Document:

Letter Agreement between the Registrant and New United Motor Manufacturing, Inc.

 Exhibit 10.45 

CONFIDENTIAL – This document was developed at private expense and includes trade secrets and commercial or financial
information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

EXECUTION COPY 

May 26, 2010 

Mr. John DiDonato 
 President 

New United Motor Manufacturing, Inc. 

45500 Fremont Boulevard 
 Fremont, California
94538-6368 
 Re: Purchase of NUMMI Property 

Dear John: 
 This letter
agreement (“Letter Agreement”) sets forth the terms and conditions under which Tesla Motors, Inc. (“Tesla” or “Buyer”) will purchase and New United Motor Manufacturing, Inc. the owner of the referenced
property, or its designee, (“NUMMI” or “Seller”), will sell certain real property (land and improvements thereon) commonly known as the NUMMI manufacturing plant in Fremont, California, as follows: 

 

	1.	Real Estate. The land consists of approximately two hundred and seven and three quarters (207.75) gross acres, located at 45500 Fremont Boulevard, in
Fremont, California (Alameda County Assessor’s Parcel Number 519-0850-107-04). The exact size of this parcel is subject to verification by survey, but provided that the exact size as verified by survey is at least 95% of the acreage specified
above, any difference determined in the actual size shall not result in any adjustment of the Purchase Price as defined below. The land is improved with an auto manufacturing facility in multiple buildings totaling approximately five million four
hundred thousand (±5,400,000) square feet. The land and existing buildings, associated structures, electrical power distribution systems, natural gas and water distribution systems, compressed air distribution system, waste water treatment
system, building HVAC systems, lighting systems, and fire protection systems, to the extent owned by Seller are referred to as the “Property.” To the extent any of the utility systems are owned by the applicable utility company, and not
Seller, Seller will convey its rights to such systems, rather than ownership. To the extent permitted without charge under any license or similar agreement, any associated technical, operating documentation and software for such mechanical equipment
shall be provided to Buyer. Except as stated above, no machinery, equipment, other personal property (tangible or intangible) or fixtures are within the scope of this or intended to be sold under this Letter Agreement. Seller’s real property
rights related to the Property including entitlements shall be included in the conveyance to the extent those entitlements relate to the Property and conveyance of them is permitted by law. Subject to the authority of governmental agencies having
jurisdiction, the parties will make a reasonable allocation for such real property rights covering multiple parcels. 

  

  

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	2.	Purchase Price: Effective Date; Evidence of Capacity. 

  

	 	(a)	Purchase Price. The Purchase Price is U.S. $42,000,000, payable in two installments. To induce Seller to enter into this Letter Agreement, Buyer will pay
directly to Seller the first, nonrefundable, installment of $3,000,000 within 5 days of execution of this Letter Agreement, which, notwithstanding anything in this Letter Agreement to the contrary, shall be fully earned upon execution of this Letter
Agreement as consideration for Seller entering into this Letter Agreement and affording Buyer the opportunity to perform its due diligence inspections (“Non-refundable Payment’). Seller shall have the right to terminate this Letter
Agreement if Buyer fails to make the Non-Refundable Payment within 5 days after execution. Seller shall be entitled to retain the Non-refundable Payment under any and all circumstances and under no circumstances whatsoever shall the Non-refundable
Payment be refundable or recoverable by Buyer. The installment of US$39,000,000 shall be paid on Closing (as defined below), but no later than October 1, 2010. 

 

	 	(b)	Effective Date: This Letter Agreement shall become effective on the date that both parties have executed this Letter Agreement (“Effective Date”).

  

	 	(c)	Evidence of Buyer’s Capacity to Perform. 

  

	 	(i)	Within 15 days after the Effective Date, Buyer shall furnish to Seller as evidence of Buyer’s ability to perform all its obligations under this Letter Agreement
and close a then-current statement of projected sources and uses of funds of Buyer through October 1, 2010, certified by Seller’s Chief Financial Officer demonstrating Buyer’s ability to fund this transaction independently from either
(1) proceeds of Seller’s proposed initial public offering and/or private placement with Toyota Motor Company, or (2) Buyer’s unrestricted cash on hand. Seller shall have the right to terminate this Letter Agreement if Buyer fails
to provide such evidence within 30 days after the Effective Date by notice in writing to Buyer on or prior to the date which is 37 days after the Effective Date. 

 

	 	(ii)	Within 5 days before the end of the Due Diligence Period, Buyer shall furnish to Seller as evidence of Buyer’s continuing ability to perform all its obligations
under this Letter Agreement and close a then-current statement of projected sources and uses of funds of Buyer through October 1, 2010, certified by Seller’s Chief Financial Officer demonstrating Buyer’s ability to fund this
transaction independently from either (1) proceeds of Seller’s proposed initial public offering and/or private placement with Toyota Motor Company, or (2) Buyer’s unrestricted cash on hand. Seller shall have the right to
terminate this Letter Agreement if Buyer fails to provide such evidence within 5 days before the end of the Due Diligence Period by notice in writing to Buyer within 10 days after the end of the Due Diligence Period. 

 

  

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	3.	Due Diligence. Buyer, at Buyer’s sole cost and expense, shall have 38 days from the Effective Date (“Due Diligence Period”) to approve or
disapprove the condition of the Property, in its sole discretion, including but not limited to the following items: 

  

	 	(a)	Title: Buyer shall have the right to obtain, review and approve an Owner’s CLTA Standard Coverage Preliminary Title Report and all exceptions to such
Preliminary Title Report, including without limitation, any easements or access rights recorded pursuant to Paragraph 4(e). Any extended coverage or title endorsements desired by Buyer will be at Buyer’s expense. Prior to the end of the Due
Diligence Period, Buyer shall confirm with the Title Company to Buyer’s sole satisfaction the availability and cost of the form of title insurance policy to be issued at Closing, including endorsements and affirmative coverages.

  

	 	(b)	Physical Inspection: Buyer shall have the right to conduct such engineering studies and such feasibility and other studies and investigations regarding the
condition of the Property as it considers prudent after Buyer has named Seller as an additional insured on a Three Million and No/100 Dollars ($3,000,000.00) combined, single limit, comprehensive general public liability insurance policy issued by a
California licensed insurance company. 

  

	 	(c)	Review of Environmental Conditions: Buyer shall have the right to review the environmental conditions of the Property including review of any environmental
studies or investigations regarding the condition of the Property, and environmental testing upon Buyer’s reasonable request, which testing shall be subject to the reasonable approval of Seller, conducted by Seller through consultants mutually
selected by the parties, and at Buyer’s sole expense. 

  

	 	(d)	Governmental Regulations: Buyer shall have the right to review and approve compliance with all zoning, land use, Americans with Disabilities Act (ADA),
California Title 24 and all other governmental regulations, laws, permits and approvals that apply to the Property. 

