Opinion
C.A. No. 19477
Date Submitted: April 17, 2002
Date Decided: April 25, 2002
Kenneth J. Nachbar, Jon E. Abramczyk, S. Mark Hurd, and Brian J. McTear, of MORRIS, NICHOLS, ARSHT TUNNELL, Wilmington, Delaware; OF COUNSEL: Barry W. Fissel and M. Charles Collins, of EASTMAN SMITH LTD., Toledo, Ohio, Attorneys for Plaintiff.
Allen M. Terrell, Jr., Thad J. Bracegirdle and Andrea K. Short, of RICHARDS, LAYTON FINGER, Wilmington, Delaware; OF COUNSEL: Timothy P. Ryan and Daniel B. McLane, of ECKERT SEAMANS CHERIN MELLOTT, LLC, Pittsburgh, Pennsylvania, Attorneys for Defendants.
MEMORANDUM OPINION
This action concerns the proposed merger of defendant First Solar, LLC ("First Solar" or the "Company") with and into First Solar Operating, LLC ("FSO"), the wholly-owned operating subsidiary of First Solar Ventures, LLC ("FSV"). The plaintiff, Solar Cells, Inc. ("Solar Cells"), alleges that the individual defendant managers of First Solar, acting at the direction of defendant True North Partners, LLC ("True North" and, collectively, "the defendants"), acted in bad faith in approving the proposed merger and that the defendants will be unable to prove the entire fairness of that merger.
The individual defendants are First Solar Managers elected by True North: Michael J. Ahearn ("Ahearn"), Michael L. Pierce ("Pierce"), and Michael Gallagher ("Gallagher").
On March 13, 2002, Solar Cells filed a motion for a temporary restraining order requesting that this Court enjoin the proposed merger, which was scheduled to close two days later. The defendants agreed to postpone consummation of the merger in order to permit the parties to conduct the limited discovery necessary to present their positions at a preliminary injunction hearing. Solar Cells' motion for a preliminary injunction was fully briefed and then argued on April 17, 2002. Because I find that Solar Cells has met its burden of establishing a reasonable likelihood that it will be successful on the merits of its claim of a breach of fiduciary duty and that it is threatened by irreparable harm if the merger is consummated, I will enter an Order preliminarily enjoining the merger.
Solar Cells also contends that True North improperly converted loans it made to First Solar into First Solar membership units, that the defendants breached their duty of care in approving the proposed merger, and that the defendants improperly are attempting to deny Solar Cells its Class B Units merger approval rights. Because a preliminary injunction will issue if a plaintiff carries his burden on at least one of his claims, my determination that Solar Cells has made an adequate showing as to this first claim obviates the need to discuss these additional claims.
I. BACKGROUND FACTS
Solar Cells, an Ohio corporation, was founded in 1987 by Harold A. McMaster ("McMaster") to develop, design, and manufacture products and processes for photovoltaic electricity generation — technology commonly referred to as "solar power." McMaster designed technologies and processes for manufacturing photovoltaic cells making use of heretofore-unknown techniques that were predicted to revolutionize the solar power industry. These inventions purportedly would permit cost-effective manufacture of photovoltaic cells that produce energy at rates competitive with, or even less than, the present cost of electrical generation using fossil fuels. In order to exploit the potential of these inventions, True North, an Arizona limited liability company, was brought in to provide needed financing. Solar Cells and True North formed First Solar as a Delaware limited liability company in February 1999 to commercialize McMaster's solar technology.First Solar is managed pursuant to the Operating Agreement of First Solar, LLC ("Operating Agreement"). The Operating Agreement required Solar Cells to contribute patented and proprietary technology — valued in the Operating Agreement at $35 million — to First Solar. True North was to contribute $35 million in capital to First Solar and, also pursuant to the Operating Agreement, was required to, and did, loan First Solar an additional $8 million. In return for their contributions, Solar Cells and First Solar each received 4,500 of First Solar's Class A membership units. Solar Cells also received 100% of First Solar's Class B membership units. The business and affairs of First Solar is conducted by five Managers. The Operating Agreement permits True North to elect three of those Managers (the "True North Managers") and Solar Cells to elect the remaining two Managers (the "Solar Cells Managers"). It is undisputed that, since its inception, First Solar has been managed by True North.
According to the Operating Agreement, Class A Units had voting rights, and Class B Units had no voting rights.
