EFiled: Feb 19 2016 04:53PM EST

Transaction ID 58601559
Case No. 11898-CB

IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE

IN RE TERRAFORM POWER, INC.
DERIVATIVE LITIGATION

) CONSOLIDATED
) C.A. NO. 11898-CB
REDACTED VERSION-FILED: February 19, 2016
SUNEDISON DEFENDANTS MEMORANDUM IN OPPOSITION TO
PLAINTIFFS MOTION FOR PRELIMINARY INJUNCTION

OF COUNSEL:
Gregory P. Joseph
Pamela Jarvis
Mara Leventhal
Honey Kober
Gregory O. Tuttle
Roman Asudulayev
Joseph Hage Aaronson LLC
485 Lexington Avenue
30th Floor
New York, New York 10017
(212) 407-1210
Dated: February 12, 2016

Thomas A. Beck (#2086)

Raymond J. DiCamillo (#3188)
Sarah A. Clark (#5872)
Ryan P. Durkin (#6149)
Richards, Layton & Finger, P.A.
920 North King Street
Wilmington, Delaware 19801
(302) 651-7700
Attorneys for Defendants SunEdison,
Inc. and SunEdison Holdings
Corporation

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .................................................................................... ii
PRELIMINARY STATEMENT ............................................................................... 1
FACTS ....................................................................................................................... 4
ARGUMENT ........................................................................................................... 33
THE INJUNCTION PLAINTIFF SEEKS IS EFFECTIVELY PERMANENT ..... 33
I.

II.

III.

SUNEDISON HONORED ITS FIDUCIARY DUTIES .......................... 35

A.

Plaintiff Lacks Standing to Object to Core

Features of the Challenged Transaction
Which Predate Its Acquisition of Stock ......................................... 35

B.

The December Amendments Are Entirely Fair ............................. 38

1.

The December Amendments Are the Product of

Fair Dealing ......................................................................... 39

2.

The Economic Terms of the December Amendments

Are Fair to TERP ................................................................. 49

PLAINTIFF HAS NOT DEMONSTRATED

IRREPARABLE INJURY ........................................................................ 52
A.

TERPs Hypothetical REDACTED Is Speculative ........................... 52

B.

SunEdison Could Pay Any Money Damages ................................ 54

C.

The Court Could Enjoin the Take/Pay Agreement in the Future ..56

THE BALANCE OF EQUITIES WEIGHS HEAVILY AGAINST

INJUNCTIVE RELIEF ............................................................................ 56

CONCLUSION ........................................................................................................ 58
i

TABLE OF AUTHORITIES
Page(s)
Cases
7547 Partners v. Beck,
682 A.2d 160 (Del. 1996) .............................................................................. 37
AB Value Partners, LP v. Kreisler Mfg. Corp.,
2014 WL 7150465 (Del. Ch. Dec. 16, 2014) ................................................ 34
AM Gen. Holdings LLC v. Renco Grp.,
2012 WL 6681994 (Del. Ch. Dec. 21, 2012) ................................................ 59
Angelo, Gordon & Co. v. Allied Riser Commcns Corp.,
805 A.2d 221 (Del. Ch. 2002) .........................................................52 n.11, 55
Bayard v. Martin,
101 A.2d 329 (Del. 1953) ......................................................................55 n.12
Braunschweiger v. Am. Home Shield Corp.,
1989 WL 128571 (Del. Ch. Oct. 26, 1989) ................................................... 58
Brown v. Automated Mktg. Sys., Inc,
1982 WL 8782 (Del. Ch. Mar. 22, 1982) ...................................................... 37
Cantor Fitzgerald, L.P. v. Cantor,
724 A.2d 571 (Del. Ch. 1998) ....................................................................... 58
Del. Open MRI Radiology Assocs., P.A. v. Kessler,
898 A.2d 290 (Del. Ch. 2006) ....................................................................... 49
Emerald Partners v. Berlin,
2003 WL 21003437 (Del. Ch. Apr. 28, 2003),
affd, 2003 WL 23019210 (Del. Dec. 23, 2003) .....................................40, 47
Gesoff v. IIC Indus., Inc.,
902 A.2d 1130 (Del. Ch. 2006) ..................................................................... 45

ii

Gotham Partners, L.P. v. Hallwood Realty Partners, L.P.,

855 A.2d 1059 (Del. Ch. 2003),
affd, 840 A.2d 641 (Del. 2003) .................................................................... 50
H.F. Ahmanson & Co. v. Great W. Fin. Corp.,
1997 WL 305824 (Del. Ch. June 3, 1997) .................................................... 54
Hexion Specialty Chems., Inc. v. Huntsman Corp.,
965 A.2d 715 (Del. Ch. 2008) ....................................................................... 19
Hillsboro Energy, LLC v. Secure Energy, Inc.,
2008 WL 4561227 (Del. Ch. Oct. 3, 2008) ................................................... 55
In re AbbVie Inc. Sholder Deriv. Litig.,
2015 WL 4464505 (Del. Ch. July 21, 2015) ................................................. 36
In re Appraisal of Dole Food Co.,
114 A.3d 541 (Del. Ch. 2014) ....................................................................... 51
In re Beatrice Cos. Litig.,
1987 WL 36708 (Del. Feb. 20, 1987) ........................................................... 37
In re Cysive, Inc. Sholder Litig.,
836 A.2d 531 (Del. Ch. 2003) ....................................................................... 40
In re Family Dollar Stores, Inc. Sholder Litig.,
2014 WL 7246436 (Del. Ch. Dec. 19, 2014) ................................................ 33
In re Gen. Motors (Hughes) Sholder Litig.,
2005 WL 1089021 (Del. Ch. May 4, 2005),
affd, 897 A.2d 162 (Del. 2006) .................................................................... 42
In re Goldman Sachs Grp., Inc. Sholder Litig.,
2011 WL 4826104 (Del. Ch. Oct. 12, 2011) ................................................. 42
In re Hanover Direct, Inc. Sholders Litig.,
2010 WL 3959399 (Del. Ch. Sept. 24, 2010)................................................ 49
In re KMC Real Estate Invrs, LLC,
518 B.R. 505 (S.D. Ind. 2014) ....................................................................... 56
iii