  

	 	(e)	Books and Records: Buyer shall have the right to review the books and records, including any studies and reports, relating to the ownership and operation of the
Property. 

 Upon notice to Seller prior to the 38th day of the Due Diligence Period, Buyer may extend
automatically the Due Diligence Period for an additional 7 days. If and only if, Buyer timely gives that notice, then the Due Diligence Period shall end on the 45th day after the Effective Date. 

Buyer shall indemnify and hold Seller, its directors, officers, employees, attorneys, agents and representatives harmless from all
liability, including attorney’s fees and costs, arising out of or in connection with any activities conducted by, or on behalf of Buyer, or its officers, employees, agents, representatives of consultants under this paragraph 3.
“Liability” and “obligation” means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to 
  

  

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become due, and regardless of when asserted). Buyer shall repair any and all damage which may occur in the course of its due diligence. 

Prior to 5pm Pacific Time on the last day of the Due Diligence Period, Buyer shall give written notice to Seller’s President and
General Counsel which writing shall state irrevocably and unconditionally, that Buyer wishes to proceed with the transaction. Upon giving that notice Buyer (a) shall be deemed to have waived any and all objections, excuses or defenses based on
or related to its ability to finance the purchase of the Property, title conditions, physical condition of the Property or any other matters that were, or with Buyer’s reasonable care could have been discovered by Buyer during the Due Diligence
Period, and (b) shall no longer have the right to terminate this Letter Agreement on the basis of any such matters, other than for the failure of the conditions expressly set forth in paragraph 4(a) below. The Buyer’s waiver set forth in
this paragraph 3 shall not affect any of the other rights or obligations of the parties under this Letter Agreement. Unless Buyer timely gives that irrevocable and unconditional written notice in strict accordance with this paragraph 3, this Letter
Agreement shall terminate automatically, without any requirement of notice by Seller or opportunity for Buyer to cure. 
  

	4.	Additional Terms. 

  

	 	(a)	 Escrow; Title Transfer; Closing. Closing will occur on or before October 1, 2010, (the “Closing” or “Closing
Date”). The parties in the future may agree to extend the Closing Date in writing, upon payment of additional consideration, but in no event to a date later than December 31, 2010. As conditions precedent to closing, Buyer will be
reasonably satisfied: (i) that there has been no material adverse change in the Property since the end of the Due Diligence Period; (ii) that the condition of title to the Property shall remain substantially the same as it existed at the
end of the Due Diligence Period; and (iii) Seller shall have complied substantially with all of its material obligations to be performed hereunder on or prior to the Closing. The parties shall diligently and in a commercially reasonable
manner endeavor to negotiate and execute a trust agreement to carry into effect the provisions of paragraph 4(d) (“Trust Agreement”) on or prior to a date that is thirty-eight (38) days after the Effective Date. Execution of a Trust
Agreement prior to Closing is a condition to closing for the benefit of both parties. The above conditions shall be the only conditions precedent to the obligations of Buyer to consummate of the transaction Closing will be through an escrow with
First American Title Company (“Title Company”). Upon execution, this Letter Agreement will be deposited with the Title Company, and shall serve as joint escrow instructions. Seller and Purchaser agree to execute such additional and
supplementary escrow instructions as may be appropriate to enable Title Company to comply with the terms of this Letter Agreement; provided, however, that in the event of any conflict between the provisions of this Letter Agreement and any
supplementary escrow instructions, the terms of this Letter Agreement shall prevail. Seller and Buyer will apportion all title charges, survey expenses, transfer fees and taxes, documentary stamp taxes, recording fees, escrow fees, and all other
expenses due or incurred in connection with the transaction, in accordance with the custom prevailing in the County of Alameda, State of California for the sale of large industrial sites. Real property taxes and the current portion of any

  

  

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assessments shall be prorated as of the Closing. Not less than 5 days before closing, (a) Buyer shall deposit with the Title Company in immediately available funds the sum of $39,000,000 plus
closing costs and prorations attributable to Buyer and a signed copy of the Trust Agreement, and (b) Seller will deposit a signed and notarized Grant Deed and a signed copy of the Trust Agreement, and in immediately available funds the sum of
$15,000,000. Upon closing, Title Company will (a) record and deliver the Grant Deed to Buyer, and issue to Buyer a CLTA Standard Owners Policy (or, provided Buyer has ordered, paid for and obtained all necessary surveys for such policy, an ALTA
Owner’s Policy) in the form approved prior to the end of the Due Diligence Period, and a copy of the Trust Agreement signed by the Seller; (b) will disburse to Seller in immediately available funds the sum of $39,000,000 (less closing
costs and prorations attributable to the Seller), and a copy of the Trust Agreement signed by the Buyer; and (c) disburse the sum of $15,000,000 to the trustee under the terms of the Trust Agreement. If the transaction does not close before the
Closing Date, then Title Company shall return to each party any funds or documents such party deposited into escrow. Title to the Property shall pass upon delivery of the Grant Deed. Seller and Buyer shall each deliver to the other outside of Escrow
such additional items as are necessary to consummate the purchase and sale of the Property pursuant to this Letter Agreement. 

  

	 	(b)	Decommissioning Plan; Property Condition and Access.  

  

	 	(i)	Decommissioning Plan. Buyer and Seller acknowledge that Seller is in the process of decommissioning the Property as required by the City of Fremont Fire
Department and as more fully described in the Decommissioning Plan dated March 2, 2010, a copy of which has been provided to Buyer. Seller agrees that it will complete the work required pursuant to the Decommissioning Plan and use commercially
reasonable efforts to do so by October 1, 2010 at Seller’s sole cost and expense and to meet any lawful requirements of the City of Fremont related to decommissioning. 

 

	 	(ii)	Property Condition; “Where Is / As Is”. Buyer acknowledges that, as a material inducement to the execution and delivery of this Letter Agreement by
Seller, Buyer is purchasing the Property in its “as-is, where-is” condition, with all faults. Buyer acknowledges that its purchase of the Property will be based solely upon Buyer’s inspection and investigation of the Property and
Buyer is not relying and will not rely on, any representations or warranties of any kind, express or implied, of Seller, its directors, officers, employees, or representatives with respect to any matters related to the Property except the
representations as set forth expressly in Representations and Warranties of Seller, below. Buyer acknowledges that its decision to purchase the Property explicitly takes into account and assumes the risk of unknown and undiscovered adverse
conditions. Notwithstanding the foregoing, except as expressly set forth in paragraphs 4(b)(i), 4(b)(iii)((2), 4(b)(v), 4(d) and 4(n)(i), Seller shall have no liability to Buyer or any other person under this Letter Agreement or otherwise as a
result of any actions or transactions following the Closing. 