First Solar's continuing development and manufacturing expenditures, as well as its inability to produce a marketable product, eventually depleted the Company's initial funding. By early 2001 it became apparent that continued operations would require additional funding. To this end, in March 2001, First Solar retained investment banker Adams, Harkness Hill, Inc. ("AHH") to find a strategic investor for the Company. In order for the Company to continue operating while AHH searched for a strategic investor, True North agreed to make an additional $15 million loan to First Solar.
The Loan Agreement between First Solar and True North bundled True North's original $8 million loan and the new $15 million loan and represented a funding commitment by True North of up to a total of $23 million through December 31, 2001. Upon either the receipt of outside investment or at the end of its funding commitment, the Loan Agreement gave True North the option of converting some or all of the loan amount into Class A Units of First Solar or to retain the investment as a loan with liquidation preferences. For reasons disputed by the parties (but not relevant to this motion), no outside investors were brought into First Solar.
The loan was convertible either at the same value as AHH proposed to outside investors or at a "conversion ratio" specified in the Loan Agreement.
From December 2001 through March 2002, the parties engaged in unsuccessful negotiations regarding different alternatives for financing and restructuring First Solar. On March 5, 2002, True North purported to convert $250,000 of its outstanding loans to First Solar into Class A Units at a conversion ratio based on a January 8, 2002 AHH valuation of First Solar at $32,000,000. On March 7, 2002, the True North Managers executed a written consent approving the challenged merger of First Solar into FSO, a Delaware limited liability company wholly owned by True North. On March 11, 2002, Solar Cells received notice of the proposed merger, which was scheduled to close on March 15, 2002, and the terms of that merger. In connection with the merger, True North would convert its remaining outstanding loans into equity at the same ratio as the March 5, 2002 conversion. The merger would occur based on a total valuation of First Solar at $32 million with First Solar ownership units being exchanged for ownership units of the surviving company. The end result of the merger-related transactions would be that Solar Cells would go from owning 50% of the Class A Units of First Solar to owning 5% of the membership units of the surviving company. On March 13, 2002, Solar Cells filed a complaint and request for temporary restraining order enjoining consummation of the proposed merger. True North agreed not to cause its Managers to close the merger before this Court's decision on Solar Cells' motion for a preliminary injunction filed in response to that agreement.
II. PRELIMINARY INJUNCTION STANDARD
The standard on a motion for preliminary injunction is well-settled. In order to prevail, a plaintiff must establish: (1) a reasonable likelihood of success on the merits of at least one claim; (2) that irreparable harm will be suffered by the plaintiff if the injunction is denied; and (3) that the harm that the plaintiff will suffer if the injunction is not granted outweighs the harm that the defendant will suffer if the injunction is granted.
See In re Aquila Inc. Shareholders Litig., 2002 WL 27815 at *5 (Del.Ch.).
III. CONTENTIONS
Solar Cells argues that the manner in which the proposed merger was approved demonstrates that the True North Managers acted in bad faith and breached their fiduciary duties to Solar Cells as a member of First Solar. Because of the defendants' bad faith, Solar Cells contends that the defendants will be required to prove that the proposed merger is entirely fair. Solar Cells argues that it is likely to be successful on the merits because the defendants will be unable to demonstrate that the proposed merger was the result of fair dealing and based on a fair price.Solar Cells lists three effects of the proposed merger that will irreparably harm it should the merger close. First, because of the purportedly improper conversion ratio used by True North to convert its outstanding First Solar loans to equity, Solar Cells' 50% voting and equity interest in First Solar will be diluted to only a 5% interest in the surviving company. Second, Solar Cells bargained for the right to elect two Managers when negotiating with True North over the creation of First Solar. As a result of the proposed merger, it will lose this bargained-for right. Instead, True North will — through its control of 95% of the voting units of the surviving company — elect all three of the Managers of the surviving LLC. Third, and finally, it is contemplated that outside investors will be brought into the surviving company. Should that happen and this Court later determines that use of an improper conversion caused the equity positions of the parties to be incorrectly established, the interests of third parties would make the resolution of that problem extremely difficult. Solar Cells argues the harm is incalculable and far outweigh any harm that might be suffered by First Solar as a result of enjoining an unfair transaction.
The plaintiff also makes lengthy arguments over which one of several valuations was appropriate to use under the terms of the Loan Agreement in determining the conversion ratio for True North debt. Plaintiff also, as a separate matter, argues that AHH's January 8, 2002 valuation of First Solar at $32,000,000 was, nonetheless, inaccurate and could not serve as the basis for conversion under any circumstances. It is not necessary for my decision on this motion to make determinations with regard to those arguments. That value was used for both the purported conversion of True North loans and served as the valuation of First Solar for purpose of the merger. I need only determine whether the values used in those transactions is likely to cause irreparable harm to Solar Cells.