In re Loral Space & Commcns., Inc.,

2008 WL 4293781 (Del. Ch. Sept. 19, 2008) ................................................ 43
In re MFW Sholders Litig.,
67 A.3d 496 (Del. Ch. 2013),
affd sub nom. Kahn v. M&F Worldwide Corp.,
88 A.3d 635 (Del. 2014) ................................................................................ 42
In re S. Peru Copper Corp. Sholder Deriv. Litig.,
52 A.3d 761 (Del. Ch. 2011) ......................................................................... 48
In re Trados, Inc. Sholder Litig.,
73 A.3d 17 (Del. Ch. 2013) .....................................................................40, 49
In re W. Natl Corp. Sholders Litig.,
2000 WL 710192 (Del. Ch. May 22, 2000) ............................................44, 45
Jedwab v. MGM Grand Hotels, Inc.,
509 A.2d 584 (Del. Ch. 1986) ....................................................................... 43
Kahn v. M&F Worldwide Corp.,
88 A.3d 635 (Del. 2014) ..........................................................................20, 42
Kahn v. Tremont Corp.,
694 A.2d 422 (Del. 1997) .............................................................................. 44
Kansas City S. v. Grupo TMM, S.A.,
2003 WL 22659332 (Del. Ch. Nov. 4, 2003) ................................................ 55
Kumar v. Racing Corp. of Am., Inc.,
1991 WL 67083 (Del. Ch. Apr. 26, 1991)............................................... 43-44
La. Mun. Police Emps. Ret. Sys. v. Crawford,
918 A.2d 1172 (Del. Ch. 2007) ..................................................................... 36
Lennane v. ASK Comp. Sys., Inc.,
1990 WL 154150 (Del. Ch. Oct. 11, 1990),
appeal refused, 1990 WL 169078 (Del. Oct. 19, 1990) ................................ 56

iv

Lonergan v. EPE Holdings, LLC,

5 A.3d 1008 (Del. Ch. 2010) ......................................................................... 51
Loppert v. WindsorTech, Inc.,
865 A.2d 1282 (Del. Ch. 2004),
affd, 867 A.2d 903 (Del. 2005) ..............................................................21, 46
Polygon Glob. Opportunities Master Fund v. W. Corp.,
2006 WL 2947486 (Del. Ch. Oct. 12, 2006) ................................................. 36
Roseton OL, LLC v. Dynegy Holdings Inc.,
2011 WL 3275965 (Del. Ch. July 29, 2011) ................................................. 53
Ryan v. Gifford,
918 A.2d 341 (Del. Ch. 2007) ....................................................................... 36
S. Muoio & Co. v. Hallmark Entmt Invs. Co.,
2011 WL 863007 (Del. Ch. Mar. 9, 2011) .................................................... 51
Sanofi-Synthelabo v. Apotex Inc.,
488 F. Supp. 2d 317 (S.D.N.Y. 2006),
affd, 470 F.3d 1368 (Fed. Cir. 2006)............................................................ 59
Sawabeh Info. Servs. Co. v. Brody,
832 F. Supp. 2d 280 (S.D.N.Y. 2011) .....................................................21, 46
Schreiber v. Bryan,
396 A.2d 512 (Del. Ch. 1978) ................................................................. 37-38
Seagraves v. Urstadt Prop. Co.,
1989 WL 137918 (Del. Ch. Nov. 13, 1989) .................................................. 48
SIGA Techs., Inc. v. PharmAthene, Inc.,
67 A.3d 330 (Del. 2013) ..........................................................................21, 46
Solar Cells, Inc. v. True N. Partners, LLC,
2002 WL 749163 (Del. Ch. Apr. 25, 2002)................................................... 58
Stahl v. Apple Bancorp, Inc.,
579 A.2d 1115 (Del. Ch. 1990) ..................................................................... 34
v

Theravectys SA v. Immune Design Corp.,

2015 WL 1308273 (Del. Ch. Mar. 9, 2015) .................................................. 52
TW Servs., Inc. v. SWT Acq. Corp.,
1989 WL 20290 (Del. Ch. Mar. 2, 1989) ...................................................... 34
Weichert Co. v. Young,
2007 WL 4372823 (Del. Ch. Dec. 7, 2007) .................................................. 34
Weldin Farms, Inc. v. Glassman,
414 A.2d 500 (Del. 1980) ......................................................................52 n.11

Rules & Statutes

8 Del. C. 327 .......................................................................................................... 36

vi

Defendants SunEdison, Inc. and SunEdison Holdings Corporation

(SunEdison) respectfully submit this memorandum in opposition to the motion
by Plaintiff Appaloosa Investment Limited Partnership I (Appaloosa) for a
preliminary injunction.
PRELIMINARY STATEMENT1
Appaloosas attack on TerraForm Power, Inc.s (TERPs) acquisition of
the assets of Vivint Solar, Inc. (Vivint) is irreconcilable with the factual record
and inadequate to warrant injunctive relief.
Injunctive relief is unwarranted for three independent reasons:
First,

REDACTED

Appaloosa
conspicuously fails to quantify the potential damages it claims SunEdison could
not satisfy in the absence of an injunction. In fact,

REDACTED

Pl. Mem. refers to Plaintiffs February 8th Memorandum in Support of its

Motion. 1/12/16 Pl. Mem. refers to Plaintiffs TRO brief. Ex. designates
exhibits to the accompanying Affidavit of Sarah A. Clark. Compl. refers to
Plaintiffs Complaint, and __ refers to paragraphs thereof. Take/Pay
Agreement refers to the take/pay agreement between SunEdison and TERP.
Litvak Report and Karcanias Report refer to the accompanying Expert
Reports of Jeff Litvak and Aris Karcanias, submitted herewith as Exhibits A and B,
respectively, to the Affidavit of Ryan P. Durkin. PX-_ refers to exhibits to the
February 8th Affidavit of Elizabeth Sloan. Atkins Aff. refers to the February
8th Affirmation of John Akins. Emphasis is added to, and internal quotations,
brackets and citations omitted from, quoted material in this brief, except as
indicated.
1

$185 million, and that amount shrinks quarterly once the loan secured by the
Take/Pay Agreement issues. This amount is well within SunEdisons capacity to
pay. Litvak Report at 11, 90-91.
Second, Appaloosa seeks an injunction to prevent supposed harm to TERP
from the Take/Pay Agreement, but that harm is both speculative and could occur
only in the future, depending on whether or when TERPs obligation to purchase
arises, the price of the assets to be purchased, the condition of the capital markets
and numerous other variables, including how long the Take/Pay remains in effect.
An injunction would, however, immediately harm Vivint, SunEdison and TERP.
x Vivint and its shareholders would lose the merger.
x SunEdison would be subject to a potentially catastrophic lawsuit from
Vivint.
x The resulting harm to SunEdison

REDACTED

Third, Plaintiff is not entitled to injunctive relief on the merits. Appaloosas

papers ignore critical facts establishing that the December 9 Take/Pay Agreement
it challenges was the product of fair dealing and fair price, including:
x TERPs entry into the preexisting July 20 Take/Pay Agreement was
approved by a Conflicts Committee whose independence Appaloosa
concedes and in all events has no standing to challenge.
REDACTED

REDACTED

The December 9 Take/Pay Agreement is objectively far better for

TERP than its July 20 predecessor. The December 9 Take/Pay is by
definition entirely fair, reducing TERPs obligations by up to
hundreds of millions of dollars and potentially
REDACTED
and it was coupled with additional
price reductions to TERP of nearly $150 million under the
accompanying amended Purchase Agreement and the Operations &
Management Support (O&M) Agreement. Litvak Report 22-26.
TERPs business objective from its inception as reflected in its S-1,
its 10-Ks, and the testimony of every witness questioned on the
subject in this proceeding was to expand into residential solar.
Residential is part of one of the largest and most important solar
markets in the United States. Karcanias Report 2.14 and Table 2-1.
Both TERP and SunEdison wanted to acquire Vivint the second
largest provider of residential solar in the U.S.
REDACTED

REDACTED

The Vivint acquisition followed the template of the January 2015 First
Wind acquisition, in which SunEdison bought First Winds
development platform and TERP bought its operating assets.

