S. public market
by Dealer without registration under the Securities Act, Counterparty shall, at
its election: (i) in order to allow Dealer to sell the Hedge Shares in a
registered offering, make available to Dealer an effective registration
statement under the Securities Act to cover the resale of such Hedge Shares and
(A) enter into an agreement, in form and substance satisfactory to Dealer,
substantially in the form of an underwriting agreement for a registered offering
of equity securities of companies of comparable size, maturity and lines of
business, (B) provide accountant’s “comfort” letters in customary form for
registered offerings of equity securities, (C) provide disclosure opinions of
nationally recognized outside counsel to Counterparty as are customarily
requested in connection with underwritten follow-on offers of equity securities
of companies of comparable size, maturity and lines of business, (D) provide
other customary opinions, certificates and closing documents customary in form
for registered offerings of equity securities of companies of comparable size,
maturity and lines of business and (E) afford Dealer a reasonable opportunity to
conduct a “due diligence” investigation with respect to Counterparty customary
in scope for underwritten offerings of equity securities of companies of
comparable size, maturity and lines of business; provided, however, that if
Counterparty elects clause (i) above but the items referred to therein are not
completed in a timely manner, or if Dealer, in its sole commercially reasonable
discretion, is not satisfied with access to due diligence materials, the results
of its due diligence investigation, or the procedures and documentation for the
registered offering referred to above, then clause (ii) or clause (iii) of this
Section 8(d) shall apply at the election of Counterparty; (ii) in order to allow
Dealer to sell the Hedge Shares in a private placement, enter into a private
placement agreement substantially similar to private placement purchase
agreements customary for private placements of equity securities of companies of
comparable size, maturity and lines of business, in form and substance
reasonably satisfactory to Dealer, including

 

23

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customary representations, covenants, blue sky and other governmental filings
and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or
any designated buyer of the Hedge Shares from Dealer), opinions and certificates
and such other documentation as is customary for private placements agreements
of companies of comparable size, maturity and lines of business, all reasonably
acceptable to Dealer (in which case, the Calculation Agent shall make any
adjustments to the terms of the Transaction that are necessary, in its
reasonable judgment, to compensate Dealer for any discount from the public
market price of the Shares incurred on the sale of Hedge Shares in a private
placement); or (iii) purchase the Hedge Shares from Dealer at the Relevant Price
on such Exchange Business Days, and in the amounts, requested by Dealer. This
Section 8(d) shall survive the termination, expiration or early unwind of the
Transaction.

(e)    Repurchase and Conversion Rate Adjustment Notices. Counterparty shall, at
least five Scheduled Trading Days prior to any day on which Counterparty intends
to effect any repurchase of Shares or consummates or otherwise engages in any
transaction or event (a “Conversion Rate Adjustment Event”) that could
reasonably be expected to lead to an increase in the Conversion Rate, give
Dealer a written notice of such repurchase or Conversion Rate Adjustment Event
(a “Repurchase Notice”) on such day if, following such repurchase or Conversion
Rate Adjustment Event, the Notice Percentage would reasonably be expected to be
(i) greater than 8.0 % and (ii) greater by 0.5% than the Notice Percentage
included in the immediately preceding Repurchase Notice (or, in the case of the
first such Repurchase Notice, greater than the Notice Percentage as of the date
hereof). The “Notice Percentage” as of any day is the fraction, expressed as a
percentage, the numerator of which is[ sum of (a)] the Number of Shares[ and
(b) the number of Shares underlying the Base Bond Hedge Confirmation,]8 and the
denominator of which is the number of Shares outstanding on such day. In the
event that Counterparty fails to provide Dealer with a Repurchase Notice on the
day and in the manner specified in this Section 8(e) then Counterparty agrees to
indemnify and hold harmless Dealer, its affiliates and their respective
directors, officers, employees, agents and controlling persons (Dealer and each
such person being an “Indemnified Party”) from and against any and all losses
(including losses relating to the Dealer’s hedging activities as a consequence
of becoming, or of the risk of becoming, a Section 16 “insider”, including
without limitation, any forbearance from hedging activities or cessation of
hedging activities and any losses in connection therewith with respect to the
Transaction), claims, damages and liabilities (or actions in respect thereof),
joint or several, to which such Indemnified Party may become subject under
applicable securities laws, including without limitation, Section 16 of the
Exchange Act or under any U.S. state or federal law, regulation or regulatory
order, relating to or arising out of such failure. If for any reason the
foregoing indemnification is unavailable to any Indemnified Party or
insufficient to hold harmless any Indemnified Party, then Counterparty shall
contribute, to the maximum extent permitted by law, to the amount paid or
payable by the Indemnified Party as a result of such loss, claim, damage or
liability. In addition, Counterparty will reimburse any Indemnified Party for
all reasonable expenses (including reasonable counsel fees and expenses) as they
are incurred (after notice to Counterparty) in connection with the investigation
of, preparation for or defense or settlement of any pending or threatened claim
or any action, suit or proceeding arising therefrom, whether or not such
Indemnified Party is a party thereto and whether or not such claim, action, suit
or proceeding is initiated or brought by or on behalf of Counterparty. This
indemnity shall survive the completion of the Transaction contemplated by this
Confirmation and any assignment and delegation of the Transaction made pursuant
to this Confirmation or the Agreement shall inure to the benefit of any
permitted assignee of Dealer.