The defendants counter that, as evidenced by the Operating Agreement, the parties unambiguously agreed that the True North Members could control decisions regarding the business and affairs of First Solar. Action by written consent is permitted by the Operating Agreement. A merger need only be approved by a majority of the Managers and True North has veto power over any mergers it does not agree with. The merger was approved by the three True North Managers in the good faith belief that, in light of failed restructuring negotiations between the parties, this was the only option available to save First Solar from a forced sale or liquidation when it runs out of operating money at the end of April 2002. Furthermore, the Operating Agreement acknowledges that there will be conflicts of interest between the True North Managers (two of which are True North principals) and eliminates liability for any conflict of interest transactions that they may engage in. The only requirement is that the True North Managers act in the good faith belief that their actions are in the best interest of First Solar. Because every action taken by the True North Managers with regard to the proposed merger was authorized by the Operating Agreement and made in the good faith belief that it was in the best interest of First Solar, True North insists that this Court should deny Solar Cells' motion.
Although True North disputes the need to establish entire fairness, it contends that both the process and the price of the merger are entirely fair. The process undertaken was clearly authorized by the Operating Agreement and the price was arrived at from a valuation by AHH based on accurate revenue statements and is further supported by an outside valuation.
True North argues that Solar Cells will not be irreparably harmed by the merger. Any dilution suffered by Solar Cells is the result of a valid conversion of True North loans to equity. Solar Cells will be permitted to make further investments in the surviving company on the same basis as True North. There is a reset provision that will reverse part of Solar Cells' dilution if a strategic investor is found during 2002. Although the defendants acknowledge that Solar Cells will not have the right to elect managers of the surviving company, they contend that True North had the right to elect a majority of First Solar Managers and, therefore, was guaranteed control over the business and affairs of the Company. True North merely continues to have the power to control the business and affairs of the surviving company. Since Solar Cells could not control First Solar, it has not lost any power over the company by not being able to elect managers of the surviving company. Having suffered no irreparable harm, defendants contend that the equities clearly balance in their favor and against the motion. They assert that if the injunction is granted, the Company will run out of money by April 30, 2002. Since True North is unwilling to continue funding the Company, it will have to terminate its employees, shut down, and be sold at a bargain in a forced liquidation.
IV. ANALYSIS
A. Likelihood of Success on the Merits
The defendants argue that all of the actions taken in connection with the proposed merger were clearly authorized by the Operating Agreement. They further argue that the Operating Agreement limited any fiduciary duties owed by True North Managers. Section 4.18(a) of the Operating Agreement provides, in relevant part:
Solar Cells and [First Solar] acknowledge that the True North Managers have fiduciary obligations to both [First Solar] and to True North, which fiduciary obligations may, because of the ability of the True North Managers to control [First Solar] and its business, create a conflict of interest or a potential conflict of interest for the true North Managers. Both [First Solar] and Solar Cells hereby waive any such conflict of interest or potential conflict of interest and agree that neither True North nor any True North Manager shall have any liability to [First Solar] or to Solar Cells with respect to any such conflict of interest or potential conflict of interest, provided that the True North managers have acted in a manner which they believe in good faith to be in the best interest of [First Solar].
I note that this clause purports to limit liability stemming from any conflict of interest. Solar Cells has not requested that this Court impose liability on the individual defendants. It is currently only seeking to enjoin the proposed merger. Therefore, exculpation for personal liability has no bearing on the likelihood that Solar Cells would be successful on the merits of its contention that the proposed merger is inequitable and should be enjoined. Even if waiver of liability for engaging in conflicting interest transactions is contracted for, that does not mean that there is a waiver of all fiduciary duties to Solar Cells. Indeed, § 4.18(a) expressly states that the True North Managers must act in "good faith." It is undisputed that First Solar was, and is, in financial distress. Months of unsuccessful negotiations have been ongoing in an attempt to come to an agreement as to how to remedy that situation. On March 6, 2002, the full Board of Managers met and the True North Managers made no mention of the planned merger. The very next day, March 7, 2002, the three True North Managers met and by written consent approved the proposed merger. No effort was made to inform the Solar Cells Managers that this action was contemplated, or imminent, when those facts were surely known at the time of the March 6 meeting. At the earliest, Solar Cells was given notice of the fact, and terms, of the proposed merger (which were presented as a fait accompli) via facsimile on March 8, 2002 — a week before consummation of a merger that will apparently reduce Solar Cells' interest from 50% to 5%. These actions do not appear to be those of fiduciaries acting in good faith. As the Supreme Court and this Court have made clear, it is not an unassailable defense to say that what was done was in technical compliance with the law. The facts before me make it likely, in my opinion, that the defendants would be required to show the entire fairness of the proposed merger.