REDACTED

renegotiated better terms for itself and

proposed substantially improved terms to TERP.

REDACTED

 SunEdisons steps to add directors and reconstitute the Conflicts

Committee
REDACTED

The reconstituted Conflicts Committee

REDACTED

REDACTED

Appaloosas motion is predicated on a fundamentally untenable theory

that SunEdison so desired the Vivint development platform it was willing to force
TERP to take substandard residential solar assets. But the development platform is
nothing more than the organization that develops the assets. PX-42 at 28:19-29:7.
If the assets are not valuable, neither is the platform, and there is no point in
acquiring it. The unrebutted evidence shows that the Vivint residential assets are
valuablemultiple bidders have expressed interest in them. Appaloosas motion
is devoid of merit and should be denied.
FACTS
SunEdison and TERP. SunEdison is one of the worlds leading developers
of solar energy projects. Ex. 2 at 1. It is a development company, or DevCo, and
formed TERP as a YieldCo on January 15, 2014. Id. at 10. TERP became a public
4

company on July 23, 2014. Ex. 3 at 10. As a YieldCo, TERPs primary business
objective is to increase the cash dividends we pay to our shareholders over time.
Ex. 3 at 8. SunEdison is a controlling shareholder of TERP and has the right to
specifically designate two TERP directors in addition to its voting power to elect
other directors. Id. at 3 at 42; Ex. 4 at 8.
Individual Defendants. Since November 20, 2015, Peter Blackmore, Jack
Jenkins-Stark and Christopher Compton (Individual Defendants) have served
as independent directors on TERPs board and members of its Corporate
Governance and Conflicts Committee (Conflicts Committee or Committee),
which review[s] and approve[s] potential conflict transactions between TERP
and SunEdison. Ex. 9 at 2(b). Blackmore previously served as an independent
director of SunEdison.
Appaloosa. Plaintiff, a hedge fund,

DevCo/YieldCo Structure.

REDACTED

The DevCo/YieldCo structure is a recent

phenomenon, devised in 2013 to finance growth in the renewable energy sector

5

(Karcanias Report 1.15, 2.1-2.9). The industry remains in its infancy with only
15 YieldCos publicly traded worldwide.

REDACTED

The relationship between SunEdison and TERP is governed by agreements

that confer many benefits on TERP and which Plaintiff concedes historically have
been fair to TERP. 1/12/16 Pl. Mem. 3.

These include (1) a Management

Services Agreement (MSA) (Ex. 7) requiring SunEdison to provide TERP a

dedicated team of professionals to serve as [its] executive officers and other key
officers, to support the operational, financial, legal and regulatory aspects of
[TERPs] business, to monitor[ ] and/or overs[ee] legal counsel and...other
independent experts, and to recommend candidates to serve on TERPs board
and board committees (Ex. 1 at 157, 197; Ex. 7 1.1.16, 2.1, 3.1); (2) a Project
Support Agreement (PSA) (Ex. 8) committing SunEdison to offer TERP
sufficient Call Right Projects (i.e., power plants) to generate at least $75 million
and $100 million of cash available for distribution (CAFD) in 2015 and 2016,
respectively, and giving TERP a right of first refusal for those assets (Ex. 1 at 1-2;
Ex. 8 2.1, 2.2(a), 2.4, 2.5); and (3) additional agreements pursuant to which
SunEdison guarantees TERP obligations and otherwise subsidizes TERP. E.g., Ex.
3 at 81 (SunEdison to pay up to $48 million in interest on certain TERP notes for 3
6

years following IPO). SunEdison provides TERP nearly all of its employees,
operations, and administrative support.
Given the DevCo/YieldCo relationship and SunEdisons ownership interest
in TERP,

REDACTED

As detailed in TERPs public disclosures, harm to

SunEdison may cause material harm to TERP. E.g.:

Certain of TERPs power purchase agreements (PPAs) and projectlevel financing arrangements include provisions that would permit
the counterparty to terminate the contract or accelerate maturity in the
event SunEdison ceases to control TERP and the termination or
acceleration of any of these agreements could have a material
adverse effect on TERP. Ex. 3 at 25.

Any failure by SunEdison to effectively manage [TERPs]

operations, or the failure by [TERP] to identify and contract with
replacement service providers, could have a material adverse effect
the operation of [TERPs] facilities. Id. at 43.

Any failure by SunEdison to continue to provide solar projects to

TERP could have a material adverse effect on [TERPs] business,
financial condition, results of operations and cash flow. Id.

See generally Ex. 3 at 42-46.

TERP Targets Residential Assets. From its inception, TERPs business
objective has been to acquire high-quality contracted cash flows, primarily from
owning solar generation assets serving utility, commercial and residential
7

customers. Ex. 1 at 1.

REDACTED

REDACTED

TERP Enthusiastically Pursued Vivint.

Plaintiffs contention that

SunEdison used the July Vivint Transaction to force[ ] low quality assets on
TERP (e.g., 2, 30, 73(f), 106; Pl. Mem. 3, 53) is groundless. TERP REDACTED

REDACTED

TERP was intimately involved in negotiating the structure and terms of the
Vivint transaction and financing.