  

  

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includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

	 	(iii)	Property Maintenance Prior to Closing; Removal of Equipment. 

  

	 	(1)	Seller will use commercially reasonable efforts not to unnecessarily damage the Property during the course of the Decommissioning Plan and removal of equipment. Until
the Closing Date, and subject to the Decommissioning Plan, Seller will use commercially reasonable efforts to maintain the Property. 

  

	 	(2)	Seller will have the right (but not the obligation except as provided in this paragraph 4(b)(iii)) to remove equipment from the Property but shall not be responsible
for filling in any pits or trenches that may remain, and may remove the electrical and mechanical (air, water, etc.) services from removed equipment back to the source. Upon 2 months advance notice which Buyer shall give no later than August 1,
2010 that specific equipment owned by Seller will interfere with Buyer’s Model S manufacturing operations, such equipment will be removed by Seller by December 31, 2010, except as the parties may agree otherwise in writing.

  

	 	(iv)	Access by Buyer Before Closing. Seller agrees that 

  

	 	(1)	Following the execution of this Letter Agreement and until the Closing Date or earlier termination of this Letter Agreement, upon prior written notice (including the
names of individuals proposed to enter) and approval by a person specifically authorized by Seller to grant such approval, which approval shall not be unreasonably withheld, Buyer shall have the right to enter onto the Property, and to observe (but
not to object to or interfere with) the work under the Decommissioning Plan. Such rights shall be without charge to Buyer. This right of entry is subject to the following requirements and conditions: (a) No activity undertaken under this right
of access shall interfere with the Decommissioning Plan or Seller’s removal of equipment; (b) Seller shall have no liability for any loss or damage of any equipment or material which Buyer may bring onto the Property and Buyer shall
indemnify and hold Seller, its directors, officers, employees, agents and representatives harmless from all liability, including attorney’s fees and costs, arising out of or in connection with its exercise of this right of entry; (c) prior
to exercising such right of entry Buyer shall obtain and maintain in force insurance determined by Seller in a commercially reasonable manner to be adequate to protect Seller against the risks, and shall name Seller as an additional insured on such
policies 

  

	 	(2)	 (A) Following the expiration of the Due Diligence Period and until the Closing Date or earlier termination of this Letter Agreement, upon prior written
notice (including the names of individuals proposed to enter) and only with the prior written agreement by a person specifically authorized by Seller to grant such approval, which approval shall not be

  

  

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unreasonably withheld, Buyer will have nonexclusive access to the Property, subject to the limitations and requirements set forth in the next succeeding provision below, in order to expedite
facilities planning. 

  

	 	    	(B) This right of entry is subject to the following requirements and conditions: (a) No activity undertaken under this right of access shall interfere with
the Decommissioning Plan or Seller’s removal of equipment; (b) Buyer shall place or store equipment only at locations specifically designated in writing by Seller in its sole discretion; (c) Buyer shall not, make any alteration or
attachment to the Property except with the prior written approval of Seller; (d) Seller shall have no liability for any loss or damage of any equipment or material which Buyer may bring onto the Property and Buyer shall indemnify and hold
Seller, its directors, officers, employees, agents and representatives harmless from all liability, including attorney’s fees and costs, arising out of or in connection with its exercise of this right of entry; (e) prior to exercising such
right of entry Buyer shall obtain and maintain in force insurance determined by Seller in a commercially reasonable manner to be adequate to protect Seller against the risks, and shall name Seller as an additional insured on such policies
(f) upon termination of this Letter Agreement, Buyer shall remove within 30 days after termination all equipment and material it may have placed on the Property, and at its sole cost, shall repair fully any alterations it may have made or
damage it may have caused to the Property. 

  

	 	(3)	As an accommodation to Buyer, prior to the expiration of the Due Diligence Period, Buyer shall have a right of access, to bring onto the Property for storage only one
press described as a press line being shipped to Buyer from Michigan. This right of access shall be subject to all the provisions of (2) above. 

  

	 	(v)	Access by Seller After Closing. Buyer agrees that after Closing 

  

	 	(1)	 Equipment Removal. Seller shall have an irrevocable license to enter onto the Property for the period commencing on the Closing and ending on
December 31, 2010, except as the parties may otherwise agree. Upon prior notice (including the names of individuals proposed to enter) and agreement by Buyer, which shall not be unreasonably withheld. The license fee shall be $1.00 for the
entire license term. Seller agrees that the license will terminate December 31, 2010, except as the parties may otherwise agree. Under the license, Seller will have the right (but not the obligation) to remove all equipment (not specified as
part of the Property) but shall not be responsible for filling in any pits or trenches that may 

  

  

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remain, and may remove the electrical and mechanical (air, water, etc.) services from removed equipment back to the source. Seller shall not, in any event, make any alteration or attachment to
the Property except with the prior written approval of Buyer. Buyer shall have no liability for any loss or damage of any equipment or material which Seller may bring onto the Property. Seller shall indemnify and hold Buyer, its directors, officers,
employees, agents and representatives harmless from all liability, including attorney’s fees and costs, arising out of or in connection with its exercise of this right of entry. Prior to exercising such entry Seller shall obtain and maintain in
force insurance determined by Buyer in a commercially reasonable manner to be adequate to protect Buyer against the risks, and shall name Buyer as an additional insured on such policies. Upon termination of this right of access, Seller shall remove
within 30 days all equipment and material it may have placed on the Property in connection with this right of entry, and at its sole cost, shall repair fully any alterations it may have made or damage it may have caused to the Property.

  

	 	(2)	Environmental Remediation. Seller shall have an irrevocable license to enter onto the Property for the period commencing on the Closing and ending on the tenth
anniversary of the Closing, as may be necessary for it to perform its obligations and to exercise its rights under paragraph 4(d), upon prior notice (including the names of individuals proposed to enter) and agreement by Buyer, which shall not be
unreasonably withheld. Buyer shall have no liability for any loss or damage of any equipment or material which Seller may bring onto the Property. Seller shall indemnify and hold Buyer, its directors, officers, employees, agents and representatives
harmless from all liability, including attorney’s fees and costs, arising out of or in connection with its exercise of this right of entry. Prior to exercising such entry Seller shall obtain and maintain in force insurance determined by Buyer
in a commercially reasonable manner to be adequate to protect Buyer against the risks, and shall name Buyer as an additional insured on such policies. 

  

	 	(c)	Operating Permits. Seller will transfer to Buyer any licenses and operating permits which are allowed to be transferred under the law and do not otherwise have
value as an asset. In the case of operating permits that have asset value, inclusive of VOC credits, Seller will sell to Buyer sufficient credits to support the manufacture of at least 100,000 vehicles per year or 25% of existing inventory at a
price to be reasonably negotiated by the parties, or at fair market value as reasonably agreed by the parties. In addition, Seller grants to Buyer for 12 months after Closing, a right of first offer on additional inventory of credits (up to an
aggregate of 50% of existing inventory). Buyer will respond within two business days of a notice of a Seller proposal to sell or pending transaction. 