The plaintiff contends that documents produced during discovery reveal that the defendants had been planning the proposed merger since at least February 27, 2002.
See Schnell v. Chris-Craft Indus., 285 A.2d 437 (Del. 1971).
The party with the burden of establishing entire fairness must establish that the challenged transaction was the result of fair dealing and offered a fair price. Fair dealing pertains to the process by which the transaction was approved and looks at the terms, structure, and timing of the transaction. Fair price includes all relevant factors "relat[ing] to the economic and financial considerations of the proposed merger."
See Weinberger v. UOP, Inc., 457 A.2d 701, 711 (Del. 1983).
The defendants argue that there is nothing inherently unfair about the structure of the merger — a holding company with a wholly-owned operating subsidiary. Solar Cells points out, however, that there was no independent bargaining mechanism set up to protect its interests. In fact, there was no negotiation at all. All of the decisions regarding the terms of the merger and its approval were made unilaterally by True North through its representative Managers. No advance notice of this merger was given to Solar Cells. The fact that the Operating Agreement permits action by written consent of a majority of the Managers and permits interested transactions free from personal liability does not give a fiduciary free reign to approve any transaction he sees fit regardless of the impact on those to whom he owes a fiduciary duty.
The defendants contend that the timing of the merger was dictated by the Company's financial emergency, an emergency they say had been exacerbated by Solar Cells' refusal to negotiate, in good faith, a suitable plan for restructuring the Company. Solar Cells counters that the timing was driven by True North's desire to increase its proportionate ownership while simultaneously squeezing out Solar Cells at an unfair price. Solar Cells argues that the effect of the merger is essentially the same as the terms of a restructuring plan Solar Cells had refused to agree to in February 2002. They contend, in the face of Solar Cells' refusal to accept an unfair restructuring offer voluntarily, that the defendants immediately sought to impose similar terms by way of the proposed merger.
I am unconvinced by defendants' argument that the merger was fair to Solar Cells because Solar Cells retains voting rights in the surviving company. On matters where the unit-holders can vote, Solar Cells is diluted from an equal (50%) voice, to only 5%. Also arguably illusory is the so-called market-reset provision that would raise Solar Cells' initial equity interest in the new entity in the event that the new entity secures third-party financing in 2002. True North has complete control over the managing board and any other decision requiring the vote of unit-holders. Certainly, then, it would be within the power of True North to delay consummation of any proposed third-party investment until after 2002. Such action would seem to be in the self-interest of both True North and any potential third-party investor, as any increase in Solar Cells' equity interest necessarily decreases the equity interest of others. Finally, the ability of Solar Cells to invest new money into the surviving corporation on the same terms as True North hardly remedies the harm suffered by Solar Cells by the initial dilution of its interest as a result of the proposed merger. In my opinion, the facts before me establish a reasonable likelihood that defendants will not be able to establish that the proposed merger was the result of fair dealing.
Application of the entire fairness standard requires a demonstration of both fair dealing and fair price. Having considered the fair dealing component of the standard, I turn now to the fair price analysis.
Solar Cells contends that True North manipulated the valuation of First Solar in order to advantage itself. That is, according to Solar Cells, when True North decided it would become a buyer of First Solar it unilaterally caused AHH to create a fundamentally flawed valuation that is less than one-third of the value calculated by AHH only five months earlier. On the other hand, True North insists that AHH's January 2002 $32 million valuation of First Solar, a calculation that forms the basis of the proposed merger terms, is a more credible calculation of First Solar's value than earlier calculations by AHH. True North contends that the earlier calculations were overly optimistic and were based on outdated financial projections as well as changed market conditions.