REDACTED

REDACTED

REDACTED

As Vivint requested,
the transaction was structured as a merger agreement between SunEdison and
Vivint (July Merger Agreement) (Ex. 22), pursuant to which SunEdison would
acquire Vivint for $2.2 billion, payable in cash, stock and convertible notes, to be
funded in part by (a) the concurrent sale of Vivints rooftop solar portfolio of 523
megawatts (MW) to TERP (the initial Drop Down Transaction) for $922
million, pursuant to the July 20, 2015 Purchase Agreement between SunEdison and
Terra LLC (July Purchase Agreement) (Compl. Ex. 1), and (b) a $500 million
REDACTED

loan provided by Goldman Sachs Bank USA to SunEdison

(the Goldman Loan or Term Facility, and with the July Merger and Purchase
Agreements, the July Vivint Transaction). Ex. 24.
REDACTED

10

REDACTED

11

REDACTED

12

REDACTED

It was ultimately agreed that the price of Future Drop Downs would be at the
lesser of fair market value (to be determined by an appraisal) or a guaranteed
return to TERP. Ex. 21 at Ex. B at 1578-79.
REDACTED

13

REDACTED

14

REDACTED

Plaintiff does not,

and could not, assert a claim for breach of fiduciary duty based on the July Vivint
Transaction or claim that Conflicts Committee acted as a rubber stamp. See 137146; PX-47 at 205:12-19.
REDACTED

15

REDACTED

16

REDACTED

17

REDACTED

TERP Announcement. In a press release issued on July 20, 2015, TERP

announced:
[TERP] is excited to expand our residential solar portfolio with
the acquisition of Vivint Solar assets, including 523 MW, which
will accelerate our growth in this segment... With immediate
accretion to our stockholders at initial drop down and the
predictable flow of drop down assets into the future, we see this
acquisition as creating substantial value for our stockholders.
Ex. 24 at 27959.
TERP raised its prior 2016 DPS guidance of $1.70 to $1.75, a 30% yearover-year increase compared to 2015 guidance. Id.
Adverse Developments. The market reacted negatively to the July Vivint
Transaction. PX-44 at 42:21-23; PX-42 at 83:9-13. General turmoil in the energy
and YieldCo markets (see Karcanias Report 1.23) also put downward pressure on
18

TERP and SunEdison stock. PX-41 at 53:6-20; PX-35 at 90:21-23; PX-42 at

81:14-15. Vivint also began missing projections. PX-42 at 81:18-23; Ex. 37.
No MAE.

None of these adverse developments constituted a Material

Adverse Effect (MAE) within the July Merger Agreement. Section 8.03(l)
specifically excluded from the definition of a Company Material Adverse Effect
any changes in the economy or the financial or securities markets...or the
industry...in which [Vivint] operates and any failure in and of itself of [Vivint] to
meet any internal or published projections.... Ex. 22 8.03(l). This Court has
held that where, as here, a purchaser agrees that a sellers failure to meet
projections does not constitute an MAE, the parties have specifically allocated the
risk to [the purchaser] that [the sellers] performance would not live up to
managements expectations. Hexion Specialty Chems., Inc. v. Huntsman Corp.,
965 A.2d 715, 741 (Del. Ch. 2008). No Delaware court has ever found an MAE in
the context of a merger agreement, nor could one be expected to do so on grounds
expressly disavowed in the MAE definition.
The July Merger Agreement authorized Vivint to seek injunctive relief to
compel specific performance.

Ex. 22 8.11.

As early as October 23, 2015,

Vivints board began preparing for, and threatening, litigation to compel specific
performance of the July Merger Agreement. Ex. 5 at 61, 63, 67. Accordingly,
non-performance by SunEdison threatened an injunctive proceeding by Vivint
19

against which SunEdison had no persuasive contractual defense

REDACTED

None of the reasons Plaintiff advances to establish that TERP was not
bound by the original deal, Pl. Mem. 19, withstands analysis.

Plaintiff asserts that SunEdison breached its fiduciary duty by entering

into the July transaction with TERP, Pl. Mem. 19,
REDACTED
Plaintiff cannot and does not establish that the
transaction was unfair in July. Kahn v. M&F Worldwide Corp., 88
A.3d 635, 653 (Del. 2014) (approval by independent committee shifts
burden of proving unfairness to plaintiff).
20

It is true that the November Committee could withhold consent to an

amendment to the July Merger Agreement and threaten nonperformance of the July Purchase Agreement, Pl. Mem. 19-20, but

REDACTED

REDACTED

Hence, Vivint kept threatening litigation.

Plaintiff maintains that TERP was never actually bound to [the]

Take/Pay Arrangement because TERP had never signed a definitive
contract. Pl. Mem. 21. The Take/Pay Agreement is set out in a
detailed, enforceable term sheet, and it was made final and binding as
part of the Interim Agreement between SunEdison and TERP in July.
Ex. 21 at 1.8 (Concurrently with the Closing, [SunEdison]and
TERPshall enter into a long-term framework agreement for the
dropdown of a certain number of US residential and small commercial
solar projects...all based on the terms set forth on Exhibit B hereto.).
Loppert v. WindsorTech, Inc., 865 A.2d 1282, 1289 (Del. Ch. 2004),
affd, 867 A.2d 903 (Del. 2005) (TABLE) (contract is binding once
there is assent on the essential terms); Sawabeh Info. Servs. Co. v.
Brody, 832 F. Supp. 2d 280, 307 (S.D.N.Y. 2011) (under New York
law, term sheet is binding contract where there is mutual intent to
commit to its terms); SIGA Techs., Inc. v. PharmAthene, Inc., 67
A.3d 330, 343-44 (Del. 2013) (an express contractual obligation to
negotiate in good faith is binding on the contracting parties).

Plaintiffs assertion that Vivints litigation threat[s] [against

SunEdison] w[ere] hollow, Pl. Mem. 21, ignores
REDACTED

21

Renegotiation.

REDACTED

22

REDACTED

23

REDACTED

24

REDACTED

SunEdison Designates Two TERP Directors.

25

REDACTED

REDACTED

On November 20, prior to a Special Meeting of TERPs Board of Directors,

Martin Truong, acting on behalf of SunEdison as majority Class B common
stockholder, sent notice to the secretary of TERP appointing Blackmore and
Jenkins-Stark to the TERP board pursuant to Article 4, 3(e) of TERPs Certificate
of Incorporation. Ex. 39 at 6512. Blackmore, who resigned as an independent
SunEdison director that day, was designated because he brought to TERP strong
leadership expertise, including significant public company experience, and a
proven track record of driving performance.3 Ex. 42 at Ex. 99.1. Jenkins-Stark
was appointed because he had substantial financial expertise, having served as
CFO for multiple public and private companies, and a long history in the energy
industry.4 Id.

Plaintiff attacks Blackmores independence based on his substantial

business ties to SunEdison, the sum total of which comprise his prior independent
service as a SunEdison board member and compensation he received therefor. Pl.
Mem. 28.

Plaintiff claims that Jenkins-Stark had substantial business ties to

SunEdison (Pl. Mem. 28), but those ties are limited to Jenkins-Starks
employment with a company in which SunEdison own a minuscule (3.3%) amount
of stock and from which SunEdison acquired two systems for an aggregate
purchase price of $253,000. PX-17 at 6.
26

At the TERP board meeting,

REDACTED

Compton, an outside director whose independence is unchallenged, has

extensive financial experience from his tenure with a large public company and a
corporate finance background. Ex. 42 at Ex. 99.1.
27

SunEdisons

REDACTED

actions were intended to and ultimately did

REDACTED

28

REDACTED

REDACTED

29

REDACTED

The December Amendments Are Fair.