  

	 	(d)	Environmental Conditions. 

  

  

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	 	(i)	Responsibility for Environmental Conditions Caused After Closing: Buyer shall be fully responsible for all remediation and any other costs incurred in connection
with environmental conditions associated with the Property, except for Pre-Existing Environmental Conditions. Any known or unknown environmental condition that exists as of the Closing Date is a “Pre Existing Environmental Condition.”

  

	 	(ii)	Responsibility for Pre-Existing Environmental Conditions: 

  

	 	(1)	Security. Prior to or on the Closing Date, Seller shall secure or collateralize its obligations with respect to Pre-Existing Environmental Conditions in the
amount of $15 million (the “Security”). The Security shall be a $15 million cash escrow under an escrow agreement approved by Buyer, a clean, irrevocable stand-by letter of credit in favor of the trustee under the Trust Agreement in the
amount of $15 million on terms and issued by a bank acceptable to Buyer; purchase of environmental remediation and liability insurance covering the applicable liability, or arrangements providing a similar protection to Buyer as mutually agreed by
the parties. Seller may draw against this Security in order solely to pay for governmentally-required action relating to Pre-Existing Environmental Conditions. After provision of the initial $15 million Security, Seller shall have no further
obligation to provide any additional funds under this Letter Agreement or the Trust Agreement on account of Pre-Existing Environmental Conditions. 

  

	 	(2)	 First Four Years. If during the first four years following the Closing, a governmental agency requires any investigation, remediation or removal
action related to a Pre-Existing Environmental Condition, Seller will take appropriate action to comply with such requirements, and will be responsible for complying with and paying the costs of complying with such requirements during such period,
provided that, to the extent permitted by law, Buyer (1) provides at least 3 (three) days written notice to Seller before initiating any communication with any governmental entity or any other person or entity (except for Buyer’s attorneys
and consultants) concerning any Pre-Existing Environmental Condition; (2) allows Seller to control all such communications. Seller shall keep Buyer informed and provide copies of correspondence Seller has with governmental entities concerning
Pre-Existing Environmental Conditions. Buyer shall provide to Seller, without charge, such access as is necessary to comply with governmentally-required actions concerning Pre-Existing Environmental Conditions. Seller will comply with such
requirements in a manner than will not delay or otherwise have a material impact on Buyer’s operations. Buyer’s failure to materially comply with the requirements of this paragraph 4(d)(ii)(2) shall, with respect to the Pre-Existing
Environmental Condition that is the subject of such failure, 

  

  

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relieve Seller of any responsibility for such condition to the extent of the costs attributable to such failure and Buyer shall indemnify and hold Seller, its directors, officers, employees,
agents and representatives harmless from all liability, including attorney’s fees, costs, fines and penalties, arising out of or in connection with any third party claim against Seller arising out of Buyer’s failure to comply with its
obligations under this paragraph 4(d)(ii)(2). Seller shall provide to Buyer an accounting of all amounts it expends to address Pre-Existing Environmental Conditions on a quarterly basis following the Closing. Buyer shall notify Seller in writing of
any objections it has with respect to such expenditures within 10 (ten) days following receipt of each accounting from Seller. In the event Buyer and Seller are unable to resolve any such objections within 45 days of Seller’s receipt of
Buyer’s written objections, Seller and Buyer shall submit such dispute to binding arbitration before a single arbitrator pursuant to the rules for commercial arbitration of the American Arbitration Association. In the event Seller spends $15
million to take governmentally-required action to address Pre-Existing Environmental Conditions prior to the fourth anniversary date of the Closing, Buyer shall, after notice by Seller, be responsible for any further expenditures required thereafter
to perform such governmentally-required actions to address Pre-Existing Environmental Conditions (“Early Expenditures”), up to a total of $15 million. Buyer shall provide to Seller an accounting of all amounts it expends to address
Pre-Existing Environmental Conditions on a quarterly basis following the exhaustion of the $15 million deposited to the Security by Seller. Seller shall notify Buyer in writing of any objections it has with respect to such expenditures within 10
(ten) days following receipt of each accounting from Buyer. In the event Buyer and Seller are unable to resolve any such objections within 45 days of Buyer’s receipt of Seller’s written objections Seller and Buyer shall submit such dispute
to binding arbitration before a single arbitrator pursuant to the rules for commercial arbitration of the American Arbitration Association. 

  

	 	(3)	On and After Fourth Anniversary Date. 

  

	 	A.	 On the fourth anniversary date of the Closing, Buyer shall pay or add to the Security a sum equal to (a) the amounts expended by Seller pursuant to
paragraph 4(d)(ii)(2) up to $15 million, less (b) any Early Expenditure made by Buyer (the “Repayment”). The Repayment shall become part of the Security and used for the purposes specified for the Security. In the event that Buyer does not
make the Repayment on the fourth anniversary date of the Closing, Seller shall be entitled to any remaining Security, provided that Seller gives Buyer written notice that Buyer has 7 (seven) days to cure the failure to make the Repayment and Buyer
fails to cure within such 7 day period. In addition, in the 

  

  

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event Buyer fails to make the Repayment, Buyer shall be responsible for all environmental conditions relating to the Property and Buyer shall indemnify and hold Seller, its directors, officers,
employees, agents and representatives harmless from all liability, including attorney’s fees, costs, fines and penalties, arising out of or in connection with any claim against Seller for such conditions. 

 

	 	B.	The funds in the Security, which will be up to $15 million after the Repayment, will be available in order solely to pay for governmentally-required action relating to
Pre-Existing Environmental Conditions, as set forth in paragraph 4(d)(ii)(3). 

  

	 	C.	From and after the fourth anniversary date of the Closing, Buyer shall be responsible for complying with and paying the costs of complying with any
governmentally-required action in connection with the Pre-Existing Environmental Conditions, up to $15 million (less the amount of the Early Expenditures and the Repayment)(the “Buyer Obligation”). Buyer shall provide to Seller an
accounting of all amounts it expends to address Pre-Existing Environmental Conditions on a quarterly basis. Seller shall notify Buyer in writing of any objections it has with respect to such expenditures within 10 (ten) days following receipt of
each accounting from Buyer. In the event Buyer and Seller are unable to resolve any such objections within 45 days of Buyer’s receipt of Seller’s written objections, Seller and Buyer shall submit such dispute to binding arbitration before
a single arbitrator pursuant to the rules for commercial arbitration of the American Arbitration Association. 