For purposes of the present motion only, I am satisfied that there is a reasonable probability that the Court will not find the January 2002 valuation to be entirely fair. First, the author of AHH's January 2002 valuation materials described those materials as a "quick and dirty" analysis of First Solar's value on that date. This contrasts with the earlier valuations in August and November of 2001, valuations that were based on multiple methodologies to arrive at a value for First Solar that ranged from $103 million in August 2001 to $72 million in November 2001, or almost two to three times the January 2002 valuation. Second, AHH's January 2002 valuation employed only a discounted cash flow analysis. Although the lower valuation in January 2002 was the basis upon which True North would acquire a 95% interest in First Solar and Solar Cells would fall to a 5% interest, the significantly lower valuation failed to employ any other method of valuation as a "crosscheck" to the discounted cash flow analysis. Because earlier valuations relied on multiple valuation methodologies, it is a reasonable inference that AHH's "quick and dirty" analysis is less reliable and authoritative. Third, the January 2002 formula used a much lower exit multiple (a 6.9 x free cash flow terminal year multiple) than did earlier valuation formulas (which used an 11 x free cash flow terminal year multiple), with no apparent rationale for that lower multiple. Fourth, AHH's lower valuation resulted from the use of a much higher discount rate (35%) than the valuations it performed only five months earlier (30%), even though the outlook for the solar cell industry was improving in that period and even though interest rates were generally falling.
Even True North's litigation expert, Mr. Brian DiLucente, arrived at a much higher value for First Solar ($51.9 million). DiLucente was able to reduce his $51.9 million valuation to $31.1 million, but to do so, he was forced to apply a 40% "marketability" discount. The courts of this State, however, have repeatedly rejected the applicability of such discounts. See, e.g., Paskill Corp. v. Alcoma Corp., 747 A.2d 549, 556-57 (Del. 2000); Cavalier Oil Corp. v. Harnett, 564 A.2d 1137, 1145 (Del. 1989); Nebel v. Southwest Bancorp., Inc., Del. Ch., C.A. No. 13618, Jacobs, V.C., slip op. at 9 (Mar. 9, 1999). Furthermore, after putting to one side DiLucente's apparent improper application of a marketability discount, his $51.9 million valuation for First Solar likely was improperly depressed by other aspects of his discounted cash flow analysis. For example, DiLucente applied a discount rate as high as 45%, based on his subjective view of First Solar's Company specific risk. But Dilucente admitted in his deposition testimony that he had no expertise in the solar cell industry and limited knowledge of the specific company, First Solar, that his analysis purported to value. This Court has been, understandably in my view, suspicious of expert valuations offered at trial that incorporate subjective measures of company specific risk premia, as subjective measures may easily be employed as a means to smuggle improper risk assumptions into the discount rate so as to affect dramatically the expert's ultimate opinion on value. See Onti, Inc. v. Integra Bank, 751 A.2d 904, 919-21 (Del.Ch. 1998); Hintmann v. Fred Weber, Inc., Del. Ch., C.A. No. 12839, Steele, V.C. (Feb. 17, 1998).
Judicial determinations of fair price in an entire fairness analysis are difficult even after a full trial on the merits. On the abbreviated record now before the Court in this preliminary injunction context, a fair price analysis is even more problematic. For that reason, I have not found it useful to rely heavily on the deposition and affidavit testimony of the parties' litigation experts. Instead, I conclude that it is reasonably likely this Court will find the January 2002 $32 million valuation of First Solar not to be a fair price because it is irreconcilable with the earlier valuations only a few months before True North decided to go forward with the proposed merger. Because Solar Cells has demonstrated a reasonable likelihood of success on the merits of its entire fairness claim, I turn next to the irreparable harm and balance of the equities component of the preliminary injunction standard.
B. Irreparable Harm
In order to show irreparable harm, the injury must be one for which money damages will not be an adequate remedy. Additionally, the threatened harm must be "imminent, unspeculative, and genuine."
See Kohls v. Duthie, 765 A.2d 1274, 1289 (Del.Ch. 2000).
H.F. Ahmanson Co. v. Great W. Fin. Corp., 1997 WL 305824 (Del. Ch.).
Solar Cells argues that it will be harmed irreparably by the dilution of its equity position and voting power as unit-holders. It also alleges that the loss of its bargained-for participation in company management is an irreparable harm. Finally, it contends that it will be irreparably harmed by the fact that, should a third-party investor be brought into the surviving company, those third-party interests will have to be taken into account by the Court. If it is then later determined that the dilution of Solar Cells' interest was improper it will be difficult, if not impossible, to craft an appropriate remedy for the wrong suffered by Solar Cells. Solar Cells is in imminent, unspeculative, and genuine danger of suffering this harm. The defendants do not argue that these results will not follow from the proposed merger, only whether they constitute harm at all, and if they are, whether they are irreparable harm.