REDACTED

The Boards of SunEdison and TERP approved the Amended

Purchase Agreement on December 9. Ex. 72.
The amended agreements were memorialized in the Amended Purchase
Agreement, the Amended and Restated Interim Agreement (Amended Interim
Agreement), and the Term Facility, Take/Pay and IDR Letter Agreement
(Letter Agreement) (together, the December Amendments, or in Plaintiffs
words, the Challenged Transaction).

REDACTED

REDACTED

30

REDACTED

Improvements to the Take/Pay Agreement included:

REDACTED

REDACTED

31

REDACTED

Purported Harm Absent Injunction. Plaintiff posits three possible harms

that will result absent an injunction, each of which is meritless. First, Plaintiff
claims that

REDACTED

32

REDACTED

Third, Plaintiff claims that it will be impossible to undo the transaction if the
transaction is not enjoined (Pl. Mem. 58-59), but nothing will prevent the Court
from enjoining the Take/Pay in the future if any dropdown should prove unfair to
TERP.
ARGUMENT
THE INJUNCTION PLAINTIFF SEEKS IS EFFECTIVELY PERMANENT
Plaintiffs motion seeks a preliminary injunction, an extraordinary remedy
that will never be granted unless earned.

In re Family Dollar Stores, Inc.

Sholder Litig., 2014 WL 7246436, at *12 (Del. Ch. Dec. 19, 2014). In fact, there
is nothing preliminary about the relief Plaintiff seeks. The injunction would have
the effect of finally quashing the Vivint merger because it would prevent the
merger from closing before the March 18, 2016 termination date.

Ex. 22 at

7.01(c). This is precisely what Plaintiff intends. PX-47 at 210:21-211:25.

33

Under these circumstances, it is not enough for Plaintiff to demonstrate a

likelihood of success. Plaintiff bears the burden of proving it is in fact entitled to
relief on a summary judgment standard. See, e.g., Stahl v. Apple Bancorp, Inc.,
579 A.2d 1115, 1120 (Del. Ch. 1990) (where a preliminary injunction would afford
final relief in the sense that a result after trial could not practically reverse the
grant of preliminary relief then absent an extraordinary circumstance, the court
ought not to grant such relief where material facts are in substantial dispute.); AB
Value Partners, LP v. Kreisler Mfg. Corp., 2014 WL 7150465, at *2 (Del. Ch.
Dec. 16, 2014). In the words of Chancellor Allen, if a preliminary injunction
would afford Plaintiff final relief, the relief now sought ought not be granted
unless [Plaintiff] satisfies the standards applicable to a grant of summary
judgment. TW Servs., Inc. v. SWT Acq. Corp., 1989 WL 20290, at *6 (Del. Ch.
Mar. 2, 1989).
This is an exacting standard, requiring that Plaintiff show:

(a) actual

success on the merits, (b) irreparable harm,(c) that, on balance, the equities
weigh in favor of issuing the injunction and (d) that the movant is entitled to
judgment as a matter of law, view[ing] the evidence presented in the light most
favorable to the non-moving party. Weichert Co. v. Young, 2007 WL 4372823, at
*2 (Del. Ch. Dec. 7, 2007) (considering injunction application under summary
judgment standard).
34

Plaintiff cannot satisfy these standards or even the lesser standards for a
preliminary injunction. The record refutes Plaintiffs claim that SunEdison used its
control to force TERP into the Challenged Transaction.

I.

REDACTED

SUNEDISON HONORED ITS FIDUCIARY DUTIES

A.

Plaintiff Lacks Standing to Object to Core Features of the

Challenged Transaction Which Predate Its Acquisition of Stock

Plaintiff pegs its fiduciary breach claim on several core features of the
Challenged Transaction that are supposedly unfair that (a) the Vivint assets are
residential (105-06; Pl. Mem. 52); (b) TERP would provide financing for the
merger through the initial Drop Down (111; Pl. Br. 51); and (c) REDACTED

(104, 107,109-10; Pl. Br. 51-

35

52). But even if any of these objections had merit, and none does,8 Plaintiff lacks
standing to raise them because each of those features was an agreed term before
Plaintiff ever became a stockholder. 8 Del. C. 327; La. Mun. Police Emps. Ret.
Sys. v. Crawford, 918 A.2d 1172, 1184 (Del. Ch. 2007) ([W]ell-settled law
precludes plaintiffs from challenging a board decision that occurred before
plaintiffs stock ownership arose.); accord Ryan v. Gifford, 918 A.2d 341, 358-59
(Del. Ch. 2007).
Section 327 furthers Delawares longstanding public policy against the evil
of purchasing stock in order to attack a transaction which occurred prior to the
purchase of the stock. Polygon Glob. Opportunities Master Fund v. W. Corp.,
2006 WL 2947486, at *5 (Del. Ch. Oct. 12, 2006); see also, e.g., In re AbbVie Inc.
Sholder Deriv. Litig., 2015 WL 4464505, at *4 (Del. Ch. July 21, 2015).
A plaintiff who buys into a disclosed corporate transaction has not been
injured in her expectation and...she has no grounds to complain as to the judgment
of the defendants in determining the...price o[r] as to the purpose which motivated
8

As shown in the Karcanias Report (3.4), there is precedent for a take/pay

arrangement in the renewable energy industry. As shown above (pp. 7-8), TERP
always sought to be in the residential solar business; its provision of some of the
merger consideration was the only way both companies could get the benefit of the
Vivint acquisition and this is the same funding mechanism used in the First
Wind acquisition, which the market applauded; and while the Take/Pay may have
been unprecedented among YieldCos in particular, the YieldCo industry is in its
infancy, and Take/Pay arrangements are not unusual in the energy industry and
others. Karcanias Report 1.15; Litvak Report 69.
36

the board.... Brown v. Automated Mktg. Sys., Inc, 1982 WL 8782, at *2 (Del. Ch.
Mar. 22, 1982). A plaintiff challenging a proposed merger...must have been a
stockholder at the time the terms of the merger were agreed upon because it is the
terms of the merger, rather than the technicality of its consummation, which are
challenged. In re Beatrice Cos. Litig., 1987 WL 36708, at *3 (Del. Feb. 20,
1987); accord 7547 Partners v. Beck, 682 A.2d 160, 162-63 (Del. 1996).
Appaloosa did not own any TERP stock until

REDACTED

It correctly omits the July Agreements from its

definition of Challenged Transaction. 1, 102-113. But the same rule that
denies Plaintiff standing to contest the July Agreements also precludes it from
taking issue with those aspects of the Challenged Transaction that do not embody a
change implemented after REDACTED
In Schreiber v. Bryan, 396 A.2d 512 (Del. Ch. 1978), the plaintiff bought
Pennzoil Offshore Gas Operators, Inc. stock in 1971, and then challenged the 1972
amendment of contracts executed in 1970. The Court denied standing to sue on the
agreement amended after the plaintiff became a shareholder because the amended
agreements only reconfirmed the ones finalized prior to that purchase. Id. at 517.
The Court observed that 327 was designed principally to prevent the purchasing
of stock to be used for the purpose of filing a derivative action attacking
transactions occurring prior to such purchase, 396 A.2d at 516, and reasoned:
37

[I]n one sense every wrongful transaction constitutes a continuing

wrong to the corporation until remedied, and yet clearly such a result
is not only unrealistic but moreover would defeat the statutory policy.
Therefore, what must be decided is when the specific acts of alleged
wrongdoing occur, and not when their effect is felt.
Id.
As in Schreiber, Plaintiff lacks standing to object to those aspects of the
Challenged Transaction that were disclosed before Plaintiff bought TERP stock REDACTED
Plaintiff concedes

B.