  

	 	D.	 From and after the fourth anniversary date of the Closing, in the event that Buyer’s cash reserves fall below $75 million and subject to any
lawful requirement for approval by the U.S. Department of Energy, which approval Buyer shall use commercially reasonable efforts to obtain, Seller or its designee may require that Buyer secure the Buyer Obligation. This security shall be in the
amount of the Buyer Obligation, less any expenditures properly made by Buyer in connection with any governmentally-required action in connection with the Pre-Existing Environmental Conditions required by paragraph 4(d)(ii)(3)(C), in the form of a
cash escrow under an escrow agreement approved by Seller or its designee, a clean, irrevocable stand-by letter of credit in favor of the trustee under the Trust Agreement in the amount of the Buyer Obligation, less any expenditures properly made by
Buyer in connection with any governmentally-required action in connection 

  

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

11 

 CONFIDENTIAL – This document was developed at private expense and
includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

	 	
with the Pre-Existing Environmental Conditions required by paragraph 4(d)(ii)(3)(C), on terms and issued by a bank acceptable to Seller; purchase of environmental remediation and liability
insurance covering the applicable liability, or arrangements providing a similar protection to Seller or its designee as mutually agreed by the parties. Buyer may use such funds solely to comply with governmentally-required actions concerning
Pre-Existing Environmental Conditions. 

  

	 	E.	In the event that Buyer is unable to meet the conditions set forth in paragraph 4(d)(ii)(3)C and D, Seller may, but shall not be required to, manage all aspects of
any governmentally-required actions concerning Pre-Existing Environmental Conditions. 

  

	 	F.	Buyer shall keep adequate books and records with respect to actions it takes, and expenditures of funds shall be subject to audit by Seller, and replenishment by Buyer
if used for any other purpose. In the event Buyer spends a total of $15 million of its own funds (including the Early Expenditures and the Repayment required above), and funds remain in the Security, Buyer may draw against funds remaining in the
Security to comply with governmentally-required actions concerning Pre-Existing Environmental Conditions. 

  

	 	(4)	Tenth Anniversary Date: From and after the earliest to occur of (a) the tenth anniversary date of the Closing, or (b) when the Security is exhausted in its
entirety pursuant to this paragraph 4(d), or (c) when the $15 million initially provided to the Security by Seller is depleted pursuant to this paragraph 4(d), then Seller’s liability under this paragraph 4(d) or otherwise to Buyer with respect
to Pre-Existing Environmental Conditions shall cease, and Buyer shall be responsible for all environmental conditions relating to the Property and may draw upon the Security to the extent available under the terms of this Letter Agreement, and Buyer
shall indemnify and hold Seller, its directors, officers, employees, agents and representatives harmless from all liability, including attorney’s fees, costs, fines and penalties, arising out of or in connection with any claim against Seller
for such conditions. Provided, however, that until the tenth anniversary date of the Closing the Seller shall remain obligated to perform such actions, if any, as may be required under the Trust Agreement referred to in paragraph 4(d)(ii)(1). In the
event that, on the tenth anniversary date, any funds remain in the Security, Seller shall be entitled to such funds. 

  

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

12 

 CONFIDENTIAL – This document was developed at private expense and
includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

	 	(e)	Easements, Access; Future Development. Buyer agrees that prior to the end of the Due Diligence Period Seller shall have the right to record against Parcels 1, 2
and 3 appropriate mutually satisfactory instruments that will assure that, after Closing 

  

	 	(1)	Seller will have all easements, access and other similar rights to and over the Property for the benefit of adjacent parcels currently owned by Seller and commonly
known as Parcels 1 and 3 that are needed to gain full value at sale of those properties, including without limitation all vehicular, emergency vehicle, utility (including drinking water, wastewater, storm water, gas, electric, video, audio and
telephone cable and other services) and pedestrian easements and access rights, and use of the existing frontage road necessary to maximize the development of Parcels 1 and 3. 

 

	 	(2)	The owners of each of the affected parcels will appropriately maintain and share the cost of maintaining any commonly used easements (such as the frontage road) to City
of Fremont standards. 

  

	 	(3)	Such instruments will include appropriate easements over Parcel 2 in favor of Parcels 1 and 3 for the purpose of Seller obtaining full value at sale of those Parcels.

  

	 	(4)	Such instruments will include appropriate easements over Parcels 1 and 3 in favor of Parcel 2 to allow the continued use of Parcel 2 for automobile manufacturing.

  

	 	(5)	No instruments will unreasonably restrict or interfere with use of Parcels 1 and 3 in a manner that would interfere with Seller obtaining full value at sale of those
Parcels, or with the continued use of Parcel 2 for automobile manufacturing. 

  

	 	(6)	The owner or owners of Parcels 1 and 3 will give notice to the owner of Parcel 2 before proceeding with the development of Parcels 1 and 3 with mixed-use projects.

  

	 	(7)	Each current or future owner of Parcel 2 agrees it shall execute and record such supplementary or clarifying instruments as may be determined after the Closing to be
beneficial or necessary for the development of Parcels 1 and 3, provided that such supplementary or clarifying instruments do not unreasonably interfere with the use of Parcel 2 for automobile manufacturing. Each current or future owner of Parcels 1
and 3 agrees it shall execute and record such supplementary or clarifying instruments as may be determined after the Closing to be beneficial or necessary to allow the continued use of Parcel 2 for automobile manufacturing, provided that such
supplementary or clarifying instruments do not unreasonably interfere with Seller obtaining full value at sale of Parcels 1 and 3. 

  

	 	(f)	 Agreement With City; Use Of Adjacent Properties. Buyer acknowledges that the City of Fremont and Seller may enter into an agreement regarding
the anticipated uses of the 

  

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

13 

 CONFIDENTIAL – This document was developed at private expense and
includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

	 	
land commonly known as Parcels 1 and 3 of the NUMMI site. Buyer will reasonably cooperate with and support Seller to obtain such an agreement, and Buyer will not object to, or support others to
object to, the development of Parcels 1 and 3 with mixed-use projects. 

  

	 	(g)	Commissions. Seller will be responsible for all commissions that may be payable to brokers it has retained. Buyer has not retained any brokers for this
transaction. 

  

	 	(h)	Contract. This Letter Agreement (and all other agreements or documents specifically contemplated by this Letter Agreement) are the entire agreement between the
parties respecting the sale by Seller and the Purchase by Buyer of the Property and supersedes all prior understandings or agreements between the parties hereto respecting such matters. This Letter Agreement may only be modified by a writing signed
by duly authorized representatives of each party. 

  

	 	(i)	Binding Agreement. This Letter Agreement is intended to be a binding agreement. The mutual non-disclosure agreement between Buyer and Seller and dated
May 17, 2010 will remain in effect and binding on Buyer and Seller. California law will apply to and govern the interpretation of this Letter Agreement. 