(f)    Transfer and Assignment. Either party may transfer or assign any of its
rights or obligations under the Transaction with the prior written consent of
the non-transferring party, such consent not to be unreasonably withheld or
delayed; provided that Dealer may transfer or assign without any consent of
Counterparty its rights and obligations hereunder, in whole or in part, to
(A) any affiliate of Dealer whose obligation would be guaranteed by Dealer or by
[Name of Dealer Parent], or (B) any person (including any affiliate of Dealer
whose obligations are not guaranteed in the manner described in clause (A)) or
any person whose obligations would be guaranteed by a person (a “Designated
Transferee”), in either case, of credit quality equivalent to Dealer’s (or its
guarantor’s), provided however that in no event

 

8 

Insert for Additional Convertible Bond Hedge Confirmation.

 

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shall the credit rating of the Designated Transferee or of its guarantor
(whichever is higher) be lower than A3 from Moody’s Investor Service, Inc. or
its successor or A- from Standard and Poor’s Rating Group, Inc. or its
successor; provided further that Dealer will notify Counterparty prior to any
proposed transfer or assignment to a Designated Transferee. If at any time at
which (1) the Equity Percentage exceeds 8.0 % or (2) Dealer, Dealer Group (as
defined below) or any person whose ownership position would be aggregated with
that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a
“Dealer Person”) under the Business Combination Statute or other federal, state
or local law, rule, regulation or regulatory order or organizational documents
or contracts of Counterparty applicable to ownership of Shares (“Applicable
Restrictions”), owns, beneficially owns, constructively owns, controls, holds
the power to vote or otherwise meets a relevant definition of ownership in
excess of a number of Shares equal to (x) the number of Shares that would give
rise to reporting, registration, filing or notification obligations or other
requirements (including obtaining prior approval by a state or federal
regulator) of a Dealer Person under Applicable Restrictions and with respect to
which such requirements have not been met or the relevant approval has not been
received minus (y) 1% of the number of Shares outstanding on the date of
determination (either such condition described in clause (1) or (2), an “Excess
Ownership Position”), Dealer, in its reasonable discretion, is unable to effect
a transfer or assignment to a third party in accordance with the requirements
set forth above after its commercially reasonable efforts on pricing and terms
and within a time period reasonably acceptable to Dealer such that an Excess
Ownership Position no longer exists, Dealer may designate any Scheduled Trading
Day as an Early Termination Date with respect to a portion (the “Terminated
Portion”) of the Transaction, such that an Excess Ownership Position no longer
exists following such partial termination. In the event that Dealer so
designates an Early Termination Date with respect to a portion of the
Transaction, a payment or delivery shall be made pursuant to Section 6 of the
Agreement and Section 8(c) of this Confirmation as if (i) an Early Termination
Date had been designated in respect of a Transaction having terms identical to
the Terminated Portion of the Transaction, (ii) Counterparty were the sole
Affected Party with respect to such partial termination, (iii) such portion of
the Transaction were the only Terminated Transaction and (iv) Dealer were the
party entitled to designate an Early Termination Date pursuant to Section 6(b)
of the Agreement and to determine the amount payable pursuant to Section 6(e) of
the Agreement. The “Equity Percentage” as of any day is the fraction, expressed
as a percentage, (A) the numerator of which is the number of Shares that Dealer
and any of its affiliates subject to aggregation with Dealer for purposes of the
“beneficial ownership” test under Section 13 of the Exchange Act and all persons
who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act) with Dealer (collectively, “Dealer Group”) “beneficially own”
(within the meaning of Section 13 of the Exchange Act) without duplication on
such day and (B) the denominator of which is the number of Shares outstanding on
such day. In the case of a transfer or assignment by Counterparty of its rights
and obligations hereunder and under the Agreement, in whole or in part (any such
Options so transferred or assigned, the “Transfer Options”), to any party,
withholding of such consent by Dealer shall not be considered unreasonable if
such transfer or assignment does not meet the reasonable conditions that Dealer
may impose including, but not limited, to the following conditions:

(A)    With respect to any Transfer Options, Counterparty shall not be released
from its notice and indemnification obligations pursuant to Section 8(e) or any
obligations under Section 2 (regarding Extraordinary Events) or 8(d) of this
Confirmation;

(B)    Any Transfer Options shall only be transferred or assigned to a third
party that is a U.S. person (as defined in the Internal Revenue Code of 1986, as
amended (the “Code”);

(C)    Such transfer or assignment shall be effected on terms, including any
reasonable undertakings by such third party (including, but not limited to,
undertakings with respect to compliance with applicable securities laws in a
manner that, in the reasonable judgment of Dealer, will not expose Dealer to
material risks under applicable securities laws) and execution of any
documentation and delivery of customary legal opinions with respect to
securities laws and other matters by such third party and Counterparty as are
reasonably requested and reasonably satisfactory to Dealer;

(D)    Dealer will not, as a result of such transfer and assignment, be required
to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of
the Agreement greater than an amount that Dealer would have been required to pay
to Counterparty in the absence of such transfer and assignment;

 

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(E)    An Event of Default, Potential Event of Default or Termination Event will
not occur as a result of such transfer and assignment;

(F)    Without limiting the generality of clause (B), Counterparty shall have
caused the transferee to make such Payee Tax Representations and to provide such
tax documentation as may be reasonably requested by Dealer to permit Dealer to
determine that results described in clauses (D) and (E) will not occur upon or
after such transfer and assignment; and

(G)    Counterparty shall be responsible for all reasonable costs and expenses,
including reasonable counsel fees, incurred by Dealer in connection with such
transfer or assignment.

(g)    Staggered Settlement. Dealer may, by notice to Counterparty prior to any
Settlement Date (a “Nominal Settlement Date”), elect to deliver any Shares due
to be delivered on one or more dates (each, a “Staggered Settlement Date”) or at
two or more times on the Nominal Settlement Date as follows:

(i)     in such notice, Dealer will specify to Counterparty the related
Staggered Settlement Dates (each of which will be on or prior to the 20th
Exchange Business Day after such Nominal Settlement Date, but not prior to the
earlier of the relevant Conversion Date and the first day of the relevant
Settlement Averaging Period) or delivery times and how it will allocate the
Shares it is required to deliver under “Delivery Obligation” (above) among the
Staggered Settlement Dates or delivery times; and

(ii)     the aggregate number of Shares that Dealer will deliver to Counterparty
hereunder on all such Staggered Settlement Dates and delivery times will equal
the number of Shares that Dealer would otherwise be required to deliver on such
Nominal Settlement Date.

(h)    Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Counterparty and each of its employees,
representatives, or other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to Counterparty relating to such tax treatment and tax structure.