REDACTED

The December Amendments Are Entirely Fair

Plaintiffs attempt to demonstrate the unfairness of the December

Amendments promotes the fiction that

REDACTED

38

REDACTED

Plaintiffs archetype of self-dealing by a controlling

stockholder, Pl. Mem. 52, is not only unsupported by the record, it is, in every
detail, contrary to uncontested evidence.
REDACTED

As set forth below, none of the supposed procedural flaws Plaintiff

purports to identify remotely undermine the substance or efficacy of the process,
much less evince an unfair result.
1.

The December Amendments Are the Product of Fair Dealing

REDACTED

39

REDACTED

A process involving a special committee

composed of independent directors who act as vigorous negotiator[s] and
bargain[] hard to get a higher price is a fair process. In re Cysive, Inc. Sholder
Litig., 836 A.2d 531, 548, 554-56 (Del. Ch. 2003).
Moreover, the price achieved was by hundreds of millions of dollars
better than the price of the preexisting July transaction, which Plaintiff has not
challenged and has no standing to challenge.

By definition, that improved

transaction is fair.
Delaware law is clear that perfection is not possible or expected. In re
Trados, Inc. Sholder Litig., 73 A.3d 17, 56 (Del. Ch. 2013). If a flaw is detected,
the magnitude of process flaw required to find an unfair process must be one
that would be likely to lead to an unfair result. Emerald Partners v. Berlin, 2003
WL 21003437, at *28 (Del. Ch. Apr. 28, 2003), affd, 2003 WL 23019219 (Del.
Dec. 23, 2003). There are no such flaws here.
40

The brief submitted by the Individual Defendants demonstrates that the

REDACTED

Plaintiff labels this process

corrupt, and identifies six supposed flaws. Pl. Mem. 43-49. Plaintiffs claims
are meritless and the purported flaws immaterial under Delaware law.
First, Plaintiff contends that the reconstitution of the Committee effectively
remov[ed] any pretense of arms-length bargaining between SunEdison and TERP.
Pl. Mem. 43.

REDACTED

The reconstituted Committee demonstrated

its independence by the results it achieved.
REDACTED

41

REDACTED

Third, Plaintiff argues Committee chairman Blackmore was compromised

by his previous service as an independent SunEdison director and the
compensation he received in that capacity,

REDACTED

Blackmores prior connections to SunEdison are immaterial. He was an

independent director of SunEdison and became an independent director of TERP.
To show lack of independence, a plaintiff must demonstrate that the director is
beholden to the controlling party or so under [the controllers] influence that [the
directors] discretion would be sterilized. In re MFW Sholders Litig., 67 A.3d
496, 509-10 (Del. Ch. 2013), affd sub nom. Kahn v. M&F Worldwide Corp., 88
A.3d 635 (Del. 2014); see also In re Gen. Motors (Hughes) Sholder Litig., 2005
WL 1089021, at *8 (Del. Ch. May 4, 2005) (amount of salary insufficient), affd,
897 A.2d 162 (Del. 2006); In re Goldman Sachs Grp., Inc. Sholder Litig., 2011
WL 4826104, at *11-12 (Del. Ch. Oct. 12, 2011) (holding independent CEO of
42

entity and advisor to a fund in which Goldman invested 464 million and $600
million, respectively). In re Loral Space & Commcns., Inc., 2008 WL 4293781,
at *5, *20 (Del. Ch. Sept. 19, 2008), on which Plaintiff relies (Pl. Mem. 47), is
inapposite the director was a long-time friend[] of the CEO who was
responsible for the CEOs appointment and had been the CEOs rent-free tenant
and advisor.

REDACTED

Fourth, Plaintiff contends that SunEdison pressur[ed] the New Committee

for a quick approval, and that haste deprived the Committee of a full
opportunity to digest all available material information, which often may require
several meetings. Pl. Mem. 46.

REDACTED

Moreover, an allegation that the timing of a transaction was influenced by

a controlling shareholder does not generate an inference of unfair dealing without a
showing that the minority shareholders were financially injured by the timing and
that the controlling shareholder gained from it. Jedwab v. MGM Grand Hotels,
Inc., 509 A.2d 584, 599-600 (Del. Ch. 1986); see also Kumar v. Racing Corp. of
43

Am., Inc., 1991 WL 67083, at *5 (Del. Ch. Apr. 26, 1991). No such showing has
been, or can be, made here.
Fifth,

REDACTED

But Truong is also on TERPs board, see Ex. 40, and SunEdison is
obligated to arrange for advisors, expressly including legal advisors or at the
Committees request. Ex. 7 3.1, 3.2.
Precisely the same

REDACTED

challenge was rejected by In re Western National Corp. Shareholders Litigation,

2000 WL 710192, at *22 (Del. Ch. May 22, 2000),

REDACTED

for the perfectly appropriate reasons that they were highly qualified and
independent.

In Western National,

REDACTED

the special committee members

interviewed firm representatives, inquired as to their experience and independence,

and selected the firm because they concurred with the inside directors.

REDACTED

That is a substantively and procedurally

sound manner of selecting advisors. W. Natl, 2000 WL 710192, at *22.
Western National distinguished Kahn v. Tremont Corp., 694 A.2d 422, 429
(Del. 1997), on which Plaintiff relies (Pl. Mem. 48), for the same reason Kahn is
inapposite here the challenged law firm in Kahn had strong financial
44

connections to the controlling shareholder, whereas here management merely

arranged for the committee to interview [financial and legal] advisors that appeared
qualified and did not have any connection to either the corporation or its
controlling shareholder. Western National, 2000 WL 710192, at *22. Similarly,
Gesoff v. IIC Indus., Inc., 902 A.2d 1130, 1151 (Del. Ch. 2006) (Pl. Mem. 48), is
distinguishable because the supposed independent counsel to the special
committee was (1) outside counsel to the entity and (2) had been advising its
parent company on the transaction at issue.

REDACTED

Plaintiffs suggestion that

REDACTED

should also have

advised the Committee it was not bound to the Take/Pay because it was only an
unsigned term sheet

REDACTED

is legally infirm.