 

	 	(j)	Remedies; No Recording. Each party shall have all remedies available at law or in equity in the event of default of the other party, provided that neither party
shall have any liability for consequential, special, incidental or punitive damages under this Letter Agreement. Both parties waive a trial by jury as to all matters related to this Letter Agreement. Neither this Letter Agreement or any memorandum
(or short form of either), or any other instrument affecting the Property may be recorded by Buyer, except in connection with the actual filing of an action seeking to compel specific performance. The parties agree that failure of a party to perform
any of the provisions of this Letter Agreement in accordance with their specific terms or otherwise to breach the Letter Agreement would cause irreparable damage. Accordingly the parties agree that in addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, each party shall be entitled to compel specific performance of the other party’s obligations under this Letter Agreement. The parties agree that monetary damages would not
be adequate compensation for any such nonperformance or breach and therefore each waives in any action for specific performance the defense that a remedy at law would be adequate. 

 

	 	(k)	 Sophistication of Buyer; Representation by Counsel. Buyer acknowledges that it is a sophisticated commercial party, advised by legal and
financial professionals, and that the terms of the transactions contemplated by this Letter Agreement have been negotiated on a good faith, arm's length basis. Buyer acknowledges that it has been advised in this transaction by counsel of its own
choice, and has had the opportunity to consult with such counsel fully regarding the terms and conditions of this Letter Agreement, and the legal consequences of entering into it. No transfer of property is being made and no obligation is being
incurred in connection with the transactions contemplated by this Letter Agreement with the intent to hinder, delay or defraud either 

 

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

14 

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includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

	 	
present or future creditors of the buyer. Buyer further acknowledges that it will receive at least reasonably equivalent value in exchange for all payments and other consideration and all other
transfers contemplated by this Letter Agreement. Buyer further acknowledges that it is not an “insider” of the Seller as such term is defined and understood under Title 11 of the United States Code and applicable state law

  

	 	(l)	Financial Capacity. The Buyer has, and shall have on the Effective Date and on the Closing Date, sufficient immediately available funds to pay the Non-refundable
Payment, the Purchase Price, and all Closing costs, and to make all other payments required by the terms hereof, to pay all related fees and expenses in connection with this Letter Agreement and the transactions contemplated hereby and to otherwise
consummate the transactions contemplated hereby. Immediately after giving effect to the transactions contemplated by this Letter Agreement, the Buyer will be Solvent. As used herein, “Solvent” means, as of any date of determination,
(a) the amount of the fair saleable value of the assets of such person will, as of such date, exceed the value of all existing and probable liabilities of such person, including contingent and other liabilities, as of such date, as such debts
become absolute and matured, (b) such person will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date, and (c) such
person will be able to pay its liabilities, including contingent and other liabilities, as they mature. 

  

	 	(m)	Acknowledgement of Seller Winding Up. Buyer acknowledges that Seller is in the process of winding-up its affairs and, subsequent to the Closing, Seller as
promptly as possible will dissolve and cease to exist. Seller will have no further business or commercial operations, and will have no continuing legal obligations, other than as may be required (a) under paragraphs 4(b)(i), 4(b)(iii)((2),
4(b)(v), 4(d) and 4(n)(i) of this Letter Agreement, and (b) in connection with the winding-up of Seller's affairs, including establishing the Security. Seller agrees that nothing in this Letter Agreement shall in anyway require Seller to delay
or take any actions in connection with the winding-up of its affairs and its dissolution, and Seller will in no way take any action or make any claims to interfere or delay such winding-up and dissolution of Seller. Notwithstanding anything
contained herein, Buyer further acknowledges that subsequent to the Closing Date, Seller, and its directors, officers, employees, and legal and financial advisors will have no further obligations whatsoever in connection with this Letter Agreement
and the transactions contemplated hereby, other than as may be required (a) under paragraphs 4(b)(i), 4(b)(iii)((2), 4(b)(v), 4(d) and 4(n)(i) of this Letter Agreement,. Buyer agrees to assist Seller with its wind-up and dissolution as Seller
may reasonably request from time to time following the Closing. Buyer further agrees that, after the Closing and for a period of 18 months thereafter, Buyer shall grant reasonable access to Seller and its successors (and their respective Affiliates
and representatives) to the books and records of Buyer as they relate to the Property and the transactions contemplated hereby, including making extracts and copies of such books and records as reasonably requested. Any such access shall be granted
during regular business hours upon reasonable advance notice and shall be subject to restrictions under applicable law. 

  

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

15 

 CONFIDENTIAL – This document was developed at private expense and
includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

	 	(n)	Representations and Warranties. 

  

	 	(i)	Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer as follows: 

 

	 	(1)	Leases. There are no leases (or other real property agreements regarding use or occupancy) of space in the Property which will be in force on the Closing Date
and under which Seller is the landlord which would have a material adverse effect on the Property. 

  

	 	(2)	Litigation. There is no pending (and Seller has not received any written notice of any threatened) action, litigation, arbitration, mediation, condemnation or
other proceeding (collectively, “Proceedings”) involving any portion of the Property and Seller is not aware of any Proceeding involving any portion of the Property (other than routine slip and fall claims covered by insurance) that has
previously been settled or otherwise concluded and Seller has no knowledge of any contemplated condemnation or existing or contemplated special assessment affecting any portion of the Property any of which would have a material adverse effect on the
Property. 

  

	 	(3)	Compliance. Other than environmental related notices, Seller has received no written notice (and it has no knowledge) to the effect that the Property is not in
compliance with applicable laws and ordinances or that there has been or may be an investigation of the Property by any governmental authority having jurisdiction over the Property which would have a material adverse effect on the Property.

  

	 	(4)	Service Agreements. Seller has not entered into any service agreements, equipment leasing contracts or other contracts relating to the Property which will be in
force after the Closing which would have a material adverse effect on the Property. 

  

	 	(5)	Due Authorization. This Letter Agreement is and on the Closing Date will be (subject to any requirements under applicable corporate law) duly authorized,
executed and delivered by and binding upon Seller. 

  

	 	    	 Consents and Permissions. At Closing Seller will have obtained all consents and permissions related to the transactions herein contemplated and
required under any covenant, agreement, encumbrance, or applicable laws, except those which would not have a material adverse effect on the Property. Neither this Letter Agreement nor any agreement, document or instrument executed or to be executed
in connection with the same, does now or shall hereafter breach, violate, invalidate, cancel, make inoperative or interfere with, or result in the acceleration or maturity of, any agreement, document, instrument, right or interest, or applicable

  

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

16 

 CONFIDENTIAL – This document was developed at private expense and
includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

	 	
law affecting or relating to Seller or the Property, except those which would not have a material adverse effect on the Property. Seller will remove prior to Closing any monetary encumbrances on
the Property and any liens held by any direct or indirect owner of Seller. 