The defendants do not dispute that Solar Cells' equity position and voting power as unit-holders will be diluted. They cite Rovner v. Health-Chem Corp. for the proposition that dilution alone cannot be viewed as irreparable harm. The plaintiff in Rovner could be compensated for any improper dilution of its shares. The plaintiff stockholder in Rovner, moreover, held less than 3% of the eight million shares issued by a publicly-traded company. There was no contention that any dilution would have drastically affected voting power or that the value of the purportedly diluted shares of a public corporation could not be readily valued. Here, not only is dilution not the sole claim of irreparable harm, but the harm alleged is the power inherent in voting 50% of Class A Units compared to voting only 5%. Moreover, accurately valuing this two-member limited liability company may not be possible, as evidenced by the vastly different valuations the parties ascribe to First Solar. Therefore, these are not the types of harm that can be remedied with money damages.
1996 WL 377027 (Del.Ch.).
Id. at *1.
The Operating Agreement, § 4.18, limits True North's liability for conflicts arising from its fiduciary obligations. This may also cause harm to Solar Cells to be irreparable in nature.
The defendants do not deny that Solar Cells will not have the right to appoint managers of the managing board of the surviving corporation. They argue that since True North had the right to nominate a majority of First Solar's Managers, True North could control the business and affairs of the Company. That reality is unaltered with the surviving company. The defendants reason, therefore, that Solar Cells has suffered no harm by losing its right to appoint managers. That argument carries no weight whatsoever. To accept that assertion would be to believe that every time the ability to elect a manager or director of a corporation is negotiated, there is no benefit derived therefrom if there is not a right to elect a majority of the managers or directors. Such a notion would certainly come as a surprise to all those who have given valuable consideration in negotiating such valueless rights. The right to participate in a management group is a valuable right whether or not that participation includes control of the group. In this case, it is undisputed that Solar Cells will lose that right if the proposed merger closes, thereby suffering an irreparable harm.
Finally, if a third-party investor were brought into the surviving company, the Court would have to consider the interests of that party in formulating relief, if any, later found owing to Solar Cells. The possibility of such investment is not merely speculative, as the defendants claim one of the purposes behind the proposed merger is to make the surviving company more attractive to outside investors. Based on the facts before me, I conclude that Solar Cells is at risk of suffering immediate, irreparable harm if the proposed merger is consummated.
C. Balance of the Equities
The harm suffered by Solar Cells is the irreparable harm discussed above. The harm the defendants allege they will suffer if the injunction is granted is that the Company will run out of money in a matter of days and will be forced to close down and terminate its employees and liquidate assets in the undesirable setting of a forced sale. It does not appear to be a certainty, despite defendants' assertions to the contrary, that True North would let the Company close rather than protecting its investment for the short period of time necessary to reach a final judgment in this matter. Actually, Solar Cells has noted that, under the right terms, McMaster would be willing to make financing available to First Solar. A determination of the likelihood that one of the parties will extend additional financing is not necessary to my decision, however. I am required to balance the harm to the plaintiff if I do not grant the injunction with the harm to the defendants if I do grant the injunction. I note that even if the circumstance the defendants present does occur, that is not a harm that would fall solely on the defendants. Such a forced sale would adversely affect Solar Cells as well. In actuality, this predicted result might have an even greater detrimental effect on Solar Cells. As the defendants have pointed out, True North is entitled to priority repayment of its original $35,000,000 capital contribution before Solar Cells would be able to make a claim to any of the proceeds of a liquidation. As a result, I find that the balance of the equities favors granting Solar Cells' motion for a preliminary injunction against the proposed merger.
See Ahearn Aff., at § 10.1.
V. CONCLUSION
For the reasons stated, I grant plaintiff's motion for preliminary injunction. An Order has been entered in accordance with this decision.
A secured bond in the amount of $2500 shall be posted by plaintiff before the injunction becomes effective.
IT IS SO ORDERED.
ORDER
For the reasons set forth in this Court's Memorandum Opinion entered in this case, on this date, it is
ORDERED:
1. Plaintiff's motion for a preliminary injunction is granted;
2. Defendants, their counsel, agents, directors, officers, employees, and all persons acting under, in concert with, or for them are preliminarily enjoined from taking any steps in furtherance of the proposed merger of First Solar, LLC ("First Solar") and First Solar Operating LLC (the "Proposed Merger") and, in particular, from consummating the Proposed Merger or filing with the Delaware Secretary of State any further documents in connection with the Proposed Merger or any other merger to which First Solar is or would be a party.
3. This Order shall become effective upon plaintiff's posting of a secured bond in the sum of $2,500.