(i)     No Netting and Set-off. The provisions of Section 2(c) of the Agreement
shall not apply to the Transaction. Each party waives any and all rights it may
have to set-off delivery or payment obligations it owes to the other party under
the Transaction against any delivery or payment obligations owed to it by the
other party, whether arising under the Agreement, under any other agreement
between parties hereto, by operation of law or otherwise.

(j)     Equity Rights. Dealer acknowledges and agrees that this Confirmation is
not intended to convey to it rights with respect to the Transaction that are
senior to the claims of common stockholders in the event of Counterparty’s
bankruptcy. For the avoidance of doubt, the parties agree that the preceding
sentence shall not apply at any time other than during Counterparty’s bankruptcy
to any claim arising as a result of a breach by Counterparty of any of its
obligations under this Confirmation or the Agreement. For the avoidance of
doubt, the parties acknowledge that the obligations of Counterparty under this
Confirmation are not secured by any collateral that would otherwise secure the
obligations of Counterparty herein under or pursuant to any other agreement.

(k)     Early Unwind. In the event the sale by Counterparty of the [Firm
Securities]9[Option Securities]10 (as defined in the Underwriting Agreement) is
not consummated pursuant to the Underwriting Agreement for any reason by the
close of business in New York on March [    ], 2017 (or such later date as
agreed upon by the parties, which in no event shall be later than March [    ],
2017) (March [    ], 2017 or such later date being the “Early Unwind Date”), the
Transaction shall automatically terminate (the “Early Unwind”) on the Early
Unwind Date and the Transaction and all of the respective rights and obligations
of Dealer and Counterparty hereunder shall be cancelled and terminated and
Counterparty shall pay to Dealer,

 

9  Insert for Base Convertible Bond Hedge Confirmation.

10 

Insert for Additional Convertible Bond Hedge Confirmation.

 

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other than in cases involving a breach of the Underwriting Agreement by Dealer
as the Underwriter, an amount in cash equal to the aggregate amount of costs and
expenses relating to the unwinding of Dealer’s hedging activities in respect of
the Transaction (including market losses incurred in reselling any Shares
purchased by Dealer or its affiliates in connection with such hedging
activities, unless Counterparty agrees to purchase any such Shares at the cost
at which Dealer purchased such Shares) or, at the election of Counterparty,
deliver to Dealer Shares with a value equal to such amount, as determined by the
Calculation Agent, in which event the parties shall enter into customary and
commercially reasonable documentation relating to the registered or exempt
resale of such Shares. Following such termination, cancellation and payment or
delivery, each party shall be released and discharged by the other party from,
and agrees not to make any claim against the other party with respect to, any
obligations or liabilities of either party arising out of, and to be performed
in connection with, the Transaction either prior to or after the Early Unwind
Date. Dealer and Counterparty represent and acknowledge to the other that upon
an Early Unwind and following the payment referred to above, all obligations
with respect to the Transaction shall be deemed fully and finally discharged.

(l)     Illegality. The parties agree that, for the avoidance of doubt, for
purposes of Section 5(b)(i) of the Agreement, “any applicable law” shall include
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any rules
and regulations promulgated thereunder and any similar law or regulation,
without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 or any similar legal certainty provision in any
legislation enacted, or rule or regulation promulgated, on or after the Trade
Date, and the consequences specified in the Agreement, including without
limitation, the consequences specified in Section 6 of the Agreement, shall
apply to any Illegality arising from any such act, rule or regulation.

(m)     Payments by Counterparty upon Early Termination. The parties hereby
agree that, notwithstanding anything to the contrary herein, in the Definitions
or in the Agreement, following the payment of the Premium, in the event that an
Early Termination Date (whether as a result of an Event of Default or a
Termination Event) occurs or is designated with respect to the Transaction or
the Transaction is terminated or cancelled pursuant to Article 12 of the Equity
Definitions and, as a result, Counterparty would owe to Dealer an amount
calculated under Section 6(e) of the Agreement or Article 12 of the Equity
Definitions, such amount shall be deemed to be zero.

(n)     Tax Matters.

(i)    Payee Representations:

For the purpose of Section 3(f) of the Agreement, Counterparty makes the
following representation to Dealer:

Counterparty is a corporation for U.S. tax purposes and a U.S. person (as that
term is defined in Section 7701(a)(30) of the Code).