  

	 	    	Except as set forth in this paragraph 4(n)(i), none of Seller, its affiliates or any of their respective officers, directors, members, managers, stockholders, employees
or representatives make or have made any other representation or warranty, express or implied, at law or in equity, in respect of Seller, its affiliates, or their assets and liabilities including the property, including with respect to
merchantability or fitness for any particular purpose and none of Seller, its successors affiliates, or any of their respective officers, directors, members, managers, stockholders, employees or representatives will have or be subject to any
liability or indemnification obligation to Buyer or to any other person resulting from the sale of the Property to Buyer, its affiliates or representatives, for Buyer’s use of, any information, documents or material made available to Buyer,
whether orally or in writing, responses to questions submitted on behalf of Buyer or in any other form in expectation of the transaction contemplated by this agreement. Any such other representation or warranty is hereby expressly disclaimed.

  

	 	(6)	Seller’s representations and warranties contained in this paragraph 4(n)(i) shall survive the Closing for a period of 9 months (“Survival Period”), and
any claim for breach of any representation or warranty of Seller set forth in this paragraph 4(n)(i) will be forever barred unless Buyer gives Seller specific written notice of such claim within the Survival Period. After the expiration of the
Survival Period, after Closing Buyer shall not have recourse against or bring any action, suit or proceeding against Seller, its officers, directors, employees, agents, representatives or advisors of the Seller seeking a judgment for any of such
alleged breaches. 

  

	 	(ii)	Representations and Warranties of Buyer. Buyer hereby represents and warrants to Seller: 

 

	 	(1)	Due Authorization. This Letter Agreement and all agreements, instruments and documents herein provided to be executed or to be caused to be executed by Buyer
are, and on the Closing Date will be, duly authorized, executed and delivered by and are binding upon Buyer; 

  

	 	(2)	Existence and Good Standing. Buyer is a corporation, duly organized and validly existing and in good standing under the laws of the State of Delaware; and Buyer
is duly authorized and qualified to do all things required of it under this Letter Agreement; and 

  

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

17 

 CONFIDENTIAL – This document was developed at private expense and
includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

	 	(3)	Consents and Permissions. Buyer has the capacity and authority to enter into this Letter Agreement and consummate the transactions herein provided without the
consent or joinder of any other party. Neither this Letter Agreement nor any agreement, document or instrument executed or to be executed in connection with the same, does now or shall hereafter breach, violate, invalidate, cancel, make inoperative
or interfere with, or result in the acceleration or maturity of, any agreement, document, instrument, right or interest, or applicable law affecting or relating to Buyer, except those which would not have a material adverse effect on the ability of
Buyer to perform its obligations under this Letter Agreement or to consummate this transaction. 

  

	 	    	Buyer’s representations and warranties contained in this paragraph 4(n)(ii) shall survive the Closing for a period of 12 months, and any claim for breach of any
representation or warranty of Seller set forth in this paragraph 4(n)(ii) will be forever barred unless Seller gives Buyer specific written notice of such claim within such 12 month period. 

 

	 	(o)	Waivers; Relinquishment of Unknown Claims. Except for Seller’s obligations explicitly provided in the representations and warranties above, with respect to
all waivers above, the Buyer acknowledges that it is familiar with the provisions of Section 1542 of the California Civil Code as set forth below and expressly waive, give up and relinquish any rights or benefits they have or may have under
Section 1542, as well as under any other state or federal statute or common law or principle of similar effect. California Civil Code Section 1542 states: 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.” 

Buyer acknowledges that it may hereafter discover facts different from, or in addition to, those that it now knows or
believes to be true with respect to claims, demands, debts, liabilities, transactions, obligations and causes of action relating to the this transaction. Buyer nevertheless acknowledges that this Letter Agreement has been negotiated and agreed upon
in light of this realization and, being fully aware of the situation, hereby expressly agrees that the releases contained herein shall be given full force and effect even as to unknown and unsuspected claims, demands, and causes of action, if any.

  

	 	(p)	 Notices. Any and all notices or other communications required or permitted to be given under this Agreement, or by law, shall be in writing and
either (i) personally delivered, (ii) sent by United States mail, registered or certified, or express mail, postage prepaid, return receipt requested, or (iii) sent by Federal Express or other nationally recognized

  

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

18 

 CONFIDENTIAL – This document was developed at private expense and
includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

	 	
overnight courier service that provides receipted delivery service, delivery charges prepaid, return receipt requested, addressed to the following addresses: 

 

			
	If to Seller:	  	 New United Motor Manufacturing, Inc.

45500 Fremont Boulevard
 Fremont, California
94538-6368
 Attention:     President

Attention:     General Counsel

		
	If to Buyer:	  	 Tesla Motors, Inc.

3500 Deer Creek Road
 Palo Alto,
CA 94304-1317
 Attention:     Legal Dept.

Notice shall be deemed to have been given upon the date of delivery (or the date of refusal to accept delivery, as the case may be) or at
such other address as either party may from time to time specify in writing to the other in the manner aforesaid. Either party may change the address and persons to whom notice is to be sent to it under this Letter Agreement by giving notice to the
other party in the manner provided above in this paragraph (q). 
  

	 	(q)	Termination. If for any reason the Closing does not occur by December 31, 2010 this Letter Agreement shall terminate automatically, unless the parties agree
otherwise in writing. 

  

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

19 

 CONFIDENTIAL – This document was developed at private expense and
includes trade secrets and commercial or financial information, or both, that Tesla Motors, Inc. considers privileged, confidential, and exempt from disclosure under the Freedom of Information Act (5 USC § 552(b)). 

 

 If the foregoing terms are acceptable, please countersign one copy of this Letter
Agreement and return to Buyer. 
  

			
	 Sincerely,
  

Tesla Motors, Inc.

		
	By:	 	     /s/    Elon Musk

		 	     Elon Musk

    Chief Executive Officer

  

			
	 ACCEPTED AND AGREED TO AS OF MAY 26, 2010
  

New United Motor Manufacturing, Inc.

		
	 By:
	 	    /s/    John C.D. DiDonato

			
		
	 Printed:
	 	 

  

 

  

CONFIDENTIAL: Contains proprietary commercial / financial information and / or trade secrets. Do not release under FOIA. 

20Form of Convertible Senior Note due 2015

 Exhibit 4.1 

[FORM OF FACE OF NOTE] 
 [UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]* 

 
  

	*	Use bracketed language for a Global Note. 

  

 A-1 

 SALIX PHARMACEUTICALS, LTD. 

[    ]% Convertible Senior Note due 2015 

 

			
	No. [            ]	 	$[    ],000,000
		
	CUSIP No. [            ]	 	

 Salix Pharmaceuticals, Ltd., a corporation duly organized and validly existing
under the laws of the State of Delaware (herein called the “Company,” which term includes any successor corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to
[CEDE & CO., or its registered assigns,]2 the
principal sum of [            ] million Dollars, [as revised by the Schedule of Increases and Decreases in Global Note attached
hereto,]3 on May 15, 2015, interest thereon as set
forth below and Additional Interest in the manner, at the rates and to the Persons set forth in Sections 5.06(d), 5.06(e) and 7.03, as applicable, of the Indenture. 