Plaintiff claims the Take/Pay Agreement is an unsigned term sheet that

purported to set forth only certain terms and was far short of a definitive, binding
agreement, and that TERP was never actually bound. Id. But the Interim
Agreement, which is signed, provides that the parties shall enter into a long-term
45

framework agreementfor the dropdown of a certain number of US residential

and small commercial solar projects ... all based on the terms set forth on Exhibit
B hereto and shall negotiate in good faith to finalize the forms of the [Take/Pay
Agreement]. 1.8, 1.9. Such an express contractual obligation to negotiate in
good faith is binding on the contracting parties. SIGA Techs., 67 A.3d at 343-44.
Moreover, the detailed term sheet set forth the essential terms of the agreement,
concluding with the requirement that Pricing Assumptions shall generally be
consistent with and...not be more restrictive, when taken as a whole, with
customary practices for Sellers and Purchasers existing tax equity funds. Ex. 67
at Ex. B, at 1168. This is a binding agreement under Delaware law. Loppert, 865
A.2d at 1289; see also Sawabeh, 832 F.Supp. 2d at 307 (same under New York
law).
REDACTED

46

REDACTED

Emerald is instructive. In Emerald, independent directors considering a

merger failed to insist that a director and controlling shareholder absent
themselves from their deliberations, but the Court held this was not a process
deficiency that would lead to an unfair result because:
No adverse consequence resulted from those procedural lapses....
[A]lthough Hall and Berlin should not have been permitted to be
present at meetings of these three directors, the credible evidence
establishes that neither Hall nor Berlin influenced the non-affiliated
directors decisions in any significant way.
2003 WL 21003437 at *8, *28.

Sixth,

REDACTED

REDACTED

47

REDACTED

But the absence of a fairness opinion creates no

inference of unfair dealing. To be sure, our case law recognizes that establishing
an independent negotiating committee, and obtaining an investment banker
fairness opinion (or asset appraisal), are indicia of fair dealing in a merger. But
those authorities do not impose an affirmative fiduciary duty to implement one or
more of these procedural safeguards, with the result that a failure to do so would
constitute actionable unfair dealing. Seagraves v. Urstadt Prop. Co., 1989 WL
137918, at *4 (Del. Ch. Nov. 13, 1989) (fairness opinion is an indication of fair
dealing in a merger, but failure to do so does not constitute actionable unfair
dealing).
An entire fairness inquiry must focus on how the special committee
actually negotiated the deal and the substance, and efficacy, of the special
committees negotiations. In re S. Peru Copper Corp. Sholder Deriv. Litig., 52
A.3d 761, 789 (Del. Ch. 2011).

REDACTED

That is the essence of procedural fairness.

48

2.

The Economic Terms of the December Amendments Are Fair to

TERP

Even if there had been flaws in the Conflicts Committee process rising to the
level of unfair dealing and there were none the economic terms the
Committee negotiated were fair and should thus be upheld. See, e.g., Trados, 73
A.3d at 76, 78 (fiduciaries did not breach their duties when they failed to follow a
fair process yet nevertheless approved a transaction that yielded a fair price); Del.
Open MRI Radiology Assocs., P.A. v. Kessler, 898 A.2d 290, 310 (Del. Ch. 2006)
([T]he bottom line outcome of the caseturns on whether the merger was
financially fair.); In re Hanover Direct, Inc. Sholders Litig., 2010 WL 3959399,
at *2 (Del. Ch. Sept. 24, 2010) (The issue of fair process is secondary to the
ultimate import of fair price....).
REDACTED

Each of Plaintiffs economic unfairness arguments is refuted by evidence

adduced during expedited discovery.
Residential Asset Base.

Plaintiff continues to press its unsupported

allegation that the economic terms of the December Amendments are unfair
49

because the new residential assets fundamentally change[] TERPs business

model...from a purchaser of high-quality commercial and utility assets into a
purchaser of primarily (riskier) residential rooftop solar assets. Pl. Mem. 52
(repeating, without a shred of evidence, 11, 23, 73, 106, 139).

REDACTED

In the real world, market prices matter and are usually

considered the best evidence of value. Gotham Partners, L.P. v. Hallwood Realty

PX-35 at 25:9-23; PX-36 at 57:14-58:9; PX-37 at 20:4-23:7, 26:21-27:10;

PX-38 at 23:12-25:24; PX-40 at 18:20-19:18; PX-41 at 18:11-19:10, 21:16-25;
PX-44 at 36:11-24.
10

See Ex.13 at 4604.

50

Partners, L.P., 855 A.2d 1059, 1080 (Del. Ch. 2003), affd, 840 A.2d 641 (Del.
2003); see also In re Appraisal of Dole Food Co., 114 A.3d 541, 558 (Del. Ch.
2014).
Take/Pay.

The record amply demonstrates strong business reasons for

TERPs decision to enter into a Take/Pay Agreement in July, to achieve the welldocumented benefits to TERP of the entire transaction.

S. Muoio & Co. v.

Hallmark Entmt Invs. Co., 2011 WL 863007, at *16 (Del. Ch. Mar. 9, 2011) (the
court asks whether the transaction was one that a reasonable seller, under all of the
circumstances, would regard as within a range of fair value; one that such a seller
could reasonably accept); Lonergan v. EPE Holdings, LLC, 5 A.3d 1008, 1020
(Del. Ch. 2010) (a Delaware court determines entire fairness based on all aspects
of the entire transaction). That decision is one that Plaintiff has neither standing
nor evidence to challenge.

REDACTED

51

REDACTED

For reasons set forth in nominal defendant TERPs brief and in

Section II, Plaintiffs concerns about the impact of the Take/Pay are speculative
and insufficient to support injunctive relief.
II.

PLAINTIFF HAS NOT DEMONSTRATED IRREPARABLE INJURY

The plaintiff must establish both a threat of irreparable harm and that such

harm is imminent. Theravectys SA v. Immune Design Corp., 2015 WL 1308273,

at *9 (Del. Ch. Mar. 9, 2015).11 Appaloosa can satisfy neither of these elements.
A.

TERPs Hypothetical REDACTED Is Speculative

Plaintiff seeks an injunction on the grounds that

11

REDACTED

See also Weldin Farms, Inc. v. Glassman, 414 A.2d 500, 505 (Del. 1980)
([A]n injunction will not issue by reason of mere apprehension of uncertain
speculative damage at an indefinite time in the future.); Angelo, Gordon & Co. v.
Allied Riser Commcns Corp., 805 A.2d 221, 231 (Del. Ch. 2002) (no irreparable
harm where injuries are both speculative and [would] not result from the Merger
itself but [would] only be felt, if at all, with the passage of time after the Merger).
52

REDACTED

The brief submitted by nominal defendant TERP in

opposition to the pending motion spells out in detail the speculative nature of
Plaintiffs concern

REDACTED

Even if Plaintiffs scenario is

possible, it cannot support an injunction. Roseton OL, LLC v. Dynegy Holdings

Inc., 2011 WL 3275965, at *19 (Del. Ch. July 29, 2011) (finding insufficient a
speculative claim that if various contingencies occur plaintiff will suffer
irreparable harm).
REDACTED

But there is no way to predict when or if that may ever happen:

The quantity of future dropdowns is unknown.