For the purpose of Section 3(f) of the Agreement, Dealer makes the following
representation to Counterparty:

It is a “U.S. person” (as that term is used in Section 1.1441-4(a)(3)(ii) of the
United States Treasury Regulations) for U.S. federal income tax purposes.

[OR IF DEALER IS NON-US

 

  (A) It is a bank organized under the laws of [COUNTRY] and is a corporation
for U.S. federal income tax purposes and

 

  (B) Each payment received or to be received by it in connection with this
Confirmation will be effectively connected with its conduct of a trade or
business in the United States.]

(ii)    Tax Documentation. For purposes of Section 4(a)(i) of the Agreement,
each party shall provide to the other party a valid United States Internal
Revenue Service Form W-9 (or successor thereto), (i) on or before the date of
execution of this Confirmation and (ii) promptly upon learning that any such tax
form previously provided by it has become inaccurate or incorrect. Additionally,
each party shall, promptly upon request by the other party, provide such other
tax forms and documents reasonably requested by the other party.

 

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[OR IF DEALER IS NON-US

For purposes of Section 4(a)(i) of the Agreement, Counterparty shall provide to
the Dealer a valid United States Internal Revenue Service Form W-9 (or successor
thereto) and Dealer shall provide to the Counterparty a valid United States
Internal Revenue Service Form W-8ECI (or successor thereto), (i) on or before
the date of execution of this Confirmation and (ii) promptly upon learning that
any such tax form previously provided by it has become inaccurate or incorrect.
Additionally, each party shall, promptly upon request by the other party,
provide such other tax forms and documents reasonably requested by the other
party.]

(iii)    Withholding Tax imposed on payments to non-US counterparties under the
United States Foreign Account Tax Compliance Act. “Indemnifiable Tax” as defined
in Section 14 of the Agreement, shall not include any U.S. federal withholding
tax imposed or collected pursuant to Sections 1471 through 1474 of the Code, any
current or future regulations or official interpretations thereof, any agreement
entered into pursuant to Section 1471(b) of the Code, or any fiscal or
regulatory legislation, rules or practices adopted pursuant to any
intergovernmental agreement entered into in connection with the implementation
of such Sections of the Code (a “FATCA Withholding Tax”). For the avoidance of
doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is
required by applicable law for the purposes of Section 2(d) of the Agreement.

(iv)    HIRE Act. “Indemnifiable Tax”, as defined in Section 14 of the
Agreement, shall not include any tax imposed on payments treated as dividends
from sources within the United States under Section 871(m) of the Code or any
regulations issued thereunder.

(o)     Governing Law. THE AGREEMENT, THIS CONFIRMATION AND ALL MATTERS ARISING
IN CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO ITS CHOICE OF LAW DOCTRINE, OTHER THAN TITLE 14 OF THE NEW
YORK GENERAL OBLIGATIONS LAW). THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF
MANHATTAN, IN THE CITY OF NEW YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR
RELATING TO THE AGREEMENT, THIS CONFIRMATION OR ANY TRANSACTIONS CONTEMPLATED
HEREBY.

(p)     Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE AGREEMENT, THIS CONFIRMATION OR ANY TRANSACTIONS CONTEMPLATED
HEREBY.

(q)     Amendment. This Confirmation and the Agreement may not be modified,
amended or supplemented, except in a written instrument signed by Counterparty
and Dealer.

(r)     Counterparts. This Confirmation may be executed in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

 

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Counterparty hereby agrees (a) to check this Confirmation carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Dealer) correctly sets forth the terms of the agreement between
Dealer and Counterparty with respect to the Transaction, by manually signing
this Confirmation or this page hereof as evidence of agreement to such terms and
providing the other information requested herein and immediately returning an
executed copy to the address provided in the Notices section of the
Confirmation.

 

Yours faithfully, [                    ] By:  

 

  Name:   Title:

 

Agreed and Accepted By: TESLA, INC. By:  

 

  Name:   Title:

[Signature Page to [Base][Additional] Convertible Bond Hedge Transaction]