The Company promises to pay interest on the principal amount of this Note at the rate of [    ]% per annum (subject
to increase pursuant to Sections 5.06(d) and 7.03, as applicable, of the Indenture) from May [    ], 2010 until May 15, 2015. The Company will pay interest semi-annually on May 15 and November 15 of each year, commencing on
November 15, 2010, to holders of record at the close of business on the preceding February 1 and August 1 (whether or not such day is a Business Day), respectively. Interest on the Note will accrue from the most recent date to which
interest has been paid, or, if no interest has been paid on the Note, from May [    ], 2010. 
 Payment of
the principal of and accrued and unpaid interest and Additional Interest, if any, on this Note shall be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in such lawful money
of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts; provided, however, that any payment to the Depositary or its nominee shall be paid by wire transfer in
immediately available funds in accordance with the wire transfer instruction supplied by the Depositary or its nominee from time to time to the Trustee and Paying Agent (if different from Trustee). 

Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions
giving the holder of this Note the right to convert this Note into cash, shares of Common Stock of the Company or a combination of cash and shares of Common Stock, as applicable, on the terms and subject to the limitations set forth in the
Indenture. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. 
  

 

	2
	 Use bracketed language for a Global Note. 

	3	 Use bracketed
language for a Global Note. 

  

 A-2 

 This Note shall be deemed to be a contract made under the laws of the State of New York, and
for all purposes shall be construed in accordance with and governed by the laws of said State (without regard to the conflicts of laws provisions thereof). 

This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually
signed by the Trustee or a duly authorized authenticating agent under the Indenture. 
 [Remainder of page intentionally left
blank] 
  

 A-3 

 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed. 

 

			
	SALIX PHARMACEUTICALS, LTD.
		
	By:	 	 
	Name:	 	
	Title:	 	

  

			
	 Dated:

	
	 TRUSTEE’S CERTIFICATE OF AUTHENTICATION

U.S. BANK NATIONAL ASSOCIATION
 as Trustee,
certifies that this is one of the Notes described in the within-named Indenture.

		
	By:	 	 
		 	Authorized Officer

  

 A-4 

 [FORM OF REVERSE OF NOTE] 

SALIX PHARMACEUTICALS, LTD. 

[    ]% Convertible Senior Note due 2015 

This Note is one of a duly authorized issue of Notes of the Company, designated as its [    ]% Convertible Senior
Notes due 2015 (the “Notes”), limited to the aggregate principal amount of $[            ],000,000 all issued or to be issued under and pursuant to an Indenture dated as of May
[    ], 2010 (as such may be amended from time to time, the “Indenture”), between the Company and U.S. Bank National Association (the “Trustee”), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Notes. Additional Notes may be issued in an unlimited aggregate
principal amount, subject to certain conditions specified in the Indenture. 
 In case an Event of Default, as defined in the
Indenture, shall have occurred and be continuing, the principal of and interest, including Additional Interest, if any, on all Notes may be declared, by either the Trustee or the holders of not less than 25% in aggregate principal amount of Notes
then outstanding, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions and certain exceptions set forth in the Indenture. 

Subject to the terms and conditions of the Indenture, the Company will make all payments and deliveries in respect of the principal
amount on the Maturity Date, as the case may be, to the holder who surrenders a Note to a Paying Agent to collect such payments in respect of the Note. The Company will pay cash amounts in money of the United States that at the time of payment is
legal tender for payment of public and private debts. 
 The Indenture contains provisions permitting the Company and the
Trustee in certain circumstances, without the consent of the holders of the Notes, and in other circumstances, with the consent of the holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced
as in the Indenture provided, to execute supplemental indentures modifying the terms of the Indenture and the Notes as described therein. It is also provided in the Indenture that, subject to certain exceptions, the holders of a majority in
aggregate principal amount of the Notes at the time outstanding may on behalf of the holders of all of the Notes waive any past Default or Event of Default under the Indenture and its consequences. 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and accrued and unpaid interest, and Additional Interest, if any, on this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed.

 The Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples
thereof. At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the 

 

 A-5 

 
Indenture, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations, without payment of any service charge but, if required by the Company or
Trustee, with payment of a sum sufficient to cover any tax, assessments or other governmental charges that may be imposed in connection therewith as a result of the name of the holder of the new Notes issued upon such exchange of Notes being
different from the name of the holder of the old Notes surrendered for such exchange. 
 Subject to the provisions of the
Indenture, upon the occurrence of a Fundamental Change, the holder has the right, at such holder’s option, to require the Company to repurchase for cash all of such holder’s Notes or any portion thereof (in principal amounts of $1,000 or
integral multiples thereof) on the Fundamental Change Repurchase Date at a price equal to the Fundamental Change Repurchase Price. 

Subject to the provisions of the Indenture, the holder hereof has the right, at its option, during certain periods and upon the
occurrence of certain conditions specified in the Indenture, prior to the close of business on the second Scheduled Trading Day immediately preceding the Maturity Date, to convert any Notes, into cash, shares of Common Stock or a combination of cash
and shares of Common Stock, as applicable, at a Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture. 

Terms used in this Note and defined in the Indenture are used herein as therein defined. 

 

 A-6 

 ABBREVIATIONS 

The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according
to applicable laws or regulations: 
  

					
	TEN COM -as tenants in common	  	UNIF GIFT MIN ACT	 	
			
		  	 	 	Custodian
		  	(Cust)	 	

  

					
	TEN ENT as tenants by the entireties	  		 	
			
		  	 	 	
		  	(Minor)	 	
	JT TEN -as joint tenants with right of survivorship and not as tenants in common	  		 	
		  	Uniform Gifts to Minors Act	 	
			
		  	 	 	(State)

 Additional abbreviations may also
be used 
 though not in the above list. 
  

 A-7 

 SCHEDULE OF INCREASES AND DECREASES IN GLOBAL
NOTE4 

SALIX PHARMACEUTICALS, LTD. 

[    ]% Convertible Senior Notes due 2015 

The initial principal amount of this Global Note is $[    ],000,000. The following increases or decreases in this
Global Note have been made: 
  

									
	 Date
	  	 Amount of decrease in

Principal Amount of this

Global Note
	  	 Amount of increase in

Principal Amount of this

Global Note
	  	 Principal Amount of this

Global Note following

such decrease or increase
	  	 Signature of

authorized signatory of

Trustee or

Custodian

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

 

	4
	 For Global Notes only. 

  

 A-8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}]]