53

REDACTED

The duration of TERPs obligations may be less than a year.

REDACTED

Its sufficiency cannot be

determined without knowing when TERPs dropdown obligations will
materialize, their cost, whether SunEdison or TERP will sell the
assets, whether TERP can sell any of its other assets, and what
financing TERP will be able to obtain.
REDACTED

REDACTED

[A]n event that might or might not occur does not show irreparable harm.
H.F. Ahmanson & Co. v. Great W. Fin. Corp., 1997 WL 305824, at *11 (Del. Ch.
June 3, 1997). Plaintiffs claim of a possible 2017 insolvency of TERP is purely
conjectural.
B.

SunEdison Could Pay Any Money Damages

Plaintiff asserts that TERP would be unable to collect money damages were
it to prevail against SunEdison in trial. Pl. Mem. 56-59; 133-35. There is no
basis for this assertion. Plaintiff does not quantify the amount that SunEdison
would theoretically be unable to pay. As shown above, that amount cannot exceed
REDACTED

54

REDACTED

Hillsboro, 2008 WL 4561227, at *3;

Kansas City S., 2003 WL 22659332, at *5.12

12

The other case Plaintiff cites, Bayard v. Martin, 101 A.2d 329, 335 (Del.
1953), also establishes that Plaintiffs failure to make an affirmative showing of
SunEdisons future insolvency is insufficient.
55

C.

The Court Could Enjoin the Take/Pay Agreement in the Future

Plaintiff last argues that because the Vivint merger is to be effectuated

through multiple interrelated transactions, the Court would not be able to undo the
transaction once the merger closes. Pl. Mem. 58-60. But the only transaction
Plaintiff attacks as irreparably injurious is the Take/Pay Agreement. If in the
future the Take/Pay were to prove unfair to TERP, nothing would prevent the
Court from exercising its equitable powers to enjoin the agreement at the time.
There would be no need to undo the Vivint merger. [T]he Court would be able to
fashion an appropriate remedy...without, in the words of Judge Easterbrook, having
to unscramble an egg. In re KMC Real Estate Invrs, LLC, 518 B.R. 505, 510
(S.D. Ind. 2014).
III.

THE BALANCE OF EQUITIES WEIGHS HEAVILY AGAINST

INJUNCTIVE RELIEF
[A] court must be cautious that its injunctive order does not threaten more

harm than good. Lennane v. ASK Comp. Sys., Inc., 1990 WL 154150, at *6 (Del.
Ch. Oct. 11, 1990), appeal refused, 1990 WL 169078 (Del. Oct. 19, 1990) (Del.
Oct. 19, 1990).
An injunction would preclude the Vivint merger by disabling SunEdisons
ability to finance it with cash from the Goldman Loan or proceeds of the Amended
Purchase Agreements.

That will harm Vivint, SunEdison, TERP and their

shareholders.
56

Plaintiff argues that the duty to close the Vivint merger would be suspended
by entry of an injunction, citing 6.01(b) of the Amended Merger Agreement. Pl.
Mem. 60. But the only immediate effect of the injunction would be to prevent
SunEdison from accessing its financing, which is dependent on the existence of the
Take/Pay. SunEdisons duty to close under the Amended Merger Agreement is not
conditioned on financing. Ex. 69 at 4.05(a) (obligations to perform...including
to consummate the Closing...are not conditioned on...the Debt Financing or any
other financing).

On entry of an injunction, Vivint can be expected to sue

SunEdison immediately because March 18, 2016 is the merger termination date.
Id. at 7.01(c).
If Vivint were to sue and prevail on its reading of the contract that an
injunction preventing the financing does not excuse closing because financing is
expressly carved out of the conditions to closing SunEdison would be forced
into the impossible position of having to close anyway (which it will be unable to
do) or paying damages, which contractually include the losses suffered by Vivint
shareholders for not receiving the merger consideration.

Id. at 7.02.

(Shareholders separately have the right to sue for the merger consideration, id. at
8.06(iii).)

REDACTED

57

REDACTED

It is appropriate for the Court to consider that issuance of an injunction

would harm Vivint as well. See Cantor Fitzgerald, L.P. v. Cantor, 724 A.2d 571,
588 (Del. Ch. 1998) (considering impact on more business entities and individuals
than the parties to this litigation); accord Braunschweiger v. Am. Home Shield
Corp., 1989 WL 128571, at *5 (Del. Ch. Oct. 26, 1989); Solar Cells, Inc. v. True
N. Partners, LLC, 2002 WL 749163, at *8 (Del. Ch. Apr. 25, 2002).
The merger offers Vivint shareholders substantial benefits a 21.1% price
premium and near-term value and liquidity. Ex. 5 at 79.
CONCLUSION
For the forgoing reasons, Plaintiffs motion for a preliminary injunction
should be denied. If the Court grants an injunction, it should require the Plaintiff
58

to post a bond commensurate with the extreme harm that may result. See AM Gen.
Holdings LLC v. Renco Grp., 2012 WL 6681994, at *7 (Del. Ch. Dec. 21, 2012);
Sanofi-Synthelabo v. Apotex Inc., 488 F. Supp. 2d 317, 349 (S.D.N.Y. 2006)
(requiring $400 million bond based on potential lost profits, lost market share and
associated costs of relaunch stemming from preliminary injunction barring
distribution of prescription drug), affd, 470 F.3d 1368 (Fed. Cir. 2006).
Specifically, because a wrongful injunction of the Challenged Transaction would
disable SunEdison from closing the Vivint merger due to lack of financing, would
expose SunEdison to
and

REDACTED

from Vivint and its shareholders,

REDACTED

Plaintiff should be compelled to post a bond of

59

REDACTED

/s/ Thomas A. Beck

Thomas A. Beck (#2086)
Raymond J. DiCamillo (#3188)
Sarah A. Clark (#5872)
Richards, Layton & Finger, P.A.
920 North King Street
Wilmington, Delaware 19801
(302) 651-7700

OF COUNSEL:
Gregory P. Joseph
Pamela Jarvis
Mara Leventhal
Honey Kober
Gregory O. Tuttle
Roman Asudulayev
Joseph Hage Aaronson LLC
485 Lexington Avenue
30th Floor
New York, New York 10017
(212) 407-1210

Attorneys for Defendants SunEdison,

Inc. and SunEdison Holdings
Corporation

Dated: February 12, 2016

60